The Proposed Transaction
Pre-Closing Capitalization of Leo
As of the date hereof, Leo has 8,240,500 Leo Shares issued and outstanding and securities exercisable or exchangeable for, or convertible into, or other rights to acquire, an aggregate of 1,248,000 Existing Leo Shares at an exercise price of $0.10 per Leo Share. Upon completion of the Leo Consolidation, Leo will have 4,120,250 Leo Shares outstanding and securities exercisable or exchangeable for, or convertible into, or other rights to acquire, an aggregate of 674,000 Leo Shares at an exercise price of $0.20 per Leo Share.
Pre-Closing Capitalization of Conversion
As of the date hereof, Conversion's authorized capital consists of an unlimited number of class A common shares, of which 4,000 are issued and outstanding, an unlimited number of class B common shares, of which 2,000 are issued and outstanding, an unlimited number of class C common shares, of which 1,000 are issued and outstanding, an unlimited number of class D common shares, of which 1,000 are issued and outstanding, an unlimited number of class E common shares, of which 1,000 are issued and outstanding, an unlimited number of class F common shares, of which 1,000 are issued and outstanding, an unlimited number of class G non-voting common shares, of which none are issued and outstanding and an unlimited number of class H non-voting common shares, of which none are issued and outstanding (all of the issued and outstanding shares of all classes collectively, the "Conversion Shares"). There are no convertible securities of Conversion currently outstanding. Conversion has an aggregate of $2.25 million of shareholder loans outstanding (the "Conversion Loans"). The Conversion Loans will be converted into Conversion Shares prior to the completion of the Qualifying Transaction and it is expected that after the conversion of the Conversion Loans, there will be 460,000 Conversion Shares issued and outstanding.
Warren Eddy, Goodwin Gibson, Jonathan Huth, Greg Geralde, Rob Rathke and Carey Mende-Gibson together own, directly or indirectly, all of the issued and outstanding shares of Conversion. Each of the foregoing shareholders of conversion are residents of Canada.
Terms of the Transaction
Leo proposes to acquire all of the Conversion Shares pursuant to the terms of a Definitive Agreement. It is expected that each shareholder of Conversion will receive 45.65 Leo Shares (on a post-consolidation basis) for each Conversion Share held (the "Exchange Ratio") resulting in the Leo Shareholders holding approximately 16.4% of the common shares of the combined entity (the "Resulting Issuer") and the former Conversion Shareholders holding approximately 83.6% of the common shares of the Resulting Issuer upon completion of the Transaction (immediately prior to giving effect to the Offering). All classes of Conversion Shares will be exchanged for common shares of Leo in connection with the Transaction.
Conversion Marketing-Communication Inc. provides enterprise organizations with optimized digital marketing performance and financial returns through a uniquely integrated approach. Using a proprietary diagnostic tool, The Conversion Index, the company has developed a platform on which it is building a service offering focused on driving long term client relationship and recurring revenues. The Conversion Index is a robust digital marketing evaluation and executive management tool focused on the development of focused, effective and integrated digital marketing strategies and tactics. The Conversion Index evaluates over 300 digital marketing data points that are scored against either best performance and or best practice benchmarks across the broadest spectrum of digital marketing activities inclusive of Search Engine Marketing, Content Marketing, Web Presence, Customer Relationship Management (CRM) Social Media as well as Measurement and Analytics. Clients benefit from the benchmarking scores that the Conversion Index generates as well as a detailed gap analysis that informs a focused and actionable go forward strategy for their digital marketing. Annual re-scoring of the Index also allows clients to effectively measure their performance improvement. Clients have included major national retailers, financial service organizations, media organizations and manufacturers. The Conversion Index gap analysis and strategic recommendations also generates demand for the other core service offerings Conversion is building organically and through acquisition in the areas of Research, Search Engine Marketing, Content Marketing, Database Management, Social-CRM and Marketing Analytics. Conversion Marketing-Communication Inc. is based in Toronto, Ontario, Canada. www.driveconversion.com Financial Information Concerning Conversion.
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