August 06, 2013 17:33 ET

ePals Completes Private Placement of Senior Secured Convertible Debentures

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

TORONTO--(Marketwired - Aug 6, 2013) - ePals Corporation (TSX VENTURE: SLN) ("ePals" or the "Company") is pleased to announce that it has completed a non-brokered private placement of senior secured convertible debentures (the "Debentures"), issuing Debentures in an aggregate principal amount of $1,250,000 to ZG Ventures, LLC ("ZG"), an entity controlled by ePals Chairman, Miles Gilburne, and co-founder and Board member, Nina Zolt.

The Debentures were issued pursuant to the terms and conditions of a trust indenture (the "Indenture") dated March 20, 2013 between the Company and Olympia Transfer Services Inc. which provides for the issuance of debentures in an aggregate principal amount of up to $10,000,000. To date, debentures in the aggregate principal amount of $9,000,000 have been issued pursuant to the Indenture. The Company may complete additional closings in respect of the principal amount of $1,000,000 of debentures that remain available for issuance under the Indenture.

The Debentures rank senior to other indebtedness of the Company and rank equally with all other secured convertible debentures issued pursuant to the Indenture. The terms of the Debentures are identical to all other secured convertible debentures issued pursuant to the Indenture which are described in a news release of the Company dated March 13, 2013. 

The Company intends to use the net proceeds of the offering for general corporate purposes and working capital. 

The Debentures issued in connection with the offering, as well as the underlying voting common shares, will be subject to resale restrictions under applicable Canadian securities laws for a period of four months from the closing date.

Pursuant to Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"), the issuance of the Debentures to ZG is a "related party transaction" for the Company. The Company is exempt from the formal valuation requirements of MI 61-101 in connection with the transaction in reliance on section 5.5(b) of MI 61-101 as no securities of the Company are listed or quoted for trading on the Toronto Stock Exchange, the New York Stock Exchange, the American Stock Exchange, the NASDAQ stock market or any other stock exchange outside of Canada and the United States. Additionally, the Company is exempt from obtaining minority shareholder approval in connection with the transaction in reliance on section 5.7(1)(b) of MI 61-101 as, in addition to the foregoing: (i) neither the fair market value of the Debentures nor the consideration received in respect thereof exceeds $2,500,000; (ii) the Company has one or more independent directors in respect of the transaction who are not employees of the Company; and (iii) all of the independent directors have approved the transaction.

The securities described herein have not been registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"), and may not be offered or sold in the United States unless registered under the U.S. Securities Act or unless an exemption from registration is available.

About ePals Corporation

ePals Corporation (TSX VENTURE: SLN) is an education media company and the leading Global Learning Network. Focused on the K-12 market, ePals offers elementary and secondary school administrators, teachers, students and parents worldwide a safe and secure platform for building educational communities, providing quality digital content and facilitating collaboration for effective 21st century learning. ePals' award-winning products include: the ePals Global Community®; Learn365; In2Books®, a common core eMentoring program that builds reading, writing and critical thinking skills; and popular children's media brands including Cricket® and Cobblestone®. ePals customers and partners include the International Baccalaureate, Microsoft Corporation, Dell Inc., National Geographic and leading school districts across the United States and globally. ePals serves approximately 1 million classrooms and reaches millions of teachers, students and parents in approximately 200 countries and territories. Corporate information is available at

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 press 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 expected use of proceeds of the private placement and subsequent closings of the private placement. 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.

Contact Information


    Aric Holsinger
    Chief Financial Officer
    ePals Corporation
    Phone: (703) 885-3400

    Cory Pala
    Investor Relations
    Phone: (416) 657-2400