SPRX - Sparx Completes Sale of iPowow USA Inc.
(TheNewswire)
Vancouver, BC, Canada – TheNewswire - July 12, 2024 – Sparx Technology Inc . (TSXV: SPRX.H) (“ Sparx ” or the “ Company ”) announcesthat, further to its news releases dated April 1, 2024 and June 4,2024, and the share purchase agreement (the “ SPA ”) datedeffective March 26 , 2024,as amended, with Blok Sports, LLC (“ Blok ”), aprivately-held, third-party corporate entity headquartered in LosAngeles, California, the Company has completed the sale of all of theissued and outstanding securities of its U.S. operating subsidiary,iPowow USA Inc. (‘ iPowow ”), to Blok (the “ Sale Transaction ”). The Company and Blok are arm’s length parties.
Blok is an early-stage, venture backed technologycompany founded in 2019 by Mitchell Chun, its current CEO, which hasdeveloped a suite of social sports betting, fan engagement, andAI-driven content and analytics solutions. Blok’s core offering isa regulated decentralized sports betting exchange developed usingnext-generation blockchain technology to ensure an unparalleled levelof trust, fairness, and transparency for its users around the globe.
Pursuant to the Sale Transaction, Sparx’s Canadianoperating subsidiary, Sparx Technology Corp. (“ Subco ”),transferred all of its operating assets and material contracts toiPowow. In addition, through the Sale Transaction, and a follow-onsale transaction of Subco that is expected to close in the comingdays, an aggregate of approximately $1.375 million of consolidatedindebtedness of Sparx was extinguished. Following completion of theSale Transaction, Sparx has no operating assets.
In connection with the Sale Transaction, an aggregateof 26,814,154 currently outstanding common shares of Sparx (the“ Shares ”) have been cancelled pursuant to the terms of a SurplusEscrow Agreement dated March 23, 2022 (the “ Escrow Share Cancellation ”). Following the Escrow Share Cancellation, the Companyhas 46,288,175 Shares issued and outstanding.
As consideration for the Sale Transaction, Sparxreceived 721,587 common units of Blok (the “ Blok Units ”), representing approximately 4.5 % of the Blok Unitsissued and outstanding on a post-transaction basis. In addition,Sparx is entitled to receive approximately 12% of up to an additional 3,200,000 Blok Units which may be issued byBlok, subject to iPowow achieving certainrevenue milestones (the “ Performance Payment Units ”), from definedcustomers, over a period of 16 months following completion of the SaleTransaction.
Pursuant to the Sale Transaction, Sparx depositedapproximately 17 % of its Blok Units into escrowfor a period of one year, to support indemnity obligations concerning certain representations, warrants andcovenants set out in the SPA. Certain othersignificant members of Blok have also deposited Blok Units into escrowunder the same terms.
The Company will provide further updates regardingcertain other reorganization events discussed in its news releasedated April 1, 2024 and approved by shareholders of the Company at itsAnnual General and Special Meeting held May 31, 2024, as they becomeavailable. In connection with such transactions, the Company willalso be making application to the TSX Venture Exchange (the“ Exchange ”) in connection with the resumption in trading of itsshares on the NEX board of the Exchange.
Early Warning Disclosure
As a result of the Escrow Share Cancellation, thefollowing persons (collectively, the “ Principal Shareholders ”) disposed of Shares, requiring disclosure pursuant to theearly warning requirements: (a) Drew Craig disposed of 9,659,259Shares that he had ownership and direction or control over (13.21% ofthe issued and outstanding Shares on a non-diluted basis); (b) CedarCreek Broadcasting LLC (a company controlled by Brian Brady) disposedof 7,883,281 Shares that it had ownership and direction or controlover (10.78% of the issued and outstanding Shares on a non-dilutedbasis); and (c) Richard Hubbard disposed of 7,883,282 Shares that hehad ownership and direction or control over (10.78% of the issued andoutstanding Shares on a non-diluted basis).
Following the Escrow Share Cancellation, the PrincipalShareholders have ownership and direction or control over thefollowing: (a) Drew Craig 8,194,527 Shares, and 400,000 options,representing 17.70% of the issued and outstanding Shares on anon-diluted basis and 18.41% on a partially diluted basis, assuming exercise of his options; (b) Brian Brady6,624,958 Shares, and 400,000 options, representing 14.31% of theissued and outstanding Shares on a non-diluted basis and 15.05% on apartially diluted basis, assuming exercise of his options; and (c)Richard Hubbard 6,449,957 Shares, representing 13.93% of the issuedand outstanding Shares on a non-diluted basis.
Neither the Company nor, to the knowledge of theCompany after reasonable inquiry, the Principal Shareholders, haveknowledge of any material information concerning the Company or itssecurities which has not been generally disclosed.
The Company has been advised that the securities weredisposed of by the Principal Shareholders due to the contractualrequirements governing such Shares and the Principal Shareholders haveno present intention to dispose of or acquire further securities ofthe Company, although the Principal Shareholders may, in the future,acquire or dispose of securities of the Company through the market orotherwise, as circumstances or market conditions warrant.
To obtain a copy of the early warning reports filedunder applicable Canadian provincial securities legislation, please goto the Company’s profile on SEDAR.
On behalf of the Board
Al Thorgeirson
CEO and President
For further information, pleasecontact:
Al Thorgeirson
CEO and President
(403) 471-3503
Investor relations
Neither TSX Venture Exchange nor itsRegulation Services Provider (as that term is defined in the policiesof the TSX Venture Exchange) accepts responsibility for the adequacyor accuracy of this release.
Forward-LookingStatements
Statements included in this newsrelease, including statements concerning the Company’s plans,intentions, and expectations, which are not historical in nature, areintended to be, and are hereby identified as, “forward?lookingstatements”. Forward?looking statements may be, but are notalways, identified by words including “anticipates”,“believes”, “intends”, “estimates”, “expects” andsimilar expressions. The Company cautions readers thatforward?looking statements, and related matters, are subject tocertain risks and uncertainties that could cause actual results todiffer materially from those indicated in the forward?lookingstatements. There can be no assurance that any forward-lookingstatement will prove to be accurate or that management's assumptionsunderlying such statements, including assumptions concerning theCompany, or future developments, circumstances or results willmaterialize. The forward-looking statements included in this newsrelease are made as of the date of this news release and the Companydoes not undertake to update or revise any forward-looking informationincluded herein, except in accordance with applicable securitieslaws.
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