VANCOUVER, -- Dec. 23, 2004 -- IP Applications Corp. (TSX-Venture: IAP) ('IP Applications' or the 'Company'), a leading provider of outsourced Internet services, announces the closing of the first tranche of the non-brokered private placement led by Pender Growth Fund (VCC) Inc. ("PGF") of up to 9 million Units at $0.20 per Unit for gross proceeds of up to $1.8 million.
The Company has issued 5 million Units to PGF for net proceeds of $1 million. Each Unit consists of one common share, one-half warrant and one cashless put warrant, as previously announced. The common shares and warrants comprising the Units, and any common shares issued upon exercise of the warrants, are subject to a four month hold period that expires on April 23, 2005.
The closing of the second tranche of up to 4 million Units for net proceeds of up to $800,000 is subject to the Company meeting certain conditions and is scheduled to occur within 120 days.
The Company will use the proceeds to drive additional North American sales and marketing, establish comprehensive agent and reseller programs and continue to develop and enhance its proprietary application technology.
As previously announced, the Company also issued to PGF warrants to purchase an additional 3,750,000 common shares at a price of $0.20 per share for a period of 24 months from today.
PGF now owns an aggregate of 11,750,000 common shares of the Company, share purchase warrants entitling it to acquire a further 9,250,000 common shares of the Company and cashless put warrants convertible into 1,666,667 common shares of the Company. PGF currently holds 25.6% of the issued and outstanding common shares of the Company. Assuming the exercise of all warrants held by PGF and the conversion of the cashless put warrants, PGF will hold approximately 39.9% of the issued and outstanding common shares of the Company. PGF has acquired the Units for investment purposes and may make further purchases of securities of the Company. If the conditions to the second tranche are satisfied and the Company issues an additional 4 million Units, PGF will be required to purchase 2.5 million Units and will own an aggregate of 14,250,000 common shares of the Company, share purchase warrants entitling it to acquire a further 10,500,000 common shares of the Company and cashless put warrants convertible into 2,500,000 common shares of the Company. PGF would then hold 28.6% of the issued and outstanding common shares of the Company and, assuming the exercise of all warrants held by PGF and the conversion of the cashless put warrants, PGF would hold approximately 43.4% of the issued and outstanding common shares of the Company.
PGF is a widely held corporation with approximately 2,000 shareholders. The largest shareholder of PGF is Pender Financial Group (TSX Venture: PDF - News) which owns approximately 3% of PGF.
About IP Applications
IP Applications provides comprehensive outsourcing solutions that enable service providers to deliver high quality Internet services. A leading provider in the industry, IP Applications has an enviable customer list, providing secure Internet outsourcing solutions to AOL Canada, Sprint, Telus, Melaleuca, Quixtar, Skycable and Navigata.
