/(NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA)/
TSX VENTURE: LEM-X
TORONTO, Sept. 19 /CNW/ - Lemontonic Inc. ("Lemontonic" or the
"Corporation") (TSX Venture: LEM-X) today announced amendments to its proposed
business combination with Pioneering Technology Inc. ("Pioneering") pursuant
to an amending letter agreement entered into on September 16, 2005 (the
"Pioneering Letter Agreement").
"We have been working through the details of this transaction for a
number of months and I am satisfied that we have maximized the potential value
for Lemontonic shareholders," stated Mark Pavan, CEO of Lemontonic. "We will
be holding a conference call within the next ten days to answer any further
questions shareholders may have."
Summary of the Proposed Reverse Takeover
As previously announced, Lemontonic entered into a non-arm's length
letter agreement dated April 26, 2005 with Pioneering and the principal
shareholders of Pioneering, pursuant to which the Corporation and Pioneering
have agreed to complete a business combination (the "Business Combination") to
form a new company called Pioneering Technology Inc. ("New Pioneering"). The
Business Combination is expected to constitute a Reverse Takeover of the
Corporation as defined in the policies of the TSX Venture Exchange Inc. ("TSX
Venture").
Pursuant to the Pioneering Letter Agreement, immediately prior to the
proposed Business Combination with Lemontonic, Pioneering will reorganize its
capital structure (the "Pioneering Reorganization") so as to have 155,000,000
common shares (the "Pioneering Common Shares") issued and outstanding and no
stock options, warrants or other dilution. Pursuant to the Pioneering
Reorganization the holders of all units of Energy Smart General Partnership
will convert their units into Pioneering Common Shares and the Marketing and
Development Agreement dated as of January 2, 2003 between Pioneering and
Energy Smart General Partnership will be terminated.
Pursuant to the Pioneering Letter Agreement, Pioneering will not be
proceeding with a private placement financing as previously announced but
alternatively the Business Combination will be completed after Lemontonic has
completed a private placement of approximately 23,000,000 units of Lemontonic
(the "Lemontonic Units") at a price expected to be between $0.08 and $0.10 per
unit or such other price as is in the context of the market (the "Offering
Price") for gross proceeds of approximately $1,840,000 (the "Lemontonic
Private Placement"), to be completed in one or more closings. Each Lemontonic
Unit will consist of one Lemontonic Common Share and one share purchase
warrant (the "Lemontonic New Warrants") exercisable at a price of $0.15 per
share for two years. Lemontonic has engaged Research Capital Corporation
("Research Capital") to act as agent in connection with the Lemontonic Private
Placement and in connection therewith Research Capital will be paid a
commission. In addition, Research Capital will be granted agents' options (the
"Lemontonic New Agents' Options") to purchase 10% of the number of Lemontonic
Units issued pursuant to the Lemontonic Private Placement at the Offering
Price for a period of two years.
Lemontonic intends to complete the Lemontonic Private Placement in escrow
on October 6, 2005 and the funds, subscription agreements, share certificates
and warrant certificates will remain in escrow until the completion of the
Business Combination. Lemontonic intends to use the proceeds of the Lemontonic
Private Placement for general working capital purposes of New Pioneering in
the discretion of the Board of Directors of New Pioneering after completion of
the Business Combination.
Pursuant to the terms of the Business Combination as amended by the
Pioneering Letter Agreement: (i) the holders of the Pioneering Common Shares
will receive one common share of New Pioneering (the "New Pioneering Common
Shares") with a deemed value of the Offering Price per share for each
Pioneering Common Share owned; and (ii) the holders of the Lemontonic Common
Shares will receive one New Pioneering Common Share and one common share of
New Lemontonic (defined below) (the "New Lemontonic Shares") for each existing
Lemontonic Common Share owned. The outstanding Lemontonic agent's options,
warrants and stock options shall be replaced with agent's options, warrants
and stock options of New Pioneering with identical terms.
As a condition of the Business Combination, Lemontonic is required to
either sell or shut down its existing online dating business. Lemontonic has
in a previous press release announced that it has entered into a letter
agreement dated April 26, 2005 with Silverback Media Limited ("Silverback
Media"), pursuant to which Lemontonic has agreed to sell its existing online
dating business to Silverback Media. Pursuant to an amending letter agreement
dated September 16, 2005, between Silverback Media and Lemontonic (the
"Silverback Letter Agreement), the parties have agreed that pursuant to the
Business Combination with Pioneering, Lemontonic will transfer its existing
online dating business to a new subsidiary ("New Lemontonic") and pursuant to
the Business Combination shareholders of Lemontonic will receive New
Pioneering Common Shares as well as New Lemontonic Shares such that
shareholders of Lemontonic will own 81.5% of New Lemontonic and shareholders
of New Pioneering (the "Lemontonic Reorganization") will own the remaining
18.5%. After completion of the Lemontonic Reorganization and the Business
Combination, pursuant to the Silverback Letter Agreement, New Lemontonic and
Silverback Media then intend to complete a merger by way of amalgamation or
arrangement (the "Silverback Merger"). Pursuant to the Silverback Merger, the
shareholders of New Lemontonic will receive shares of Silverback Media on the
basis of an aggregate of CDN$14,972,000 in shares of Silverback Media at a
price of US$2.00 per share, or lower in certain circumstances, for an
aggregate of 6,327,916 shares of Silverback Media (based on an exchange ratio
of US$0.8453 for each CDN$1.00) to be issued to all shareholders of New
Lemontonic. New Lemontonic will have approximately 118,500,000 New Lemontonic
Shares outstanding, with 81.5% being owned by shareholders of Lemontonic and
18.5% by New Pioneering.
Conditions of Closing
The completion of the Business Combination and the Lemontonic
Reorganization is subject to the approval of TSX Venture and all other
necessary regulatory approval. The completion of the Business Combination and
the Lemontonic Reorganization is also subject to additional conditions
precedent, including shareholder approval of Lemontonic and Pioneering,
satisfactory completion by due diligence reviews by the parties, board of
directors approval of Lemontonic and Pioneering, the entering into of a formal
binding agreement, the entering into of employment agreements and non-
competition agreements with certain senior officers and principal shareholders
of Pioneering, and certain other usual conditions. The closing of the Business
Combination is not conditional on the completion of the Silverback Merger, and
will be completed if the closing conditions are met even if the Silverback
Merger is not completed.
The completion of the Silverback Merger is subject to the receipt of all
necessary regulatory approval and certain other conditions precedent,
including shareholder approval of New Lemontonic, directors approval of New
Lemontonic and Silverback Media, satisfactory completion of due diligence
review by the parties, the entering into of a formal binding agreement and the
listing of the shares of Silverback Media on an acceptable stock exchange or
bulletin board.
Transaction Summary
After completion of the Business Combination and the Silverback Merger,
each shareholder of Lemontonic will hold one common share of New Pioneering,
and will receive five shares of Silverback Media for each 100 Lemontonic
Shares formerly owned.
About Pioneering
Pioneering is an "Energy-Smart" product innovation company based in
Mississauga, Ontario that creates platform and derivative technologies that
manage, control and transform heat into useful forms of energy. Pioneering
engineers and brings to market energy smart solutions for consumer products
making them safer, smarter and/or more efficient. Pioneering's business to
business model is focused on developing innovative solutions for existing
industry problems and licensing or selling its proprietary product components
to leading Original Equipment Manufacturer's ("OEM's") and other established
distribution channels.
About Silverback Media
Silverback Media is a private company recently established to accumulate
various interactive online media businesses, with an international reach and
an emphasis on the social networking space. Silverback Media has entered into
agreements to acquire one private online dating business and three wireless
content technology and online advertising companies.
Silverback Media was recently incorporated under the laws of Gibraltar.
The principal offices of Silverback Media are located at 53 Jarvis Street,
Suite 300, Toronto, Ontario M5C 2H2 and 33 Cork Street, 5th Floor, London,
U.K. W1S 3NQ.
The current directors of Silverback Media are Martin J. Doane and
Paul Heney. The principal shareholder of Silverback Media is Balaton Group
Inc. The current officers of Silverback Media are Martin J. Doane, President
and CEO; Paul Heney, Executive Vice President, and COO, and Khurram Qureshi,
Chief Financial Officer.
As indicated above, completion of the Business Combination, Lemontonic
Reorganization and the Silverback Merger are subject to a number of
conditions, including but not limited to, TSX Venture acceptance and
shareholder approval. The Business Combination, Lemontonic Reorganization and
the Silverback Merger cannot close until the required shareholder approval is
obtained. There can be no assurance that the Business Combination, Lemontonic
Reorganization or the Silverback Merger will be completed as proposed or at
all.
Investors are cautioned that, except as disclosed in the Information
Circular of the Corporation to be prepared in connection with the Business
Combination, Lemontonic Reorganization and the Silverback Merger, any
information released or received with respect to the Business Combination,
Lemontonic Reorganization and the Silverback Merger may not be accurate or
complete and should not be relied upon. Trading in the securities of the
Corporation should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the
Business Combination, Lemontonic Reorganization or the Silverback Merger and
has neither approved nor disapproved the contents of this press release.
Except for historical information contained herein, this news release
contains forward-looking statements that involve risks and uncertainties.
Actual results may differ materially. Factors that might cause a difference
include, but are not limited to, market acceptance of principal products, the
impact of competitive products and technologies, the possibility of products
infringing patents and other intellectual property of fourth parties, and
costs of product development. Lemontonic will not update these forward-looking
statements to reflect events or circumstances after the date hereof. More
detailed information about potential factors that could affect financial
results is included in the documents filed from time to time with the Canadian
securities regulatory authorities by Lemontonic.
%SEDAR: 00015147E
