Ulster1,
Here is the first set of news that should start the promotion campaign for EKP (formerly SOJ)
TC
EcomPark Inc -
EcomPark completes acquisition of Generation-Net
EcomPark Inc EKP
Shares issued 25,981,400 1999-06-04 close $1.35
Friday Jun 4 1999
Mr. John McMahon reports
EcomPark Inc. (formerly Storage One Inc.) has completed its previously announced acquisition of all of the issued and outstanding shares of Generation-Net Services Inc., a private company based in Montreal and Toronto, which specializes in the conception and realization of Web-based business strategies and solutions, including Web site/intranet/extranet development, e-commerce and Web hosting. The final purchase price for the shares of Generation-Net was $10,850,000 which was paid by $4,850,000 in cash and by the issuance of six million common shares of EcomPark at a deemed value of $1.00 per share. The six million common shares are subject to two escrow agreements imposed by the Alberta Stock Exchange with 2,209,800 common shares being subject to a time-release escrow over three years and 3,790,200 common shares being subject to a performance escrow releasable based on revenue of Generation-Net. In addition, in connection with the Generation-Net acquisition, EcomPark invested $644,730.50 in Generation-Net, which Generation-Net used to repay certain outstanding debentures of Generation-Net. Further, EcomPark also invested $1.15-million in Generation-Net for working capital purposes and to repurchase all outstanding options to purchase shares of Generation-Net. EcomPark used the proceeds from the recently completed special warrant financing to finance the cash portion of the purchase price and the investments into Generation-Net.
Generation-Net has solidified its position as a leading Web strategist/developer by bringing together the rare combination of superior, creative and technical talent, professional sales and marketing personnel, as well as an experienced management team. Generation-Net, with 60 employees and offices in Montreal and Toronto, has co-ordinated and executed over 100 successful Web projects and has received numerous awards for both design and technical achievement.
Generation-Net's clients include such companies as Alliance Atlantis Communications, Bristol-Myers Squibb, Canadian National, History Television, Showcase Television, CHOM FM, Royal Lepage, Cadillac Fairview, A.L. Van Houtte, Holt Renfrew, Aldo Shoes, the Quebec Liquor Board, Radio Canada, Microsoft Canada, Microsoft Network, the Comedy Network, Astral Communications, Southam Newspapers, Gaz Metropolitain and Bentley Group, Casa Loma, and Fuji-Xerox Laboratories.
Generation-Net was founded in March 1995 by Garner Bornstein and Pierre Vanacker. Mr. Bornstein, the president and chief execution officer of Generation-Net and the new chief executive officer of EcomPark, possesses over 16 years of management experience. Prior to commencing Generation-Net, from April, 1987, until March, 1995, Mr. Bornstein held the position of vice-president, operations for a mid-sized real estate development and management firm. From September, 1981, until April, 1987, Mr. Bornstein worked for STS Systems Ltd., one of Canada's largest software companies. At STS, Mr. Bornstein held a variety of positions including programmer, senior analyst and director of special projects. Mr. Vanacker, the chief technology officer of Generation-Net, graduated from University of Lyon, France with a Masters degree in business information systems analysis and possesses six years of software design and development experience. Other members of Generation-Net's management team include: Mark Dickie, vice-president of sales and marketing who has 15 years sales and sales management experience in the media sector with such companies as MacLean Hunter Limited and CHUM Ltd.; Isabelle Lebreton, director of human resources, who possesses a Masters of Human Resource Management and several years of related experience for such companies as the National Bank of Canada and the City of Montreal; Imane Choukrallah, director of development, who possesses seven years of experience in information systems management for such companies as Bell Sygma and CGI; John Bickle, management of network systems, who has 10 years of experience in the networking and operations field, having worked as a consultant to the Canadian Federal Government and for the Canadian and United States military; Daniel Dutescu, creative director, who has participated in the conception of creative campaigns for such companies as La Senza, Suzy Shier, Boca, Au Coton, Imperial Tobacco, Du Maurier, Sony United States and Player's; and finally Isabelle Johnson, director of finance, who possesses 13 years experience in the financial field for various companies, including Standard Life and Arthur Andersen & Co.
For the year ended May 31, 1998, Generation-Net posted revenues of $2,461,778, with EBITDA of $413,666 and net earnings of $86,278. For the 10 month period ended March 31, 1999, Generation-Net posted revenues of $2,810,928 and is on target for its estimated annual revenues of $3.4-million for May 31, 1999. For the same 10 month period, Generation-Net had EBITDA of $270,553 and a net loss of $28,336, subject to final year-end adjustments. During the current year, revenues have increased by an average of 16.5 per cent per quarter and Generation-Net has a current revenue run rate (revenue run rate is calculated by annualizing last quarter revenues of approximately $1-million) of approximately $4-million. The assets of Generation-Net grew from $1,082,300, as at May 31, 1998, to $2,171,145 as at March 31, 1999. Shareholders' equity (treating subordinated shareholder loans as equity) rose from ($487,779) as at May 31, 1998 to $555,732 as at March 31, 1999, in large part due to a financing with Caisse de depot et placement in July, 1998.
On June 15, 1998, Generation-Net was selected as one of the charter members of Montreal's Multimedia City. As part of this program, Generation-Net is eligible to receive tax credits equivalent to approximately 40 per cent of its development payroll for the next 10 years. The Multimedia City program provides Generation-Net with a tremendous opportunity to expand its presence in United States and European markets. Generation-Net's low development cost base, together with the relatively low Canadian dollar enables Generation-Net to provide clients in those markets with extremely cost-effective Web solutions.
The acquisition of Generation-Net follows the recently completed acquisition of Web developer, Rollercoaster Studios Inc. The two entities together will be one of Canada's largest Web strategy and development companies.
Yorkton Securities Inc. acted as financial adviser with respect to the Generation-Net acquisition and in connection therewith was paid a fee of $165,000 cash and 385,000 common shares of EcomPark by the shareholders of Generation-Net, with the shares also being subject to time and performance-based escrow. In addition, Yorkton received a finder's fee from EcomPark of $500,000 which was paid by the issuance to Yorkton of 500,000 common shares of EcomPark at a deemed price of $1.00 per share, which shares will be subject to a one-year statutory hold period.
Finally, as a condition of the Generation-Net acquisition, EcomPark has granted 1.5 million stock options to the employees, officers and directors of Generation-Net to purchase 1.5 million common shares of EcomPark at a price of $1.00 per share.
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