Park Avenue Investment Corporation
TSX VENTURE : PAI.P

August 30, 2007 17:29 ET

Park Avenue Investment Corporation Announces Update to Qualifying Transaction

TORONTO, ONTARIO--(Marketwire - Aug. 30, 2007) -

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

Park Avenue Investment Corporation (TSX VENTURE:PAI.P) ("Park Avenue") today provided an update of its proposed qualifying transaction (the "Business Combination") with Electric-Spin Corporation ("Electric-Spin"), previously announced on March 22, 2007 as well as the results of the Annual and Special Meeting of Shareholders. Since the announcement of the non-binding Letter of Intent dated March 20, 2007, Park Avenue has entered into a share exchange agreement dated August 30, 2007 with Electric-Spin and each of the shareholders of Electric-Spin (the "Share Exchange Agreement"). Following completion of the Business Combination, Park Avenue will own all of the issued and outstanding shares of Electric-Spin (the "Electric-Spin Shares"). If completed, the Business Combination will constitute Park Avenue's Qualifying Transaction pursuant to the policies of the TSX Venture Exchange (the "Exchange").

Information about the Qualifying Transaction

Park Avenue and Electric-Spin have agreed to proceed by way of share exchange by which 38,314,654 common shares of Park Avenue will be issued to Electric-Spin shareholders at a deemed price of approximately $0.2088 per common share in exchange for all of the issued and outstanding shares in the capital of Electric-Spin.

It is contemplated that the share exchange shall be subject to a performance escrow agreement (the "Performance Escrow Agreement") to be entered into by and among Park Avenue, each of the shareholders of Electric-Spin and an escrow trustee, pursuant to which up to 14,367,988 of the Park Avenue common shares to be issued to Electric-Spin shareholders will be forfeited and cancelled in the event of the failure of Electric-Spin to achieve a minimum consolidated revenue target threshold in the 12 calendar month period immediately following the completion of the Business Combination (the "Performance Escrow Term"). In the event that Electric-Spin's consolidated revenue during the Performance Escrow Term is equal to or greater than a maximum consolidated revenue target threshold, all of the Performance Escrow Shares shall be released from escrow and delivered to the Electric-Spin shareholders on a pro rata basis The number of Performance Escrow Shares which shall be released from escrow in respect of Electric-Spin's consolidated revenues falling within these minimum and maximum target thresholds during the Performance Escrow Term shall be released on a pro rata basis and shall be determined in accordance with the terms of the Performance Escrow Agreement (subject in both cases to any additional terms of escrow imposed by the Exchange in connection with the Qualifying Transaction).

Following completion of the Qualifying Transaction, Park Avenue will own all of the Electric-Spin Shares. As of the date hereof, the two significant shareholders of Electric-Spin are the Munshi Family Trust, which owns 44% of the Electric-Spin Shares and of whom Anees Munshi is a trustee, and the Ebrahim Family Trust, which owns 16.89% of the Electric-Spin Shares and of whom Alnoor Ebrahim is a trustee. Mr. Munshi resides in Woodbridge, Ontario. Mr. Ebrahim resides in Toronto, Ontario. The remainder of the Electric-Spin Shares are owned by 28 shareholders, each of whom owns less than 10% of the Electric-Spin Shares.

In connection with the completion of the Business Combination, Park Avenue will grant options (collectively, the "Post-Closing Options") to various employees of Electric-Spin to purchase 1,577,362 common shares in the capital of Park Avenue, which options will, in each case, subject to the terms of the Share Exchange Agreement and the approval of the Exchange, be granted at a price per share of $0.21. In accordance with the terms of the Qualifying Transaction, it is contemplated that up to 596,599 of the Post-Closing Options (the "Performance Options") will only vest and be exercisable by the holders thereof in accordance with the terms of the option agreements to be entered into by Park Avenue and these individuals which will be subject to the same minimum and maximum target thresholds as identified in the Performance Escrow Agreement. In the event that Electric-Spin does not meet the minimum target threshold, all of the Performance Options will be immediately forfeited and cancelled and will not be exercisable by the holders thereof. Any Performance Options that are not cancelled and forfeited will vest and be exercisable in accordance with the terms of Park Avenue's Amended and Restated Stock Option Plan.

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 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.

Canaccord Capital Corporation ("Canaccord") has agreed to act as sponsor and to issue a sponsorship report in connection with the Qualifying Transaction subject to the completion of certain due diligence investigations and review procedures by Canaccord. An agreement to sponsor should not be construed as any assurance with respect to the merits of the Business Combination or the likelihood of its completion.

Annual and Special Meeting of Shareholders

At the Annual and Special Meeting of shareholders held on July 18, 2007, Park Avenue's shareholders approved the following corporate matters in connection with the completion of the Qualifying Transaction: (i) a special resolution increasing the number of directors of Park Avenue to five directors and authorizing the board of directors to thereafter fix the number of directors; (ii) a special resolution approving the change of name of Park Avenue to "Electric-Spin Corporation" or such other similar name as the board of directors and applicable regulators shall approve, which name change will only be effective upon completion of the Qualifying Transaction; and (iii) a resolution approving and adopting an amended and restated stock option plan of Park Avenue to provide for a fixed number of common shares to be made available under the stock option plan, rather than a "rolling" number (the "Amended and Restated Stock Option Plan"), which will only be effective upon completion of the Qualifying Transaction. The maximum number of Common Shares to be made available under the Amended and Restated Stock Option Plan will be 7,807,915 Common Shares, which will be equal to approximately 17.16% of the total number of common shares outstanding immediately upon completion of the Qualifying Transaction (or 25.08% if all of the Performance Escrow Shares are forfeited and cancelled).

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 (the "Park Avenue Shares") and there are currently 7,184,000 Park Avenue Shares issued and outstanding. 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.

Trading in the Park Avenue Shares has been suspended for failure to complete a Qualifying Transaction within 24 months of listing on the Exchange. The Exchange has advised that Park Avenue must complete its Qualifying Transaction (or satisfactorily file all documentation to transfer to the NEX in the event that it fails to do so) on or prior to October 9, 2007 in order to avoid the delisting of Park Avenue's securities.

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 (the "Electric-Spin Shares"), and there are currently 1,129,500 Electric-Spin Shares and options to purchase 100,000 common shares outstanding.

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 Ltd., 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 in 2008.

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.

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. It is anticipated that the board of directors of the resulting issuer will be comprised of the following individuals: (i) Christopher Skillen and Barry Reiter (both of whom are existing Park Avenue directors); (ii) Anees Munshi, Alnoor Ebrahim and Anwar Matin (the existing Electric-Spin directors); and (iii) an additional director to be identified and 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.

Anwar Matin, Director: Mr. Matin has been retired since 2000. Prior to that, he was a consultant, partner and senior manager with KPMG for 29 years. During his time at KPMG, Mr. Matin held a number of senior positions, including serving as the Head of Corporate Finance at KPMG for the UAE and Lower Gulf region, and as the Managing Partner of KPMG's Oman office.

Christopher (Chris) Skillen, Director: Mr. Skillen heads a consulting company providing investment and executive advisory services to small to medium-sized technology companies. Mr. Skillen founded the Crowntek Business Centers, a significant Canadian computer distributor in the early 1980's. Mr. Skillen was CEO of Telepanel Systems Inc., a TSX and NASDAQ listed company until August 2000. Mr. Skillen is CEO of Cymat Technologies, a TSX listed company. Mr. Skillen is also a director and advisor in a number of private companies, including Hotspex.Com, SelectCore and ES3.

Barry Reiter, Director: Mr. Reiter is a senior partner of Bennett Jones LLP, a law firm based in Calgary, Toronto and Edmonton. Mr. Reiter obtained his BA from York University (1969), his LLB from Osgoode Hall Law School (1972, Gold Medalist) and his BCL from Oxford University (1974) before being called to the Ontario bar in 1976. Mr. Reiter practices in the areas of corporate finance, development and governance. He is a director of Avotus Corporation, SkyPower Corporation, and SkyPower Wind Energy Fund LP, Pharos Life Corporation and MOSAID Technologies Incorporated. He is on Advisory Boards to Hunter Muntz & Beatty and The Centre for Innovation Law and Policy.

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
    Barry Reiter
    Director
    (416) 777-6500