Home » Environment » Waste Management » SEL Exchange Inc. Updates Market

SEL Exchange Inc. Updates Market

TORONTO, ONTARIO — (Marketwired) — 10/20/14 — SEL Exchange Inc. (TSX VENTURE: SEL) (the “Company”) provides the following update to the market.

The Company conducts its operations through three (3) wholly owned subsidiaries, SLM Logistics Corporation (“SLM”), Service Results Technology Inc. (“SRT”) and SEL Exchange, USA, Inc. (“SEL US”). Since the unexpected departure of the Company–s former CEO on September 22, the SLM business has been negatively affected. The Board of Directors, together with the Company–s management, have taken steps to reorganize and to re-orientate the SLM business for the purpose of stabilizing operations and developing a go forward plan. The SRT and SEL US business have not been significantly affected by the departure of the former CEO and are not part of the current investigation.

As in all situations of this nature, liquidity is an essential element in dealing with untimely and unexpected expenses that arise. Due to the liquidity issues of SLM and unplanned expenses, the Company is facing a liquidity challenge. The Board of Directors have instructed management and their advisors, to sell and/or divest the SLM operations and to seek short term financing to provide interim funding to the Company, to ensure continued orderly operations and to fund the work of the Special Committee, established by the board.

Special Committee Update

As previously announced, the Board of Directors, established a special committee, chaired by Henry Tse, CA. The mandate of the special committee is to conduct an internal investigation, to determine whether there is any evidence that would implicate the Company–s wholly owned subsidiary SLM, in any illegal conduct which forms the basis for the criminal charges laid against the former CEO, and to make such recommendations to the Board as may be appropriate in the circumstances.

The committee has hired special legal counsel to assist in establishing the appropriate process and review, to assist with communications with the various authorities and regulators, amongst other matters. The committee is in discussions with external forensic accountants, to determine their role and scope in assisting the special committee to fulfill its mandate. The work of the committee will take time and will consume financial resources. These are extraordinary expenses and the Company is examining options on how best to fund this work.

In addition to executing a search warrant on SLM–s premises as previously disclosed, the Company has also been notified by the RCMP that the agency–s GTA FC (Proceeds) section is investigating SLM with respect to the alleged actions of the Company–s former executive. No charges have been made against the Company or SLM.

SLM Operations

The SLM business unit has been affected by the management change and the above allegations. Management immediately took taken steps to reduce costs and improve cash flows at SLM. These measures include: staff reductions, deferral of business development initiatives, programs aimed at liquidating inventory, etc. In addition, the directors have commenced the process to sell and/or divest itself of SLM and all of its related liabilities. The divestiture of SLM will allow the Company to focus it efforts and finances on the continued growth of SRT and SEL US. There is no certainty that the divestiture can be completed on favorable terms or on a timely basis.

Stardust Acquisition

The Board has provided notice to Stardust that it does not intend to complete its previously announced transaction that was scheduled to close in 2014. Discussions will continue with the owners of Stardust to determine the best way to move forward.

Corporate Debentures

As a result of the SRT acquisition in the summer of 2014, the Company issued approximately $4 million in debentures. Given the events at the Company, the Company expects to enter into discussions with the current debenture holders to renegotiate the terms of the outstanding debentures to reduce pressure on short term cash outflows from the business. Any proposed amendment to the debentures will require the approval of a majority of the debenture holders and the TSX Venture Exchange. It is hoped that these measures will allow the Company to preserve cash and provide the necessary financing to allow SRT and SEL US to expand their business operations.

SRT & SEL US Operations (Go Forward Plan)

The Board is of the opinion that the focus of the business, on a going forward basis will be the continued growth of its SRT and SEL US operations. SRT continues to be cash flow positive and is currently quoting on a number of additional opportunities to expand its revenue base. A major international OEM (the “OEM”), which is a major client of SRT, has recently announced that it will be issuing a request for proposals (“RFP”) for managed services that will cover repair and warehousing related services in support of its retail business with the objective of consolidating into a single supplier. In connection with the RFP, which SRT was anticipating, the OEM has provided SRT with notice that it is exercising its option to terminate its current agreement with SRT as of April 10, 2015. The termination of the agreement by the OEM is not indicative of its displeasure with SRT but a necessary step with respect to the RFP. SRT, in conjunction with SEL US, will be submitting a proposal with respect to the OEM–s business in both Canada and the United States.

SEL US recently commenced operations in June 2014 and the Company expects that the SEL US operations will be in a cash flow breakeven position within the next 30 days. The Board and management expect to see significant growth from SEL US.

Management Update

On September 22, 2014, then director Mr. Clifford, took over as interim Chairman and interim CEO, due to the sudden and unexpected removal of the then Chairman and CEO. Mr. Clifford has advised the Company that due to his other interest, he is resigning as director and interim CEO and Chairman. The Company would like to thank Mr. Clifford for his service to the Company and wishes him success in his future endeavors.

Mr. Pat Westfall, CA, the Company–s current CFO has been appointed interim CEO and Mr. Henry Tse, a current director of the Company, has been appointed Chairman of the Board. In addition, Mr. Westfall was also appointed to the board of directors of the Company.

Mr. Westfall is supported by a capable management team including Joe Fiorillo and Celeste Pereira who are managing SLM with SRT being managed by Anthony Palumbo, CA, Jacob Shemesh and Oren Shemesh Jacobs and SEL US being managed by Melvin Simpson and Mark Blevins.

About SEL Exchange Inc.

The Company, through its three wholly owned subsidiaries SLM Logistics Corporation, Service Results Technology Inc. and SEL Exchange, USA, Inc. is dedicated to managing consumer and retail store returns and problematic electronics through a product management system. The Company manages product warranties, service repairs, consumer returns from receiving to end-of-life with quality assurance testing, factory servicing, resale through non-traditional channels and recycling of non saleable product to support a closed-loop distribution process. The Company is able to recycle the non-saleable returns it receives, thereby allowing customer returns to have a very low environmental impact. Independent Waste Audit Reports, since 2011, show the Company is able to achieve a consistent waste diversion rate of over 98.6%. This means brands using Company–s processes are able to divert over 98.6% of their product from landfill. The Company is currently working on rolling out this product offering to retailers to allow them to capture the environmentally conscious consumer. The Company currently operates only in Ontario, Canada and Tennessee, USA.

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.

Forward looking information is typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions, or are those, which, by their nature, refer to future events. The Corporation cautions investors that any forward-looking information provided by the Corporation is not a guarantee of future results or performance, and that actual results may differ materially from those in forward looking information as a result of various factors, including, but not limited to: the state of the financial markets for the Corporation –s securities; the state of the industry; recent market volatility; the Corporation –s ability to raise the necessary capital or to be fully able to implement its business strategies; and other risks and factors that the Corporation is unaware of at this time. The Corporation expressly disclaims any obligation to update any forward-looking statements except as may be required by law.

Contacts:
SEL Exchange Inc.
Pat Westfall
Chief Executive Officer

Leave a Reply

Your email address will not be published. Required fields are marked *