DD: CAPSTREAM MD&A, Subsequent event Proposed Transactions and Subsequent Events
1. On January 17, 2012, the Company completed a non-brokered private placement of
4,000,000 common shares at
.10 per share for gross proceeds of $400,000. On February
7, 2012, 450,000 of these shares were returned to treasury and the proceeds of $45,000
were refunded to the investor.
2. On February 29, 2012, 315,000 stock options were exercised at
.10 for proceeds of
$31,500.
3. Subsequent to year end the Company entered into a Letter of Intent (“LOI”) to complete
its Qualifying Transaction with Intertainment Media Inc. (“Intertainment”), whereby the
Company will acquire 100% of Ortsbo Inc. (“Ortsbo), a subsidiary of Intertainment (the
“Transaction”).
The Company and Intertainment entered into the LOI dated February 22, 2012, which
contemplates: (1) Capstream consolidating its share capital on a 14 for 1 basis; (2)
Capstream acquiring all of the issued and outstanding shares of Ortsbo (“Ortsbo Shares”) in
consideration for the issuance of 30,000,000 Capstream common shares (“Capstream
Shares”), on a post-consolidation basis, at a price of $7.00 per share, of which 20,100,000
Capstream Shares will be issued to Intertainment’s Ortsbo subsidiary security holders (67%
of the pre-financing value of Ortsbo), and the remaining 9,900,000 Capstream Shares will
be distributed to the security holders of Intertainment on a pro rata basis (33% of the prefinancing
value of Ortsbo).
In connection with the Transaction, the parties are investigating the process of listing the
common shares of the resulting entity on a senior exchange in Canada and a potential dual
listing on a senior exchange in the U.S. following the completion of the Transaction