KidsFutures Inc.
TSX VENTURE : FUT

KidsFutures Inc.

January 24, 2007 09:49 ET

KidsFutures Announces a Proposed Equity Financing, the Streamlining of Its Corporate Structure and Management Team and Amendments to Its Articles

TORONTO, ONTARIO--(CCNMatthews - Jan. 24, 2007) -

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KidsFutures Inc. (TSX VENTURE:FUT), operator of the Futura Rewards Program, a national rewards program that helps families save money for their financial goals, today announced that it intends to raise up to $5 million by way of a private placement of units (each, a "Unit") at a subscription price of $0.12 per Unit (the "Financing"). Each Unit will consist of one common share of the Company (a "Common Share") and one half Common Share purchase warrant (a "Warrant"). Each full Warrant will give the holder the right to purchase one Common Share at a price of $0.20 for a period of 18 months from the first closing date of the Financing (the "Closing Date"). The Financing is being conducted in conjunction with the previously announced convertible debenture financing (the "Debenture Financing"). The Company intends to raise up to $7 million in the aggregate pursuant to both financings. The proceeds of the financings will be used primarily to help fund: (i) the implementation by the Company of the recently announced grocery and pharmacy launches; (ii) the ongoing marketing activities and operating costs of the business; and (iii) the redemption of all or a portion of the outstanding Series 2 Class C Preference Shares (the "Series 2 Shares").

The Company has engaged Wellington West Capital Markets Inc. ("Wellington West") on a best efforts basis as its lead agent to complete the Financing. As consideration for acting as agent, the Company has agreed to pay Wellington West a cash commission of 7% of the gross proceeds of the Financing raised by Wellington West and a reduced commission on proceeds from investors sourced by the Company. In addition, Wellington West will be granted broker warrants giving it the right to purchase such number of Units as is equal to 6% of the number of Units issued pursuant to the Financing which were placed by Wellington West at an exercise price of $0.12 per Unit. The broker warrants will be exercisable for a period of 18 months from the Closing Date. The proposed Financing and the Debenture Financing are subject to the receipt of the approval of the TSX Venture Exchange.

The Company also announced that as a result of the recent resignation from the Mutual Fund Dealers Association by its subsidiary, KidsFutures Investments Inc., the Company has streamlined its management team to allow for greater efficiencies. To this end, Dave Lacey has resigned his position as President of the Company but will remain an integral part of the Company's go-forward strategy through his ongoing role as a member of the board of directors and as a significant shareholder by virtue of his personal and family company's equity holdings. In addition, Tom Hamza has resigned his position as Vice President Finance leaving 5 members on the management team. The Company thanks Tom for all his hard work and wishes him great success in his new role as President of the Investor Education Fund established by the Ontario Securities Commission. Dave will continue to add his invaluable insights and contribute to the Company's growth through his ongoing board representation and management looks forward to continuing to work together to implement what Dave was an integral part of developing. Mark Farrell has assumed the title of President in addition to his current position of Chief Executive Officer.

"After careful consideration by Dave and me as to what was best for the business in conjunction with constructive feedback from the board, we feel that these changes to the management team truly reflect the recently announced improvements to the Company's value proposition and its focus on building the co-branded loyalty business," says Mark Farrell, CEO of KidsFutures Inc.

The Company has also obtained shareholder approval at its special meeting of shareholders which was held on December 29, 2006 (the "Special Meeting") to amend its by-laws and change its corporate name from KidsFutures Inc. to The Futura Loyalty Group Inc. which will take effect once the Company files the requisite articles of amendment.

"The name change is significant for us in that it better represents what we are accomplishing with the expanded rewards offered to our members" adds Farrell. "With our expanded data analytics capabilities and value proposition to members and program partners, we intend to differentiate the Company in the loyalty space and take advantage of industry leading initiatives."

Finally, the Company also announced that the shareholders approved a special resolution at the Special Meeting amending the articles to allow the Company to redeem the outstanding Series 2 Shares which, when completed, will leave the Company with Common Shares as the only remaining outstanding class of shares. The amendment was overwhelmingly approved by the shareholders of the Company voting at the Special Meeting. The amendment of the articles for the Series 2 Shares is intended to streamline the Company's capital structure by removing certain provisions of the Series 2 Shares including anti-dilution rights, rights of first refusal, pre-emptive rights and a liquidity preference and adding the redemption provisions. In light of the anti-dilution rights that existed and the assertion by certain of the Series 2 shareholders that they had the right to approve any further debt incurred by the Company, the Board of Directors of the Company considers these amendments to be in the Company's best interests.

The Series 2 shareholders will have the option of redeeming their shares for either: (i) a cash payment of $0.25 and the issuance of one unit (a "Unit") of the Corporation consisting of a secured subordinated convertible redeemable debenture (the "Debenture") in the principal amount of $0.65 and 0.541 of a Common Share purchase warrant (a "Warrant"). Each Warrant will entitle the holder thereof to purchase one Common Share at a price of $0.30 at any time before the date which is 24 months after the date of issue which will be on or before March 30, 2007; or (ii) a cash payment on or before March 30, 2007 of $0.62 provided that in the event that the Company is not in a position to pay $0.62 cash per share to each holder who has made this election, any Series 2 shareholder who has elected this option will receive cash in an amount not less than $0.25 (the "Cash Payment") and the issuance of a secured subordinated promissory note (the "Notes") bearing interest at the rate of 10% per annum and maturing on March 30, 2008 in a principal amount equal to the difference between $0.90 and the Cash Payment for each Series 2 Share redeemed. The Notes would be secured against all of the present and future assets of the Corporation and would be subordinated to the Corporation's existing first secured debt in the principal amount of $650,000. Further information on the articles of amendment, including a description of the rights currently attaching to the Series 2 Shares is set out in the material change report filed by the Company on www.sedar.com. The associated Notice of Meeting and Information Circular for the Special Meeting may also be viewed at www.Sedar.com.

About KidsFutures Inc. and Futura Rewards

Operated by Toronto-based KidsFutures Inc., the Futura Rewards Program helps Canadians save money by purchasing a wide variety of consumer products and services from a broad array of some of Canada's best-known retailers, service companies and brands. Members earn rewards that are cash-equivalent and can be directed into any financial product - mutual funds in a RRSP, Registered Education Savings Plans (RESPs), GICs, etc. - at any financial institution in Canada. Members can also direct their rewards to registered charities of their choice.

The Futura Rewards Program has in excess of 330,000 members who benefit from numerous opportunities to earn Futura Rewards through a coalition of over 60 Program Partners representing over 100 well-known brands, services and hundreds of individual products. The program is also available in more than 1,100 retail locations and more than 50 grocery locations across Canada. For more information, visit www.FuturaRewards.ca.

Forward-Looking Statements

This news release includes certain forward-looking statements that are based upon current expectations, which involve risks and uncertainties associated with our business and the environment in which the business operates. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements, including those identified by the expressions "anticipate", "believe", "plan", "estimate", "expect", "intend" and similar expressions to the extent they relate to the Company or its management. The forward looking statements are not historical facts, but reflect KidsFutures' current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including any risks and uncertainties described herein, as well as the risks and uncertainties detailed in our final long form prospectus dated November 29, 2005 filed with the regulatory authorities.

TM Trademark of KidsFutures Inc.

The TSX-Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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