Sherwood Park, Alberta, January 6, 2014 - Virtutone Networks Inc. ("Virtutone" or the "Corporation") (TSX Venture: VFX.V) is pleased to announce that it has entered into an agreement with First Republic Capital Corporation ("First Republic") respecting a brokered private placement (the "Private Placement") pursuant to which First Republic will act as Virtutone's agent to sell, on a "commercially reasonable efforts" basis, a minimum of 6,666,667 units ("Units") of the Corporation and up to a maximum of 13,333,334 Units at a price of $0.30 per Unit for approximate aggregate minimum proceeds of $2 million and up to an approximate maximum aggregate proceeds of $4 million, subject to the receipt of all applicable regulatory approvals.
Each Unit is comprised of: (i) one common share ("Common Share") of the Corporation; and (ii) one half of one common share purchase warrant ("Warrant") of the Corporation. Each whole Warrant will entitle to holder to purchase one Common Share at an exercise price of $0.40 for a period of two years from the date of the closing of the Private Placement (the "Warrant Expiry Date"). If, during the period commencing on the date that is four months and one day following the closing of Private Placement and ending on the Warrant Expiry Date, the daily volume weighted average trading price of the Common Shares on the TSX Venture Exchange exceeds $0.40 for each day for a period of 20 consecutive trading days, then the Corporation may, from time to time, give the holders of the Warrants written notice (the "Accelerated Expiry Date Notice") of such occurrence within 30 days of such occurrence, in which case the Warrants will expire at 4:00 p.m. (Calgary time) on the 30th day following the giving of the Accelerated Expiry Date Notice.
The Private Placement is expected to close, in one or more closings, beginning on or about January 17, 2014.
The Corporation has agreed to pay First Republic a cash commission of 8% of the gross proceeds of the Private Placement and to issue to the First Republic broker warrants ("Broker Warrants") to a maximum of 8% of the number of Units sold in the Private Placement. Each whole Broker Warrant will entitle to holder to purchase one Common Share at an exercise price of $0.30 for a period of two years from the date of the closing of the Private Placement.
All securities issued pursuant to the Private Placement will be subject to a four-month hold period from the closing of the Private Placement. The Private Placement is subject to approval of the TSX Venture Exchange.
The proceeds of the Private Placement will be used for general working capital and corporate purposes.
The securities offered pursuant to the Private Placement have not been, and will not be, registered under the United States Securities Act of 1933, as amended or any U.S. state securities laws and may not be offered or sold in the United States or to United States persons absent registration or any applicable exemption from the registration requirement of the U.S. Securities Act and applicable U.S. state securities laws. This news release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there by any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
About Virtutone Networks Inc.
Virtutone Networks Inc. is a technology company based in Sherwood Park, Alberta and is listed on the TSX Venture Exchange in Canada. The Corporation is a leading supplier of wholesale telecommunication services. Additional information can be found on the Corporation's website at www.virtutone.ca and under the Corporation's profile on www.sedar.com.
For further information, please contact Jason Allen at 780-702-5777.
This news release contains forward looking statements. More particularly, this news release contains statements concerning the securities to be sold under the Private Placement, the terms and conditions of such Private Placement, the anticipated closing date of the Private Placement and the anticipated use of the proceeds of the Private Placement. Although Virtutone believes that the expectations reflected in these forward looking statements are reasonable, undue reliance should not be placed on them because Virtutone can give no assurance that they will prove to be correct. Since forward looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. The terms and conditions of the Private Placement may be amended depending on investor interest in the Private Placement. The Private Placement may not proceed if there is a lack of investor interest in subscribing for securities under the Private Placement or if First Republic elects to terminate its obligations under the definitive agreement entered into in connection with the Private Placement. In addition, the closing of the Private Placement could be delayed if Virtutone is not able to obtain the necessary regulatory and stock exchange approvals on the timelines it has planned. The Private Placement will not be completed at all if these approvals are not obtained or some other condition to the closing is not satisfied. Accordingly, there is a risk that the Private Placement will not be completed within the anticipated time or at all. Moreover, the intended use of the proceeds of the Private Placement by Virtutone might change if the board of directors of the Corporation determines that it would be in the best interests of Virtutone to deploy the proceeds for some other purpose.
The forward looking statements contained in this news release are made as of the date hereof and Virtutone undertakes no obligation to update publicly or revise any forward looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Neither TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
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