Vancouver-based energy tech company Smartcool Systems (TSX-V: SSC)(OTCPK: SSCFF) is aiming to acquire privately-owned Total Energy Concepts (TEC), a distributor of Smartcool and other energy products headquartered in Baxter, Minnesota. The deal was first announced in March, with some opaqueness surrounding a few details, details that seem to have been hammered out now moving the companies one step closer to a merger.
TEC’s product bag includes a holistic energy solutions for commercial and industrial businesses, schools, governments and more to help companies and organizations save money while taking a proactive approach towards the environment. These products include not only the Smartcool offerings, but also products proprietary to TEC, such as Power Factor Correction equipment (PFC), Voltage Conditioning Units (VCU) and Intelligent Generator Optimization Systems (IGOS).
The agreement postulates that Damian Smith, founder and CEO of TEC, will serve as the top executive of a new TEC division of the Smartcool group of companies.
The newest agreement, announced on Tuesday, lays out the terms of the acquisition. For 100% of TEC, Smartcool will pay 18 million shares of its common stock (Toronto-listed shares are trading at C$0.055 each equating to C$990,000 (US$745,965)), US$150,000 in cash (payable over 12 months from the transaction closing) and issue Smith 5 million warrants with a five-year expiration date. Today’s press didn’t spell out the warrant price, but the original letter detailed it as “at the closing market price on the date before the transaction closes.”
The cash and warrant portions of the agreement appear to have been unchanged. The difference in the new agreement has to do with the share component, which was locked in at 18 million shares instead of being variable based upon a value of US$850,000.
Smartcool reported that TEC had revenue of US$2.01 million in 2017 and a net profit of US$147,251. The additional revenue and income would certainly provide a boon for Smartcool’s books, which show $314,363 in revenue and a net loss of $238,116 during the first quarter of 2018.
The acquisition remains subject to a definitive agreement between the two companies and other customary approvals. Ted Konyi, president and chief executive at Smartcool, said he hopes to have the transaction completing in the next few weeks.
Traders are moving cautiously, with shares of SSC flat at 5.5 cents at noon in Toronto.
