NEW YORK, Oct. 28, 2013 /PRNewswire/ -- AccelPath, Inc., a Delaware corporation (OTN:ACLP) announced today that it has further diversified its business by acquiring a 19% equity position in privately held Energy Innovative Products Inc., a Nevada corporation (EIP). AccelPath's common stock is currently traded on the OTC Pink Sheets.
AccelPath and EIP have entered into an Agreement and Plan of Reorganization dated as of October 24, 2013, which will result in EIP becoming a wholly-owned subsidiary of AccelPath. It is expected that the equity holders of EIP will become the holders of approximately 76% of the total outstanding capital stock, on a fully diluted basis, upon completion of the transaction. For accounting and financial reporting purposes under Securities and Exchange Commission rules, the transaction is expected to be treated as a reverse merger. Management of EIP will become management of AccelPath upon completion of the transaction. A majority of the Board of Directors of the post-merger company will be represented by persons associated with EIP.
Scott Caputo, the President of Energy Innovative Products, states this transaction allows us to grow faster as we become a public company and allows AccelPath to diversify its business model. He goes on to say we will make this transaction our number one priority as we move to close this and embark on our business plan.
Gilbert Steedley, the interim CEO of AccelPath stated, "I am pleased that the transaction will allow us to diversify our business model and increase shareholder value. We are very optimistic about the business opportunities of Energy Innovative Products, its technology and management team and we will work together to get this transaction completed as soon as possible so the new management team can implement their business plan."
The transaction will be undertaken in two steps. In the initial step, completed on Friday, October 25th, AccelPath acquired from EIP shares of Common Stock of EIP representing 19% of the issued and outstanding Common Stock of EIP in return for 3,500 shares of a newly created Series I Preferred Stock of AccelPath. The Series I Preferred Stock will be convertible 120 after the closing of the merger into 14% of AccelPath's common stock on a fully diluted basis and is redeemable by AccelPath at its issue price plus any accrued dividends. The transaction is intended to be a tax free merger under Section 368 (a)(1)(B) of the Internal Revenue Code and for accounting purposes, will be treated as a reverse merger. At the final closing of the transaction, AccelPath expects to change its corporate name to reflect the business operations of EIP. The parties expect to complete the merger within 120 days.
Energy Innovative Products, Inc. headquartered in Peapack, New Jersey, provides a comprehensive range of energy solutions, using leading proprietary technology. EIP designs, develops and markets products which reduce energy usage in Ice Machines, Freezers, Coolers, Refrigerators and other AC induction motor applications. In addition, EIP provides energy audits, retro-fits, and price savings in energy supply of natural gas and electricity. Energy Innovative Products, Inc. is currently in the process of securing additional rebates for its patented technology from major U.S. utilities.
Energy Innovative Products, Inc. has developed a small, easy to install, patented single-phase motor controller device known as the EIP-2 that reduces energy consumption by reducing the electricity used in an AC induction motor. The EIP controller also reduces noise while maintaining temperature levels. AC Induction Motors are the most ubiquitous energy-consuming device in the home, workplace and the food and beverage industry. It is estimated that AC Induction Motors consume 65% of all the energy used in the United States.
The EIP-2 has been fully tested and certified by Intertek Testing Services, a leading global inspection, product testing, and certification company, headquartered in London, United Kingdom. It is the largest testing center of consumer goods in the world and has a network of more than 1,000 laboratories in over 100 countries. The EIP-2 has the ETL listed Mark by Intertek, which is proof of product compliance (electrical, gas and other safety standards) to North American safety standards. Independent testing results performed by Intertek has verified that beverage cooler energy consumption is reduced by up to 35% with the EIP-2 motor controller installed. The EIP-2 controller is also Energy Star compliant. The EIP motor controller will be marketed under the name PowerSaver PLUS. Energy Star is a U.S. Environmental Protection Agency voluntary program that helps businesses and individuals save money and protect our climate through superior energy efficiency.
Consummation of the merger is subject to usual and customary closing conditions. In addition, the parties must satisfy several other closing conditions in order to complete the merger transaction. AccelPath is required to undertake a recapitalization and restructuring of its equity and debt on terms satisfactory to EIP, the parties are required to obtain necessary shareholder approvals for the proposed reverse merger as may be required under state law. Both AccelPath and EIP are required to complete audited and unaudited financial statements to allow for the filing of Form 8-K in accordance with the requirements of the Securities and Exchange Act of 1934, as amended, and SEC rules and regulations and AccelPath must be current in its Securities and Exchange Act filings. The parties expect to undertake a reverse stock split of the post merger company's combined equity to be effective at the time of closing of the merger.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or AccelPath's future financial performance. Any statements that are not statements of historical fact (including without limitation statements to the effect that the Company or its management "believes", "expects", "anticipates", "plans", "intends" and similar expressions) should be considered forward looking statements that involve risks and uncertainties which could cause actual events or AccelPath's actual results to differ materially from those indicated by the forward-looking statements. There are a number of important factors that could cause AccelPath's actual results to differ materially from those indicated by the forward looking statements, including those factors described under "Risk Factors" in the Company`s periodic reports filed with the U.S. Securities Exchange Commission, including its Annual Report on Form 10-K. In light of the significant risks and uncertainties inherent in the forward-looking statements included herein, the inclusion of such statements should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved. Accordingly, you are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements contained in this press release are made as of the date hereof and may become outdated over time. AccelPath undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events, changes in expectation or otherwise, except as required by law.
SOURCE AccelPath, Inc.