Galleria Opportunities Ltd.
TSX VENTURE : GOI.H
NEX BOARD : GOI.H

February 17, 2017 18:49 ET

Galleria Opportunities to Complete RTO With QYOU Media and Raise $4 Million

CALGARY, ALBERTA--(Marketwired - Feb. 17, 2017) -

NOT FOR DISSEMINATION, DISTRIBUTION, RELEASE, OR PUBLICATION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES.

Galleria Opportunities Ltd. ("Galleria" or the "Corporation") (NEX:GOI.H) announces an update to its proposed transaction involving a business combination with QYOU Media Inc. ("QYOU"). QYOU is a private Ontario media company whose principal business is based in Dublin, Ireland and holds a license to broadcast its linear Pay TV channel. QYOU is the world's first entertainment company focused on the curation and programming of short-form video content for the TV Everywhere age. It delivers linear and on-demand TV channels, playlist-driven mobile apps, custom shows, and influencer marketing support to TV operators, mobile carriers and subscription video service providers worldwide.

Galleria is pleased to announce that further to the letter of intent entered into with QYOU dated November 2, 2015, it has entered into an amalgamation agreement dated effective February 13, 2017 among Galleria, a wholly-owned subsidiary of Galleria and QYOU, pursuant to which the parties intend to complete a reverse takeover of Galleria (the "Transaction") by way of a three-cornered amalgamation (Galleria following completion of the Transaction being referred to herein as the "Resulting Issuer").

Pursuant to the Transaction, each issued and outstanding common share of QYOU (the "QYOU Common Shares") will be exchanged for 0.92 of a common share of Galleria (post-Consolidation (as defined below)) ("Resulting Issuer Shares") with a deemed value of $0.50 per share. As a result, 52,412,836 QYOU Common Shares will be exchanged for 48,219,809 Resulting Issuer Shares. The Resulting Issuer Shares to be issued in exchange for each of the QYOU Common Shares outstanding will be subject to contractual resale restrictions such that only 10% thereof may be sold after 45 days from the date the Resulting Issuer Shares commence trading (the "Listing Date") on the TSX Venture Exchange ("Exchange"), and additional amounts of 30% may be released after 6, 12, and 18 months respectively after the Listing Date, subject to earlier releases (subject to regulatory approval) as the Resulting Issuer and Dominick (as defined below) may determine. The remaining securities of QYOU will be exchanged on a one for one basis such that: (i) 14,082,294 existing common share purchase warrants of QYOU will be exchanged for 14,082,294 post-Consolidation common share purchase warrants of the Resulting Issuer ("Resulting Issuer Warrants") at an average exercise price of $0.75 per share; and (ii) 1,182,190 compensation options of QYOU will be exchanged for 1,182,190 post-Consolidation compensation options of the Resulting Issuer at an average exercise price of $0.50 per share.

In connection with the Transaction, Dominick Inc. ("Dominick"), as lead agent on its own behalf and on behalf of a syndicate of agents to be formed (collectively with Dominick, the "Agents"), has agreed to act for: (a) QYOU on a "best efforts" private placement of approximately 4,000,000 subscription units of QYOU (the "Subscription Units") at a price of $0.50 per Subscription Unit for gross proceeds of approximately $2,000,000 (the "QYOU Offering"); and (b) Galleria on a "best efforts" private placement of approximately 4,000,000 units of Galleria (the "Galleria Units") at a price of $0.50 per Galleria Unit, each Galleria Unit comprised of one common share of Galleria ("Galleria Common Share") and one-half of one share purchase warrant of Galleria, exercisable at $0.75 per share for a period of 24 months from the closing of the Galleria Offering, for gross proceeds of approximately $2,000,000 to be completed through the use of an Exchange Short Form Offering Document (the "Galleria Offering", and together with the QYOU Offering, the "Offerings"), for total aggregate gross proceeds of approximately $4,000,000. Prior to the closing of the Offerings, which are expected to close on or about February 23, 2017, and subject to regulatory approval, Galleria shall effect a consolidation of the Galleria Common Shares (the "Consolidation") pursuant to which one Galleria Common Share (a Resulting Issuer Share) will be issued for every two Galleria Common Shares then issued and outstanding.

The Subscription Units will automatically be exchanged for units of QYOU (the "QYOU Units") upon the satisfaction of certain escrow release conditions, and each QYOU Unit will be comprised of one QYOU Class A Common Share (the "Class A Shares") and one-half of one QYOU Class A Share purchase warrant (each whole warrant, a "QYOU Warrant"). Each whole QYOU Warrant will entitle the holder thereof to subscribe for one additional Class A Share (each, a "QYOU Warrant Share") at an exercise price of $0.75 per QYOU Warrant Share at any time prior to the day that is 24 months from the closing of the Transaction. In connection with the Transaction, the QYOU Class A Shares will then immediately be exchanged for Resulting Issuer Shares on the basis of one QYOU Class A Share for each Resulting Issuer Share, and the QYOU Warrants will be exchanged for Resulting Issuer Warrants on the basis of one QYOU Warrant for each Resulting Issuer Warrant. Each Resulting Issuer Warrant shall entitle the holder thereof to subscribe for one additional Resulting Issuer Share at an exercise price of $0.75 per Resulting Issuer Share at any time prior to the day that is 24 months from the closing of the Transaction.

In connection with the Offerings, the Agents shall be paid a cash commission equal to (i) 7.5% of the gross proceeds from the sale of the Offerings on a brokered private placement basis and (ii) 1.0% of the gross proceeds from the sale of Offerings on a non-brokered private placement basis.

The Agents will also be issued (a) compensation options (the "QYOU Compensation Options") equal to (i) 7.5% of the number of Subscription Units sold under the QYOU Offering to investors completed on a brokered private placement basis and (ii) 1.0% of the number of Subscription Units sold under the QYOU Offering to investors completed on a non-brokered private placement basis; and (b) compensation options (the "Resulting Issuer Compensation Options") equal to (i) 7.5% of the number of Galleria Units sold under the Galleria Offering completed on a brokered private placement basis and (ii) 1.0% of the number of Galleria Units sold under the Galleria Offering completed on a non-brokered private placement basis. Each Resulting Issuer Compensation Option shall entitle the holder thereof to subscribe for one Galleria Unit at a price of $0.50 per Galleria Unit at any time prior to the day that is 24 months from the closing of the Transaction. Each QYOU Compensation Option shall entitle the holder thereof to subscribe for one QYOU Unit at a price of $.50 per Subscription Unit for a period of two years from the closing of the Transaction. In connection with the Transaction, each QYOU Compensation Option will be exchanged for Resulting Issuer Compensation Options on the basis of one QYOU Compensation Option for each Resulting Issuer Compensation Options upon the satisfaction of the escrow release conditions on or before the release deadline.

The proceeds of the Offerings will be used to fund the Resulting Issuer's initial capital program and for general corporate purposes and general working capital. The net proceeds of the Offerings will be held in escrow and released concurrent with the completion of the Transaction.

Chairman G. Scott Paterson said: "The entire QYOU Media team is excited about becoming a public company; the next chapter in our journey towards building a global media company. We are particularly pleased by the number of high quality investors who have embraced our vision."

About QYOU Media Inc.

QYOU was incorporated under the Business Corporations Act (Ontario) on June 15, 2015. The registered office of QYOU is located at 200 Front Street West, Suite 2300, Toronto, Ontario, M5V 3K2. QYOU has two wholly-owned subsidiaries, QYOU Ltd. which is incorporated under the laws of Ireland and QYOU USA Inc. which is incorporated under the laws of Delaware. QYOU curates, licenses and programs the best of internet video for the benefit of video content providers worldwide; from traditional cable and satellite to IPTV, over-the-top content (OTT), mobile carriers and more. QYOU's carriage partners offer the channel on a linear, mobile, broadband and VOD basis.

Founded and created by industry veterans Scott Ehrlich, Curt Marvis, Les Garland and G. Scott Paterson, all of whom have extensive histories in both traditional and digital media, QYOU's operations are headquartered in Dublin, Ireland.

Financial Information for QYOU Media Inc.

Based on unaudited management prepared financial statements for the nine month period ended September 30, 2016, QYOU had operating expenses of $6,322,963, and a net loss of $4,653,608. In addition, as at September 30, 2016, QYOU had current assets of $1,639,058, working capital of $365,322, total assets of $2,330,736 and liabilities of $1,273,736. The QYOU statements were prepared in accordance with IFRS.

Summary of Proposed Directors and Officers

Following completion of the Transaction, the following individuals will be the directors and officers of the Resulting Issuer:

G. Scott Paterson, Chairman of the Board

G. Scott Paterson is a media/technology venture capitalist. Mr. Paterson serves as a Director of Lionsgate Entertainment and Chair of the company's Audit & Risk Committee. He also serves as Chairman of Symbility Solutions Inc., a cloud-based SaaS provider of software to the insurance industry; and Chairman of Engagement Labs Inc., a cloud-based SaaS provider of software for marketers.

Scott H. Ehrlich, Co-Chief Executive Officer and Director

Mr. Ehrlich has been Chief Executive Officer of Agility Studios, LLC since May 2008. Prior thereto, he was Partner of Dig works, LLC from May 2005 to May 2008. As Chief Executive Officer of QYOU, Mr. Ehrlich is responsible for day-to-day business operations including strategy, marketing initiatives, financing and developing key industry partnerships. He brings a three decades long track record of successfully creating new ventures in television, technology and new media.

Curt Marvis, Co-Chief Executive Officer and Director

Curt Marvis is currently Co-Chief Executive Officer and Co-Founder of QYOU.

Mr. Marvis previously served as Lionsgate's President of Digital Media from April 2008 to June 2013, helping the company evolve into a leading next-generation filmed entertainment studio. Mr. Marvis was responsible for guiding the company's portfolio of digital businesses including Lionsgate's broad spectrum of digital delivery agreements for its filmed entertainment content.

Peter Lamberti, Chief Financial Officer

Mr. Lamberti has been acting Chief Financial Officer with QYOU since June 2015 and was formally appointed Chief Financial Officer in December 2016. Prior thereto, Mr. Lamberti was Vice-President, Corporate Finance of AMC Networks from August 2008 to July 2010 and Vice-President, Corporate Finance of Crown Media Holding from December 1999 to September 2006. Mr. Lamberti obtained his Master in Business Administration in 1996.

Timothy Hogarth, Director

Mr. Hogarth is the President and Chief Executive Officer of The Pioneer Group Inc. and previously served as the Chairman and Chief Executive Officer of Pioneer Energy until it was acquired by Parkland Fuel Corporation on June 25, 2015 (upon which Mr. Hogarth joined the Parkland board). Mr. Hogarth was educated at Bishops University (BBA) and the Harvard Graduate School of Business (Program for Management Development).

Ken LaCorte, Director

Mr. LaCorte has been Vice President and Senior Executive Producer of FOX News Network, LLC since November 2006. Prior to this, Mr. LaCorte served as the Director of News Editorial of Fox News since 2003, where he oversaw editorial content for news reporting under Moody's direction. Mr. LaCorte began his career as a communications specialist. He is a graduate of Claremont McKenna College.

Catherine Warren, Director

Ms. Warren has been the President of FanTrust Entertainment Strategies since September 2001. Ms. Warren has extensive team management experience and has recruited, led and retained senior managers and line staff in public, private and non-profit environments. Formerly the Chief Operating Officer of Blue Zone, an international leader in uniting television with new media, she spearheaded significant convergence broadcasting deals and developed media creation/distribution/monetization IP. Ms. Warren obtained a Masters in Journalism from the Columbia University Graduate School of Journalism in 1985.

James Swayze, Director

Mr. Swayze is the CEO of Symbility Solutions in Toronto, Ontario. Mr. Swayze has been Chief Executive Officer of Symbility Solutions since May 31, 2004 and served as President of Symbility Solutions from May 31, 2004 to March 5, 2012.

Other Matters Concerning Transaction

The completion of the Transaction is subject to the approval of the Exchange and all other necessary regulatory approval and certain other usual conditions for transactions of this nature.

The Transaction will be an arm's length transaction as none of the directors, officers or insiders of Galleria own any interest in QYOU.

Galleria has applied to the Exchange for an exemption from the sponsorship requirements in connection with the Transaction. There is no assurance that such exemption will be granted. If such exemption is not granted, Galleria will be required to engage a sponsor for the Transaction.

Trading of the Galleria common shares will not resume until all documents required by the Exchange have been filed. Galleria will issue a further news release when the Exchange has received the necessary documentation and trading of the Galleria common shares is to resume.

Galleria will not be obtaining shareholder approval of the Transaction as: (i) Galleria is without active operations and is listed on the NEX; (ii) Galleria is not and will not be subject to a cease trade order and will not otherwise be suspended from trading on completion of the Transaction; and (iii) shareholder approval of any aspect of the Transaction is not required under applicable corporate laws and is not required under applicable securities laws.

As indicated above, completion of the Transaction is subject to a number of conditions, including but not limited to, acceptance and shareholder approval or an exemption therefrom. The Transaction cannot close until the required shareholder approval or exemption is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the Filing Statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of the Corporation should be considered highly speculative.

Neither the Exchange nor its Regulation Service Provider (as that term is defined in the policies of the Exchange) has in any way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties including, but not limited to, the completion of the Transaction, the completion of the Offerings and the anticipated proceeds thereof, the anticipated closing date of the Offerings, the completion of the Consolidation, the anticipated use of proceeds of the Offerings, the proposed directors and officers of the Resulting Issuer, the receipt of Exchange approval of the Transaction, the receipt of an exemption from the Exchange's sponsorship requirements and the resumption of trading of the Resulting Issuer Shares. Actual results may differ materially. Neither QYOU nor Galleria will update these forward-looking statements to reflect events or circumstances after the date hereof, except as may be required by applicable securities law. More detailed information about potential factors that could affect financial results is included in the documents filed from time to time with the Canadian securities regulatory authorities by Galleria.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Contact Information

  • Galleria Opportunities Ltd.
    Al Kroontje
    (403) 607-4009