VANCOUVER, B.C. – TheNewswire – November 16, 2021 – Efficacious Elk Capital Corp. (“Elk”) (TSXV:EECC.P) is pleased to announce that it has entered into a definitive merger agreement dated November 15, 2021 (the “Merger Agreement”) with MiMedia Inc. (“MiMedia”) pursuant to which a newly incorporated, wholly-owned Delaware subsidiary of Elk, Elk Media Inc. (“Elk Subco”), will merge with MiMedia (the “Merger”) to complete Elk’s qualifying transaction (the “Transaction”) in accordance with the policies of the TSX Venture Exchange (the “TSXV”). The parties mutually agreed to extend the previously announced Transaction deadline of October 31, 2021. The Merger is structured as a reverse-triangular merger under the Delaware General Corporation Law. As a result of the Merger, MiMedia will become a wholly-owned subsidiary of Elk. Upon completion of the Merger, it is intended that Elk will be known as “MiMedia Holdings Inc.” (the “Resulting Issuer”). The Transaction is subject to the receipt of all necessary regulatory and shareholder approvals, including majority of the minority shareholder approval (if applicable), as well as the satisfaction of certain conditions to closing as set out in the Merger Agreement.
About MiMedia
MiMedia is a private company incorporated in 2012 under the laws of the State of Delaware, USA.
Based in New York city, MiMedia has built a next generation consumer cloud platform that enables all types of personal media (photos, videos, music, docs, contacts and SMS) to be secured in the cloud, accessed seamlessly, across all devices (smartphones, tablets, laptops / desktops, web) and on all operating systems (Android, iOS, MAC, PC) at any time.
MiMedia differentiates with its highly visual interface, rich media experience, automatic organization and robust content curation tools, unique private sharing platform for families and deep promotion of content (re)discovery and re-engagement. A portfolio of issued patents, approximately US$45M in investment and four years of development supports MiMedia’s robust, unique and proprietary technology platform and leading consumer experience.
MiMedia’s platform has millions of engaged users around the world today and will now enter its growth phase. MiMedia believes that is it well-positioned for an inflection in revenue and cash generation based on current partner deployments and a growing partner pipeline. MiMedia deploys its solution via partnerships with industry leading smartphone device manufacturers (“OEMs”) and telecom carriers (“Telcos”) globally. MiMedia provides its partners with potential high-margin, recurring revenue streams, improved customer retention and immediate market leadership.
Summary of Financial Information for MiMedia
The following table sets forth selected audited historical financial information for MiMedia for the financial years ended December 31, 2020 and December 31, 2019. The financial information has been prepared in accordance with International Financial Reporting Standards.
|
Income Statement Data |
Year Ended (audited) |
Year Ended (audited) |
|
|
Total Revenues |
29,615 |
14,162 |
|
|
Total Expenses |
1,138,914 |
1,890,692 |
|
|
Net Loss Before Income Tax Expense |
(1,109,299)
|
(1,876,530) |
|
|
Statement of Financial Position |
As at (audited) |
As at (audited) |
|
|
Total Assets |
27,363
|
35,892 |
|
|
Total Liabilities |
2,817,394 |
2,818,470 |
In the first half of 2021, MiMedia successfully completed a non-brokered private placement of shares of common stock for aggregate gross proceeds of US$2,777,932.
MiMedia Financing
Subject to the satisfaction of the applicable conditions, on or about November 16, 2021, MiMedia intends to complete a private placement (the “Private Placement”) of 16,586,000 subscription receipts (the “Subscription Receipts”), at a price of C$0.25 per Subscription Receipt, for aggregate gross proceeds of approximately C$4.1 million. Each Subscription Receipt will be convertible into one unit of MiMedia (each, a “Unit”) comprised of one share of common stock of MiMedia (each, a “MiMedia Share”) and one-half of one MiMedia Share purchase warrant (each whole MiMedia Share purchase warrant, a “Warrant”). Each Warrant will be exercisable to acquire one MiMedia Share at a price of C$0.32, subject to adjustment and acceleration in accordance with the warrant indenture governing the Warrants.
Pursuant to the Merger, each Unit will ultimately entitle the holder thereof to acquire one Resulting Issuer SVS and one-half of one Resulting Issuer SR Warrant (as each such term is defined below) and each Resulting Issuer SR Warrant will ultimately entitle the holder there of to acquire one Resulting Issuer SVS (on economically equivalent terms).
Canaccord Genuity Corp. (the “Agent”) has been engaged as agent in connection with the brokered portion of the Private Placement. The Agent will receive a cash commission equal to C$248,605 (the “Agent’s Commission”), an advisory fee (the “Advisory Fee”) equal to C$24,150 and 1,091,020 compensation warrants (the “Compensation Warrants”). Each Compensation Warrant will be exercisable to purchase one Unit at a price of C$0.25 for a period of twenty-four (24) months from the date that the Escrow Release Conditions (as hereinafter defined) are satisfied. In addition, the Agent will receive a corporate finance fee payable by the issuance of 497,580 Subscription Receipts to the Agent on the closing date of the Private Placement.
The proceeds from the Private Placement (less 50% of the Agent’s Commission, 50% of the Advisory Fee and certain expenses of the Agent in connection with the Private Placement) (the “Escrowed Proceeds”) will be held in escrow until the satisfaction of certain escrow release conditions, including the confirmation that all conditions precedent to the Transaction, other than the release of the Escrowed Proceeds, have been satisfied (the “Escrow Release Conditions”).
About the Transaction
Prior to the completion of the Transaction, Elk will hold a special meeting of its shareholders (the “Elk Meeting”), to approve, among other things, (i) the election of the board of directors of the Resulting Issuer following the completion of the Merger; (ii) the appointment of McGovern Hurley LLP as auditor of the Resulting Issuer; (iii) the consolidation (the “Consolidation”) of the issued and outstanding common shares of Elk (each, an “Elk Share”) prior to the Merger on the basis of 0.52083 of a post-Consolidation Elk Share for every one (1) pre-Consolidation Elk Share; (iv) the change of the name of the Resulting Issuer to “MiMedia Holdings Inc.”; (v) the amendment of the rights and restrictions of the Elk Shares and the re-designation of the issued and outstanding Elk Shares as “subordinate voting shares” (the “Resulting Issuer SVS”); (vi) the creation of multiple voting shares in the capital of the Resulting Issuer (the “Resulting Issuer MVS”); and (v) approval of a new equity incentive plan for the Resulting Issuer. On a post-Consolidation basis, it is anticipated that there will be approximately 3,177,083 Elk Shares issued and outstanding immediately prior to the completion of the Transaction.
Prior to, and in connection with, the Transaction, MiMedia will, among other things, complete a stock split (the “Stock Split”) whereby each outstanding MiMedia Share will be exchanged for approximately 2.6 post-split MiMedia Shares. On a post-Stock Split basis, it is anticipated that there will be approximately 39,915,343 MiMedia Shares issued and outstanding immediately prior to the completion of the Transaction (and, for greater certainty, prior to the issuance of the MiMedia Shares issuable upon conversion of the Subscription Receipts).
Details regarding the Elk Meeting and the terms of the Resulting Issuer SVS and Resulting Issuer MVS will be available in a management information circular that will be mailed to shareholders of Elk and filed on Elk’s SEDAR profile prior to the Elk Meeting. In addition, MiMedia will seek the requisite approval of its stockholders to approve the Merger, Stock Split and related matters.
The Resulting Issuer MVS are being proposed in order to minimize the proportion of the outstanding voting securities of the Resulting Issuer that are held by “U.S. persons” for purposes of determining whether the Resulting Issuer is a “foreign private issuer” for purposes of United States securities laws. The Resulting Issuer MVS will be entitled to one vote in respect of each Resulting Issuer SVS into which such Resulting Issuer MVS could be converted. As more particularly described below, it is currently anticipated that pursuant to the Merger each MiMedia Share, other than MiMedia Shares issued pursuant to the Private Placement, will be exchanged on the basis of one (1) Resulting Issuer MVS for every five (5) MiMedia Shares, with each such Resulting Issuer MVS being convertible at the option of the holder into five (5) Resulting Issuer SVS and being entitled to five (5) votes per share at meetings of the shareholders of the Resulting Issuer. Accordingly, the Resulting Issuer MVS and Resulting Issuer SVS will be economically equivalent on an as converted to Resulting Issuer SVS basis. Only the Resulting Issuer SVS are proposed to be listed on the TSX Venture Exchange.
Under the terms of the Merger Agreement, at the effective time of the Merger, among other things:
-
(a)The Resulting Issuer will issue to holders of MiMedia Shares that acquired their MiMedia Shares pursuant to the Private Placement one (1) Resulting Issuer SVS in exchange for each MiMedia Share held (approximately 16,586,000 Resulting Issuer SVS in aggregate).
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(b)The Resulting Issuer will issue to all other holders of MiMedia Shares one (1) Resulting Issuer MVS in exchange for every five (5) MiMedia Shares held (approximately 7,983,068 Resulting Issuer MVS in aggregate).
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(c)The Resulting Issuer will issue to holders of Warrants that acquire their Warrants pursuant to the Private Placement one (1) warrant of the Resulting Issuer (each, a “Resulting Issuer SR Warrant”) exercisable to acquire one (1) Resulting Issuer SVS on substantially the same terms applicable to the exercise of the Warrants (approximately 8,293,000 Resulting Issuer SR Warrants in aggregate).
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(d)Each holder of an outstanding warrant to purchase MiMedia Shares (of which 82,661 are issued and outstanding as at the date hereof) (each, a “MiMedia Warrant”) immediately before the completion of the Merger shall exchange each such MiMedia Warrant for one (1) Resulting Issuer MVS purchase warrant in the Resulting Issuer (each, a “Resulting Issuer Warrant”) with such Resulting Issuer Warrants having substantially the same terms and economic value as the MiMedia Warrants being exchanged.
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(e)Each holder of an outstanding option to purchase MiMedia Shares (of which 9,374 are issued and outstanding as at the date hereof) (each, a “MiMedia Option”) immediately before the completion of the Merger shall exchange each such MiMedia Option for one (1) Resulting Issuer MVS purchase option in the Resulting Issuer (each, a “Resulting Issuer Option”) with such Resulting Issuer Option having substantially the same terms and economic value as the MiMedia Option being exchanged.
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(f)Each Compensation Warrant will be exchanged for an economically equivalent compensation warrant of the Resulting Issuer exercisable to acquire Resulting Issuer SVS.
The completion of the Merger is conditional on obtaining all necessary regulatory and shareholder approvals in connection with the matters described above and other conditions customary for a transaction of this type.
Assuming the conversion of all Resulting Issuer MVS into Resulting Issuer SVS, it is currently anticipated that upon completion of the Transaction (the “Closing”): (i) the holders of Elk Shares will hold approximately 5.1% of the issued and outstanding shares of the Resulting Issuer; (ii) the holders of MiMedia Shares immediately prior to Closing (excluding the holders of the MiMedia Shares issued upon conversion of the Subscription Receipts) will hold approximately 64.1% of the issued and outstanding shares of the Resulting Issuer; (iii) the holders of MiMedia Shares issued upon conversion of the Subscription Receipts will hold approximately 27.5% of the issued and outstanding shares of the Resulting Issuer; and (iv) the holder of shares issued as payment of the Finder’s Fee (as defined below) will hold approximately 3.3% of the issued and outstanding shares of the Resulting Issuer.
The Transaction is being completed at deemed transaction price of C$0.25 per Elk Share (on a post- Consolidation basis).
The value of the consideration for the 39,915,343 MiMedia Shares (on a post-Stock Split basis) to be acquired by Elk pursuant to the Transaction is C$9,978,835.
Upon completion of the Transaction, Jeff Keswin, of New York, New York, is expected to be an insider of the Resulting Issuer by virtue of beneficially owning or controlling, directly or indirectly, more than 10% of the issued and outstanding shares of the Resulting Issuer.
Arm’s Length Transaction
The Transaction is not a non-arm’s length transaction in accordance with the policies of the TSXV and is not subject to Elk shareholder approval.
Directors and Officers of the Resulting Issuer
Upon completion of the Transaction, it is anticipated that the persons identified below will serve as directors and officers of the Resulting Issuer.
Chris Giordano – Director and Chief Executive Officer
Mr. Giordano has successfully funded, grown and exited tech, media and telecom companies over 22+ years. Before founding MiMedia Inc., Mr. Giordano was a Director at Baker Capital, a USD $1.5B Private Equity firm based in NYC. At Baker, Mr. Giordano served as a key contributor in $500M+ of investments, with some private investments in the Cloud industry resulting in USD $B+ exits. Prior to Baker, Mr. Giordano started his career at Merrill Lynch in NYC as an investment banker in the #1 ranked Telecom banking team globally. Due to his growing expertise in Internet Infrastructure platforms, Merrill Lynch recruited Mr. Giordano to launch Equity research coverage on the first group of “Cloud” or Internet Infrastructure companies. Mr. Giordano and team launched coverage on 16 companies and earned Top Institutional Investor rankings for their work.
Cole Brodman – Director
Mr. Brodman is a 30-year veteran of the telecommunications and technology industries. He was the former Chief Technology Officer and separately Chief Marketing Officer during his 17 years as a key member of the T-Mobile USA leadership team. During his tenure at T-Mobile and its predecessor, VoiceStream Wireless, Mr. Brodman helped lead the business from pre-launch stage to a national leader in wireless innovation with $20B in revenue and over 30 million customers. Mr. Brodman has also spent time as the CEO of a telecommunication software business, a partner at Trilogy Equity and served on boards of several scaling technology companies.
Seth Solomons – Director
Mr. Solomons brings over 30 years of global marketing experience in advertising, media, integrated marketing, data, and technology. He was most recently the CMO of Equinox, a premier luxury fitness club and hotel brand headquartered in NYC. Mr. Solomons has also been a C-level executive at some of the largest marketing agencies in the world, including Wunderman (CEO of North America for 4 years), RGA (President of US) and Digitas (Global Chief Marketing Officer for 12 years).
John MacPhail – Director
Mr. MacPhail brings 30+ years of business experience in Canada, as a former President, CEO, Officer, Board Director and Audit Committee member of many Canadian-based public companies that span the Financial Services, Mining, Healthcare and Technology industries. Currently, he is President, Chief Executive Officer & Director at Pacific Arc Resources Ltd. and Chairman and Chairman and CEO of Frontier Wellness Management Inc. John D. MacPhail is also on the board of five other companies. In the past, Mr. MacPhail occupied the position of Chief Executive Officer of Union Securities Ltd. and was President of Global Securities Corporation.
David W. Smalley – Director
Mr. Smalley is the principal of David Smalley Law Company where he practices Corporate and Securities law, prior to which he was a partner at Fraser and Company LLP in Vancouver, BC. He was called to the bar of the Law Society of British Columbia in 1989. Mr. Smalley earned a Bachelor of Laws degree from the University of British Columbia in 1988 and a Bachelor of Arts degree from the University of Victoria in 1985. He has been an officer and director of numerous public companies over the last 20 years as well as serving as chair of numerous audit and governance committees. Mr. Smalley was one of the founders of Canaco Resources (now Orca Gold Corp.) and was a director and chair of the audit committee of Scorpio Gold Company until November 2017.He currently serves as a Chairman and Director of Fabled Silver Gold Corp.
Chief Financial Officer
MiMedia has not yet identified a Chief Financial Officer of the Resulting Issuer, but intends to do so prior to closing of the Transaction.
Finder’s Fee
In connection with the completion of the Transaction, MiMedia will issue 2,025,316 MiMedia Shares (on a post-Stock Split basis) to certain arm’s length parties pursuant to a finder’s fee payable in connection with the Transaction (the “Finder’s Fee”).
Sponsorship
The TSXV has confirmed that the Transaction is exempt from sponsorship requirements under the policies of the TSXV subject to the submission to the TSXV of certain documentation. The parties intend to submit all applicable required documentation to the TSXV in connection with such exemption.
Filing Statement
In connection with the Transaction and pursuant to TSXV requirements, Elk will file a filing statement on SEDAR (www.sedar.com), which will contain details regarding the Transaction, the Merger, the Private Placement, Elk, MiMedia and the Resulting Issuer.
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 (THE “1933 ACT”) AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO A U.S. PERSON IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT.
The information contained or referred to in this press release relating to MiMedia has been furnished by MiMedia. Although Elk has no knowledge that would indicate that any statement contained herein concerning MiMedia is untrue or incomplete, neither Elk nor any of its respective directors or officers assumes any responsibility for the accuracy or completeness of such information.
Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and, if applicable pursuant to TSXV requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the 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 Transaction, any information released or received with respect to the 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.
The TSXV has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the content of this press release.
Notice regarding forward-looking statements:
This release includes forward-looking statements regarding Elk, MiMedia, and their respective businesses, which may include, but is not limited to, statements with respect to the completion of the Transaction, the terms on which the Transaction is intended to be completed, the use of the net proceeds from the Private Placement, the ability to obtain regulatory and shareholder approvals, the proposed business plan of MiMedia and other factors. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “is expected”, “expects”, “scheduled”, “intends”, “contemplates”, “anticipates”, “believes”, “proposes” or variations (including negative variations) of such words and phrases, or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. 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 Transaction, may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the companies, including risks regarding the MiMedia industry, failure to obtain regulatory or shareholder approvals, economic factors, the equity markets generally and risks associated with growth and competition. Although Elk and MiMedia have attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. 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 Elk and MiMedia undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
Elk is a capital pool company governed by the policies of the TSXV. The principal business of Elk is the identification and evaluation of assets or businesses with a view to completing a qualifying transaction.
Contact:
Efficacious Elk Capital Corp.
David Smalley, Director
Tel: (604) 684 – 4535
Email: [email protected]
MiMedia Inc.
Chris Giordano, Chief Executive Officer
Tel: (347) 687 – 4403
Email: [email protected]
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
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