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File: VidWRX - NR Restructuring Debenture PP Bridge Loan.pdf
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES
FOR IMMEDIATE RELEASE TRADING IN THE COMMON SHARES OF VIDWRX INC. WILL
RESUME FOLLOWING THIS ANNOUNCEMENT
VidWRX Announces Bridge Loan Default and Renegotiation, Management Changes and
Debenture Financing
Vancouver, British Columbia: March 21, 2016 VidWRX Inc. (TSX-V:VID) ("VidWRX" or the
"Company") announces that it is in default of its repayment obligations due and owing under the
bridge loan facility entered into by the Company on January 18, 2016 (the "Bridge Loan"). The
Company and the lenders have agreed in principle to settle the Bridge Loan through the issuance of
a secured convertible debenture (the "Convertible Debenture"), subject to the approval of the TSX
Venture Exchange and to the completion of documentation. The principle terms of the Convertible
Debenture are expected to include a coupon of 12% per annum, a maturity date no earlier than
December 31, 2016 and a conversion price of $0.05. For further information regarding the Bridge
Loan, readers are encouraged to review the Company's news release of January 18, 2016. The
Company will provide further information in respect of the completion of the settlement as soon as
available.
Management Changes
Effective immediately, Steven Hancock will assume the role of Chief Executive Officer of the
Company, replacing George Fleming who will remain on the board of directors as Chairman to assist
the Company during a three month transition period. Mr. Hancock was recently appointed to the
board of the Company and subsequently as President. As Chief Executive Officer, Mr. Hancock will
assume all the responsibilities for operations and report to the board.
As the founder of VidWRX, Mr. Fleming was responsible for driving the creation of the Company's
video production platform. The board thanks Mr. Fleming for his commitment and appreciates the
contribution that he has made to the establishment of the Company's business over the past ten
years.
Strategic Review
The Company is pleased to announce that its board of directors has completed a comprehensive
review of the Company's ongoing strategic operations. As a result of this review, the board has
concluded that:
1. The demand for video content for Small to Medium Businesses (SMB) continues to
accelerate worldwide;
2. The Company's existing client base, sales pipeline and strategic partners show strong
sustainable revenue potential;
3. The Company should continue to advance strategic relationships with major search, social
media and programmatic advertising partners;
4. The core video production platform technologies, staff and creative network are in place to
support growth to operating positive cashflow; and
5. With economies of scale the Company will be able to grow operating margins.
Accordingly, the board has concluded that, by implementing various operational changes and
efficiencies, managing the Company's creditors and raising new capital, VidWRX will be positioned
to capitalize on its strengths in a proven, rapidly growing market.
401-220 Cambie Street | Vancouver, BC V6B 2M9 | VidWrx.com
In addition, the board of directors do not see any reason to consider a stock consolidation in the
foreseeable future.
Operational Changes
In connection with its strategic review, the board has approved a comprehensive business plan
developed by Mr. Hancock, together with senior management that incorporates the following key
elements:
1. Significant reductions in monthly expenses.
2. Significant staff reductions through the elimination of non-essential sales, marketing,
technology staff and redundant corporate positions.
3. Significant reductions in management compensation.
4. A refocused sales strategy to expedite revenues realized rather than bookings generated.
5. A focus on larger existing customers that can immediately move into high volume video
production.
6. A focus on fewer but larger qualified active channel partners or resellers.
7. The proactive establishment of strategic business referral channels with major social
networks and video advertising platforms targeting SMB's.
8. A reduction in corporate debts and payables through a combination of share settlements,
renegotiation and payment deferral.
9. Rigorous monitoring of costs, margins and cash.
The primary goal of the business plan is to achieve positive operational cash flow by the fourth
quarter of 2016, while positioning the Company to take advantage of higher margin new business in
a fast growing industry.
The Company also announces that it has terminated its previously announced investor relations
agreement with Greg Werbowski.
Financing
The Company has elected to restructure the terms of its previously announced non-brokered private
placement (the "Private Placement") of Debentures, as a result of the board's review of the
Company's ongoing operations. The Private Placement will now consist of up to 200 units
(individually, a "Unit") at a price of $5,000 per Unit, for aggregate gross proceeds of up to
$1,000,000, each Unit to be comprised of a $5,000 debenture (individually, a "Debenture") and
10,000 warrants (individually, a "Warrant"). Each Warrant will entitle the holder thereof to purchase
one common share in the capital of the Company (a "Common Share"). Proceeds of the Private
Placement will be made immediately available to the Company on closing, and will not be placed in
escrow. Completion of the Private Placement is subject to the approval of the TSX Venture
Exchange.
Each Debenture will mature 3 years after the issuance thereof, subject to early repayment. VidWRX
has agreed that, from January 1, 2017, 3% of cash revenues received will be paid quarterly against
the principal outstanding under each Debenture, until such time as the Debentures are repaid in full.
For each Debenture held, the holder thereof will also be entitled to an additional quarterly distribution
of $150 so long as any of the principal amounts owing under the Debentures are outstanding.
Notwithstanding that the principal amounts owing under the Debentures are paid back prior to the
expiry of the three year term, each holder of a Debenture will be entitled to a minimum of six
quarterly distributions.
Each Warrant issued pursuant to the Private Placement shall be exercisable for a term of three
years at an exercise price of $0.05. If the average closing trading price of the Company's Common
Shares on the Exchange or other recognized exchange is equal to or greater than $0.20 for a period
of 60 consecutive days, the Company shall have an option at its sole discretion to provide a written
notice to accelerate the expiry (the "Acceleration Notice") advising the Warrant holders that they
shall have 21 days following the date of the Acceleration Notice to exercise their Warrants and any
unexercised Warrants after the expiry of the 21st day following the Acceleration Notice shall expire
with no further rights and privileges attached thereto.
The Private Placement is open to all accredited investors. Interested individuals should contact Rick
Schultz (CFO) at 604.683.5510 ext. 550 or email rschultz@vidwrx.com
Conference Call
Steve Hancock (CEO & Director), Beng Lai (Independent Director) and Goodwin Gibson
(Independent Director) will host a live conference call to discuss the board's strategic review on
Monday, March 21, 2016 at 1:00 pm EDT (11:00 am MDT, 10:00 am PDT).
To access the conference call by phone within Canada and the U.S.A., the toll-free number is 1-800-
319-4610. Outside Canada and the U.S.A., dial 1-604-638-5340. (Callers should dial in five to ten
minutes prior to the scheduled start time).
Management will speak to a presentation entitled the Stabilization & Growth Plan during the
conference call. The presentation is available by clicking here or visiting the VidWRX website
http://vidwrx.com/investors#/downloads or The Howard Group's https://howardgroupinc.com/vidwrx-
inc Investor Presentation tab.
Management will accept questions by telephone and e-mail. Individuals wishing to ask a question
during the call can do so by pressing *1. Questions can also be forwarded in advance of the
conference call to info@howardgroupinc.com.
An archive of the conference call will be posted in the Investors section of VidWRX's website
http://vidwrx.com/investors#/downloads and The Howard Group https://howardgroupinc.com/vidwrx-
inc Investor Presentation tab as soon as it is available.
About VidWRX Inc.
Founded in 2006 as SoMedia Networks, VidWRX is an industry pioneer, providing scalable video
production services to marketers and digital agencies in any volume, anywhere in North America.
Combined with its online platform and proven processes, VidWRX expert production teams ensure
exceptional customer service and affordable, high quality videos.
Company Contact: Investor Relations / Howard Group
Steve Hancock, CEO Dave Burwell
Tel: 604.683.5510 ext. 824 1-888-221-0915
Email: shancock@vidwrx.com Email: dave@howardgroupinc.com
Neither the 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. This news release
does not constitute an offer to sell or a solicitation of an offer to sell any securities in the United States. The
securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the
"U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S.
Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from
such registration is available.
Certain information contained in this document may include "forward-looking information". Without limiting the
foregoing, the information and any forward-looking information may include statements regarding the closing of
the Offering, the filing of a preliminary and final prospectus and the use of proceeds of the Offering. In this
document, words such as "may", "would", "could", "will", "likely", "believe", "expect", "anticipate", "intend",
"plan", "estimate" and similar words and the negative form thereof are used to identify forward-looking statements.
Forward-looking statements should not be read as guarantees of future performance or results, and will not
necessarily be accurate indications of whether, or the times at or by which, such future performance will be
achieved. Forward-looking statements and information are based on information available at the time and/or the
Company management's good-faith beliefs with respect to future events and are subject to known or unknown
risks, uncertainties, assumptions and other unpredictable factors, many of which are beyond the Company's
control. For additional information with respect to these and other factors and assumptions underlying the forward-
looking statements made in this press release, see the section entitled "Risks and Uncertainties" in the
Management's Discussion and Analysis of the Company for its most recent interim financial statements filed with
the Canadian securities commissions. The forward-looking information set forth herein reflects the Company's
expectations as at the date of this press release and is subject to change after such date. The Company disclaims
any intention or obligation to update or revise any forward looking statements, whether as a result of new
information, future events or otherwise, other than as required by law.
The Company does not intend, nor does it undertake, any obligation to update or revise any forward-looking
information or statements contained in this document to reflect subsequent information, events or circumstances
or otherwise, except as required by applicable laws.
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