Rebecca Capital Inc.
TSX VENTURE : REB.P

March 07, 2008 18:23 ET

Rebecca Capital Inc. Announces Status of Qualifying Transaction With Arius3D Inc.

TORONTO, ONTARIO--(Marketwire - March 7, 2008) -

NOT FOR RELEASE IN THE UNITED STATES

REBECCA CAPITAL INC. (TSX VENTURE:REB.P) (the "Corporation") announced today, further to its announcement dated October 5, 2008, additional details of its agreement in principle to acquire Arius3D Inc. ("Arius"). The acquisition of Arius will be the Corporation's arm's length qualifying transaction (the "Qualifying Transaction") pursuant to the policies of the TSX Venture Exchange Inc. (the "Exchange").

ABOUT ARIUS3D INC.

Arius is a corporation incorporated on May 22, 2000 under the laws of the State of Delaware. Arius is a holding company that carries on business primarily through three subsidiaries. One subsidiary is a corporation incorporated under the laws of the Province of Ontario with the name Arius3D Canada Inc. ("Arius Canada"), the second is a corporation incorporated under the laws of Canada with the name Pointstream Inc. and the third is a corporation incorporated under the laws of Ontario with the name Hall Train Studios Limited ("Hall Train"). Arius, through its subsidiaries, is engaged in the business of developing and commercializing proprietary technologies capable of measuring the colour and geometry of real world objects on a time and point-by-point basis with registration and accuracy to microscopic levels and, through Hall Train, using the resulting data for multimedia applications.

The acquisition of Arius by the Corporation pursuant to the terms of an acquisition agreement (the "Acquisition Agreement") to be entered into among Arius, the Corporation, Rebecca Sub, Arius Canada and Arius Holdings Inc., a newly formed Ontario corporation ("Arius Holdings"), will provide Arius with a vehicle to become a public issuer on the Exchange.

ABOUT REBECCA CAPITAL INC.

The Corporation is classified as a capital pool company pursuant to the rules of the Exchange. The principal business of the Corporation is identifying and evaluating assets or businesses with a view to completing a transaction to acquire a business which, when completed, would result in the resulting issuer (the "Resulting Issuer") meeting the minimum listing requirements of the Exchange.

The Corporation completed its initial public offering of 5,000,000 common shares on September 13, 2007 at a price of $0.20 per share for gross proceeds to the Corporation of $1,000,000. The Corporation's common shares were listed on the Exchange with the symbol REB.P on September 18, 2007. The proceeds of the offering have provided the Corporation with a minimum of funds with which to identify and evaluate companies, businesses or assets with a view to completing a Qualifying Transaction. Except as specifically contemplated in the CPC Policy, until the completion of the Qualifying Transaction, the Corporation has not and will not carry on business, other than the identification and evaluation of companies, business or assets with a view to completing a proposed Qualifying Transaction.

QUALIFYING TRANSACTION

Transaction Summary

The Corporation, Rebecca Sub, Arius, Arius Canada and Arius Holdings will enter into the Acquisition Agreement providing for the Qualifying Transaction, including, the following:

Arius Capital Reorganization

(a) Arius will convert outstanding indebtedness in the principal amount of $392,171 into 1,120,488 Arius shares.

(b) Convertible debentures issued by Arius in the principal amount of $512,326 will be converted into 1,913,450 Arius shares and 956,725 Arius warrants.

(c) Arius Holdings has or will enter into share exchange agreements with the beneficial owners of the Arius shares and shares in the capital of Arius Canada providing for the acquisition of all or substantially all of such shares, such that Arius Holdings becomes the direct parent of Arius. Each former Arius shareholder will receive 0.85 Arius Holdings shares for each Arius share.

(d) Arius Holdings will assume the obligations of Arius pursuant to all of the outstanding options and warrants issued by Arius.

Private Placement

(e) Arius Holdings or the Corporation will complete a private placement prior to and as a condition of completion of the Qualifying Transaction with a minimum aggregate subscription of $2,500,000 (the "Minimum Private Placement") and a maximum aggregate subscription of $6,000,000 (the "Maximum Private Placement"). The Private Placement will consist of Units offered by Arius Holdings and/or the Corporation and/or convertible debentures offered by Arius. Each Unit will be comprised of one common share and 1/2 of one Private Placement Warrant at a price of $0.35 per Unit. Each whole Private Placement Warrant will entitle to holder to acquire one common share at a price of $0.55 for a period of 24 months.

The Corporation, Arius and Canaccord Capital Corporation (the "Agent") entered into an engagement letter dated January 10, 2008 whereby the Agent was appointed on a commercially reasonable efforts basis to conduct the Private Placement. The Agent is entitled to reimbursement of its expenses, a $10,000 corporate finance fee, a commission equal to 8% of the gross proceeds raised and warrants granted by Arius Holdings to acquire one Arius Holdings share at a subscription price of $0.55 for a period of two years following the completion of the Private Placement equal to 10% of the Units offered by Arius Holdings and issued pursuant to the Private Placement.

If the gross proceeds raised under the Private Placement exceed $3,000,000 then the Agent shall be entitled to 750,000 Arius Holdings shares. If the gross proceeds exceed $5,000,000 then the Agent shall be entitled to a further 250,000 Arius Holdings shares. If the gross proceeds are less than $3,000,000 then the Agent is entitled to a pro rata portion of the initial 750,000 Arius Holdings shares. In any event the Agent shall be entitled to no less than 500,000 Arius Holdings shares. All Arius Holdings shares and Units offered by Arius Holdings issued to the Agent shall be exchanged for an equal number of common shares and warrants pursuant to the Amalgamation.

As a further matter, the Corporation and Arius granted the Agent a right of first refusal to all future financings for a period of 12 months.

The proceeds of the Private Placement are required in order for the Resulting Issuer to have sufficient working capital to satisfy the minimum listing requirements of the Exchange.

Amalgamation

(f) Pursuant to an amalgamation between Rebecca Sub and Arius Holdings, Arius Holdings will become wholly owned by the Corporation. As a result of the amalgamation, the shareholders of Arius Holdings (who were the former shareholders of Arius) will receive one common share in the capital of the Corporation in exchange for each Arius Holdings share. Each such share will have a deemed value of $0.35 per share.

(g) The Corporation will grant options and warrants to the holders of the options and warrants granted by Arius Holdings on substantially the same terms.

Arm's Length Transaction

Since the transaction is arm's length, the Corporation is not required to obtain shareholder approval. The Corporation proposes to issue a filing statement pursuant to Exchange policies containing full disclosure regarding Arius and the Qualifying Transaction. This filing statement, when issued, will be accessible on SEDAR by viewing the Corporation's public documents (www.sedar.com).

Amendments

In conjunction with the Qualifying Transaction, the Corporation proposes to change its name to Arius3D Corp., appoint new auditors and amend and restate the existing stock option plan of the Corporation and reserve for issuance 25,000,000 common shares in the capital of the Corporation upon the completion of the Qualifying Transaction. At the special meeting of shareholders of the Corporation held on February 11, 2008, the Corporation increased the size of its board of directors from three to six and David Breukelman, Brian Mori and Joseph Waechter were elected directors.

Rebecca Capital Securityholders

At present, there are 9,000,000 common shares issued and outstanding in the capital of the Corporation. In addition, there are incentive options to acquire 900,000 common shares granted to the officers and directors of the Corporation and options to acquire 483,500 common shares granted to the agent as part of the Corporation's initial public offering. 4,000,000 of these common shares are subject to Exchange escrow provisions.

David Beutel, Paul Little, John Wood and Joseph Waechter are each registered owners of 1,000,000 common shares in the capital of the Corporation, each representing 11.11% of the issued and outstanding shares in the capital of the Corporation.

Arius Securityholders

The authorized capital of Arius consists of 255,000,000 shares of common stock, of which 14,601,097 shares are issued and outstanding, and 205,000,000 shares of preferred stock, comprised of 20,000,000 Series A Convertible shares, of which 13,824,405 shares are issued and outstanding; 50,000,000 Series B Convertible shares, of which 35,500,000 shares are issued and outstanding; 60,000,000 Series C Convertible Shares, of which 31,532,169 shares are issued and outstanding; 25,000,000 shares of Series D Preferred shares, none of which are issued and outstanding; and 50,000,000 Special Voting shares of which 40,000,000 shares are issued and outstanding.

In addition, there are options to acquire 16,036,782 shares of Arius common stock outstanding with an exercise price of $0.25 and which expire on September 30, 2009. There are also warrants to acquire 21,749,802 shares of Arius Common Stock with an exercise price of up to $0.25 and which expire on or before December 31, 2009.

The two largest shareholders of Arius are Frontier One LLC, a company organized under the laws of the State of Hawaii, and Business Arts Inc., a company incorporated under the laws of Ontario. Frontier One LLC owns 59,751,096 Arius shares, which will represent 44.44% of the shares in the capital of the Resulting Issuer assuming completion of the Minimum Private Placement and 41.25% of the shares in the capital of the Resulting Issuer assuming completion of the Maximum Private Placement. Frontier One LLC is controlled by Toshio Masuda. Business Arts Inc. owns 22,896,745 Arius shares, which will represent 17.03% of the shares in the capital of the Resulting Issuer assuming completion of the Minimum Private Placement and 15.81% of the shares in the capital of the Resulting Issuer assuming completion of the Maximum Private Placement. Business Arts Inc. is controlled by the Breukelman family.

Resulting Issuer Securityholders

Immediately following completion of the Qualifying Transaction, the Resulting Issuer is anticipated to have 134,485,726 common shares issued and outstanding assuming completion of the Minimum Private Placement and 144,860,726 common shares issued and outstanding assuming completion of the Maximum Private Placement. In addition, there will be options to acquire 15,014,765 common shares and warrants to acquire 23,130,187 common shares in the event of the Minimum Private Placement and 29,630,187 common shares in the event of the Maximum Private Placement.

Assuming completion of the Minimum Private Placement, the 134,485,726 issued and outstanding shares in the capital of the Resulting Issuer and the transaction value will be issued to or held as follows: (i) 9,000,000 common shares ($3,150,000) by the former shareholders of the Corporation; (ii) 115,139,021 common shares ($40,298,658) by the former Arius shareholders; (iii) 2,578,848 common shares ($902,597) by the holders of debt and convertible debentures of Arius; and (iv) 7,767,857 common shares ($2,718,750) pursuant to the Minimum Private Placement.

Assuming completion of the Maximum Private Placement, the 144,860,726 issued and outstanding shares in the capital of the Resulting Issuer and the transaction value will be issued to or held as follows: (i) 9,000,000 common shares ($3,150,000) by the former shareholders of the Corporation; (ii) 115,139,021 common shares ($40,298,658) by the former Arius shareholders; (iii) 2,578,848 common shares ($902,597) by the holders of debt and convertible debentures of Arius; and (iv) 18,142,857 common shares ($6,350,000) pursuant to the Maximum Private Placement.

The promoters, directors, officers and insiders of the Resulting Issuer and their associates and affiliates, as a group, will beneficially own or control, directly or indirectly, approximately 98,422,856 common shares, which will represent 73.18% of the issued and outstanding common shares of the Resulting Issuer assuming completion of the Minimum Private Placement and 67.94% of the issued and outstanding common shares of the Resulting Issuer assuming completion of the Maximum Private Placement.

SELECTED FINANCIAL INFORMATION

The following tables present selected financial statement information concerning the financial condition and results of operations for Arius. This information is derived from the unaudited interim financial statements of Arius for the period ended September 30, 2007 and the audited financial statements of Arius for the period ended March 31, 2007. The information provided herein should be read in conjunction with such financial statements, which have been prepared in accordance with Canadian GAAP, and which will be filed on SEDAR when the Corporation files its filing statement with respect to the Qualifying Transaction.



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September 30, 2007 March 31, 2007
unaudited interim audited year end
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Revenue $763,603 $36,521
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Cost of Sales $(75,000) $(91,667)
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Expenses $(1,384,262) $(3,360,190)
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Net Income ($696,220) ($3,839,414)
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Assets $1,426,375 $1,009,657
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Liabilities $(1,754,895) $(1,312,127)
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Shareholder Equity $(999,581) $(302,470)
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SPONSORSHIP

The Corporation has applied for exemption from the requirement to retain a sponsor in connection with the Qualifying Transaction.

ARMS'S LENGTH TRANSACTION

The Qualifying Transaction is an arm's length transaction. There are potential conflicts of interest to which some of the Corporation's promoters, officers, directors, insiders and their associates and affiliates (the "Related Parties") will be subject to in connection with the Qualifying Transaction. In particular, certain of the Related Parties of the Corporation are also Related Parties of Arius. Accordingly, situations may arise where the interests of some or all of the Related Parties of the Corporation will be in conflict with the interests of the Corporation. These conflicts will be subject to the procedures provided under applicable law.

Related Parties of the Corporation own 4,000,000 common shares in the capital of the Corporation and 2,436,493 shares in the capital of Arius. Upon completion of the Qualifying Transaction, these persons will own 4.79% of the issued and outstanding common shares in the capital of the Resulting Issuer in the event of the Minimum Private Placement and 4.44% of the issued and outstanding common shares in the capital of the Resulting Issuer in the event of the Maximum Private Placement. In addition, David Beutel and John Wood are directors of both the Corporation and Arius.

DIRECTORS AND SENIOR MANAGEMENT

As part of the Qualifying Transaction, Arius' current directors and officers will assume management responsibilities for the Corporation. The board of directors of the Resulting Issuer will be comprised of David Beutel, David Breukelman, Paul Little, Brian Mori, Joseph Waechter and John Wood. Brian Mori will be appointed President and Chief Executive Officer of the Resulting Issuer and James McGlone will be appointed Chief Financial Officer of the Resulting Issuer.

David Beutel, MBA, B.A.

Mr. Beutel will be a director of the Resulting Issuer. Since 2007 he has been a director, president, chief executive officer, chief financial officer and secretary of Rebecca Capital. For the past 15 years, Mr. Beutel has been working to build early stage and high growth businesses as a founder, adviser and investor in Canada and the United States. He is currently President of Belweather Capital Partners Inc., a merchant banking and private investment company in Toronto, which provides value to both public and private companies, primarily in the areas of strategic development and financing. From 1996 to 1999, Mr. Beutel headed up new business and content development at Pelmorex Inc., owner and operator of The Weather Network/MeteoMedia. From 1999 until 2001, he was Vice President of Grey Worldwide where he assisted multinational companies develop interactive businesses to better serve and market their shareholders. Since 2004, he has been a director of The Futura Loyalty Group Inc., a company listed on the Exchange and since 2006, he has been a director of Rutter Inc., a company listed on the Toronto Stock Exchange Inc. Mr. Beutel received an M.B.A. from York University and a B.A. from the University of Pennsylvania. Mr. Beutel is a resident of Toronto, Ontario.

David Breukelman, M.B.A, B.A.

Mr. Breukelman will be a director of the Resulting Issuer. He is a co-founder of Arius. He also serves as the President of Business Arts Inc. His experience includes serving as the President and co-founder of an entertainment company in the music and cinema industry, head of global theatre development for IMAX Corporation and Vice-President/Head of Risk Management for Bank of America (Canada) Ltd. In addition, with Business Arts Inc. he grew and divested a company which eventually matured into a component of BCE Emergis. Mr. Breukelman is a resident of Grimsby, Ontario.

Paul F. Little, MBA, B.A. Ec., C.A.

Mr. Little will be a director of the Resulting Issuer. Since 2007 he has been a director of Rebecca Capital. Mr. Little is President of Westover Investments Inc., an investment company. Mr. Little currently serves on the board of directors of a number of Canadian public companies, including Denison Mines Corp., Pure Energy Services Ltd., World Point Terminals Inc. and EGI Financial Holdings Inc. From 1986 to 1999, he was a principal of a Toronto-based merchant Bank, Gornitzki, Thompson & Little and President of GTL Securities Inc., a related securities dealer. From 1980 to 1985, Mr. Little was Vice President and Chief Financial Officer of Union Gas Ltd., a Canadian natural gas utility. Mr. Little is a chartered accountant. He received an M.B.A. from the University of British Columbia and a B.A. in economics from the University of Toronto. Mr. Little is a resident of King City, Ontario.

James McGlone, C.A.

Mr. McGlone will be the Chief Financial Officer of the Resulting Issuer. He is a co-founder of Arius and has extensive financial management experience in rapid growth and public company environments. Prior to joining Business Arts Inc. in 1996, he served as director and Chief Financial Officer for The Ondaatje Corporation, a company focused on strategic international banking, corporate finance and asset management. He was the Chief Financial Officer of an institutional investment bank operating in North American and European markets between 1990 and 1992. Mr. McGlone is a resident of Aurora, Ontario.

Brian Mori, B.Sc., P. Eng.

Mr. Mori will be the President, Chief Executive Officer and a director of the Resulting Issuer. He is the President of Arius Canada and the former Executive Vice President, Business Development of Enginneering.com Inc., a company listed on the Exchange providing a business-to-business Internet marketplace for engineering products and services. From 2003 to 2008, Mr. Mori served as the Vice President, Sales of RAND North America, a private company providing professional services and technology to the engineering community. Mr. Mori is a professional engineer. He received a B.SC, Eng. from Queen's University. Mr. Mori is a resident of Oakville, Ontario.

Joseph Waechter

Mr. Waechter will be a director of the Resulting Issuer. He is a director of Arius and his experience includes serving as a director of 24/7 Real Media, and Photoworks, Inc., both of which are public companies listed on the NASDAQ. From 2002 to 2007, Mr. Waechter was the President of Sunra Capital Holdings, Ltd., an investment firm. From 1989 to 1997, Mr. Waechter served as Chairman and Chief Executive Officer of United Micronesia Development Association, Inc., a holding company with investments in the tourism, telecommunications and airline industries. During that period, he served as a director of Continental Micronesia, Inc., a commercial airline. From 1994 to 1997, Mr. Waechter served as Chairman, Chief Executive Officer and a director of Danao International Holdings, a developer of golf, hotel and resort projects in Vietnam. Mr. Waechter is a resident of Orinda, California.

John Wood, B.A.

Mr. Wood will be a director of the Resulting Issuer. Since 2007 he has been a director of Rebecca Capital and he is currently the President and Chief Executive Officer of Thompson Wood Page & Co, an investment management firm. He has worked in the financial services industry since 1983 and currently serves on the board of directors of a number of private companies. Since 1999, Mr. Wood has been a director of Manitou Capital Corporation, a company listed on the Exchange. Mr. Wood has also been a director of Connor Clark & Lunn ROC Pref Corp. since 2004 and a member of the advisory board of Connor Clark & Lunn Tigers Trust from 2002 to 2006. He is the former Chief Executive Officer of Maxxum Fund Management Ltd., Financial Concept Group Limited and 20/20 Funds Inc. Mr. Wood obtained several securities licenses, such as investment advisor and investment counselor and portfolio manager, from the Canadian Securities Institute. Mr. Wood earned a B.A. in history from McMaster University and is a resident of Oakville, Ontario.

LISTING PROCEDURE

Completion of the listing procedure for the Corporation includes the following steps:

a) Completion and filing of a filing statement providing disclosure of the Corporation, Arius and the Resulting Issuer;

b) Completion of the Private Placement;

c) Satisfactory review and acceptance of the proposed Qualifying Transaction by the Exchange; and

d) Posting of the filing statement on SEDAR once conditional approval has been obtained from the Exchange.

CONDITIONS

Completion of the Qualifying Transaction is subject to number of conditions, including but not limited to, performance of the terms of the Acquisition Agreement, receipt of Exchange approval, satisfaction of the minimum listing requirements of the Exchange, and completion of a private placement for a minimum of $2,500,000. The Qualifying Transaction cannot close until all the conditions are satisfied. There can be no assurance that the Qualifying Transaction will be completed as proposed or at all.

Exchange approval requires, among other things, satisfaction by the Resulting Issuer of the minimum listing requirements, including adequate financial resources and working capital, sponsorship, background review of the proposed directors, officers and insiders. It is currently estimated that it will take a further three weeks to complete the Exchange's customary pre-approval process. The Corporation believes that, subject to completion of the private placement, the minimum listing requirements will be satisfied or waived.

Investors are cautioned that, except as disclosed in the Exchange information circular to be prepared in connection with the Qualifying Transaction, any information released or received with respect to the Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading the securities of a capital pool company should be considered highly speculative.

The TSX Venture Exchange Inc. has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed Qualifying Transaction and has neither approved nor disapproved of the contents of this release.

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