North Sur Resources Inc. Announces Definitive Agreement

CALGARY, ALBERTA–(Marketwired – Dec. 31, 2015) –

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

North Sur Resources Inc. (“North Sur” or the “Corporation“) (TSX VENTURE:NST) is pleased to announce that further to the Corporation’s press release dated August 19, 2015, the Corporation has entered into an arm’s length amalgamation agreement dated December 30, 2015 (the “Amalgamation Agreement“) with Integrated Commerce Technology Holdco, Ltd. (“ICT Holdco“), a private corporation incorporated pursuant to the laws of Alberta, and North Sur Subco Inc. (“North Sur Subco“), a wholly-owned subsidiary of the Corporation established to facilitate the transaction. ICT Holdco is the parent of Integrated Commerce Technology, Inc. (“ICT“), a corporation formed under the laws of Nevada, the owner of intellectual property and know-how relating to a reverse ATM stand-alone “coupon based” machine that is used for cash, debit and credit card transactions (including secure auditable cash payment systems to the legal cannabis industry) and such other rights and assets (the “Assets“) that relate to such technology.

Pursuant to the Amalgamation Agreement, the parties thereto will effect a “three-cornered” amalgamation whereby ICT Holdco and North Sur Subco will amalgamate with holders of ICT Holdco each receiving one common share of North Sur (“North Sur Share“), for every common share in ICT Holdco held (the “Transaction“). The Transaction is expected to constitute a Change of Business and Reverse Takeover of North Sur pursuant to the TSX Venture Exchange (the “Exchange“) Policy 5.2 – Changes of Business and Reverse Takeovers, and upon completion thereof North Sur will be a Tier 2 Technology Issuer.

Upon completion of the Transaction, North Sur will be engaged in the development and marketing of the Assets with a focus on installing reverse ATM stand-alone “coupon based” machines known as “Greeniosk”™, a cash and collections solution providing a purchase through deposit audit trail, initially targeting the State legalized cannabis industry in the United States. ICT’s management believes there is a large potential market opportunity for Greeniosk™ to capture a small percentage of the significant revenue generated through the sale of State legalized marijuana.

According to researchers from The ArcView Group, a cannabis industry investment and research firm based in Oakland, California, the U.S. State legalized cannabis market grew from $1.5 billion in 2013 to $2.7 billion in 2014 in combined retail and wholesale sales. It is estimated there are currently over 12,000 dispensaries servicing more than 1.5 million shoppers who purchased State legalized marijuana in 2014, either medical or recreational. A total of 23 States and the District of Columbia have medical cannabis laws, with 14 active State markets in 2014. Four of those states and Washington, DC, have legalized cannabis for adults 21 and over. Many predict that other states will follow Colorado, Washington, Alaska and Oregon in enacting legislation or approving ballot measures that expand the permitted use of cannabis.

The Transaction

Pursuant to the Transaction, ICT Holdco will amalgamate with North Sur Subco and holders of ICT Holdco will each receive one North Sur Share for every ICT Holdco common share held. The amalgamated entity (“Amalco“) will be wholly-owned by North Sur and ICT will be wholly-owned by Amalco.

In connection with and as a condition of the Transaction, North Sur will consolidate its shares on a 6:1 basis (the “Consolidation“). There are currently 23,390,000 North Sur Shares and options for 420,000 North Sur Shares outstanding which will result in approximately 3,898,333 post-Consolidation North Sur Shares and options for 70,000 post-Consolidation North Sur Shares.

ICT Holdco shareholders, other than subscription receipt holders (see “Private Placement” below), will be issued an aggregate of 24,283,330 post-Consolidation North Sur Shares in exchange for shares of ICT Holdco held thereby. Upon completion of the Transaction it is expected that the outstanding post-consolidation North Sur Shares prior to the completion of the Private Placement (as defined herein) will be held as follows: (i) existing holders of North Sur Shares will hold approximately 13.8%; and (ii) ICT Holdco shareholders, other than subscribers to the Private Placement, will hold approximately 86.2%.

Terms of the Transaction

Pursuant to the Amalgamation Agreement, ICT Holdco and North Sur have provided customary representations and warranties to one another with ICT Holdco also providing certain representations and warranties to North Sur with respect to intellectual property ownership and rights relating to the Assets. In connection with the Amalgamation, the insiders and majority shareholders of ICT Holdco will enter into escrow agreements, which will include an escrow and indemnification on the intellectual property for two years with 25% of the post-Consolidation North Sur Shares issued to such ICT Holdco shareholders posted as security.

The Transaction is subject to conditions customary to such transactions including:

  • approval by North Sur shareholders of the Transaction as a Change of Business/Reverse Takeover under policies of the Exchange;
  • Exchange approvals related to the Transaction and listing of North Sur Shares to be issued in connection therewith;
  • North Sur having obtained a waiver of Exchange sponsorship requirements or in the alternative, a sponsor filing an acceptable sponsor’s report with the Exchange;
  • North Sur receiving Exchange approval no later than January 29, 2016, unless otherwise agreed to by the parties in writing;
  • North Sur convening and holding a shareholders’ meeting no later than February 29, 2016 unless otherwise agreed to by the parties in writing for the approval of the change of business, the Consolidation and a name change in connection with the Transaction; and
  • certain founders and insiders of ICT Holdco entering into the Exchange’s form of escrow agreement.

Each party has agreed pursuant to the Amalgamation Agreement to use its reasonable commercial best efforts to fulfill or obtain the fulfillment of conditions precedent at or prior to the closing date of February 29, 2016, or such other date as may be agreed to by the parties in writing.

Unless all of such conditions are satisfied or waived by the party for whose benefit such conditions exist, to the extent they may be capable of waiver, the Transaction will not proceed. There is no assurance that the conditions will be satisfied or waived on a timely basis, or at all.

The Transaction is also subject to a customary mutual exclusivity clause ending the earlier of the closing date of the Transaction and upon termination of the Amalgamation Agreement.

The Amalgamation Agreement may be terminated: (i) by a party upon a condition for its benefit not having been fulfilled or performed and not being cured within five business days of notice thereof; (ii) by mutual agreement of ICT Holdco and North Sur; or (iii) unilaterally, if the Transaction does not become effective on or before March 31, 2016.

Private Placement

It is expected that ICT Holdco will conduct a subscription receipt financing for subscription receipts of ICT Holdco, each such subscription receipt entitling the holder thereof to one share of ICT Holdco upon conversion in accordance with its terms (the “Private Placement“), for gross proceeds of between $2,000,000 and $5,000,000. Further details regarding the Private Placement will be disclosed once available by way of press release.

Management of the Resulting Issuer

It is expected that upon completion of the Transaction, the management of North Sur (the “Resulting Issuer“) will be reconstituted with Sylvain Desrosiers being appointed as President and Chief Executive Officer and Douglas Porter as Chief Financial Officer and Corporate Secretary. Similarly, following the Transaction the board of directors of North Sur would be reconstituted with the appointment of Sylvain Desrosiers, Charles Crowder, Russell Jackson, Douglas Porter and another director to be determined.

Sylvain Desrosiers: Sylvain Desrosiers is the proposed President and CEO and a director of the Resulting Issuer. Mr. Desrosiers has a controlling interest in ICT Holdco and has specialized in creating, developing and marketing various successful innovative technologies. His expertise includes electronic security, GPS driven technologies, compliance and auditing for the cargo shipping and gaming industry. Mr. Desrosiers has been doing business in Canada, United States, Latin America and Europe for almost three decades. Mr. Desrosiers founded and led several successful businesses during his career; including Imaging Technologies Systems, Inc., a private company that was one of the first companies to specialize in positive identification cards for various industry such as access control, student ID and State Driver License. He sold his interest in ITS in 1996. He co-founded AXS Technologies, Inc. from May 1997 to 2002, He was the CEO of its subsidiary Alco Advanced Technologies, Inc., an electronic access control company that developed and manufacture innovative hardware and software (named Intelli-M that was the first IP based access control in the world with multiple patents). From 2002 to 2006 he was the CEO of Progressive Casino Technologies, Inc. a company specialized in Digital Video Recording for the gaming industry with the first digital fail safe system and the utilization of H.264 video data compression method that became the industry standard to this day. He was CEO of Southern ITS International, Inc. (OTC Markets), from March 2012 to September 2015, a technology integration company for the gaming industry with the first installation of complete Network Video Recording system with IP cameras in the Gaming industry. Mr. Desrosiers also founded Port Scanning Services, Inc., a private company, Emap, Inc., a private company, and Integrated Commerce Technology, Inc., a private company specialized in Secure Auditable Cash Transaction Systems known as Greeniosk™. Mr Desrosiers is fluent in French, English and Spanish.

Charles Crowder: Mr. Crowder is a proposed director of the Resulting Issuer. Charles has over 35 years of business and legal experience in the Americas, specializing in natural resources, land acquisition and early stage or venture capital businesses. During the 1990s, Mr. Crowder owned and managed several operations focused on forestry projects and natural resources in South America with over 2,000 employees for operations in Bolivia and Chile. Mr. Crowder served as Director and Vice President of the Bolivian National Forestry Association and Director of the Chilean National Forestry Association.

During the 1980s, Mr. Crowder was President of a trading company and owned 32 entities involved in real estate acquisition and development. He also taught graduate seminars on law and business as a Visiting Professor at the Thunderbird School of International Management in Phoenix, AZ. During the 1970s, Mr. Crowder represented over 20 Indian Tribes, was General Counsel to the Navajo Nation with 160,000 members and established the Council of Energy Resource Tribes (CERT). From 1969 to 1972, he opened and managed the international department of the law firm Connor, Cavanagh, Anderson, Westover, Killingsworth, & Beshears, where he led investment missions to Central America and Mexico. He formed and managed a Cummins diesel distributorship in Panama that was sold to a NYSE company and authored the 30 year trust law in Mexico, allowing direct foreign investment in Mexican beaches. He left the law firm to work directly with the Howard Hughes Group and former executives.

Mr. Crowder has worked for the U.S. Dept. of State in South America and USAID as a Capital Development Officer & a Foreign Service Reserve Officer. He received his Bachelor of Science in Business Administration and Doctor of Jurisprudence from the University of Arizona. He is fluent in English and Spanish and conversant in Portuguese.

Russell Jackson: Mr. Jackson is a proposed director of the Resulting Issuer. Formerly employed in the equity capital markets, Mr. Jackson has been a founder and director of several public and private companies. Mr. Jackson was a founder and director of C & C Energy Canada Ltd., a Columbia focused E&P company which was bought by Pacific Exploration and Production, from inception to IPO (2005 – 2010) and also served as President of C & C Energia (Barbados) (2005 – 2007). He was also a co-founder and director of North Sur (2011 – 2013). Presently, Mr. Jackson is a co-founder and director of Sun God Resources, a private energy company focused on Latin America (2014 – present) and also serves as Chairman of Guatavita Gold Corporation (2006 – present), a Colombia focused gold company.

Douglas Porter: Mr. Porter is the proposed Chief Financial Officer and Corporate Secretary and a director of the Resulting Issuer. Mr. Porter is currently the Chief Financial Officer and a director of North Sur (January 2011 – present). Since 1997 Mr. Porter has been Managing Director of Porter Valuations & Financial Consulting Inc., a specialty business valuation firm providing valuation and financial consulting services to a broad spectrum of private and public companies throughout Western Canada. He is also currently CFO and director of several publically traded and private companies, including, Altitude Resources Inc., a publicly-traded junior coal explorer focused in western Canada (2012 – present) and Guatavita Gold Corporation (private). Mr. Porter is CFO of STIMWRX Energy Services Ltd., a privately-owned oilfield service company (2014 – present) and is also a director and Audit Committee Chair of Manson Creek Resources (April 2006 – present). Previously, he was a director of Forent Energy Ltd. (December 2008 – June 2014). Mr. Porter has a Bachelor of Commerce degree from the University of Calgary (1990) and is a Chartered Accountant and a Chartered Business Valuator.

Name Change

Concurrent with the completion of the Transaction, it is expected that North Sur will change its name to “Integrated Commerce Technology Ltd.” or such other name as may be determined by North Sur and ICT Holdco.

Loan to ICT

As previously announced, North Sur has advanced ICT $409,000 (the “Secured Loan“). Concurrent with executing the Amalgamation Agreement, the Corporation advanced an additional $70,000 to ICT as part of the Secured Loan. The Secured Loan bears interest on the outstanding principal amount at a rate of 6% per annum, with maturity occurring on the earlier of: (a) one (1) year from the effective date of such loan, in the event the definitive agreement in respect of the Transaction has not been executed by the lender and the borrower; and (b) in the event such definitive agreement has been executed before one (1) year from the effective date of such loan, the earlier to occur of the following: (i) the date of termination of such definitive agreement, and (ii) the closing of the Transaction. In the event of default, unpaid amounts shall bear interest at a default rate of 8% per annum.

The Secured Loan is to be used to assist ICT in the development and fabrication of the Greeniosk system, which includes system software and a reverse ATM stand-alone “coupon based” machines for cash, debit and credit card transactions (including secure auditable cash payment systems to the legal cannabis industry).

Additional Information

In accordance with Exchange policy, North Sur Shares are currently halted from trading and will remain so until such time as the TSXV determines, which may not occur until completion of the Transaction.

North Sur will issue subsequent press releases in accordance with the policies of the Exchange as additional information to the Transaction becomes available, including details concerning sponsorship or waiver thereof (and if waiver is sought, there is no assurance that such waiver will be obtained), summary financial information, and to the extent not contained in this press release, additional information with respect to the Private Placement, the proposed business of the Resulting Issuer and insiders of the Resulting Issuer upon completion of the Transaction.

Completion of the Transaction is subject to a number of conditions, including TSXV acceptance and disinterested shareholder approval, if required. The Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the disclosure document to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of North Sur should be considered highly speculative.

The TSXV has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this press release.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States unless registered under the U.S. Securities Act and applicable state securities laws, unless an exemption from such registration is available.

Forward-Looking Information

Certain statements contained in this news release, including statements or information that contain terminology such as “anticipate”, “believe”, “intend”, “expect”, “estimate”, “may”, “could”, “will”, “the review and analysis of other business opportunities” and similar expressions constitute “forward-looking statements” within the meaning of applicable Canadian securities laws. All statements, other than statements of historical fact, that address activities, events, or developments that North Sur or a third party expect or anticipate will or may occur in the future, including our future growth, results of operations, performance and business prospects, outlook and opportunities are forward-looking statements. In particular, this news release contains forward-looking statements concerning the completion and timing of the Transaction and Private Placement, expected terms of the Private Placement (including the use of proceeds), the Secured Loan, the requirement for shareholder approval and the parties’ ability to satisfy closing conditions and receive necessary approvals.

Forward-looking statements are based on a number of material factors, expectations or assumptions of North Sur which have been used to develop such statements and information but which may prove to be incorrect. Although North Sur believes that the expectations reflected in these forward-looking statements are reasonable, undue reliance should not be placed on them because North Sur can give no assurance that they will prove to be correct. There can be no assurance that the Transaction and the Private Placement will occur or that, if the Transaction and Private Placement does occur, each will be completed on the terms described above. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results and developments may differ materially from the results and developments discussed in the forward-looking statements as certain of these risks and uncertainties are beyond our control.

Consequently, all of the forward-looking statements made in this news release are qualified by these cautionary statements and the other cautionary statements and risk factors and uncertainties contained in this news release. The reader is cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements are made as of the date of this news release. Except as required by applicable Canadian securities laws, the Corporation assumes no obligation to update publicly or revise any forward-looking statements to reflect subsequent information, events, or circumstances.

Neither TSX Venture Exchange 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 release.

Douglas Porter
Chief Financial Officer
403-870-4349
doug@portervaluations.com