TORONTO, CANADA - YANGAROO
Inc. (TSX-V: YOO, OTC: YOOIF),
the industry's leading secure digital media management company (the
"Company"), is pleased to announce that it
has completed the brokered private placement financing (the
"Private Placement") of subscription receipts (the "Subscription
Receipts") sold at a price of $0.25 per Subscription Receipt, based
on the post-consolidation share price, as was previously announced
in a news release dated July 3rd, 2013 (the "July 3 Release"), with
subsequent updates issued on August 2, 2013 (the "Aug 2 Release")
and August 22, 2013 (the "Aug 22 Release", together with the July 3
Release and the Aug 2 Release, the "Releases"). Please see the
Releases for details.
The Company is also
pleased to announce that it exceeded its original expectations as
it neared the closing of the Private Placement. To accommodate an
additional investor, and with the approval of the TSX Venture
Exchange (the "Exchange") with respect to the increased maximum
amount of the Private Placement, the Company raised gross proceeds
of CAD $1,600,000 (the "Proceeds"), the majority of which were
deposited into escrow with Equity Financial Trust Company
("Equity"), an escrow agent today, September 5th, 2013, to be held until their release
upon the satisfaction by the Company of the Release Conditions (as
defined in the July 3 Release), or otherwise returned in the event
that the Release Conditions are not satisfied, in accordance with
the Subscription Receipt Agreement. A small amount of the Proceeds,
as delivered by certain insiders of the Company, shall be subject
to the same or substantially similar terms and conditions as those
delivered under the Subscription Receipt Agreement, but shall not
be held by Equity.
Upon satisfaction of
the Release Conditions, each Subscription Receipt will be
automatically converted into one common share (each the "Common
Share") of the Company and one warrant of the Company (each the
"Warrant"). Each Warrant will entitle the holder, upon exercise, to
purchase one Common Share during a period of thirty-six (36) months
(the "Warrant Exercise Period") following the Conversion Date (the
Warrant Expiry Date"), at a price of $0.25 within the first year of
the Warrant Exercise Period and at a price of $0.35 within the
second and third years of the Warrant Exercise Period. The
Company's agent, Fraser Mackenzie Limited ("Fraser"), will be
entitled to receive its commission upon the release of the escrowed
Proceeds, which commission will be comprised of (i) a cash fee
equal to eight percent (8%) of the gross subscription proceeds, and
(ii) broker warrants (the "Broker Warrants") entitling Fraser, upon
exercise of the Broker Warrants, to purchase, in aggregate, Common
Shares equal to eight percent (8%) of the number of Common Shares
sold pursuant to the Private Placement. Such Broker Warrants shall
be exercisable at a price of $0.25 per Common Share until the
Warrant Expiry Date.
As certain directors
of the Company have participated in the Private Placement, this
Private Placement constitutes a related party transaction under
Multilateral Instrument 61-101 ("MI 61-101") and TSX Venture
Exchange Policy 5.9. The Company is relying on exemptions from the
formal valuation and minority approval requirements of MI 61-101,
based on a determination that the securities of the Company are
listed on the TSX Venture Exchange only and that the fair market
value of the Private Placement, insofar as it involves interested
parties, does not exceed 25% of the market capitalization of the
Company at the time the Private Placement was initially announced.
No new insiders have been created, nor has there been any change of
control as a result of the Private Placement.
In compliance with
applicable securities laws and the rules of the TSX Venture
Exchange, (i) the Common Shares, the Warrants and the Broker
Warrants will be subject to a hold period of four (4) months
following the issuance thereof, and (ii) the Common Shares
underlying the Warrants and the Broker Warrants will be subject to
a four (4) months hold period following their issuance upon
exercise thereof.
The Private Placement
is subject to compliance with applicable securities laws and to
receipt of the final approval of the TSX Venture Exchange,
conditional approval having been obtained as required.
The Proceeds from the Private Placement shall be
used as working capital, subject to payment of professional fees
associated therewith.
The Share Consolidation and the
Shares for Debt Transaction (as defined in the July 3 Release),
being the Release Conditions, are anticipated to be completed
within the month of September, 2013.
Share
Consolidation
Upon the effective
date of the Share Consolidation on a ten for one basis, the Company
will have approximately 16,324,477 Common Shares outstanding, prior
to the issuance of the Common Shares underlying the Subscription
Receipts. The change in the number of issued and outstanding Common
Shares that will result from the Share Consolidation will not
materially affect any shareholder's percentage ownership in the
Company, although such ownership will be represented by a smaller
number of Common Shares.
Letters of
transmittal with respect to the Common Shares to be consolidated
under the Share Consolidation have been mailed out to all
registered shareholders together with the Notice and Information
Circular prior to the Annual and Special Meeting of the
Shareholders. All registered shareholders of the Company will be
required to send their certificates representing pre-consolidation
Common Shares with a properly executed letter of transmittal to
Equity, the Company's transfer agent, in accordance with the
instructions provided in the letter of transmittal.
Shares for Debt
Transaction
The Company intends
to enter into a Shares for Debt Agreement with certain of its
current debenture holders (collectively the "Debenture Holders"),
whereby the Company will issue one (1) Common Share in exchange for
each $0.25 of the Debt, in the month of September. In order for
this second Release Condition to have been met, 40% or greater of
the Debt must be converted into Common Shares in accordance with
the pending Shares for Debt Agreement(s).
The Shares for Debt
Transaction is subject to approval by the TSX Venture Exchange. As
the Shares for Debt Transaction will not result in the creation of
a new control person, disinterested shareholder approval was not
required or sought. No warrants will be issued with respect to the
Shares for Debt Transaction.
Debenture
Amendments
Subject to the
consent of the Debenture Holders (as defined in the July 3
Release), the Company also intends to complete the Debenture
Amendments, as described in the July 3 Release, in the month of
September. Subject to TSX Venture Exchange approval, the Company
will offer a one-half of one Warrant for every $1.00 of current
indebtedness to the Debenture Holders as consideration for amending
the Debenture Agreements to reflect more favourable terms, as are
described below. Each whole Warrant will be exercisable for a
period of thirty-six (36) months from the date of issuance at a
price equal to $0.25.
If approved, the
Company intends to amend the Debenture Agreements by reducing the
interest rate from fourteen percent (14%) to ten percent (10%),
extending the term by an additional twelve (12) months to October
3, 2016, and by waiving so called "Cash Sweeps", as defined in the
Debenture Agreements. Currently, pursuant to the Cash Sweeps, the
Company is required to pay 25% of each equity, debt or equity-like
financing, including the Private Placement, to the Debenture
Holders. Upon amendment, which the Company
proposes to have occurred prior to the Conversion Date, such
requirement would be eliminated in connection with the Private
Placement and all future debt, equity, and equity-like
financings.
Further updates on the Release
Conditions will be provided as appropriate.
About
YANGAROO:
YANGAROO is a company dedicated to
digital media management. YANGAROO's patented Digital Media
Distribution System (DMDS) is a leading secure B2B digital cloud
based solution focused on the music and advertising industries. The
DMDS solution provides more accountable, effective, and far less
costly digital management of broadcast quality media via the
Internet. It replaces the physical, satellite and closed network
distribution and management of audio and video content, for music,
music videos, and advertising to television, radio, media,
retailers, and other authorized recipients. The YANGAROO Awards
platform is now the industry standard and powers most of North
America's major awards shows.
YANGAROO has offices
in Toronto, New York, and Los Angeles. YANGAROO trades on the TSX
Venture Exchange (TSX-V) under the symbol YOO and in the U.S. under
OTCBB: YOOIF. For further information, please contact Gary Moss at
416-534-0607 ext.111 or visit www.yangaroo.com.
###
The
statements contained in this release that are not purely historical
are forward-looking statements and are subject to risks and
uncertainties that could cause such statements to differ materially
from actual future events or results. Such forward-looking
statements are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Neither the TSX
Venture Exchange nor its Regulation Services Provider (as that term
is defined in policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this
release.
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