Dexit Announces Appointment of New CEO and Strategic Equity Investment
Kirchner and Company, Inc. acted as investment advisor and agent to Dexit Inc. Toronto, Ontario 16 November 2006 – Dexit Inc. (TSX: DXT – News; “Dexit” or the “Company”) announced today that it has executed a term sheet pursuant to which Mr. Paul Howell will be appointed to the position of President and CEO of…
Kirchner and Company, Inc. acted as investment advisor and agent to Dexit Inc.
Toronto, Ontario 16 November 2006 – Dexit Inc. (TSX: DXT – News; “Dexit” or the “Company”) announced today that it has executed a term sheet pursuant to which Mr. Paul Howell will be appointed to the position of President and CEO of Dexit and to its board of directors, effective immediately. Mr. Howell will also be the lead investor in a $1,141,743 equity investment in Dexit which is expected to close on Friday November 17, 2006, pursuant to which up to 1,902,905 common shares of Dexit (or 18.75% of Dexit’s issued and outstanding common shares) and warrants to acquire up to an additional 634,301 common shares of Dexit, will be issued.
At Dexit’s annual general shareholder meeting in June, Dexit’s shareholders elected a new Board of Directors with a mandate to restore the Company’s fiscal health and to identify and secure prospects for long term business success. This board, in conjunction with a special committee of the board of directors and an independent U.S. based mergers and acquisition firm, Kirchner and Company, performed an extensive review of numerous potential strategic alternatives before determining to proceed with the transaction with Mr. Howell.
Mr. Howell, a veteran in the retail systems industry, is the founder, chairman, and majority shareholder of Howell Data Systems Inc. (“HDS”), a leading supplier of point of sale solutions in North America and a supplier of business software solutions, hardware systems, and support services, to thousands of merchants in the grocery, restaurant, theatre, and general retail industries. Due to consistent success in deploying solutions to new merchant locations, HDS received the IBM North America Market Growth Achievement Award for 2005.
Mr. Howell submitted a detailed plan to the Board of Directors outlining his vision for enhancing and broadening Dexit’s product and services. Mr. Howell’s business plan focuses on decreasing operating expenses, commencing a strong marketing initiative and immediately deploying technology to grow revenues.
In order to properly describe the new broadened product offering, the Company intends to begin operating as Dexit Hosted Data Solutions as soon as possible.
“This transaction provides an immediate infusion of capital and allows an experienced and seasoned operator with a clear go forward vision and significant personal investment in Dexit to take control of the day to day operations of the Company,” said John McBride, Dexit’s Chairman of the Board and interim President and CEO. “Current shareholders will maintain their leverage with respect to important customer initiatives long being pursued by Dexit and have exposure to new revenue generating opportunities that will be pursued under the direction of Mr. Howell.”
Mr. McBride also commented “This deal provides working capital, committed leadership and a focused plan for achieving profitability. This is precisely what the Company needs at this turning point in its history. Importantly, shareholders deservedly preserve their leverage on over $35million of prior capital investment.”
Paul Howell commented: “In recent years, North American and overseas clients have expressed a need for reliable, secure, feature rich payment systems and hosted data solutions. Stored value solutions, gift cards and loyalty solutions play an increasingly important role in understanding and influencing consumers’ purchasing habits. Dexit’s robust architecture provides the technological foundation required to deliver these benefits. I look forward to working closely with the excellent team of technologists and developers at Dexit to adjust, enhance, and expand the existing suite of Dexit products. We will begin deploying payment and loyalty solutions to merchants and institutions immediately.”
This transaction recognizes that the growth in popularity of stored value payment systems has introduced new opportunities and challenges for merchants. Consumers now expect a high degree of speed, convenience, and sophistication in the features and benefits afforded them by their chosen payment solution.
The market opportunity for Dexit Hosted Data Solutions is significant. For the 2005 holiday season alone the U.S. National Retail Federation’s Gift Card Survey found that 75.5% of consumers purchased gift cards totaling $18.48 billion. This represents a 6.6% increase over the 2004 holiday season. This year, a survey of the prepaid marketplace found that total volume on all prepaid segments in 2005 was $165 billion.
In a pre-emptive response to impending changes in international and regional government regulation of the gift card industry, and at the request of many progressive merchants and business operators, Dexit Hosted Data Solutions will provide private branded payment systems with enhanced accounting and management tools. Unlike many current gift card solutions, a “merchant branded, chain specific” Dexit payment system allows merchants to provide a branded, secure, web site interface so that consumers have access to their account balance, purchase history transparency, and prepaid account “re-load” capabilities. At the consumer’s option, Dexit offers direct messaging to the consumers’ email account, PDA, cell phone, or pager. These features will be combined with consumer loyalty systems, “direct to consumer” promotional capabilities, and chain data intelligence tools.
“Over the coming months, we will continue to restructure Dexit’s operations to reduce monthly expenditures and focus intensely on the goal of achieving profitability in a reasonable time frame.”continued Mr. Howell.
Following completion of the offering, Mr. John McBride and Mr. Thomas Pladsen will be resigning their duties as interim President and CEO and COO, respectively. They will, however, maintain their Board roles and Mr. McBride will remain as Chair of the Board. Mr. Robert Cudney will resign from the Dexit Board following completion of the offering to allow Mr. Howell to join the Board. The Board wishes to thank Mr. Cudney for his contribution.
Mr. Howell intends to recommend to the Board of Directors the appointment of two directors that are acceptable to the current Board of Directors and who would replace two current directors. Any such changes would reflect the Company’s evolution as a result of this transaction. A Special Governance Committee of the board will be constituted in this regard to identify qualified candidate directors with a view to transitioning the Board thoughtfully and commensurate with the new and exiting directional change. There are currently no specific changes contemplated.
Up to 1,902,905 units in total will be sold at a price of $0.60 per unit, resulting in gross proceeds from the offering of up to $1,141,743.
Each unit will be comprised of one common share and 1/3 of a warrant, with each full warrant being exercisable for one common share at a price of $0.75 for a period of 24 months. The proceeds from the offering will be used for working capital purposes, including sales and marketing and continued product development.
In other developments, on July 20, 2006 Dexit reported an extension to the renegotiations relating to the Merchant License Agreement with Bell Canada. We are pleased to report that these renegotiations were recently successfully concluded. The new agreement results in no material revenue to Dexit at this time. The new agreement provides a mutually satisfactory framework for Bell and Dexit to continue to work closely together in the pursuit of key target customers on a non- exclusive basis.
This discussion includes certain forward-looking statements that are based upon current expectations, which involve risks and uncertainties associated with our business and the environment in which the business operates. Any statements contained herein that are not statements of historical facts may be deemed to be forward- looking, including those identified by the expressions “anticipate”, “believe”, “plan”, “estimate”, “expect”, “intend”, and similar expressions to the extent they relate to the Company or its management. The forward-looking statements are not historical facts, but reflect Dexit’s current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including the matters discussed under “Risks and Uncertainties” in the Annual Information Form filed on March 23, 2006 with the regulatory authorities. Dexit assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements.
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For further information
Paul Howell, President/CEO, Dexit Hosted Data Solutions, (416) 703-6462, x.263