Lemontonic Inc.
TSX VENTURE : LEM

Lemontonic Inc.

May 24, 2005 07:00 ET

Silverback Media to Acquire Lemontonic Business

TORONTO, ONTARIO--(CCNMatthews - May 24, 2005) -

(Not for dissemination in the United States of America)

Lemontonic Inc. (TSX VENTURE: LEM) ("Lemontonic" or the "Corporation") today announced details concerning its proposed reorganization (the "Lemontonic Reorganization") involving the sale of its existing online dating business to Silverback Media Limited ("Silverback Media").

The Lemontonic Reorganization will be a non-arm's length transaction as Martin Doane, a director of the Corporation, is a director and officer of Silverback Media.

Summary of the Proposed Transaction

Lemontonic has entered into a letter agreement dated April 25, 2005 with Silverback Media, pursuant to which Lemontonic has agreed in arm's length negotiations (Martin J. Doane represented Silverback Media and Mark Pavan, the President of Lemontonic, represented Lemontonic) to sell its existing online dating business to Silverback Media for a purchase price of CDN$15.2 million to be payable by the issuance of shares of Silverback Media with a value per share to be determined (the "Lemontonic Reorganization") based upon the financing price of Silverback Media. As part of the Lemontonic Reorganization, Lemontonic may first transfer its existing online dating business to a wholly-owned subsidiary and then may dividend 80% of the shares of the subsidiary to the shareholders of Lemontonic as of a record date to be determined, subject to regulatory approval. Lemontonic intends to distribute 78.5% of the Silverback Media shares to the shareholders of Lemontonic as of a record date to be determined, and 20% will be retained by Lemontonic.

Pursuant to the employment agreement of Mark Pavan, the President of the Corporation, he is entitled to a bonus of 1.5% of the sale price of the online dating business of Lemontonic. Pursuant to the Lemontonic Reorganization, the parties have agreed Mr. Pavan will be paid his bonus by the issuance of 1.5% of the total share consideration being paid by Silverback Media to Lemontonic, or the subsidiary of Lemontonic, as applicable, subject to regulatory and shareholder approval.

After completion of the Lemontonic Reorganization in August 2005, it is expected Lemontonic will have net cash assets of approximately $850,000 and no material liabilities.

Lemontonic has also announced a proposed business combination with Pioneering Technology Inc. (the "Business Combination"). See the press release dated today of Lemontonic entitled "Pioneering Technology Inc. to Complete Reverse Takeover of Lemontonic Inc.".

About Silverback Media

Silverback Media is a private company recently established to accumulate various interactive online media businesses, with an international reach and an emphasis on the social networking space.

Silverback Media has entered into a letter agreement to acquire a private online dating business with revenue of CDN$5 million per year (the "Silverback Media Acquisition").

Silverback Media Corporate History and Structure

Silverback Media was recently incorporated under the laws of Gibraltar. The principal offices of Silverback Media are located at 53 Jarvis Street, Suite 300, Toronto, Ontario M5C 2H2 and 33 Cork Street, 5th Floor, London, U.K. W1S 3NQ.

Directors, Officers and Principal Shareholders of Silverback Media

The current directors and principal shareholders of Silverback Media are Martin J. Doane and Paul Heney.

The current officers of Silverback Media are Martin J. Doane, President and CEO; Paul Heney, Executive Vice President, and COO, and Khurram Qureshi, Chief Financial Officer.

Martin J. Doane

Martin J. Doane, B.A., LL.B., is the Chairman of Lemontonic, and oversees the company's governance, compliance and administration in the public company environment. He is one of the founders of Lemontonic. Since his admission to the Ontario Bar in 1991, Mr. Doane has engaged in a diverse litigation practice, including significant work in the areas of business, employment, constitutional, securities and class action litigation. He has appeared as counsel at all levels of court in Canada, including the Supreme Court of Canada.

Mr. Doane began his legal career with Gowlings LLP, where he became a partner in 1997. In 2000, he helped found the litigation boutique, Paliare Roland Rosenberg Rothstein LLP, where he served on the firm's Executive Committee. In January 2005, he formed a new litigation boutique, Doane Phillips Young, LLP. Mr. Doane has served as Special Counsel to two Canadian public advocacy organizations: the Canadian Civil Liberties Association and Democracy Watch. He is a published author and frequent speaker on numerous legal subjects. He is a member of the Law Society of Upper Canada.

In January 2005, Mr. Doane became the Managing Director of Balaton Group Inc., a corporate finance and development firm with offices in Toronto, Ontario, Vancouver, British Columbia and London, U.K. The firm takes ownership and control of undervalued private and public entities that meet its selective criteria.

Paul Heney

Paul Heney has a Bachelor of Social Sciences degree in Economics and Bachelor of Laws degree the University of Ottawa. He also has a Master of Business Administration from the Schulich School of Business, York University and is a member of the Law Society of Upper Canada.

Mr. Heney spent the first years of his law practice with Holden Murdoch Finlay and he is currently counsel to Avlesworth, Thompson Phelan O'Brien LLP. Mr. Heney's legal work has focused on public and private securities offerings serving the venture capital/small cap market, as well as mergers and acquisitions and securities regulatory matters for issuers, underwriters and investment bankers. He has also advised a number of discretionary money managers. His practice has involved a broad range of industries from local to international in geographic scope, and from natural resources to financial services, information technology and biotechnology.

In January 2005, Mr. Heney became the Executive Vice-President and General Counsel of Balaton Group Inc., a corporate finance and development firm with offices in Toronto, Ontario, Vancouver, British Columbia and London, U.K. The firm takes ownership and control of undervalued private and public entities that meet its selective criteria.

Khurram Qureshi

Khurram Qureshi has 15 years' experience in the fields of accounting and corporate finance, including several assignments with public companies listed on Canadian and United States stock exchanges. He is currently the CFO of Lingo Media Inc. (LMD: TSX-V) and Canadian Shield Resources Inc. (CSP: TSX-V). He is serving as Interim CFO of Silverback Media and leads Silverback's search team for a permanent CFO. Mr. Qureshi is a chartered accountant.

Conditions to Closing

The completion of the Lemontonic Reorganization is subject to the approval of TSX Venture and all other necessary regulatory approval. The completion of the Lemontonic Reorganization is also subject to additional conditions precedent, including shareholder approval of the Corporation, satisfactory completion by due diligence reviews by the parties, board of directors approval of the Corporation, the entering into of a formal agreement, the concurrent completion by Silverback Media of another acquisition for which there is currently an executed letter of intent, and involves a separate online dating company which has approximately $5 million per year in annual revenues, as well as the completion of sufficient financing by Silverback Media.

As a result of the conditions precedent described above the completion of the Lemontonic Reorganization, Lemontonic anticipates it will not be in a position to announce details of the Silverback Media Acquisition or the financing of Silverback Media for over 30 days from the date hereof.

The completion of the Lemontonic Reorganization is not dependent on the completion of the Business Combination, so if the Business Combination with Pioneering Technology Inc. is not completed, the Lemontonic Reorganization may still proceed if the closing conditions are met.

As indicated above, completion of the Business Combination and the Lemontonic Reorganization are subject to a number of conditions, including but not limited to, TSX Venture acceptance and shareholder approval. The Business Combination and the Lemontonic Reorganization cannot close until the required shareholder approval is obtained. There can be no assurance that the Business Combination or the Lemontonic Reorganization will be completed as proposed or at all.

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

The TSX Venture Exchange Inc. has in no way passed upon the merits of the Business Combination or the Lemontonic Reorganization 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. Actual results may differ materially. Factors that might cause a difference include, but are not limited to, market acceptance of principal products, the impact of competitive products and technologies, the possibility of products infringing patents and other intellectual property of fourth parties, and costs of product development. Neither Silverback Media nor Lemontonic will update these forward-looking statements to reflect events or circumstances after the date hereof. 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 Lemontonic and Silverback Media.


Contact Information

  • Lemontonic Inc.
    Mark Pavan
    President
    (416) 874-7190
    or
    Silverback Media Limited
    Martin Doane
    President and Chief Executive Officer
    (416) 366-6691