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TORONTO,
July 7, 2014 /CNW/ - Oriana
Resources Corporation (TSXV: OUP.P) ("Oriana") is pleased to
update its press release dated February 27,
2014 which announced that it had entered into a letter of
intent (the "LOI") dated February 25,
2014 with MLM1 Corp., doing business as The Madcap Learning
Adventure ("Madcap"), a corporation existing under the laws
of Ontario. Today, Oriana announces execution of an
Amalgamation Agreement with Madcap, pursuant to which Oriana's
wholly-owned subsidiary corporation, 2424334 Ontario Inc.
("Oriana Subco") will amalgamate with Madcap and result in
Madcap becoming a wholly-owned subsidiary of Oriana. The
transaction will constitute Oriana's qualifying transaction under
the policies of the TSX Venture Exchange (the
"Exchange").
Terms of Acquisition
Under the terms of the Amalgamation Agreement,
Oriana Subco and Madcap will amalgamate, with Madcap shareholders
receiving equity in Oriana, as further described below (the
"Qualifying Transaction"). The Qualifying
Transaction will be effected through a "three-cornered
amalgamation" (the "Amalgamation"), whereby: (i) Madcap will
amalgamate with Oriana Subco to form an amalgamated corporation
("Amalco"); (ii) the holders of Madcap's common shares will
receive common shares of Oriana ("Common Shares") at an
ascribed value of $0.40 per Common
Share, post consolidation of the Common Shares as described herein;
and (iii) Amalco will become a wholly-owned subsidiary of
Oriana.
Pursuant to the terms of the Amalgamation
Agreement, completion of the Qualifying Transaction will be subject
to a number of conditions, including the completion of the Private
Placement (as defined and described below), completion of the Debt
Conversion (as defined and described below), completion or waiver
of sponsorship, receipt of all required regulatory approvals,
including the approval of the Exchange of the Qualifying
Transaction, completion of all due diligence reviews, satisfaction
of the minimum listing requirements of the Exchange and all
requirements under the Exchange rules relating to completion of a
Qualifying Transaction.
A filing statement in respect of the proposed
Qualifying Transaction will be prepared and filed in accordance
with Policy 2.4 of the Exchange on SEDAR at www.sedar.com no less
than seven business days prior to the closing of the proposed
Qualifying Transaction. A press release will be issued once the
filing statement has been filed, as required pursuant to Exchange
policies or any other material changes occur.
Name Change
Concurrent with the closing of the Qualifying
Transaction, Oriana intends to change its name and will also apply
to change its stock symbol after the closing of the Qualifying
Transaction.
Capitalization
Oriana currently has 13,000,000 Common Shares
issued and outstanding, as well as options and warrants to acquire
Common Shares. There are 1,100,000 options that entitle the holders
thereof to acquire an aggregate of 1,100,000 Common Shares at a
price of $0.10 per share. There are
300,000 warrants that entitle the holders thereof to acquire an
aggregate of 300,000 Common Shares at a price of $0.10 per share. Under the terms of the
Amalgamation Agreement, Oriana will undertake a 4:1 share
consolidation such that it will have 3,250,000 Common Shares issued
and outstanding with a corresponding adjustment taking place to the
options and warrants. On a pre-consolidation basis, the Qualifying
Transaction is being done at an ascribed value of $0.10 per share which equals $0.40 per share on a post-consolidation
basis.
Madcap currently has 88.32 common shares
outstanding and no options or warrants. Based on a Private
Placement (as defined below) for gross proceeds of $5,000,000, each Madcap common share shall be
split (the "Split") prior to the Amalgamation into
236,838.377 Common Shares, such that post Amalgamation the
shareholders of Madcap will hold, in the aggregate, 20,896,250
Common Shares.
Post-consolidation, and without taking into
account the Private Placement (as described below), Oriana will
have approximately 350,000 options and warrants issued and
outstanding.
Debt Conversion
In conjunction with the closing of the Qualifying
Transaction, Pearson Canada Inc., the holder of $1,500,000 principal amount of convertible
promissory notes issued by Madcap has agreed, pursuant to the terms
set out in a debt conversion agreement among Oriana, Madcap and
Pearson, to convert all of such notes into 7,134,375 Madcap common
shares (post-Split) and 2,378,125 Madcap preferred shares
(post-Split) based on a Private Placement (as defined below) for
gross proceeds of $5,000,000.
Concurrent with the completion of the Amalgamation and transactions
contemplated in the filing statement, such Madcap common shares
will be exchanged for Oriana Common Shares on a one-for-one basis
and such Madcap preferred shares will be exchanged for preferred
shares of Oriana (the "Preferred Shares") on a one-for-one
basis (the "Debt Conversion"). The Oriana Common and
Preferred Shares will be identical in all respects (including
voting and dividends), other than the Preferred Shares will have
liquidation preference on a winding-up, dissolution or other
liquidation event. In addition, a trade creditor has agreed
to accept 128,750 Oriana Common Shares at an issue price of
$0.40 per Oriana Common Share to satisfy a trade payable
of Oriana in the amount of $51,500.
Private Placement
Prior to the closing of the Qualifying
Transaction, Madcap intends to complete a brokered private
placement of subscription receipts (the "Subscription
Receipts") for gross proceeds of a minimum of $5,000,000 (the "Private Placement"). The
price per Subscription Receipt will be $0.40. Each Subscription Receipt will be
automatically exchanged, without any further action on the part of
the holder and without payment of additional consideration,
immediately prior to the completion of the Qualifying Transaction
for one Madcap common share (post-Split) and one-half of one common
share purchase warrant (post- Split) (the "Madcap Warrants")
upon satisfaction of certain escrow release conditions on or before
a termination date that is to be determined (the "Release
Deadline") (collectively, the "Release Event"). The
proceeds from the Private Placement (the "Escrowed
Proceeds") will be delivered to and held in escrow by the
subscription receipt agent, and invested in an interest-bearing
account (the Escrowed Proceeds, together with all interest and
other income earned thereon, the "Escrowed Funds") pending
the Release Event. Provided that the Release Event occurs on or
before the Release Deadline, the Escrowed Funds will be released
from escrow to Madcap and the Madcap Shares and Madcap Warrants
underlying the Subscription Receipts will be issued to the holders
of Subscription Receipts. Each Madcap Warrant will be exercisable
for one Madcap common share for a period of three years following
the closing of the Private Placement at an exercise price of
$0.60 per Madcap Warrant.
It is contemplated that Octagon Capital
Corporation (the "Agent") will receive options (the
"Madcap Agent's Option") entitling the Agent to purchase
that number of Subscription Receipts equal to 8% of the
Subscription Receipts sold under the Private Placement, excluding
sales from existing shareholders or contacts of Madcap (the
"President's List"), and 4% of the Subscription Receipts
sold on the President's List, exercisable at any time for a period
of up to 36 months following the closing date of the Private
Placement at the same price as the Subscription Receipts.
It is anticipated that the Madcap common shares,
the Madcap Warrants and the Madcap Agent's option will be exchanged
for Common Shares, equivalent warrants and an equivalent agent's
option of Oriana at the time of the Amalgamation.
The completion of the Private Placement is a
condition to closing the Qualifying Transaction.
Madcap will use the proceeds of the Private
Placement to continue to fund the development costs to produce 24
new modules of its educational software and for general working
capital purposes.
Pre-Amalgamation Steps and Shareholder
Approval
Prior to the Amalgamation, it is expected that
the articles of incorporation of Oriana will be amended at the
annual and special meeting of shareholders of Oriana to, among
other things, approve (i) the name change of Oriana to "The Madcap
Learning Adventure Inc." or such other name as the board of
directors of Oriana deems appropriate, and (ii) the creation of the
Oriana Preferred Shares (as defined above). In addition, at
the annual and special meeting of shareholders of Oriana,
shareholders of Oriana will be asked to approve the stock option
plan of Oriana, the election of the directors of Oriana, a
consolidation of Oriana Shares on the basis of 1 new Oriana Share for each 4 existing Oriana Shares,
and the appointment of Zeifmans LLP as the auditor of Oriana.
The terms of the Qualifying Transaction are being
negotiated by the parties dealing at arm's length with each other
and therefore, in accordance with the policies of the TSX Venture
Exchange, the Qualifying Transaction is not a Non-Arm's Length
Qualifying Transaction. As a result, approval of the
Qualifying Transaction itself by shareholders of Oriana is not
required under the policies of the TSX Venture Exchange as a
condition to the completion of the Qualifying
Transaction.
Post Qualifying Transaction
Capitalization
Assuming completion of the Qualifying Transaction
and the Private Placement for gross proceeds of $5,000,000, Oriana will have 46,312,500 shares
outstanding of which 3,378,750 will be held by existing Oriana
shareholders/debtholders (6.92%), 20,896,250 will be held by
existing Madcap shareholders (45.12%), 9,512,300 will be held by
Pearson Canada Inc. (20.53%, of which 7,134,175 will be Common
Shares and 2,378,125 will be Preferred Shares) and 12,500,000 will
be held by investors participating in the Private Placement
(26.99%). On a fully diluted basis, immediately after
completion of the Qualifying Transaction and a Private Placement
for gross proceeds of $5,000,000,
Oriana will have 54,412,500 shares outstanding. Following
completion of the Qualifying Transaction, it is anticipated that
each of Pearson Canada Inc., an Ontario corporation with its registered office
at 26 Prince Andrew Place,
Don Mills, Ontario, M3C 2T8, and David Devine (an individual residing in
Toronto, Ontario and the principal
shareholder of Madcap), will own, directly or indirectly, more than
10% of the issued and outstanding voting securities of Oriana and
as such will be "insiders" of Oriana for purposes of applicable
securities laws.
The proposed directors and officers of Oriana
post closing of the Qualifying Transaction and their biographies
are set out below.
David Devine
(Toronto, Ontario), Director,
Chief Executive Officer, and President – David Devine is the creator of The Madcap
Learning Adventure and has been the CEO of Madcap since
November 2011. Prior thereto, Mr.
Devine acted as the President and CEO of Educated Pictures from
July 2009 to October 2012 and as Chairman and CEO of Devine
Entertainment Corporation from June
1994 to July 2009. As a
filmmaker, Mr. Devine is known best for his classic children's
films on great inventors, artists and composers, making 19 HBO
Original films. Mr. Devine's films have 12 EMMY nominations, 5 EMMY
awards, 22 Canadian Screen Awards and 80 other international
awards. His films have been broadcast in 110 countries and sold
over 3.2 million DVDs, 500,000 of which are being used in American
elementary and middle school classrooms.
Manfred
Leventhal (Thornhill,
Ontario), Chief Financial Officer – Manfred Leventhal is a corporate director and
consultant of LHlegacy and was CFO and COO of Tau Capital Corp.
from April 2000 to March 2012.
Prior to this, Mr. Leventhal was a Senior Principal at the head
office of KPMG LLP in Toronto. Manfred is a graduate of the
University of Witwatersand in South
Africa with a B.Com, CTA, and is a CGA in Canada.
Richard Mozer
(Toronto, Ontario), Director,
Chief Operating Officer and Secretary – Richard Mozer has been the Producer and Head of
Business Affairs of Madcap since January 2012. Prior to this,
Mr. Mozer acted as director and CFO of Devine Entertainment
Corporation from June 1994 to
July 2009. Mr. Mozer is an Emmy
winning filmmaker who has numerous creative awards for the HBO
children's films which he produced with David Devine. Mr. Mozer has also
specialized in building relationships with production, financing
and distribution partners around the world. He has managed
multi-million dollar production slates and has over 15 years of
public financing experience with private placements, public
offerings and debt instruments.
Michael Chai
(Foster City, California),
Director – Michael Chai is the
Senior Vice President of Product Technology at Pearson for School,
PLC. The Pearson School line of business is responsible for
digital product and development and engineering strategy across
global lines. Prior to this, Mr. Chai was the Chief Digital Officer
for Pearson Education. Mr. Chai has his BS in Mechanical
Engineering from Yale University and
his MS in Computer Science from Stanford University.
Kevin Shea
(Algonquin Highlands, Ontario),
Director – Kevin Shea is a
career executive in the online, broadcasting, entertainment, cable
and cultural industries. Mr. Shea is the founding President and CEO
of YTV Canada, led the CRTC licensing of Sirius Radio, Life Network
and others across Canada. He has also served as President and
COO of Atlantis Communications Inc. and The Global Television
Network. Mr. Shea is currently involved with a variety of U.S. and
Canadian companies as a director and advisor such as the role of
Chair of Social Gaming Universe, Intertainment.com and K2
MediaLabs.com of New York. In August
2006, Mr. Shea was appointed Chair of the Ontario Media
Development Corporation.
Teri Kirk
(Toronto, Ontario), Director -
Teri Kirk is the founder and CEO of
The Funding Portal, Canada's leading platform for companies seeking
government funding and private financing. Ms Kirk was the
Vice President Business Development, of Bell Canada, where she led the introduction of
e-commerce solutions in health care, justice and government.
Ms Kirk holds a Juris Doctor from Osgoode Hall Law School,
University of Toronto, and a Masters
from Queen's University focusing in e-business transformation.
MLM1 Corp ("The Madcap Learning
Adventure")
Knowledge Creation through Digital
Innovation -
The Madcap Learning Adventure was established to
develop and produce a transformational and comprehensive web based
non-linear digital interactive educational platform with the
mission of improving K-12 public education in the U.S.
Madcap's goal is to change the learning experiences of teachers and
students by engaging them in exciting digital learning resources
systematically geared to the U.S. Common Core State Standards
curriculum.
Madcap received initial funding from the Bill
& Melinda Gates Foundation on March
15, 2012. Madcap also received a strategic investment
from industry leader, Pearson Education, on May 24, 2012.
The Madcap Learning Adventure, Madcap's
educational platform, is a 100% web-based interactive and adaptive
digital education platform that is designed to be accessible on all
web-enabled devices including tablets, laptops and mobile phones
through an internet browser anywhere an internet connection is
available. Madcap is comprised of three integrated
components: change leadership with pedagogical resources for
teachers, innovative adaptive digital interactive curriculum
content, and project-based learning with collaborative knowledge
creation that leads to critical thinking.
From May 1 to June 28,
2013, a pilot study was conducted in classrooms in
Brunswick, Maine and the Toronto
District School Board by The Centre for Research and Evaluation at
the University of Maine and the study
formed a 'Proof-of-Concept' for the education platform. The
study focused on Madcap providing broad improvements in 3 key
areas: 1) student learning outcomes, 2) student engagement, and 3)
changes to teacher pedagogy that reflected the Common Core State
Standard objectives.
The U.S. is the primary market for the initial
rollout of The Madcap Learning Adventure. Delivered on
streaming broadband directly into classrooms, Madcap's target
market is the over $9 billion annual
text book and curriculum market for Grades K to 12. This is a
market under great pressure to find a digital solution.
Madcap has developed a broad subscription based model to deliver
digital curriculum focused on improving the way students learn.
David Devine is
the creator of The Madcap Learning Adventure and has been the CEO
of Madcap since November 2011. Prior
thereto, David acted as the President and CEO of Educated Pictures
from July 2009 to October 2012 and as Chairman and CEO of Devine
Entertainment Corporation from June
1994 to July 2009. As a
filmmaker, David is known best for his classic children's films on
great inventors, artists and composers, making 19 HBO Original
Children's films. David's films have 12 EMMY nominations, 5 EMMY
awards, 22 Canadian Screen Awards and 80 other international
awards. His films have been broadcast in 110 countries and sold
over 3.2 million DVDs, 500,000 of which are being used in American
elementary and middle school classrooms.
Madcap was amalgamated pursuant to the laws of
the Province of Ontario on
April 1, 2013, pursuant to an
amalgamation between ML/Madcap Corp. and its wholly owned
subsidiary, MLM1 Corp. The amalgamated entity continued to
carry on the business of Madcap under the name MLM1 Corp.
David Devine of Toronto, Ontario is the sole control person of
Madcap.
Madcap's audited statements for the fiscal year
ended March 31, 2013 show no revenue
and a loss for operations of $259,395. As at March 31, 2013, the Madcap balance sheet reflects
assets of $1,877,618, liabilities of
$1,948,160, a deficit of $294,112 and a total shareholders deficiency of
$60,542.
Further Information
Oriana's Common Shares were halted for trading at
the request of Oriana and in accordance with the policies of the
Exchange on January 29, 2014 and will
remain halted until completion of the Qualifying Transaction.
All information contained in this news release
with respect to Oriana and Madcap was supplied by the parties
respectively, for inclusion herein, and each party and its
directors and officers have relied on the other party for any
information concerning the other party.
Completion of the Qualifying Transaction is
subject to a number of conditions including, but not limited to,
completion of satisfactory due diligence, completion of the Private
Placement, completion of the Debt Conversion, Exchange acceptance
and if applicable pursuant to Exchange Requirements, majority of
the minority shareholder approval. Where applicable, the Qualifying
Transaction cannot close until the required shareholder approval is
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 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 in the securities of a capital
pool company should be considered highly speculative.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange ) has in any way passed upon
the merits of the proposed Qualifying Transaction and has neither
approved nor disapproved of the contents of this release.
This press release does not constitute and the
subject matter hereof is not, an offer for sale or a solicitation
of an offer to buy, in the United
States or to any "U.S Person" (as such term is defined in
Regulation S under the U.S. Securities Act of 1933, as amended (the
"1933 Act")) of any equity or other securities of the Company. The
securities of Oriana to be issued in connection with the Private
Placement have not been registered under the 1933 Act and may not
be offered or sold in the United
States (or to a U.S. Person) absent registration under the
1933 Act or an applicable exemption from the registration
requirements of the 1933 Act.
Notice on forward-looking statements:
This release includes forward-looking
statements regarding Oriana, Madcap and their respective
businesses. Such statements are based on the current
expectations of the management of each entity. The forward-looking
events and circumstances discussed in this release, including
completion of the Qualifying Transaction and the Private Placement,
may not occur and could differ materially as a result of known and
unknown risk factors and uncertainties affecting the companies,
including risks affecting the companies, 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 Oriana and Madcap undertake no obligation to publicly
update or revise any forward-looking statement, whether as a result
of new information, future events, or otherwise.
SOURCE Oriana Resources Corporation