Burnaby, British Columbia – Legend Power Systems Inc. (TSX.V: LPS) (“Legend Power”) reports that the offering by way of Short Form Offering Document, which was announced on January 30, 2009, for a minimum offering amount of $300,000 and a maximum offering amount of $2,000,000 did not close because the minimum offering amount of $300,000 was not achieved by the closing date. The Short Form Offering Document was accepted by the TSX Venture Exchange (the “TSX-V”) on February 3, 2009 and had a closing date of April 3, 2009.
SHORT FORM OFFERING
Legend Power announces that it is proceeding with a new offering by way of Short Form Offering Document (the “Offering”) of up to 3,636,364 common shares (the “Shares”) at a price of $0.55 per share, for maximum gross proceeds of up to $2,000,000. The Offering is not subject to a minimum amount of aggregate gross proceeds, but is subject to a minimum subscription level per purchaser of $2,000. The Offering is being made on a non-brokered basis, however a finder’s fee (“Finder’s Fee”) will be paid as outlined below.
Legend Power will pay a Finder’s Fee to persons who are properly qualified to market and sell Shares under applicable securities laws and who assist Legend Power in finding purchasers of Shares. The amount of the Finder’s Fee is calculated as a percentage of the actual dollar value of the Shares purchased. The percentage increases in approximately $50,000 increments as follows:
Value of Shares Purchased ($) Finder’s Fee (per cent)
$2,000 to $50,000 5 per cent
$50,001 to $100,000 6 per cent
$100,001 to $150,000 7 per cent
$150,001 or more 8 per cent
The closing of the Offering is expected to occur before, on or about June 26, 2009. Versant Partners Inc. (“Versant”) has been engaged by Legend Power to execute the Agent’s Certificate in the Short Form Offering Document pursuant to the requirements of TSX-V Policy 4.6. Versant will receive a fee (the “Initial Fee”) equal to $5,000, plus GST, and a fee (the “Closing Fee”), such fee not to exceed $50,000, equal to the greater of $20,000 or 2 per cent of the gross proceeds of the Offering and any other equity or equity-linked financings completed by Legend Power on or before April 14, 2010, plus GST. The Initial Fee is payable upon execution of the Certificate of the Agent. $20,000 of the Closing Fee is payable upon the first closing of a financing to occur (regardless of whether it is the closing of the Offering or another equity or equity-linked financing). The remaining portion of the Closing Fee will be calculated and paid upon the close of subsequent financings occurring on or before April 14, 2010, whether they are closings of the Offering or of other equity or equity-linked financings.
As at March 31, 2009, Legend Power had a working capital deficit of approximately $67,000. If the Offering is fully subscribed, there will be funds available to Legend Power of $1,728,000 after deducting Versant’s fees of $45,000, the maximum Finder’s Fees of $160,000 and Legend Power’s working capital deficiency of $67,000. Legend Power will use the net proceeds from the Offering to expand its operations, sales and technical capabilities in British Columbia and Ontario, settle current accounts, build inventory, increase marketing expenditures, and purchase equipment and assets required for the expansion.
“Legend Power requires this injection to our working capital in order to position ourselves for growth and build on the momentum gained in 2008. We need to grow our operations to capitalize on opportunities.” says Gerry Gill, Chairman and CEO of Legend Power. “Despite the depressed economy, there are still good opportunities within the green sector due to government regulated conservation targets, business’ needs for cutting costs, and incentive funding programs, especially in B.C. and Ontario.”
Legend Power is currently focusing sales and marketing efforts in B.C. and Ontario due to the incentive funding programs offered by BC Hydro’s Power Smart Partner Program and Ontario’s Conservation and Demand Management Program through Ontario’s Building Owners and Managers Association.In January 2009, Ontario’s Chief Energy Conservation Officer recognized Canada Post with a Certificate of Recognition for Energy Conservation for its voltage optimization initiatives through its installation of Legend Power’s Electrical Harmonizer-AVR at postal facilities in Greater Toronto.
The Offering is subject to regulatory approval and is applicable only in the Provinces of British Columbia and Alberta. All Shares acquired by any purchaser in excess of $40,000 will be subject to a four month hold period from the date of closing, no more than 50 per cent of the Shares sold may be subject to the four month hold period, and no purchaser may purchase more than 20 per cent of the Offering.
FINANCIAL UPDATE AND SECURED SHAREHOLDER LOAN
Since the date of incorporation, Legend Power has accumulated losses. However, it has taken steps to reduce non-discretionary expenses and lower its “burn rate” (i.e. the amount of cash it spends to funds its operations). Legend Power estimates that its current non-discretionary expenses are $110,000 per month. Legend Power must raise additional capital in order to fund operations until it has sufficient product revenues to cover its monthly expenses.
In order to fund its operations while it works towards completing sales opportunities, Legend Power entered into a loan agreement dated April 15, 2009 with a shareholder who holds less than 10 per cent of the issued and outstanding common shares of Legend Power (the “Shareholder”). The Shareholder has agreed to lend up to $160,000 (the “Loan”) to Legend Power, which will be used for general working capital purposes, and, as of April 15, 2009, the Shareholder has advanced $60,000 of the Loan. The outstanding daily balance of the Loan bears interest at the Royal Bank of Canada’s prime rate plus 2 per cent per annum calculated monthly. Interest on the outstanding daily balance of the Loan is payable on the 15th day of each month. The Loan, and any interest accrued thereon, will be due and payable on the earlier of April 15, 2010 and the completion of the last equity or debt financing through which Legend Power will have raised at least $1,500,000 in the aggregate since April 15, 2009, as well as upon the occurrence of a customary event of default, such as dissolution or bankruptcy, or if, in the reasonable opinion of the Shareholder, there is a material adverse change in Legend Power’s financial condition, ownership or operation. The Loan is not convertible and is secured by a general security agreement. The Shareholder’s security interest ranks in priority behind prior secured lenders.
Legend Power’s 2008 Annual Information Form, detailed financial information for the year ending September 30, 2008 along with accompanying Management’s Discussion and Analysis for the same period, detailed interim financial information for the period ending December 31, 2008 along with accompanying Management’s Discussion and Analysis for the same period, and the Short Form Offering Document dated January 30, 2009 are available on SEDAR (www.sedar.com) and at Legend Power’s website at www.legendpower.com.
About Legend Power Systems Inc.
Legend Power Systems Inc. is a leading electrical energy conservation company that manufactures and markets a patented device to help commercial and industrial customers achieve significant energy savings through voltage optimization. Legend Power’s Electrical Harmonizer-AVR eliminates inefficiencies by delivering the optimal level of voltage a user needs. Most customers receive higher voltage levels than required at certain points of the grid from electrical utilities delivering higher levels to compensate for line loss across the feeder length. Higher than nominal voltage can affect the lifespan of electrical equipment and result in high monthly utility bills. By delivering the optimal voltage to the user, Legend Power’s Electrical Harmonizer-AVR helps companies reduce their electricity bills, maintenance costs and greenhouse gas emissions while increasing the life of electrical equipment. The technology also decreases capital and operating costs for electrical utilities.
Forward Looking Information
Statements contained herein that are not based on historical or current fact, including without limitation statements containing the words “anticipates,” “believes,” “may,” “continues,” “estimates,” “expects,” and “will” and words of similar import, constitute “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions, both nationally and in the regions in which the Company operates; history of losses and uncertainty of revenues; ability to obtain required financing; technology changes and/or market changes, including actual electrical billing rates; adequate protection of the Company’s proprietary rights; competition; changes in business strategy or development plans; and other factors referenced in the Company’s filings with Canadian securities regulators. Although the Company believes that expectations conveyed by the forward-looking statements are reasonable based on the information available to it on the date such statements were made, no assurances can be given as to the future results, levels of activity, performance or achievements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company does not assume the obligation to update any forward-looking statements except as otherwise required by applicable law.
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.
For further information, please contact:
Gerry Gill, Chairman & CEO
Legend Power Systems Inc.
+ 1 604 420 1500