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The proposed business combination of Wherify and Lightyear creates a public entity that will target the markets for location based services and network service solutions. Upon closing of the merger existing Lightyear members and note-holders will own 51 percent of Wherify's fully diluted shares. Sherman Henderson will be named Chairman and CEO of Wherify. For the year ended December 31, 2007, Lightyear generated approximately $65 million in revenue, $2.8 million in EBITDA.
The initial Board of Directors of the combined company at the closing will consist of seven persons -- five new directors chosen by Lightyear (one of which will be approved by Wherify), one director chosen by Wherify, and one director chosen by GPS Associates LLC.
Wherify's proprietary Springboard location based services platform enables mobile carriers, mobile application providers and mobile device manufacturers to develop a wide variety of location based services applications for their products. This platform will provide the combined organization with several additional potential avenues of growth including markets for enterprise employee mobility service management, mobile social networking, personal safety, mobile community search and mobile shopping.
"We believe the combined efforts of these two companies will enhance the service offering to prospective customers and our more than 84,000 existing small and mid-sized business and residential customers," said Sherman Henderson, President and CEO of Lightyear. "Our strong distribution base and long-term partnerships combined with Wherify's leading LBS platform and GPS technologies will allow the combined organization to introduce a variety of new products to the marketplace over the coming months and years."
The merger is conditioned on, among other things, obtaining a minimum of $15 million in new equity capital, the restructuring of existing debt, and the conversion of Wherify's Series A and Series B preferred stock. The parties have retained Seven Hill Partners, LLC to assist with the financing. Under the agreement, $2.5 million of the new equity capital is anticipated to be used to retire approximately $18 million of Wherify's current unsecured liabilities. An additional $2.5 million of the new capital is anticipated to be used to restructure Wherify's secured debt with Yorkville Associates. Upon completion of the merger and financing, Wherify and its subsidiaries will collectively retain approximately $2.5 million of secured debt with Yorkville and approximately $17.5 million of existing long-term Lightyear debt. In addition, Yorkville shall no longer retain any conversion features but will remain secured by certain current Wherify assets. Wherify anticipates that net working capital from the financing will be approximately $6.5 million.
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