Le Lézard
Classified in: Science and technology, Business
Subjects: BOARD OF DIRECTORS, SHAREHOLDER RIGHTS PLANS, Restructuring / Recapitalization

ARCpoint Inc. Announced Completion of Reverse Takeover Transaction

Not for distribution to U.S. news wire services or dissemination in the United States. 

TORONTO, Oct. 21, 2022 (GLOBE NEWSWIRE) -- ARCpoint Inc. (the "Company"), formerly RSI International Systems Inc., is pleased to announce that it has closed its previously announced business combination (the "Transaction") with ARCpoint Group LLC ("ARCpoint") in accordance with the business combination agreement dated April 27, 2022, as amended (the "Business Combination Agreement"), among the Company, ARCpoint, ARCpoint Finance Corp. ("ARCpoint Finco"), 1000151427 Ontario Inc. ("RSI Subco") and all of the securityholders of ARCpoint, resulting in the reverse takeover of the Company by the members of ARCpoint. Trading in the Class A Subordinate Voting Shares ("SVS") of the Company on the TSX Venture Exchange (the "Exchange") is expected to resume at open of markets on October 27, 2022 under the symbol "ARC".

Prior to the completion of the Transaction, the Company consolidated its common shares on a 2.4930814 to 1 basis, continued its corporate existence from British Columbia to the federal jurisdiction under Canada Business Corporations Act ("CBCA") under the new corporate name "ARCpoint Inc.", created Class A Subordinate Voting Shares ("SVS") and Class B Proportionate Voting Shares ("PVS"), and reclassified its post-consolidation common shares into SVS for the purpose of structuring the Company as a "foreign private issuer" under applicable U.S. securities laws. Furthermore, ARCpoint, the Company and certain holder of ARCpoint's convertible notes with aggregate principal amount of US$2.5 million (the "Convertible Notes") have amended the Convertible Notes to postpone the conversion date of the Convertible Notes from the closing date of the Transaction to the maturity dates of the Convertible Notes (being September 7, 2024 and December 31, 2024, respectively) (the "Conversion Postponement") and to permit the Convertible Notes to be convertible into SVS of the Company at the postponed conversion at a conversion price of US0.312 per SVS. The parties have subsequently amended the Business Combination Agreement to, among other things, give effect to the Conversion Postponement.

Following these changes, the Company, RSI Subco and ARCpoint Finco completed a three-cornered amalgamation (the "Amalgamation") pursuant to which RSI Subco amalgamated with ARCpoint Finco. In connection with the Amalgamation, each common share of RSI Pubco was exchanged for one common share of the amalgamated entity, each common share of ARCpoint Finco was exchanged for one SVS of the Company, and each warrant of ARCpoint Finco was exchanged for one SVS purchase warrant of the Company.

Following the Amalgamation, the Company acquired 25,000 ARCpoint Class A Common Units held by Felix Mirando for US$2,500,000 by issuing an unsecured 1.88% interest bear promissory note (the "Promissory Note") with a maturity date of April 26, 2031 (the "Leveraged Acquisition"). Immediately after giving effect to the Leveraged Acquisition, the remaining securities of ARCpoint were exchanged with the securities of the Company as follows: (A) each Class A Common Unit of ARCpoint was exchanged for one PVS, (B) each Class B Common Unit of ARCpoint was exchanged for 500 SVS, and (C) each Class B Common Unit purchase warrant of ARCpoint was exchanged for 500 SVS purchase warrants of the Company.

In connection with the Transaction, ARCpoint Finco has satisfied the escrow release conditions of the subscription receipt private placement previously announced on June 29 and October 18, 2022 (the "Private Placement"). The escrowed funds, net of the cash commission and expenses payable to the finders and the service fees of the subscription receipt agent, has been released to ARCpoint Finco.

Upon completion of the Transaction, the Company has a total 27,300,744 SVS and 123,894 PVS issued and outstanding. Each PVS is convertible into 500 SVS under limited circumstances. Assuming full conversion of the PVS into the SVS, the Company will have a total of 89,247,744 SVS issued and outstanding, with 16.56% held by former shareholders of the Company, 78.03% held by the former securityholders of ARCpoint and 5.42% held by the investors of the Private Placement, on a non-diluted basis. In connection with the Transaction, the Company has issued 561,554 replacement options to the former option holders of the Company, 5,000,000 replacement warrants to the former warrantholder of ARCpoint, 2,416,868 replacement warrants to the former warrantholders of ARCpoint Finco, and 45,351 replacement compensation warrants to the former compensation warrantholders of ARCpoint Finco. In addition, the Company has reserved 8,012,500 SVS for issuance upon conversion of the Convertible Notes.

Following the closing of the Transaction, the incumbent directors and officers of the Company tendered their resignations (other than Adam Ho and David Keys who remain as directors of the Company), and the board of directors of the Company is now comprised of the following individuals: John Constantine, Felix Mirando, Mark Orsmond, Adam Ho and David Keys. In addition, John Constantine has been appointed as the President and Chief Executive Officer, Jason Tong has been appointed as the Chief Financial Officer and Corporate Secretary, and Dano Jukanovich has been appointed as the Chief Operating Officer of the Company.

The new omnibus incentive plan (the "Omnibus Plan") and the new CBCA by-laws (the "New By-Laws") of the Company approved by the Company's shareholders at its annual and special meeting shareholders held on June 28, 2022 (the "Meeting") have received approval by the new board of directors of the Company upon closing of the Transaction and have come into effect upon such approval. The Omnibus Plan replaced the Company's existing stock option plan and includes a 10% "rolling" option plan permitting a maximum of 10% of the aggregate number of SVS that are: (A) then issued and outstanding and (B) convertible from the PVS that are then issued and outstanding, as at the date of any option grant to be reserved for option grants and a fixed plan permitting 8,924,774 SVS of the Company to be reserved for grant of restricted share units ("RSU"), performance share units and deferred share units. A copy of the Omnibus Plan and the New By-Laws are available under the Company's profile at www.sedar.com.

Following the closing of the Transaction, the board of directors of the Company has approved the granting of 320,000 options ("Options") and 353,000 RSU to certain directors, officers, employees and consultants of the Company under the Omnibus Plan. Each Option vests immediately upon grant and is exercisable to acquire one SVS at an exercise price of $0.45 until October 21, 2027. Each RSU can be settled for one SVS after such RSU vests on October 21, 2023.

Furthermore, effective upon the closing of the Transaction, the appointment of Davidson & Company LLP as the auditor of the Company, as approved by the shareholders of the Company at the Meeting, has become effective, and MNP LLP has ceased to be the auditor of the Company. To the Company's knowledge, there were no "reportable events" as defined in section 4.11 of the National Instrument 51-102 Continuous Disclosure Obligations.

The Company received conditional approval for the Transaction from the the Exchange on August 5, 2022 and has delivered all documentation to the Exchange required to satisfy its listing conditions. It is expected that the SVS will be listed on the Exchange and the PVS will not be listed for trading on the Exchange but may be converted into Exchange-listed SVS under limited circumstances. Upon issuance of the final exchange bulletin of the Exchange providing final acceptance of the Transaction, the Company will recommence trading as a Tier 2 Life Science Issuer on the Exchange. Trading in the SVS of the Company on the Exchange is expected to resume at open of markets on October 27, 2022 under the symbol "ARC".

For further information relating to the Company, ARCpoint and the Transaction, please refer to the Filing Statement in respect of the Transaction which is available under the Company's profile at www.sedar.com.

About ARCpoint Inc.

ARCpoint is a leading US-based franchise system providing drug testing, alcohol screening, DNA and clinical lab testing, corporate wellness programs, and employment and background screening, among other services. The company is based in Greenville, South Carolina, USA. ARCpoint Franchise Group LLC, formed under the laws of the state of South Carolina in February 2005, is the franchisor of ARCpoint Labs and supports over 120 independently owned locations. ARCpoint sells franchises to individuals throughout the United States and provides support in the form of marketing, technology and training to new franchisees. ARCpoint Corporate Labs LLC develops corporate-owned labs committed to providing accurate, cost-effective solutions for customers, businesses and physicians. AFG Services LLC serves as the innovation center of the ARCpoint group of companies as it builds a proprietary technology platform and a physician network to equip all ARCpoint labs with best-in-class tools and solutions to better serve their customers. The platform also digitalizes and streamlines administrative functions such as materials purchasing, compliance, billing and physician services for ARCpoint franchise labs and other clients.

For more information, please contact:

ARCpoint Inc.
Jason Tong, Chief Financial Officer
Phone: (604) 889-7827
E-mail: [email protected]

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain "forward-looking statements" under applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to: the Exchange's final approval of the Transaction, and the expected listing and timing for commencement of trading of the shares of the Company. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; and delay or failure to receive regulatory approvals. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this Press release.

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