Burnaby, B.C., July 21, 2016 – Photon Control Inc. (“Photon Control” or the “Company”) (TSX-V: PHO), a leading developer of optical measurement technologies, today provided an update on actions recently undertaken as part of its commitment to strengthen its leadership team, improve corporate governance and recover funds from an unauthorized transaction. The actions include the appointment of a new independent director, the engagement of forensic accounting and intellectual property auditors, and the termination of a services agreement with a related third-party company.
Photon Control announced that it has appointed Ronan McGrath, a business innovator and visionary with more than 45 years of public company experience, to its Board of Directors.
“Ronan is a welcome addition to our Board of Directors,” said Michael Goldstein, Chairman and Acting CEO of Photon Control. “His experience at scaling technology-driven companies will be invaluable as we seek to build on our market leadership with new offerings that capitalize on emerging opportunities for our core precision measurement solutions. Ronan’s accounting and finance background and depth of experience with publicly-traded companies will also be of benefit as we enhance our internal control and corporate governance practices.”
Known as an “impact player” and business builder, Mr. McGrath was instrumental in the $26 billion market cap increase at Rogers Communications, and was responsible for the restructuring of Canadian National Railways, Canada’s largest railroad. Mr. McGrath was previously CIO of Rogers Communications Inc., and President of Rogers Shared Services, Canada’s national wireless carrier. In that role, he built much of what is today one of the most advanced communications technology platforms in the world. He was also instrumental in numerous acquisitions and alliances, including the agreement with Microsoft Corp. that resulted in a $600 million investment aimed at developing and rolling out advanced TV services, which were considered pivotal to Rogers’ success at the time. Previously, as the CIO and Controller of Canadian National Railways, Mr. McGrath led principal aspects of the restructuring and strategic review that led to the privatization of the company.
Mr. McGrath started his career in Accounting with Arthur Andersen & Co. in various European countries. He was awarded the CIO of the Year award in Canada in 1995, and served on the global advisory boards of HP and Lotus Development. He is a Past Chair of the Information Technology Association of Canada (ITAC). Mr. McGrath is a graduate in Business Administration at Trinity College, Dublin, and is also a Chartered Accountant. In connection with Mr. McGrath’s appointment as a new director, the Company granted Mr. McGrath under its Stock Option Plan of stock options to purchase 270,000 common shares of the Company at an exercise price of $0.67 per share for a term of 5 years. In addition, the Company granted Mr. McGrath under its Restricted Share Unit Plan of restricted share units to purchase 129,000 common shares of the Company at a price of $0.67 per share for a term of two years.
The grant of stock options and restricted share units are subject to any necessary regulatory approvals. Options will vest as to 25% of the optioned shares on the date of grant and a further 25% will vest every six months thereafter until fully vested. Restricted share units granted will vest in annual instalments over a two-year period following the grant date, with one-third vesting on the date of grant and one-third on each of the first and second anniversaries of the date of grant.
Photon Control has also announced that it has engaged a forensic accounting firm to review and evaluate the Company’s transactions with related third-party companies. The review is intended to ensure that the Company’s control and disclosure practices were properly followed.
In tandem with the hiring of the forensic accounting firm, Photon Control has also engaged an intellectual property auditor to review all of the Company’s intellectual property ownership and agreements, including its relationship with Photon Control R&D Ltd.
In addition, Photon Control announced that it has terminated its services agreement with DCD Management, a provider of financial, payroll and information technology services. DCD Management is controlled by David Dueck, a Director of Photon Control. Photon Control previously disclosed on June 27, 2016 that it became aware of an unauthorized transfer of $4.5 million to a related company controlled by Mr. Dueck.
“We remain very committed to recovering the funds from the unauthorized loan and to putting measures in place to restore proper controls and governance practices,” added Mr. Goldstein. “These latest steps demonstrate the progress we are making and the efforts we are taking to demonstrate that we will ‘walk the talk’ on Governance. We will continue to update shareholders as material developments occur.”
About Photon Control Inc.
Photon Control Inc. designs, manufactures and distributes a wide range of optical sensors & instruments to measure temperature, pressure, position, and flow. These products are used by original equipment manufacturers (OEM) as well as end-users in the Semiconductor, Oil and Gas, Power, Life Science, and Manufacturing industries. Photon Control’s products provide high accuracy and reliability in extreme conditions and are supported by a team of experts that offer onsite installation, training, and support. Photon Control Inc. also provides engineering services for customized optical measurement systems. Headquartered in an ISO 9001:2008 manufacturing facility in Burnaby, BC, Photon Control Inc. is listed on the TSX Venture Exchange, trading under the symbol ‘’PHO”. Additional information about the company can be found at www.photon-control.com/investorrelations.html
This News Release contains “forward looking statements” within the meaning of applicable Canadian securities legislation. Such forward looking statements concern the business and anticipated financial performance of the Company and include, without limitation, statements with respect to the Transfer to Photon Control R&D Ltd., the timing and likelihood of the return of the funds transferred, including, but not limited to, action taken by the Company to recover the funds, further investigations and conclusions of the Independent Committee; additional controls and measures to be taken by the Company, the Company’s objectives, goals, liquidity, sources of capital, expectations of sales and continued development of technologies and products.
These forward looking statements are based on certain factors and assumptions, including, without limitation, the Company’s ability to recover the funds transferred; the Company’s ability to successfully transition management and board transitions; the Company’s ability to successfully complete new purchase orders along the timelines expected; continued and future demand for the Company’s products; continued sales to the Company’s major customers; the continued financial health of the semiconductor industry; and the Company’s ability to continue and further enhance revenue diversification and open new market opportunities.
Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation, the Company may never be able to recover the funds transferred, the Company may face legal action as a result of the Transfer, additional measures and controls may not be implemented as expected or along the timelines anticipated, uncertainties in the availability and cost of financing for the Company to enable the Company to achieve its goals; uncertainties relating to the market for the Company’s products and maintaining a stable level of orders; fluctuations in revenue as a result of volatility in the markets and product mix; risks relating to the Company’s present reliance on four major customers for the majority of its sales; risks relating to the Company’s reliance on the financial health of the semiconductor industry; risks relating to the development of competing technologies and the possibility of increased competition; the effect of slow growth in the United States, the Company’s principal market, as well as in Canada and other economies generally and other economic trends and conditions in the markets that the Company and its customers serve; risks associated with technical difficulties or delays in product introductions, improvements, implementation; uncertainties in product pricing or other initiatives of the Company and its competitors; uncertainties in factors that may result in a reduction in capital expenditures and/or delayed buying decisions affecting demand for the Company’s products; risks relating to currency fluctuations, particularly between the Canadian and United States dollars; and risks in pursuing additional development projects to support existing customers or pursue other business opportunities.
The foregoing assumptions, risks and uncertainties are not exhaustive of the items that may affect our forward looking statements. Should underlying assumptions prove to be incorrect or one or more of these risks and uncertainties materialize, actual results may vary materially from those described in the forward looking statements. The Company’s forward looking statements are based on beliefs, expectations and opinions of management on the date the statements are made. For the reasons set forth above, readers should not place undue reliance on forward looking statements. The Company undertakes no obligation to update or revise any forward looking statements included herein if these beliefs, estimates and opinions or other circumstances should change, except as otherwise required by applicable law.
For Investor Relations Inquiries Please Contact:
Helena Rebec, CPIR
Chief Administrative Officer / IR
604.422.8861 Ext 101
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.
News Release 7-16