Sparx Completes Sale of iPowow USA Inc.
 | |||||||||
 |  |  | |||||||
Vancouver, BC, Canada – TheNewswire - July 12, 2024 – Sparx Technology Inc. (TSXV: SPRX.H) (“Sparx” or the “Company”) announces that, further to its news releases dated April 1, 2024 and June 4, 2024, and the share purchase agreement (the “SPA”) dated effective March 26, 2024, as amended, with Blok Sports, LLC (“Blok”), a privately-held, third-party corporate entity headquartered in Los Angeles, California, the Company has completed the sale of all of the issued 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 technology company founded in 2019 by Mitchell Chun, its current CEO, which has developed a suite of social sports betting, fan engagement, and AI-driven content and analytics solutions. Blok’s core offering is a regulated decentralized sports betting exchange developed using next-generation blockchain technology to ensure an unparalleled level of trust, fairness, and transparency for its users around the globe.
Pursuant to the Sale Transaction, Sparx’s Canadian operating subsidiary, Sparx Technology Corp. (“Subco”), transferred all of its operating assets and material contracts to iPowow. In addition, through the Sale Transaction, and a follow-on sale transaction of Subco that is expected to close in the coming days, an aggregate of approximately $1.375 million of consolidated indebtedness of Sparx was extinguished. Following completion of the Sale Transaction, Sparx has no operating assets.
In connection with the Sale Transaction, an aggregate of 26,814,154 currently outstanding common shares of Sparx (the “Shares”) have been cancelled pursuant to the terms of a Surplus Escrow Agreement dated March 23, 2022 (the “Escrow Share Cancellation”). Following the Escrow Share Cancellation, the Company has 46,288,175 Shares issued and outstanding.
As consideration for the Sale Transaction, Sparx received 721,587 common units of Blok (the “Blok Units”), representing approximately 4.5% of the Blok Units issued 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 by Blok, subject to iPowow achieving certain revenue milestones (the “Performance Payment Units”), from defined customers, over a period of 16 months following completion of the Sale Transaction.
Pursuant to the Sale Transaction, Sparx deposited approximately 17% of its Blok Units into escrow for a period of one year, to support indemnity obligations concerning certain representations, warrants and covenants set out in the SPA. Certain other significant members of Blok have also deposited Blok Units into escrow under the same terms.
The Company will provide further updates regarding certain other reorganization events discussed in its news release dated April 1, 2024 and approved by shareholders of the Company at its Annual General and Special Meeting held May 31, 2024, as they become available. In connection with such transactions, the Company will also be making application to the TSX Venture Exchange (the “Exchange”) in connection with the resumption in trading of its shares on the NEX board of the Exchange.
Early Warning Disclosure
As a result of the Escrow Share Cancellation, the following persons (collectively, the “Principal Shareholders”) disposed of Shares, requiring disclosure pursuant to the early warning requirements: (a) Drew Craig disposed of 9,659,259 Shares that he had ownership and direction or control over (13.21% of the issued and outstanding Shares on a non-diluted basis); (b) Cedar Creek Broadcasting LLC (a company controlled by Brian Brady) disposed of 7,883,281 Shares that it had ownership and direction or control over (10.78% of the issued and outstanding Shares on a non-diluted basis); and (c) Richard Hubbard disposed of 7,883,282 Shares that he had ownership and direction or control over (10.78% of the issued and outstanding Shares on a non-diluted basis).
Following the Escrow Share Cancellation, the Principal Shareholders have ownership and direction or control over the following: (a) Drew Craig 8,194,527 Shares, and 400,000 options, representing 17.70% of the issued and outstanding Shares on a non-diluted basis and 18.41% on a partially diluted basis, assuming exercise of his options; (b) Brian Brady 6,624,958 Shares, and 400,000 options, representing 14.31% of the issued and outstanding Shares on a non-diluted basis and 15.05% on a partially diluted basis, assuming exercise of his options; and (c) Richard Hubbard 6,449,957 Shares, representing 13.93% of the issued and outstanding Shares on a non-diluted basis.
Neither the Company nor, to the knowledge of the Company after reasonable inquiry, the Principal Shareholders, have knowledge of any material information concerning the Company or its securities which has not been generally disclosed.
The Company has been advised that the securities were disposed of by the Principal Shareholders due to the contractual requirements governing such Shares and the Principal Shareholders have no present intention to dispose of or acquire further securities of the Company, although the Principal Shareholders may, in the future, acquire or dispose of securities of the Company through the market or otherwise, as circumstances or market conditions warrant.
To obtain a copy of the early warning reports filed under applicable Canadian provincial securities legislation, please go to the Company’s profile on SEDAR.
On behalf of the Board
Al Thorgeirson
CEO and President
For further information, please contact:
Al Thorgeirson
CEO and President
(403) 471-3503
Investor relations
Neither 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 release.
Forward-Looking Statements
Statements included in this news release, including statements concerning the Company’s plans, intentions, and expectations, which are not historical in nature, are intended to be, and are hereby identified as, “forward‐looking statements”. Forward‐looking statements may be, but are not always, identified by words including “anticipates”, “believes”, “intends”, “estimates”, “expects” and similar expressions. The Company cautions readers that forward‐looking statements, and related matters, are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward‐looking statements. There can be no assurance that any forward-looking statement will prove to be accurate or that management's assumptions underlying such statements, including assumptions concerning the Company, or future developments, circumstances or results will materialize. The forward-looking statements included in this news release are made as of the date of this news release and the Company does not undertake to update or revise any forward-looking information included herein, except in accordance with applicable securities laws.