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TMCNet:  Oriana Resources Corporation announces agreement to complete qualifying transaction with MLM1 Corp.

[July 07, 2014]

Oriana Resources Corporation announces agreement to complete qualifying transaction with MLM1 Corp.

(Canada Newswire Via Acquire Media NewsEdge) /NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR RELEASE PUBLICATION, DISTRIBUTION OR DISSEMINATION DIRECTLY, OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAWS./ 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

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