ZG Ventures, LLC

March 06, 2014 12:27 ET

ZG Ventures, LLC Acquires Securities of ePals Corporation

WASHINGTON, DISTRICT OF COLUMBIA--(Marketwired - March 6, 2014) -

NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA OR THROUGH U.S. NEWSWIRE SERVICES

ZG Ventures, LLC ("ZG"), a venture capital firm located at 400 7th Street N.W., Washington, DC, acquired direct ownership of 13,269,600 restricted voting common shares ("Restricted Voting Common Shares") of ePals Corporation ("ePals") and 737,200 warrants of ePals, each of which is exercisable to acquire one Restricted Voting Common Share at a price of C$0.075 per share. In addition, Shaman III, LLC ("Shaman"), a company which is 50% indirectly owned by ZG, acquired direct ownership of 5,160,400 Restricted Voting Common Shares and 1,720,133 warrants of ePals, each of which is exercisable to acquire one Restricted Voting Common Share at a price of C$0.075 per share. The Restricted Voting Common Shares are convertible into voting common shares of ePals ("Voting Common Shares" and together with the Restricted Voting Common Shares, the "Common Shares") on a one-for-one basis.

ZG now directly holds 66,098,598 Restricted Voting Common Shares representing approximately 31% of the outstanding Restricted Voting Common Shares (approximately 20.6% of the outstanding Common Shares). In addition, ZG holds: (i) 412,918 warrants, each of which may be exercised for either one Voting Common Share or one Restricted Voting Common Share (as determined by the board of directors of ePals) at a price of US$0.495 per share as to 343,434 warrants and at a price of US$4.87 per share as to 69,484 warrants; (ii) convertible debentures in the aggregate principal amount of C$2,250,000, which debentures are convertible into Voting Common Shares at a price of C$0.40 per share; and (iii) 5,181,644 warrants, each of which is exercisable to acquire one Restricted Voting Common Share at a price of C$0.075 per share.

Shaman now holds 4,580,259 Voting Common Shares and 8,698,834 Restricted Voting Common Shares representing approximately 4.2% of the outstanding Voting Common Shares and approximately 4.1% of the outstanding Restricted Voting Common Shares, respectively (approximately 4.1% of the outstanding Common Shares). In addition, Shaman holds: (i) 931,310 warrants, each of which may be exercised for either one Voting Common Share or one Restricted Voting Common Share (as determined by the board of directors of ePals) at a price of US$0.495 per share; and (ii) 1,720,133 warrants, each of which is exercisable to acquire one Restricted Voting Common Share at a price of C$0.075 per share.

ZG II, LLC ("ZG II"), an affiliate of ZG, directly holds 2,222,977 Voting Common Shares and 6,668,937 Restricted Voting Common Shares representing approximately 2.1% of the outstanding Voting Common Shares and approximately 3.1% of the outstanding Restricted Voting Common Shares, respectively (approximately 2.7% of the outstanding Common Shares). Zolt-Gilburne 2012 Family Trust (the "ZG Trust"), an affiliate of ZG, directly holds 33,333,333 Restricted Voting Common Shares representing approximately 15.6% of the outstanding Restricted Voting Common Shares (approximately 10.4% of the outstanding Common Shares). In addition, ZG Trust holds: (i) convertible debentures in the aggregate principal amount of C$1,500,000, which debentures are convertible into Voting Common Shares at a price of C$0.40 per share; and (ii) 11,111,111 warrants, each of which is exercisable to acquire one Restricted Voting Common Share at a price of C$0.075 per share.

If all of the warrants held by ZG (directly and through Shaman and ZG Trust) were exercised for Restricted Voting Common Shares, ZG would hold or control a total of 134,156,818 Restricted Voting Common Shares, representing approximately 57.6% of the then outstanding Restricted Voting Common Shares.

If all of the Restricted Voting Common Shares, convertible debentures and warrants held by ZG, Shaman, ZG II and ZG Trust described above were converted into or exercised for Voting Common Shares, ZG and its affiliates would hold or control a total of 150,335,054 Voting Common Shares representing approximately 59.8% of the then outstanding Voting Common Shares (approximately 45.3% of the then outstanding Common Shares), calculated on a partially diluted basis and assuming no other increases in the number of issued and outstanding Common Shares.

Of the 13,269,600 Restricted Voting Common Shares acquired by ZG, 11,058,000 of such shares were issued at a deemed price of C$0.075 per share as consideration for the assignment by ZG to ePals of the outstanding debt owed to ZG by ePals, Inc., a wholly-owned subsidiary of ePals, in the aggregate amount of US$750,000 (CDN$829,350). The balance of the Restricted Voting Common Shares acquired by ZG together with all of the 737,200 warrants acquired by ZG were issued pursuant to a private placement ("Private Placement") of units ("Units") of ePals, each Unit consisting of one Restricted Voting Common Share and one-third of one warrant. The 5,160,400 Restricted Voting Common Shares and 1,720,133 warrants acquired by Shaman were issued pursuant to the Private Placement.

ZG's holding of securities of ePals is for investment purposes. ZG may from time to time acquire ownership of, or control over, additional securities of ePals, dispose of some or all of the existing or additional securities of ePals or may continue to hold the current position.

Contact Information

  • ZG Ventures, LLC
    Farid Sadrzadeh
    (202) 386-7482