Leezamax Capital Corp.
TSX VENTURE : LZX.P

January 28, 2011 12:57 ET

Leezamax Capital Corp. Announces Proposed Qualifying Transaction

SURREY, BRITISH COLUMBIA--(Marketwire - Jan. 28, 2011) - LEEZAMAX CAPITAL CORP. (TSX VENTURE:LZX.P) of Surrey B.C. ("Leezamax" or the "Corporation") is pleased to announce that that it has entered into a letter of intent dated December 23, 2010 (the "Agreement") pursuant to which it intends to acquire all of the issued and outstanding common shares of Coconut Grove Textiles Inc ("CGTI"), a Toronto-based company which designs, manufactures and distributes ladies intimate apparel and accessories, and, also holds exclusive North American distribution rights for a new generation of intelligent textiles which have the ability to kill bacteria, repel insects and heal skin among other things (the "CGTI Acquisition"). In terms of the letter of intent, the issued and outstanding common shares of CGTI will be exchanged for the issuance of common shares and preferred shares of the Corporation.

Leezamax was originally listed on the TSX Venture Exchange (the "Exchange") on October 26, 2007, as a capital pool company but was delisted from the Exchange on June 30, 2010, for failure to complete a Qualifying Transaction within the time frames required by Exchange policies. It is expected that the CGTI Acquisition will constitute a "Qualifying Transaction" for the Corporation as such term is defined in the Exchange policies and Leezamax will be making application to re-list its common shares in conjunction with the approval of the proposed Qualifying Transaction.

Pursuant to the terms of the Agreement, it is intended that CGTI will, in conjunction with the completion of the CGTI Acquisition: (i) complete a private placement financing for gross proceeds of a minimum of $1,500,000, and a maximum of $2,000,000 (the "Private Placement"), and (ii) subject to the approval of the shareholders of Leezamax, it is the intention of the Corporation to change its name to "iFABRIC CORP" or such other similar name as is acceptable to regulatory authorities and approved by the board of directors.

A special meeting of the shareholders of Leezamax (the "Meeting") will be held to consider and approve certain aspects related to the Qualifying Transaction in accordance with the policies of the Exchange and the Business Corporations Act (Alberta), including the appointment of the new board of directors of the Resulting Issuer (as defined in Exchange Policy 2.4) and the proposed change of name.

All information contained in this news release with respect to CGTI was furnished by CGTI, and with respect to such information, Leezamax and its board of directors and officers have relied on the accuracy thereof.

Highlights of the Transaction

The Parties

The Corporation was incorporated on April 9, 2007, under the provisions of the Business Corporations Act (Alberta) and is based in Surrey, British Columbia.

Leezamax was listed on the Exchange as a capital pool company on October 26, 2007, and was subsequently delisted from the Exchange for failure to complete a Qualifying Transaction within the time frames required by Exchange policies. Leezamax's only business is the identification and evaluation of assets or businesses with a view to completing a Qualifying Transaction.

CGTI is a corporation incorporated under the Business Corporations Act (Ontario), with its head office situated in Markham, Ontario. CGTI is a private company which manufactures and distributes ladies intimate apparel and accessories and, also holds exclusive North American distribution rights for a new generation of environmentally friendly, intelligent textiles which have the ability to kill bacteria, repel insects and heal skin among other things. Patents have been granted on a number of these products.

CGTI has spent over $500,000 in developing and testing products that utilize its intelligent textile technologies and the company is currently in process of obtaining regulatory approval of its technologies from both the United States Environmental Protection Agency and Health Canada in order to facilitate the marketing of these products throughout North America.

CGTI's core intimate apparel division currently supplies products to a number of the largest apparel retailers in North America and Europe. The company signed a licensing agreement with Maidenform Brands Inc. in October 2010 which, provides for exclusive worldwide distribution of Maidenform branded products, for the company's market segment and is anticipated to result in substantial sales volume increases for the apparel division in the short to medium term.

The following is a summary of CGTI financial information (unaudited) prepared by CGTI'S management for the year ended September 30, 2010:

  • total assets $6,871,000
  • total liabilities $4,248,000
  • Gross revenue $5,520,000
  • net income, pre management salary and pre tax $ 1,700,000

Upon completion of the CGTI Acquisition, CGTI will be a wholly owned subsidiary of the Resulting Issuer. It is anticipated that Resulting Issuer will be a Tier 1 Industrial Issuer under Exchange policies.

The CGTI Acquisition

The CGTI Acquisition is subject to a number of conditions including completion of satisfactory due diligence, a definitive share acquisition agreement and receipt of applicable regulatory and shareholder approvals.

The consideration to be paid by Leezamax, for all of the CGTI common shares issued and outstanding at the time of closing, shall be satisfied by the issuance of:

  1. approximately 20,000,000 common shares of Leezamax to the existing shareholders of CGTI, at a deemed price of $0.50 per common share;

  2. 30,000,000 voting, convertible preferred shares to the existing shareholders of CGTI at a deemed price of $0.50 per share which shares shall carry a 3% annual cumulative dividend; and

  3. a minimum of 3,750,000 and a maximum of 5,000,000 common shares to investors in the Private Placement, at a deemed price of $0.40 per share.

The final number of common and preferred shares of the Corporation to be issued shall be subject to final adjustment as agreed upon by the parties, and subject to completion of the Private Placement, as contemplated below, in CGTI.

The principal shareholders of CGTI are Hylton Karon and Susan Karon, resident in Thornhill, Ontario. After giving effect to minimum Private Placement, the principal shareholders will hold approximately 90% of the Resulting Issuer.

CGTI Private Placement

Concurrently with, and as a condition of the CGTI Acquisition, CGTI will complete a private placement financing for gross proceeds of a minimum of $1,500,000 and a maximum of $2,000,000 (the "Private Placement"). The net proceeds of the Private Placement will be used for general working capital. Pursuant to the Private Placement, CGTI will issue up to 5,000,000 common shares of CGTI at a deemed price of $0.40 per share.

Share Capital of the Corporation

The Corporation currently has 1,650,000 common shares issued and outstanding prior to Completion of the Qualifying Transaction. All Leezamax common shares that are issued and outstanding will be consolidated on the basis of one new share for every two existing common shares and any and all options currently issued will be cancelled as part of the CGTI Acquisition. Assuming the completion of the CGTI Acquisition and the Private Placement, the Resulting Issuer will have a minimum of approximately 55,195,000 post-consolidated common shares and a maximum of approximately 56,445,000 post-consolidated common shares issued and outstanding, of which the former shareholders of CGTI will own approximately 90%, based on the minimum Private Placement or approximately 88%, based on the maximum Private Placement.

Conditions Precedent to Completion of the Transaction

Completion of the Transaction is subject to a number of conditions, including but not limited to:

  1. completion of the Private Placement by CGTI for a minimum of $1,500,000 and maximum of $2,000,000 gross proceeds, which Private Placement shall satisfy TSX Venture Exchange requirements for public distribution and working capital;

  2. approval of all regulatory bodies, including, but not limited to, the TSX Venture Exchange, the Alberta Securities Commission and the British Columbia Securities Commission, having jurisdiction in connection with the subject transactions;

  3. approval of the final terms and conditions of the CGTI Acquisition by the board of directors of Leezamax and the board of directors of CGTI;

  4. approval of the shareholders of CGTI for the CGTI Acquisition;

  5. as required, the entering into of formal agreements reflecting the proposed CGTI Acquisition, which are agreeable to all parties; and

  6. the CGTI Acquisition being accepted by the Exchange as Leezamax's Qualifying Transaction with a Final Exchange Bulletin being released by no later than June 30 2011, or such other date the parties may agree upon.

Arm's Length Transaction

Under the policies of the Exchange, the CGTI Acquisition was negotiated as and is being completed as an arm's length transaction.

Proposed Management

Upon completion of the CGTI Acquisition, it is anticipated that Leezamax's board of directors will change with the election of CGTI's nominees, including Hylton Karon, Hilton Price, Cortney Shiner and three outside directors, as described below.

The backgrounds of each of the proposed members of the board of directors and senior management of the Resulting Issuer are as follows:

Hylton Karon, President, CEO and Director

Mr. Karon is a graduate of Philadelphia University with BSc degree in textile marketing and management. A member of the Group's founding family, he has over 30 years of experience in product development and marketing. Mr. Hylton's creative ability has resulted in the development of many successful and patented products which are sold both in North America and internationally. His leadership and motivational skills have been the main driving force for the Group's success to date.

Hilton Price, Acting CFO and Director

Mr. Price is a Chartered Accountant with over 35 years of experience covering a variety of industries and businesses. He has been involved in most elements of the Group's strategic planning and has been responsible for financial oversight since the Group's inception.

Cortney Scheiner, Vice President/Sales & Operations -Intimate Apparel Division and Director

Ms. Scheiner has a degree in Human Resources from the University of Toronto. Her work and consulting experience with some of the USA's largest corporations has provided her with the tools to negotiate sales agreements with the Group's major customers and to oversee ongoing relationships with these customers. Ms. Scheiner was instrumental in negotiating a recent licensing and distribution agreement with Maidenform Brand which is expected to result in a substantial increase in sales for the intimate apparel division.

Three outside directors will join the board of directors of the Resulting Issuer upon closing of the Qualifying Transaction. These new directors will be:

Jason Garay, Director

Mr. Garay is a communicable diseases epidemiologist and the current head of Public Health Surveillance for the Region of York, a growing community of over one million residents. He is a graduate of the University of Toronto's Faculty of Medicine in the field of Community Health and Epidemiology. Jason has served on the Board of Directors for the Lakeridge Health Corporation Research Institute, the Canadian Society for Epidemiology and Biostatistics, the Ontario Council for Community Health Accreditation and is the past-President and current Vice-President of the Association of Public Health Epidemiologists in Ontario.

Dr. Jeff Coyne, Chairman of the Board of Directors

Dr. Coyne is CEO of Provect Technologies, Inc, a U.S. based, enterprise level, time and attendance software company. He is a principal of CPR Turnaround LLC, a company that manages and advises companies in financial difficulty and he is a senior lecturing fellow at Duke University School of Law. Dr. Coyne has previously served as a director of Ezenet, (previously EZE on TSE) and ValueNet, (previously VNE on ASE). His academic qualifications include BA, Economics, U.C. Berkeley; JD, Duke University School of Law. He is also a California licensed attorney.

Mark Greenspan, Director

Mark Greenspan was CFO of The Medipattern Corporation, a TSX-V listed company, from September 2002 until February 2010. Prior to that, he spent 18 years at Scotiabank in various capacities which included COO of Scotiabank's e-commerce subsidiary, CAO of Scotia Capital and Head of Integrated Support Services. Prior to joining Scotiabank, he spent 8 years at KPMG where he specialized in business valuations, mergers and acquisitions. Mr. Greenspan is a CA and a CBV.

It is anticipated that Mr. Jason Garay, Dr. Jeff Coyne and Mr. Mark Greenspan will form the audit committee of the Resulting Issuer.

Sponsorship and Resumption of Trading

Leezamax is currently in discussions with Haywood Securities regarding sponsorship for the proposed Qualifying Transaction in accordance with Exchange requirements. Leezamax will be making an application to re-list its common shares in conjunction with the final approval of the proposed Qualifying Transaction with CGTI.

Leezamax presently has 1,650,000 common shares issued and outstanding of which 1,500,000 shares were issued pursuant to a public offering.

On June 30, 2010, trading in the Corporation's common shares was suspended for failure to complete a Qualifying Transaction within the time prescribed by TSX-V policies. The Corporation was required to complete a Qualifying Transaction, delist or transfer its listing to the NEX exchange prior to June 30, 2010.

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange requirements, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval 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 information circular, 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 a capital pool company should be considered highly speculative.

Forward-Looking Statements

Certain statements contained in this news release constitute forward looking statements. The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe", "subject to" and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements are based on reasonable assumption but no assurance can be given that these expectations will prove to be correct and the forward-looking statements included in this news release should not be unduly relied upon.

Contact Information

  • Leezamax Capital Corp.
    Terry Rogers
    President and CEO
    (604) 531-8113