March 05, 2014 10:51 ET

ePals Announces C$4.5 Million Private Placement and Completes First Tranche and Shares for Debt Transactions

Not for Distribution to United States Newswire Services or for Dissemination in the United States

WASHINGTON, DC--(Marketwired - Mar 5, 2014) - ePals Corporation (TSX VENTURE: SLN) ("ePals" or the "Company") announces that it is conducting a non-brokered private placement (the "Offering") of up to 60,000,000 units of the Company (each a "Unit") at a price of C$0.075 per Unit for aggregate gross proceeds of up to C$4,500,000. Each Unit will consist of one common share of the Company and one-third of one common share purchase warrant (each whole warrant, a "Warrant"). Each Warrant will entitle the holder to purchase one additional common share of the Company at a price of C$0.075 until August 31, 2014. The Company intends to use the net proceeds of the Offering for general corporate purposes and working capital.

The common shares of the Company to be issued in connection with the Offering (including the common shares issuable upon exercise of the Warrants) are anticipated to be voting common shares for non-U.S. purchasers and restricted voting common shares for U.S. purchasers. Each restricted voting common share is convertible into one voting common share at any time at the option of the holder. The restricted voting common shares are not listed or posted for trading on the TSX Venture Exchange or any other stock exchange or marketplace and do not carry the right to vote for the election of directors of the Company.

The Company has completed the first tranche of the Offering and issued 7,372,000 Units for gross proceeds of C$552,900. The Units issued pursuant to this first tranche consisted of one restricted voting common share and one-third of one Warrant, with each Warrant being exercisable to acquire one restricted voting common share. The Company may complete additional tranches of the Offering up to a maximum of C$4,500,000.

The Company also announces that it has issued an aggregate of 11,058,000 restricted voting common shares (the "Consideration Shares") in settlement of aggregate indebtedness of US$750,000 payable to ZG Ventures, LLC ("ZG") pursuant to a revolving loan facility in favour of ePals, Inc., a wholly-owned subsidiary of the Company. The parties determined the Canadian dollar amount of the debt to be C$829,350 and the restricted voting common shares were issued at a deemed price of C$0.075 per share. In addition, further to its news release of February 10, 2014, the Company has issued an aggregate of 3,166,336 restricted voting common shares in settlement of aggregate indebtedness of US$150,000 payable as an earnout to the former shareholders of Carus Publishing Company. The parties determined the Canadian dollar amount of the debt to be C$166,035 and the restricted voting common shares were issued at deemed price of C$0.05244 per share.

The Units issued under this first tranche of the Offering were issued to ZG and one of its affiliates. Pursuant to Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"), the issuance of the Units and the Consideration Shares is each a "related party transaction" for the Company. For these transactions, the Company has relied on the exemption from the formal valuation requirements of MI 61-101 contained in section 5.5(b) of MI 61-101 and has relied on the exemption from the minority shareholder approval requirements of MI 61-101 contained in section 5.7(a) of MI 61-101. 

The securities described herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from those registration requirements. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there by any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

All securities issued pursuant to the first tranche of the Offering, as well as the restricted voting common shares issued pursuant to the shares for debt transactions described above, are subject to a four month hold period expiring on July 6, 2014.

About ePals Corporation

ePals Corporation (TSX VENTURE: SLN) is an education media company and Global Learning Network. Focused on the K-12 market, ePals offers school administrators, teachers, students and parents worldwide trusted content, interactive learning experiences, and a collaborative learning community. ePals' award-winning products include: popular children's educational publishing brands from toddlers to teens, including Cricket® and Cobblestone®; the ePals Global Community®; and In2Books®, a Common Core eMentoring program that builds reading, writing and critical thinking skills. ePals also offers a content-licensing, clearance and production service for education publishers. ePals serves approximately one million classrooms and reaches millions of teachers, students and parents in over 200 countries and territories. Product websites include:;; and

Neither the 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 Statements

This news release contains statements that may constitute "forward-looking statements" within the meaning of applicable Canadian securities legislation. These forward-looking statements include, among others, statements regarding the completion of the Offering and the expected use of proceeds of the Offering. Readers are cautioned not to place undue reliance on such forward-looking statements. Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by the Company and described in the forward-looking statements contained in this press release. No assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur or, if any of them do so, what benefits the Company will derive therefrom. The forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

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