Friday, 17 August 2018 05:40 PM
Jackpot Digital Inc. (formerly Las Vegas From Home.com Entertainment Inc.) (the “Company” or “Jackpot”) (TSX-V: JP) (US OTC Pink: JPOTF) (Frankfurt & Berlin Exchanges: LVH) is pleased to announce that it will be making a rights offering (the “Rights Offering”) in which holders of record of the Company's common shares, as at the record date of December 15, 2016, will receive rights to subscribe for units of the Company.
Description of Rights Offering
Each shareholder of record will receive one right (a “Right”) for each Jackpot common share held. One Right will permit the holder to purchase one unit (a “Unit”) at a price of $0.01 (which is a discount to the current market price of $0.02) for a period of 28 calendar days following the date of mailing of the Notice of the Rights Offering to shareholders of record (the “Exercise Period”). Each Unit will consist of one common share and one transferable share purchase warrant (a “Warrant”). Each Warrant will entitle the holder to purchase one additional common share at a price of $0.05 for five years from the date of issuance of the Warrant.
Holders of Rights that fully exercise their Rights will be entitled to subscribe for additional Units, if available, that were not subscribed for by other holders of Rights.
The Rights Offering is not subject to any minimum subscription level. If the Rights Offering is fully subscribed, Jackpot will issue up to 155,996,550 new common shares and Warrants to purchase up to an additional 155,996,550 shares, for total gross proceeds of approximately $1,559,965.50. If all the Warrants are exercised, the additional proceeds to the Company will be approximately $7,799,828. There are currently 155,996,550 common shares issued and outstanding. If all Rights are exercised, the Company’s issued and outstanding shares will increase to 311,993,100 and if all Warrants are exercised the issued and outstanding shares will be 467,989,650.
The Company understands that the directors and officers of the Company who own common shares intend to exercise their Rights to purchase common shares under the Rights Offering.
The terms of the Rights Offering and the procedures for exercising Rights will be explained in a rights offering circular (the “Rights Offering Circular”). The Rights Offering Circular will be available on the SEDAR website at www.sedar.com on Friday, December 9, 2016. To subscribe for common shares, a completed rights certificate, together with payment in full of the subscription amount for each Unit subscribed for, must be received by the subscription agent for the Rights Offering, Computershare Trust Company of Canada (the “Rights Agent”), before the last day of the Exercise Period. The record date and the expiry date for the Rights Offering will be determined when the Exchange has approved the Rights Offering.
The Rights Offering is not being made in any jurisdiction other than the applicable jurisdictions in Canada (the “Qualified Jurisdictions”), and is not, and under no circumstances is to be construed as an offering of any securities for sale in, or to a resident of any jurisdiction, other than the Qualified Jurisdictions, or a solicitation therein or an offer to buy or sell securities.
The Rights Offering is subject to regulatory approval, including the approval of the TSX Venture Exchange (the “Exchange”). The Rights will be transferable and listed for trading on the Exchange. The Warrants, when issued, are also expected to be listed on the Exchange, subject to Jackpot satisfying the Exchange's distribution requirement that at least 75 public shareholders hold at least one board lot each of the Warrants.
Stand-by Guarantees
30 Rock Management Inc. (“30 Rock”) will act as a stand-by guarantor for up to 40,000,000 Units of the Rights Offering, for subscription funds of up to $400,000. 30 Rock is owned by Jacob H. Kalpakian, Jackpot’s President and Chief Executive Officer, and Mr. Kalpakian, as Trustee of the JHK Family Trust. Bedo Kalpakian, a director of the Company, will also act as a stand-by guarantor for up to 5,000,000 Units of the Rights Offering, for subscription funds of up to $50,000. Neil Spellman, a director of the Company, will also act as a stand-by guarantor for up to 4,000,000 Units of the Rights Offering, for subscription funds of up to $40,000. 87 Capital Corp., the holder of the secured debenture in the principal amount of US$2,250,000, will act as a stand-by guarantor for up to 30,000,000 Units of the Rights Offering, for subscription funds of up to $300,000. Maria Arenas, Corporate Secretary of the Company, will also act as a stand-by guarantor for up to 1,000,000 Units of the Rights Offering, for subscription funds of up to $10,000. Eight other persons who are at arm's length will also act as stand-by guarantors for up to an aggregate 49,500,000 Units of the Rights Offering, for subscription funds of up to $495,000. The standby-by guarantees total up to $1,295,000.
As consideration for acting as stand-by guarantors, the Company will issue bonus warrants to each of 30 Rock, Bedo Kalpakian, Neil Spellman, 87 Capital, Maria Arenas and the other stand-by guarantors entitling them to acquire up to 32,375,000 common shares of the Company equal to 25% of the total number of shares each stand-by guarantor has agreed to purchase under the stand-by commitment, at a price of $0.05 per share for a period of five years after the date on which performance under the guarantees could be required. The stand-by guarantors who receive Rights as shareholders on the Record Date will not however receive bonus warrants for exercising their basic subscription privilege. If a stand-by guarantor exercises none of its Rights or exercises only a portion of its Rights, then the number of bonus warrants that will be issued to the stand-by guarantor will be reduced in accordance with the Exchange's policy.
Advance of Stand-by Commitment Funds
30 Rock has paid Jackpot $300,000 as an advance against its stand-by commitment of $400,000. The Company has agreed to pay interest on the advance at the rate of 10% commencing on the date of advance to the date of completion of the Rights Offering. To the extent that 30 Rock's stand-by commitment is not required for the purchase of Units that are not purchased by the holders of Rights under the Rights Offering, the advance of $300,000 will be repaid from the net proceeds from the Rights Offering. Jackpot used the $300,000 advance to pay Everi approximately US$100,000 (approximately CAD$150,000), and will use the balance towards ongoing development of Jackpot's second generation electronic poker table and for general working capital. Refer to a description below of the terms of the asset purchase agreement with Everi and the Company's interim financial statements for the nine months ended September 30, 2016 available on the SEDAR website at www.sedar.com.
Use of Net Proceeds of Rights Offering
Jackpot intends to use the net proceeds raised in the Rights Offering for the following purposes:
Payment to Everi Games, Inc.: On June 30, 2015 the Company entered into an asset purchase agreement, as amended on July 31, 2015 and August 6, 2015, with Multimedia Games, Inc. (now Everi) whereby the Company agreed to purchase from MultiMedia the assets of its PokerTek business unit for a purchase price that includes cash payments over time and share purchase warrants. Jackpot pays to Everi 60% of Jackpot's total monthly net revenues. Depending on the amount raised in the Offering, Jackpot intends to pay Everi the sum of either $250,000 or $500,000 from the proceeds of the Rights Offering to be applied toward the cash payments owed to Everi under the asset purchase agreement. For a full description of the acquisition of PokerTek and the asset purchase agreement, refer to the Company's interim financial statements for the nine months ended September 30, 2016 available on the SEDAR website.
Repayment of Advance against Stand-by Commitment
As discussed above, to the extent that the stand-by commitment of 30 Rock is not required for the purchase of Units that are not purchased by the holders of Rights under the Rights Offering, the funds paid to Jackpot as an advance of 30 Rock's stand-by commitment will be repaid from the net proceeds from the Rights Offering.
Development of Second Generation Electronic Poker Table
Jackpot intends to allocate $350,000 towards completion of the development and rollout of its second generation electronic poker table. The Company is in advanced stages of developing and rolling out its second generation table, which should provide significant growth prospects. The Company anticipates that the funds raised in the Rights Offering will be vital in enabling it to complete development, assembly and shipment of the new tables early in 2017.
General Working Capital: Any balance of the proceeds of the Rights Offering will be used for general working capital.
No U.S. Offering or Registration
This news release does not constitute an offer to sell, or the solicitation of an offer to buy securities in any jurisdiction, including the United States. The securities offered under the Rights Offering will not be or have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state of the United States. Such securities may not be offered or sold in the United States or to, or for the account or benefit of, any U.S. Person (as defined in Regulation S of the Securities Act) or person in the United States except in transaction exempt from or not subject to the registration requirements of the Securities Act and applicable state securities laws.
For more information on the Company, please contact Jake H. Kalpakian, President, at (604) 681-0204 ext
6105, or visit the Company’s website at www.jackpotdigital.com.
On behalf of the Board of
Jackpot Digital Inc.
“Jake H. Kalpakian”
_____________________________
Jake H. Kalpakian
President & CEO
Trading in the securities of the Company should be considered speculative.
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.
This news release contains forward-looking information that involve various risks and uncertainties regarding future events. There are numerous risks and uncertainties that could cause actual results and the Company’s plans and objectives to differ materially from those expressed in the forward-looking information, including, but not limited to: (i) the inability of the Company to obtain TSX Venture Exchange approval of this Rights Offering; ii) the inability of any or all shareholders or stand-by guarantors to exercise and subscribe for this Rights Offering; and (iii) other factors beyond the Company’s control. Actual results and future events could differ materially from those anticipated in such information.