ZipLocal Inc.
TSX VENTURE : ZIP.H

ZipLocal Inc.

September 26, 2013 09:07 ET

ZipLocal Inc. Announces Private Placement and Proposed Change of Business

TORONTO, ONTARIO--(Marketwired - Sept. 26, 2013) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES

ZipLocal Inc. (the "Company") (TSX VENTURE:ZIP.H) announced today that it intends to complete a brokered private placement of subscription receipts (the "Subscription Receipts") for aggregate gross proceeds of up to $15,000,000 (the "Private Placement"). The Private Placement is being conducted in contemplation of a proposed "Change of Business" of the Company (as such term is defined under TSX Venture Exchange (the "Exchange") Policy 5.2 - Changes of Business and Reverse Takeovers) to an "investment issuer" in accordance with the applicable policies of the Exchange.

Description of Private Placement

Clarus Securities Inc. ("Clarus") has been engaged by the Company to act as lead agent of the Private Placement, together with a syndicate of agents including Wildlaw Capital Markets Inc. (together with Clarus, the "Agents"), to offer and sell, on a "best efforts" basis, up to 75,000,000 Subscription Receipts, at a price of $0.20 per Subscription Receipt, for aggregate gross proceeds to the Company of up to $15,000,000. The Company has further granted to the Agents an option to sell up to an additional 11,250,000 Subscription Receipts, on the same terms and conditions as under the Private Placement, for additional gross proceeds to the Company of up to $2,250,000.

On the Closing Date (as hereinafter defined), the gross proceeds of the Private Placement less certain Agents' expenses (the "Escrowed Proceeds") will be delivered to and held by an escrow agent mutually acceptable to the Company and the Agents (the "Escrow Agent"), and invested in an interest bearing account (the Escrowed Proceeds, together with any interest and other income earned thereon, are hereinafter referred to as the "Escrowed Funds").

Each Subscription Receipt shall be automatically exercised for one unit of the Company (a "Unit"), without any further action by the holder thereof and for no additional consideration, upon the satisfaction of the following conditions (the "Escrow Release Conditions"):

  1. completion of a consolidation of the outstanding common shares of the Company on a 10 (old) for 1 (new) basis (the "Consolidation");
  2. receipt of conditional approval of the Exchange for the Change of Business of the Company to become an "investment issuer" in accordance with the applicable policies of the Exchange;
  3. receipt of all shareholder and regulatory approvals required for the Change of Business;
  4. the distribution of the securities underlying the Subscription Receipts being exempt from applicable prospectus and registration requirements of applicable securities laws;
  5. the common shares of the Company, including the Unit Shares (as hereinafter defined) and Warrant Shares (as hereinafter defined), being conditionally approved for listing on the Exchange; and
  6. the Company and Clarus (on behalf of the Agents) having delivered a release notice in writing to the Escrow Agent authorizing and directing the Escrow Agent to release the Escrowed Funds from escrow.

Each Unit will consist of one common share of the Company (a "Unit Share"), on a post-Consolidation basis, and one common share purchase warrant (a "Warrant"). Each Warrant will entitle the holder thereof to purchase one common share of the Company (a "Warrant Share"), on a post-Consolidation basis, at a price of $0.25 at any time prior to 5:00 p.m. (Toronto time) on the date that is 24 months following the Closing Date.

The Company will use commercially reasonable efforts to satisfy the Escrow Release Conditions on or prior to 5:00 p.m. (Toronto time) on the date that is 120 days following the Closing Date (the "Escrow Termination Time").

If the Escrow Release Conditions are satisfied on or prior to the Escrow Termination Time: (i) the Agents' Fee (as hereinafter defined) shall be released from escrow to the Agents and the balance of the Escrowed Funds shall be released to the Company; and (ii) each outstanding Subscription Receipt shall be automatically exercised, without any further action by the holder of such Subscription Receipt and for no additional consideration, for one Unit.

If the Escrow Release Conditions are not satisfied on or prior to the Escrow Termination Time, the outstanding Subscription Receipts shall be cancelled and the Escrowed Funds will be used to pay to the holders of Subscription Receipts an amount equal to the original purchase price of $0.20 per Subscription Receipt. To the extent that the Escrowed Funds are not sufficient to repay the purchase price in respect of all outstanding Subscription Receipts, the Company will contribute such amount as is necessary to satisfy any shortfall.

For their services in connection with the Private Placement, the Agents will receive from the Company a cash fee equal to 8.0% of the gross proceeds of the Private Placement (the "Agents' Fee"), payable on satisfaction of the Escrow Release Conditions (out of the Escrowed Funds). As further compensation, the Agents will also receive that number of broker warrants of the Company ("Broker Warrants") equal to 8.0% of the number of the Subscription Receipts issued and sold pursuant to the Private Placement; provided, however, the Agents' Fee and number of Broker Warrants payable in respect of presidents' list purchasers (representing up to $4,000,000 of gross proceeds of Private Placement) shall be reduced to: (i) 6.0% if the aggregate gross proceeds of the Private Placement are between $4,000,000 and $10,000,000; or (ii) 4.0% if the aggregate gross proceeds of the Private Placement are less than $4,000,000. Each Broker Warrant will be exercisable to acquire one Unit at a price of $0.20 at any time prior to 5:00 p.m. (Toronto time) on the date that is 24 months following the Closing Date.

All of the securities issuable in connection with the Private Placement will be subject to a hold period expiring four months and one day after the Closing Date. Completion of the Private Placement is subject to receipt of all required regulatory and Exchange approvals.

It is anticipated that the Private Placement will be completed on or prior to October 31, 2013 (the "Closing Date").

Description of Proposed Change of Business

In connection with the Private Placement, the Company intends to complete a Change of Business to an "investment issuer" in accordance with the applicable policies of the Exchange and change its name to "BoB Ventures Inc." (with BoB standing for "Best of Breed").

The Company has not had an active business since July 2009 when it sold substantially all of its assets. The proposed Change of Business, and certain ancillary matters described below, will be subject to a number of conditions, including Exchange acceptance and the approval of shareholders of the Company at a duly constituted special meeting of shareholders (the "Meeting").

As an investment issuer, the Company intends to provide investors with the opportunity to gain exposure to investments to which they may not otherwise have access, such as innovative private technology companies. The objective of the Company will be to develop and manage a diversified portfolio comprised of debt and equity investments in both private and public companies with innovative technologies and potential breakthrough products. Investments by the Company will not be limited to any particular sector, thereby allowing for diversification; however, the focus initially will be on technology, innovative and growth-related companies with attractive risk/reward profiles. Specifically, the Company will focus on angel investments in early-stage technology companies, investments in innovative and growth-oriented private companies and investments in Canadian micro-cap to small-cap public technology companies. This approach may change over time as market conditions change, the capital markets respond, and the Company further builds upon its experience in these segments.

In connection with the proposed Change of Business, the Company will adopt a written investment policy. This investment policy will be included in the information circular to be mailed to shareholders in connection with the Meeting.

If the proposed Change of Business is completed, it is anticipated that the board of directors and executive officers of the Company will include the following individuals:

  • John L. Albright - Director;
  • Sheldon Inwentash - Director;
  • Jos Schmitt - Director;
  • Perry N. Dellelce - Director;
  • Paul Sparkes - Director;
  • Kevin Dane - Chief Executive Officer;
  • Bradley Robins - President; and
  • Paul Van Damme - Chief Financial Officer.

In addition to seeking approval for the proposed Change of Business at the Meeting, shareholder approval will further be sought for (among other things): (i) the reconstitution of the board of directors of the Company, specifically to add Perry N. Dellelce and Paul Sparkes as directors of the Company; (ii) the Consolidation (being a consolidation of the outstanding common shares of the Company on the basis of 10 (old) shares for 1 (new) share, or such other ratio as may be determined by the board of directors of the Company); and (iii) a change of the Company's name to "BoB Ventures Inc.", or such other name as may be determined by the board of directors of the Company. Mssrs. Albright, Inwentash, Schmitt, Dane and Van Damme are currently directors or officers of the Company.

Further particulars relating to the proposed Change of Business will follow in accordance with the policies of the Exchange in subsequent press releases.

Completion of the proposed Change of Business is subject to a number of conditions, including Exchange approval and shareholder approval (including disinterested shareholder approval if required under Exchange policies or applicable securities laws). The proposed Change of Business cannot close until the required shareholder approval is obtained.

There can be no assurance that the proposed Change of Business will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the information circular to be mailed to shareholders in connection with the Meeting, any information released or received with respect to the proposed Change of Business may not be accurate or complete and should not be relied upon. Trading in the securities of the Company should be considered highly speculative.

The Exchange has in no way passed upon the merits of the Private Placement or the proposed Change of Business and has neither approved nor disapproved the contents of this press release. Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this press release.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction. Any securities referred to herein will not be registered under the U.S. Securities Act of 1933, as amended (the "1933 Act") and may not be offered or sold in the United States or to a "U.S. Person" (as such term is defined in Regulation S under the 1933 Act) in the absence of such registration or an exemption from the registration requirements of the 1933 Act.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements regarding a proposed Private Placement and a proposed Change of Business. Actual developments may differ materially from those contemplated by these statements depending upon, among other things, the ability of the Company to raise the funds and decisions made by regulators, including the Exchange. The forward-looking statements contained in this press release represent the Company's views and expectations as of the date of this release and should not be relied upon as representing its views and expectations at any subsequent date. The forward-looking events and circumstances discussed in this press release, including the completion of the proposed Private Placement and the proposed Change of Business, may not occur or could differ materially as a result of known and unknown risk factors and uncertainties affecting the Company, including (without limitation) risks regarding the technology industry, market conditions, economic factors, and the equity markets generally. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

About ZipLocal Inc.

ZipLocal Inc. is listed on the NEX Board of the TSX Venture Exchange.

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