OTTAWA, June 12 /CNW Telbec/ - IN-TOUCH SURVEY SYSTEMS LTD. ("IN-TOUCH" TSX-VENTURE: INX) is pleased to announce that it has closed a subordinate debt financing, the closing of a private placement and is also announcing a revenue increase alert.
The sub-debt financing is with the Business Development Bank of Canada in its capacity as General Partner of AlterInvest II Fund L.P. ("BDC"). The principal amount of the loan is $550,000. The loan is to be disbursed in two tranches of $275,000 with the first disbursement on closing and the second contingent on In-Touch's second quarter 2007 results meeting identified targets for revenue and cash from operations. The loan bears interest at 11.70% on the outstanding principal. Interest is payable monthly. The loan is for a term of 5 years. The principal is repayable in full on maturity. In addition, In-Touch is obliged to make annual principal payments to a maximum annual amount of $110,000, equal to one half of 'excess available funds'. In-Touch will pay the lender a bonus between 3% and 10% of the market capitalization of In-Touch on the earlier of maturity of the loan, any prepayment, or any sale of more than 50% of the shares or assets of In-Touch. The bonus decreases as the market capitalization of In-Touch increases.
Coincident with the BDC financing, In-Touch's CEO Michael Gaffney has converted to common shares the entire principal of his outstanding loan to In-Touch, which was a secured convertible demand promissory note with a principal of $100,000, bearing interest at 2% per month. Pursuant to the terms of the loan, the principal was converted to common shares at the rate of one common share for each ten cents ($0.10) of principal, resulting in the immediate issuance of 1,000,000 common shares to Mr. Gaffney. Mr.Gaffney now owns 1,368,774 In-Touch common shares with an option to acquire another 600,000 common shares.
Also coincident with the financing, In-Touch has closed (conditional on receipt of TSX-Venture Exchange approval) a private placement of common shares for aggregate proceeds of fifty two thousand five hundred dollars ($52,500). Participating in the private placement are two insiders, Rainer Paduch and Neil Milton, both directors of In-Touch. They subscribed for an aggregate of 525,000 common shares at ten cents ($0.10) per common share. No other individuals are participating in this placement. The closing of this private placement is subject to regulatory compliance and approval of the TSX-Venture Exchange. The proceeds from the private placement will be used for general working capital purposes.
In-Touch is also alerting investors that it believes Q2 2007 and Q3 2007 revenues will be higher than Q4 2006 and Q1 2007 reflecting new sales orders and sales backlog from large Canadian and US customers.
"Our Chairman, Neil Milton, Director, Rainer Paduch, and myself as CEO are bullish on the future of In-Touch as evidenced by our further investment in the company", said Michael Gaffney, Chief Executive Officer.
"We are pleased to have the BDC as a financing partner and their investment will support our need for operating capital to service the growing demand for our new software and hardware products for major North American B2B and B2C companies," said Gaffney.
"In the last ten quarters we have invested significant resources in capital and in new technology - both hardware and software. The In-Touch on-site data collection technology and real-time reporting system are providing companies a significant solution on how to do real-time one-to-one marketing," said Gaffney.
The TSX Venture Exchange has not reviewed the foregoing and has neither
approved or disapproved the contents of this press release.
DISCLAIMER
Certain information included in the press release is forward-looking and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Such statements are generally accompanied by words such as "intend", "anticipate", "believe", "estimate", "expect" or similar statements. Factors which could cause results or events to differ from current expectations include, among other things: the impact of price competition; scarce number of qualified professionals; the impact of rapid technological and market change; loss of business or credit risk with major customers; technical risks on firm fixed price projects; general industry and market conditions and growth rates; international growth and global economic conditions, and including currency exchange rate fluctuations; and the impact of consolidations in the business services industry. For additional information with respect to certain of these and other factors, please see the Company's most recent annual report and other reports filed by In-Touch with the Ontario Securities Commission. In-Touch disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. No assurance can be given that actual results, performance or achievement expressed in, or implied by, forward-looking statements within this disclosure will occur, or if they do, that any benefits may be derived from them.
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