Illusion Systems Inc. announced today that they have reached a milestone agreement with Sony Financial Services, to finance Illusion's SpeedSports™ and JumpZone!™ simulation products for installation in key USA entertainment centers.
Sony Financial Services LLC, of Woodcliff Lake, New Jersey, provides financing solutions for both consumer and commercial customers. Illusion and Sony Financial Services have developed a Vendor Program that provides revenue share or lease financing opportunities, for the operators of select entertainment locations wishing to install Illusion's simulation products. This program substantially broadens the market for Illusion's higherend products with world-class entertainment centers.
"There are many potential quality locations for the SpeedSports™ and JumpZone!™ that will be attracted by the advantages of our financing programs. This agreement with Sony Financial Services allows for Illusion to place its products in select high quality, high attendance locations. The arrangement with Sony Financial Services was developed in connection with our successful sale of 2 SpeedSports™ units to Andretti SpeedLab in Atlanta last February. This created the perfect scenario where an excellent location combined with an experienced operator was interested in an ongoing revenue-share agreement with Illusion. As a direct result of Sony Financial Services' involvement, we now have several client locations under negotiation which can take full advantage of this opportunity", stated Peter Beale, Chairman CEO of Illusion.
Jeffrey Dorn, President of Sony Financial Services, said "We are pleased to have developed this relationship with Illusion. With the large number of quality entertainment centers in the US, we see this as a great opportunity to grow our business in this exciting market segment."
Prospectus Filing
The Company has filed with the British Columbia and Alberta Securities Commissions and the Canadian Venture Exchange (CDNX) its preliminary Prospectus dated May 3, 2001, to qualify the offering and sale in those Provinces of up to $5 million principal amount of unsecured 12% convertible redeemable debentures of the Company with a term of 5 years. The debentures will be offered in units, each unit consisting of $1,000 principal amount of debentures.
Each debenture will bear interest at the rate of 12% per annum, payable in arrears every six months, and will be non-convertible until the first anniversary of the date of its issue. After the first anniversary date, the debentures will be convertible into common shares of the Company at the option of the holder at a conversion price of $0.50 per share during the second year of the debentures' five year term and after that date at $0.60 per share until the debentures mature.
If the common shares trade at or above $0.90 for 20 consecutive trading days through the facilities of the Canadian Venture Exchange or other recognized stock exchange at an average volume greater than 50,000 shares per day, the Company shall have the right, exercisable upon 30 days' written notice to the holders of debentures, to redeem the then outstanding debentures for their face value plus accrued unpaid interest, provided that the Company shall not be entitled to redeem the debentures or any part thereof during the first two years following the date they are issued. During the 30-day redemption notice period, holders of debentures shall be entitled to exercise their conversion right. The financing is subject to a minimum offering of $3 million principal amount of debentures and is brokered through Canaccord Capital Corporation, acting as the Company's agent on a commercially reasonable efforts basis.
The Company has agreed to pay the agent a fee of 8% of the principal amount of debentures sold in cash and a fee of 20% of the principal amount of debentures sold in the form of agent's warrants with a term of two years and an exercise price to be determined prior to the filing of the final Prospectus. The Prospectus is intended to qualify the issue of the Agent's warrants as well as theissue of 466,667 common shares on the exercise of an equal number of special warrants issued lenders who advanced bridge loans to the Company from June 19, 2000 through January 29, 2001. The terms of the offering, including the debentures' conversion price and redemption price, are subject to amendment by the Company and the agent when they finalize their agency offering agreement before the final Prospectus is filed.
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