Park Avenue Investment Corporation
TSX VENTURE : PAI.P

March 22, 2007 08:00 ET

Park Avenue Investment Corporation Announces Qualifying Transaction

TORONTO, ONTARIO--(CCNMatthews - March 22, 2007) -

NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA OR OVER UNITED STATES WIRE DISTRIBUTION SERVICES

Park Avenue Investment Corporation ("Park Avenue") (TSX VENTURE:PAI.P) is pleased to announce that it has entered into a non-binding letter of intent dated March 20, 2007 (the "Letter of Intent") to complete an arm's length business combination (the "Business Combination") with Electric-Spin Corporation ("Electric-Spin"), an industry leader in home golf simulators. Pursuant to the Business Combination, Electric-Spin's shareholders will receive 32.57 common shares of Park Avenue, with a deemed value of $0.2088 per share, for each common share of Electric Spin. Following completion of the Business Combination, Park Avenue will own all of the issued and outstanding shares of Electric-Spin. If completed, the Business Combination will constitute Park Avenue's qualifying transaction (the "Qualifying Transaction") pursuant to the policies of the TSX Venture Exchange (the "Exchange").

About Park Avenue Investment Corporation

Park Avenue is a corporation existing under the laws of the Province of Ontario and is a reporting issuer in the Provinces of Ontario, Alberta and British Columbia. Park Avenue is authorized to issue an unlimited number of common shares and currently has 7,184,000 common shares issued and outstanding (the "Park Avenue Shares"). Park Avenue has granted options to acquire an aggregate of 718,400 Park Avenue Shares at an exercise price of $0.25 per share to directors, officers and consultants of Park Avenue (the "Park Avenue Options"). Other than the Park Avenue Options, no other securities of Park Avenue, convertible or exchangeable into shares of Park Avenue, are outstanding.

Further information regarding Park Avenue can be found in the Park Avenue's public disclosure record available at www.sedar.com.

About Electric-Spin Corporation

Electric-Spin is a private corporation existing under the laws of Canada. Electric-Spin is authorized to issue an unlimited number of common shares, and currently has 1,076,000 common shares (the "Electric-Spin Shares") and options to purchase 100,000 common shares outstanding (the "Electric-Spin Options").

Based in Woodbridge, Ontario, Electric-Spin has become a leader in home golf simulation, sold under its brand name, Golf Launchpad, and is dedicated to becoming the worldwide leader in interactive sports simulation products. Its first product, Golf Launchpad for the PC/Mac was introduced at the Electronics Entertainment Expo (E3) in May, 2004. In January, 2006, Electric-Spin's second product, Golf Launchpad for the PS2, introduced at the Consumer Electronics Show in Las Vegas, won the CES Innovations Award in its class. On January 2nd, 2007, at this year's Consumer Electronics Show, Electric-Spin in partnership with NDS (NASDAQ: NNDS) a subsidiary of News Corp., introduced an XTV application of Golf Launchpad that enables users to plug Golf Launchpad into a Set-Top box, and play along with their favorite golfers during televised tournaments. This service is anticipated to be commercially available later this year.

Electric-Spin's founders include executives with over 50 years of combined experience in developing, manufacturing and marketing consumer electronics products.

The Company has experienced rapid growth, with unaudited revenues increasing from $647,000 for the 2005 fiscal year to $1.9 million for the 2006 fiscal year. For the 2006 fiscal year, Electric-Spin had assets of $1.2 million and liabilities of $800,000. Electric-Spin's retail channels include leading consumer electronics retailers such as Best Buy and Circuit City, mass merchants such as Target, Wal Mart and Costco, and golf retailers such as Golf Smith, Edwin Watts, Golf Town (Canada) and Golf Haus (Germany). Electric-Spin designs and develops its products at its headquarters in Woodbridge, Ontario, with a certain portion of development also taking place at a manufacturing facility operated by a wholly-owned subsidiary in Karachi, Pakistan.

The Industry

Electric-Spin's products are targeted towards two large markets: (i) the golf accessories and training market; and (ii) the consumer electronics and video game peripheral market. In the United States, the retail golf market is, according to Golf.com, estimated to be valued at (USD) $26.5 billion, comprising more than 26 million golfers and, according to Golf Research Group, the number of golfers worldwide is estimated to be 57 million playing on 32,000 golf courses. Together, the consumer electronics and gaming markets are estimated to be valued at in excess of (USD) $35 billion, according to the Consumer Electronics Association. Electric-Spin, through its Golf Launchpad product, hopes to tap into fundamental trends in this space, such as demand for realistic gaming driven by high-definition and large-screen televisions, exer-gaming and increased interactivity between real-life sports and gaming.

Information about the Qualifying Transaction

Park Avenue and Electric-Spin entered into the Letter of Intent setting out certain terms and conditions pursuant to which the proposed Qualifying Transaction will be completed. The Qualifying Transaction is subject to the parties successfully negotiating and entering into a definitive share exchange agreement or other similar agreement such that the Qualifying Transaction may be completed on a tax preferred basis to the parties thereto. At this time, the parties do not contemplate undertaking a concurrent financing in connection with the Qualifying Transaction.

Pursuant to the Letter of Intent, Park Avenue and Electric-Spin have agreed to proceed by way of share exchange on the basis that each shareholder of Electric-Spin will receive 32.57 Park Avenue Shares, with a deemed value of $0.2088 per Park Avenue Share, in exchange for one Electric-Spin Share. Following completion of the Qualifying Transaction, Park Avenue will own all of the issued and outstanding shares of Electric-Spin.

As of the date hereof, the two most significant shareholders of Electric-Spin are Anees Munshi, who owns 46.16% of the Electric-Spin Shares, and Alnoor Ebrahim, who owns 17.73% of the Electric-Spin Shares. Mr. Munshi resides in Woodbridge, Ontario. Mr. Ebrahim resides in Toronto, Ontario. The remainder of the Electric-Spin Shares are owned by 23 shareholders, each of whom owns less than 10% of the Electric-Spin Shares.

Subject to Exchange approval, as part of the Qualifying Transaction, the Electric-Spin Options will be cancelled and the holders thereof will be issued options to purchase 3,258,049 common shares of Park Avenue pursuant to a stock option plan (the "Option Plan") for employees, officers, directors and consultants to be adopted by Park Avenue at the meeting of the shareholders of Park Avenue held to approve the Qualifying Transaction (the "Converted Options"). Following completion of the Qualifying Transaction Park Avenue intends to issue additional options to purchase 3,831,466 common shares to existing officers, directors and employees of Electric-Spin. As a result of these options, the Park Avenue Options and the Converted Options, the number of shares of Park Avenue reserved for issuance under options following completion of the Qualifying Transaction will be equal to 15.6% of the total number of issued and outstanding common shares of Park Avenue.

Assuming the completion of the Qualifying Transaction, current Park Avenue and Electric-Spin shareholders will hold approximately 15.79% and 84.21% of the then outstanding shares of Park Avenue (being shares of the resulting issuer), respectively, on a fully-diluted basis.

Immediately following completion of the Qualifying Transaction, Electric-Spin will be amalgamated with Park Avenue and Park Avenue will carry on Electric-Spin's business. Park Avenue anticipates changing its corporate name to "Electric-Spin Corporation", or a similar name, following approval at Park Avenue's next annual and special meeting of shareholders' called for that purpose, and a new stock trading symbol will be applied for at that time.

The completion of the Qualifying Transaction is subject to the approval of the Exchange and all other necessary regulatory approvals. It is also subject to additional conditions precedent, including shareholder approval of Electric-Spin as required under applicable corporate or securities laws, satisfactory completion of due diligence reviews by both parties, approvals of the board of directors of Park Avenue and Electric-Spin, the entering into of employment agreements and non-competition agreements with certain key personnel of Electric-Spin and certain other conditions customary for transactions of this nature. Since the Qualifying Transaction is an arm's length transaction, it is not contemplated that shareholder approval of Park Avenue will be required by the Exchange (except as may be otherwise required by law) provided that Park Avenue files a filing statement with the Exchange. The target closing date for the Qualifying Transaction is on or before May 30, 2007, or such other date as the parties may mutually agree on.

Park Avenue is currently conducting negotiations to find a suitable member of the Exchange to act as its sponsor and to issue a sponsorship report in connection with the Qualifying Transaction. Park Avenue will issue a press release upon an agreement being reached with a suitable sponsor. Trading in the Park Avenue Shares will remain halted until at least the time of such press release or the appointment of a sponsor and pending the completion of certain due diligence investigations by the Exchange and other background searches conducted against the directors and officers of the resulting issuer. There can be no assurance that trading in the Park Avenue Shares will resume prior to the completion of the Qualifying Transaction.

Management and Board of Directors of the Resulting Issuer

Upon completion of the Qualifying Transaction, it is anticipated that management of the resulting issuer will include the persons identified below. Additional proposed directors and officers of the resulting issuer will be identified at a later date. It is anticipated that the board of directors of the resulting issuer will be comprised of five individuals, one of whom will be an existing Park Avenue director, two of whom are noted below and an additional two directors to be named at a later date.

Anees Munshi, President, Chief Executive Officer and Director

Mr. Munshi's unique expertise in the development and commercialization of disruptive innovations has been instrumental in the conception and execution of Electric-Spin's business plan. Mr. Munshi co-founded Electric-Spin with Mr. Alnoor Ebrahim and developed the idea for the Golf Launchpad product. Prior to starting Electric-Spin, Mr. Munshi co-founded his previous start-up, Datawire Communications Networks, in 1999, where he was also instrumental in creating the vision and technology of its business, as well as developing key accounts with the largest players in the transaction processing space and raising multiple rounds of venture capital financing. From 1989 to 1999, Mr. Munshi was the CEO of Butterfly Signal Processing Inc., an engineering solutions company. Mr. Munshi has two honours degrees in Electrical Engineering from the University of Toronto, and has a background in digital signal processing, network engineering, materials science and software development (BASc 1987; MASc 1990).

Alnoor Ebrahim, Chief Financial Officer and Director

Mr. Ebrahim co-founded Electric-Spin with Mr. Munshi and has played a key role in the financial and administrative execution of Electric-Spin's business plan. In 1999, Mr. Ebrahim co-founded Datawire Communication Networks with Mr. Munshi, and was its Chief Financial Officer, where he helped raise multiple rounds of venture capital financing. From 1986 to 1996, Mr. Ebrahim held the position of Vice President at Taxprep Information Systems, Canada's dominant supplier of tax software products. At Taxprep, Mr. Ebrahim managed a technology start-up undergoing dramatic growth. Mr. Ebrahim has a Bachelor of Commerce. in Finance and International Business (McGill University - 1977), a Graduate Diploma in Public Accounting (McGill University - 1983) and is a Chartered Accountant.

Park Avenue also announces that each of its existing directors, other than the director who will remain as a director of the resulting issuer, will resign as directors of Park Avenue effective as of the closing date of the Qualifying Transaction, but will continue to assist the resulting issuer in a consultative capacity as and when requested by the resulting issuer.

As noted above, completion of the Qualifying Transaction is subject to a number of conditions, including, but not limited to, acceptance by the Exchange and if applicable pursuant to Exchange requirements, majority of the minority shareholder approval. Where applicable, the Qualifying Transaction cannot close until the required approvals have been obtained. There can be no assurance that the Qualifying Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the proposed Qualifying Transaction, any information released or received with respect to the proposed Qualifying 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 to be highly speculative.

This press release contains projections and forward-looking information that involve various risks and uncertainties regarding future events. Such forward-looking information can include without limitation statements based on current expectations involving a number of risks and uncertainties and are not guarantees of future performance of Park Avenue. These risks and uncertainties could cause actual results and Park Avenue's plans and objectives to differ materially from those expressed in the forward-looking information. Actual results and future events could differ materially from those anticipated in such information. These and all subsequent written and oral forward-looking information are based on estimates and opinions of management on the dates they are made and expressly qualified in their entirety by this notice. Park Avenue assumes no obligation to update forward-looking information should circumstances or management's estimates or opinions change.

The Exchange has in no way passed upon the merits of the proposed Qualifying Transaction and has neither approved nor disapproved the contents of this press release.

Contact Information

  • Park Avenue Investment Corporation
    Ruby Osten
    Director
    (416) 720-5566