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Innovative Composites announces $1.5 million funding agreement with Bassett Financial

News International-French

26 Aug 2014

The company announces that it has entered into a definitive Commitment Letter and Advisory Agreement with Bassett Financial Corporation to assist with the restructuring of the company, to build a more stable financial platform and to assist in growing the company to meet its full sales potential. 

The agreement also contemplates new funding, including a $500,000 6-month bridge loan and $1 million in equity funding.

The terms of the agreement include:

  • Completion of $500,000 Bridge Loan, secured by working capital and certain intellectual property, with a term of 6 months extendable under certain conditions to 12 months at a rate of 3% per month payable monthly in arrears
  • Completion of a $1 million private placement financing at the current share price of $0.01 per share
  • Installation of Bassett Director, Chris Carl, as Chief Financial Officer of the company
  • A corporate finance advisory engagement whereby Basset will assist the company in restructuring its balance sheet, work with ICI to revise the business plan toward achieving high growth sales in Canada and the US, and to provide multi-faceted assistance in leveraging the public listing potential of the company
  • Payment of a $10,000 per month working fee which will be increased to $20,000 per month in the event the company reaches monthly positive earnings before tax and depreciation at any point during the term of the agreement
  • Issuance of 48,000,000 common shares of the company at a deemed price equal to the price of shares issued in the financing, with such common shares vesting equally over the achievement of 4 critical milestones for the company, as additional payment for services
  • The nomination of Basset's CEO, Matthew Bassett, to the Board of Directors of ICI.

Completion of the obligations of Basset as set out in the agreement are subject to, among other things, the holders of the company's existing convertible debentures agreeing to amend their existing conversion privileges so as to permit conversion only at the time of maturity. The agreement is also subject to the satisfaction of certain customary conditions, including the receipt of all required regulatory approvals and satisfaction of all regulatory requirements, including the requirements of the Canadian Securities Exchange.

The proceeds of the new funding will be used to reduce trade payables and to fund new inventory to meet a growing backlog of sales orders. As the Company's balance sheet is restructured, overhead is reduced where practical and the company achieves a growth in sales, the company hopes to reach break-even on an EBITDA basis. Based on these assumptions, if completed, the Bridge Loan and the Financing would give the Company approximately 18 months of operating cash and working capital without a need for additional financing.

ICI has been actively involved in developing its patented technology into a line of lightweight, non-corrosive structural building materials which can be used in a wide array of industrial and commercial applications by large corporate customers. Following a long period of developing home and emergency shelter products for disaster relief situations, ICI has enjoyed much greater sales success recently, concentrating on more immediate commercial and industrial opportunities.

About Innovative Composites:
Innovative Composites International is working to lead the way in thermoplastics for the housing, transportation and composite panel industries with advanced, environmentally friendly materials.
The flagship product, Structure-Lite composite panels are widely usable in the transportation industry, cargo containers, truck body containers as well as highway sound barrier panels. Using recycled materials such as plastic water bottles, the panels are environmentally friendly made with low cost, readily available raw materials. This lets the panels be created quickly and efficiently and able to be customized for nearly any application. The composite panels won't rust, rot or warp and each one is insect, water and UV resistant. The strength to weight ratio also makes them much lighter compared to steel panels, which have the same strength but are twice as heavy. The versatility and durability of ICI's composite panels makes them ideal to replace many conventional materials.

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