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(TSXV-NEX: SVN.H)
TORONTO,
May 19, 2015 /CNW/ - 71 Capital Corp.
(the "Corporation") (TSXV-NEX: SVN.H) announced today that
it has entered into a letter of intent (the "Letter of
Intent") whereby the Corporation will acquire all of the issued
and outstanding securities (the "Prodigy Shares") of TCB
Corporation doing business as Prodigy Ventures ("Prodigy
Ventures") in exchange for the issuance of common shares and
restricted voting shares (as described below) to the shareholders
of Prodigy. The acquisition of the Prodigy Shares will constitute
the Qualifying Transaction of the Corporation (the "Qualifying
Transaction") as such term is defined in the policies of the
TSX Venture Exchange (the "Exchange").
It is anticipated that the acquisition of the Prodigy Shares
will be effected through the amalgamation of a wholly owned
Ontario subsidiary
("SubCo") of the Corporation and Prodigy Ventures. The
vendors of the Prodigy Shares are Tom
Beckerman of Toronto,
Ontario, Andrew Kieran of
Toronto, Ontario through his
Ontario company Mobistrat
Consulting Ltd., Paul Andrusyshyn
through his Canada company 7797958
Canada Corp., and Hussein Vastani of
Toronto, Ontario.
Prodigy Ventures is a "venture builder", creating new business
platforms and applications in many of the highest growth technology
segments: mobile video, wearables, proximity marketing, mobile
payments, augmented reality, 3D and social. The Corporation is a
capital pool company.
Terms of Qualifying Transaction
Pursuant to the terms of the Letter of Intent, subject to
completion of satisfactory due diligence, a definitive amalgamation
agreement (the "Agreement") and receipt of applicable
approvals, SubCo will amalgamate with Prodigy Ventures and the
shareholders of Prodigy Ventures will receive common shares and
restricted voting shares (as described below) in the capital of the
Corporation in exchange for their shares of the new amalgamated
company.
The Qualifying Transaction is an arm's length transaction.
No insiders of the Corporation own securities in Prodigy Ventures
and no insiders of Prodigy Ventures own securities in the
Corporation. It is likely that the Corporation will complete a 2
(old shares) for 1 (new share) consolidation of its shares and a
name change in connection with the Qualifying
Transaction. The Corporation intends to call a meeting
of its shareholders in the near future in order to approve the
consolidation and name change and deal with annual general
business.
Upon completion of the Qualifying Transaction, Prodigy Ventures
will be a wholly owned subsidiary of the Corporation and the
Corporation will be engaged in the business of Prodigy
Ventures.
Prodigy Ventures
Prodigy Ventures was incorporated under the laws of Ontario in 1992 and is based in Toronto, Canada. Prior to April 1, 2014, the company did business under its
legal name, TCB Corporation, providing the consulting services of
Tom Beckerman to a small group of
clients. On April 1, 2014, the
company took on two minority shareholders and eight initial
subcontractors, rebranded as Prodigy, and began to perform
technology services work for Canadian banks. In its first fiscal
year doing business as Prodigy, the company grew to over thirty
employees and subcontractors. The audited financial statements for
the year ending March 31, 2015 show
revenue of $2,730,698, net earnings
of $159,229, and year-end cash of
$347,582. During the year, research
and development costs, to develop new platforms and applications,
of $137,348 were expensed.
Prodigy Ventures is a "venture builder", creating new business
platforms and applications in many of the highest growth technology
segments: mobile video, wearables, proximity marketing, mobile
payments, augmented reality, 3D and social. Prodigy Ventures'
business platforms and applications deliver B2B, B2C, P2P (Peer to
Peer) and IoT (Internet of Things) capabilities. The company's
brands for these ventures include iVideo, bconix, ZETZ, Noobify Me,
Glass Crowd, We Got Game, and others. In its first year, none of
these Prodigy businesses generated revenue. Each has its own
business model and the potential for significant future growth.
Prodigy Labs is Prodigy Ventures' technology services business,
a trusted technology supplier to leading Canadian financial
institutions. Prodigy Labs provides enterprise clients with
technology consulting services, and services related to Prodigy
Ventures' business platforms. Prodigy Labs is currently active with
three Canadian chartered bank customers and is aggressively
pursuing an expansion of this business into other sectors. Prodigy
Labs is responsible for all of the revenue and earnings performance
in Prodigy Ventures first year just ended, and expects continued
rapid growth in the next two years.
Prodigy Ventures Insiders include Tom
Beckerman, Andrew Kieran,
Paul Andrusyshyn, Hussein Vastani, and Jeffrey Shaul of Robson Capital Management.
Management and Board of Directors of the Resulting
Issuer
Upon completion of the Qualifying Transaction, it is anticipated
that the resulting issuer's Board of Directors will consist of
Tom Beckerman, and additional board
members to be named later.
Tom Beckerman, MBA is the Founder
and CEO of Prodigy Ventures. Tom
Beckerman's extensive background includes leadership roles
in seven previous businesses in technology, marketing services,
financial services and medical devices. He has created unique
technologies and worked with Fortune 1000 companies. Mr. Beckerman
is focused on the strategic development and marketing of new high
growth technology platforms and services for mobile video,
wearables, proximity marketing, mobile payments, augmented reality,
3D and social.
Andrew Kieran, is Vice President
of Prodigy Ventures. With over ten years experience in IT strategy,
architecture, design and development Andrew
Kieran leads Prodigy's business development in the financial
services sector. Mr. Kieran has designed and delivered many
innovative mobile technology solutions that have been reviewed as
"best of breed". Mr. Kieran also leads Prodigy's staffing services
business, providing top tier technology talent to enterprise
customers.
Hussein Vastani, M.Sc. is the
Chief Technology Officer of Prodigy Ventures. Hussein Vastani leads Prodigy's technology
development, with responsibility for staffing and resources,
technical architecture and design, development and delivery. Mr.
Vastani has over eight years experience in full stack architecture,
design and development and has previously led advanced technology
projects at MacDonald Dettwiler and Teranet.
Sponsorship of Qualifying Transaction
Jacob Securities Inc., subject to completion of satisfactory due
diligence, has agreed to act as sponsor in connection with the
transaction. An agreement to sponsor should not be construed as any
assurance with respect to the merits of the transaction or the
likelihood of completion.
Proforma Capital Structure
The Corporation currently has 4,411,271 common shares issued and
outstanding. It is anticipated that the shares will be consolidated
on the basis of 2 old shares for each 1 new share, resulting in
2,205,636 new shares prior to the amalgamation. Prodigy Ventures
shareholders will be issued 8,822,542 post-consolidation common
shares and 99,253,598 restricted voting shares. The restricted
voting shares of the Corporation will not carry the right to vote,
will rank pari passu with the common shares of the
Corporation with respect to the payment of dividends and
distribution of assets on liquidation, and will be convertible at
the option of the holder on a one-for-one basis subject to
satisfaction of the public distribution listing requirements of the
Exchange. Prodigy Ventures currently has 116 shares outstanding and
the issuance of common shares and restricted voting shares of the
Corporation represents an exchange ratio ("Exchange Ratio")
of 931,691 shares for each Prodigy Share. The restricted voting
shares will not be listed on the Exchange.
In connection with the completion of the Qualifying Transaction
Prodigy Ventures may complete a financing (the "Private
Placement") to raise up to $50,000 through the issuance of Prodigy
Shares. Any investors in the transaction will receive freely
tradable common shares of the Corporation on completion of the
Qualifying Transaction based on the Exchange Ratio. Further details
regarding this financing will be announced when known.
Following completion of the amalgamation, shareholders of the
Corporation will hold equity interests equal to approximately 2% of
the combined entity with the remaining equity interests being held
by shareholders of Prodigy Ventures and new investors participating
in the Private Placement.
In accordance with Exchange policy, the Corporation's shares are
currently halted from trading and will remain so until the
completion of the Qualifying Transaction.
Termination
The letter of intent will terminate (i) on the mutual consent of
both the Corporation and Prodigy Ventures, (ii) if either party is
not satisfied with its due diligence review of the other party,
(iii)if a Definitive Agreement is not executed on or before
5:00 p.m. (Toronto time) on June
30, 2015.
Description of Significant Conditions to
Closing
Completion of the Qualifying Transaction is subject to a
number of conditions including but not limited to, due diligence,
Exchange acceptance and if required by Exchange policies and
shareholder approval. Where applicable, the Qualifying Transaction
cannot close until the required shareholder approval is
obtained. There can be no assurance that the Qualifying
Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the
management information circular or filing statement to be prepared
in connection with the Qualifying Transaction, any information
released or received with respect to the Qualifying Transaction may
not be accurate or complete and should not be relied upon. Trading
in the securities of a capital pool company should be considered
highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the
merits of the proposed transaction and has neither approved nor
disapproved the contents of this press release.
The Corporation will make a subsequent news release with
information on sponsorship and summary financial information in
accordance with Exchange policy.
Cautionary Statements
This news release contains "forward-looking statements"
within the meaning of applicable securities laws relating to the
proposal to complete the Qualifying Transaction and associated
transactions, including statements regarding the terms and
conditions of the Qualifying Transaction and associated
transactions. Readers are cautioned not to place undue
reliance on forward-looking statements. Actual results and
developments may differ materially from those contemplated by these
statements depending on, among other things, the risks that the
parties will not proceed with the Qualifying Transaction and
associated transactions, that the ultimate terms of the Qualifying
Transaction and associated transactions will differ from those that
currently are contemplated, and that the Qualifying Transaction and
associated transactions will not be successfully completed for any
reason (including the failure to obtain the required approvals or
clearances from regulatory authorities). The statements in this
news release are made as of the date of this release. The
Corporation undertakes no obligation to comment on analyses,
expectations or statements made by third parties in respect of the
Corporation, Prodigy Ventures, or their respective financial or
operating results or (as applicable), their securities.
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.
SOURCE 71 Capital Corp.