TORONTO, January 28, 2019 /PRNewswire/ --
- Concerned Shareholders highlight perilous 86% share price
decline during past 14 months caused by inadequate management and
oversight, underscored by apparent lack of appreciation for the
underlying business and operational issues.
- New board of highly experienced and fully independent
directors will revitalize Kuuhubb by leveraging existing assets,
focusing on market opportunities, reducing costs, improving
existing apps and developing new
associated apps.
- Nominee directors bring much
needed industry, operational, public company, governance,
financial and legal expertise
to the board, have demonstrated the ability to manage a company
through growth and are all personally committed to reversing value
destruction.
- Time to put an end to the share price freefall and
refocus on value creation.
A group of Kuuhubb Inc. (TSXV: KUU) ("Kuuhubb" or the
"Company") shareholders[1]
(the "Concerned Shareholders"), led by Marco Durante, together owning more than 5% of
the outstanding shares of the Company, have requisitioned a special
meeting of Kuuhubb shareholders for the purpose of replacing the
entire board of directors (the "Board") with new directors
capable of fixing the staggering value destruction at the hands of
the current CEO, Jouni Keränen, and
overseen by the Board.
"The current board-consisting of Jouni Keränen, Christian Kolster, Carl-Gustaf von Troil, Philip Chen, Maurice
Colson and Arnold Kondrat-has
presided over a period of dramatic destruction of shareholder value
and has shown no ability or plan to turn things around," said Mr.
Durante. "The only pragmatic choice is to install a completely new
and independent board consisting of five independent, highly
qualified, skilled and experienced directors who bring significant
industry, operational, public company, governance, financial and
legal expertise to the Company."
Given the current Board's inability
to stop the share price freefall and the
fact that the Board is already late in holding the annual meeting
of Company shareholders in contravention of the Canada Business
Corporations Act, the Concerned Shareholders request that the
special meeting of Kuuhubb shareholders be held by no later than
March 25, 2019 (the
"Meeting").
Fully Independent, Qualified, Motivated and
Accountable Nominees
The proposed nominees (the "Nominees") are
all personally focused on shareholder value creation for
suffering shareholders, who have seen Kuuhubb's share price decline
by 86% during the past 14 months. Each Nominee has been chosen
based on their extensive experience and expertise as set out below,
as well as their commitment to strong corporate governance.
Each of the industry veterans put forward knows how to build and
grow a business like Kuuhubb and has demonstrated the acumen to
adapt to constantly changing market conditions. While the Nominees
will act as
independent fiduciaries, they have all personally
committed support for plans to revitalize
Kuuhubb by leveraging existing assets, focusing on market
opportunities, reducing costs, improving existing apps and
developing new associated apps. Now is the time for immediate
and proactive action, not for excuses and defensive tactics.
[1] See note under Additional Information
The Nominees are as follows:
Richard
Lachcik - Mr. Lachcik practiced corporate
and securities law in Toronto,
Canada for 34 years, formerly with the law firm Norton Rose
Fulbright Canada LLP. He is an experienced public company director,
with many years of experience as a director of both TSX Venture
Exchange and Toronto Stock Exchange companies and is knowledgeable
on corporate governance and legal and regulatory requirements for
public companies. Mr. Lachcik would act as Chairman of the new
Kuuhubb board. Mr. Lachcik is a resident of Ontario, Canada.
Jon Walsh - Mr. Walsh is a
veteran of game publishing, delivering more than 30 games across
console, PC and mobile platforms, including five number 1 games
that have collectively generated more than 50 million downloads. He
was the Founder of Fuse Powered, a mobile ad mediation and
analytics platform used by hundreds of successful apps, and later
acquired by Upsight where he served as President. Mr.
Walsh is currently a director and officer of PopReach
Incorporated, a developer and publisher of free to play games with
150+ employees working from offices in Toronto, Halifax and Bangalore. Mr. Walsh is a resident of
Ontario, Canada.
Christopher Locke -
Mr. Locke's 20-year career in game development and publishing
includes being responsible for industry defining freemium games
like Smurfs' Village and Kim
Kardashian: Hollywood,
which have collectively grossed over US$350
million. He was the Founder and Chief Executive Officer of
Blammo Games, acquired by Glu Mobile (NASDAQ: GLUU), where he
served as Senior Vice President. Mr. Locke is currently a director
and officer of PopReach Incorporated, a developer and publisher of
free to play games with 150+ employees working from offices in
Toronto, Halifax and Bangalore. Mr. Locke is a
resident of Ontario, Canada.
Amit Khanduja - Mr.
Khanduja is Chief Executive Officer of Reliance Entertainment -
Digital, of Chicago, leading all
the digital business for Reliance Entertainment including gaming,
VOD and cloud sourcing platforms. Reliance Entertainment is a
division of a multi-billion dollar conglomerate based in
Mumbai, India. Mr. Khanduja has an
extensive background in leading mobile and digital media apps,
cloud and analytics businesses, bringing a unique blend of
international management experience. He is also on the boards
of Zapak Digital Entertainment and BigFlix, leading
VOD platforms. Mr. Khanduja is a resident of Illinois, United
States of America.
Pasi Jokinen - Mr. Jokinen is Executive Advisor and Board member of Fingersoft OY, a mobile
game
company based in Finland. Over the past six years, Fingersoft has collected over one billion downloads
internationally for its Hill Climb Racing series. Mr. Jokinen is a
former Chief Executive Officer of
pioneering Nordic IoT company Thingsee. He is also a founder and advisor to RoundZero, cutting edge
mobile app analytics company. Mr. Jokinen is a resident of
Helsinki, Finland.
The Facts Tell a Frightening Story
For reasons highlighted below, the time has come
for immediate, real
and meaningful change in the oversight and
management of Kuuhubb:
(a) 86% Share Price Decline - During the past 14 months, Kuuhubb
's share price on the TSX Venture Exchange ("TSXV") has declined
86%. Shareholders that invested Cdn$2.35 had around Cdn$0.31 of it left as at December 31, 2018.
(b) Large Losses - During the first 15 months following
Kuuhubb's listing on the TSXV (July
2017 to September 30, 2018),
the Company reported, in its financial statements, losses totaling
approximately US$19.l million (about
Cdn$25.4 million based on current
exchange rates). This is more than 47% larger than the Company's
market capitalization on the TSXV as at December 31, 2018. For the year ending
June 30, 2018, Kuuhubb reported a
loss of US$0.34 per share which,
based on current exchange rates, is significantly more than the
current share price of the Company on the TSXV. To the detriment of
shareholders, management has done nothing to stop the bleeding.
(c) 39% Drop in Revenue - During the last two financial quarters
reported on by the Company, the Company's revenue dropped
precipitously, by approximately 39%.
(d) Cash Balance - As of September 30,
2018 the Company reported a cash balance of only
US$208,713 despite having raised
about US$20,000,000 during the 16
months prior. Shareholders now face further dilution (or debt) to
replace the cash that has been burned by Mr. Keränen.
(e) Decline in Total Assets - Total assets as reported by the
Company have fallen 48% from US$30.2
million as at December 31,
2017 to US$15.6 million as at
September 30, 2018.
(f) Popularity of the Recolor App - The Concerned Shareholders
view the Recolor App as the principal asset for the entire business
of the Company. According to App
Annie, a respected app performance monitoring service,
weekly iPhone downloads of the Recolor App have collapsed over the
past 12 months. Most of the drop off can be attributed to poorly
executed app development and roll-out.
(g) Cease Trade Order and TSXV Trading Suspension - The Company
failed to file its most recent audited annual financial statements
(and related MD&A and certifications under National Instrument
52-109 - Certification of Disclosure in Issuers' Annual and Interim
Filings) by the filing deadline, resulting in the issuance, by the
Ontario Securities Commission in November
2018, of a cease trade order with respect to securities of
the Company and the TSXV suspending trading in the Company's shares
(trading on the TSXV was reinstated once the Company filed the said
documents late). Shareholders of well-run companies do not face
cease trade events due to a bookkeeper's failure to meet their
obligations.
(h) Delinquent in Holding Annual Shareholders' Meeting - The
directors failed to hold the annual meeting of the Company's
shareholders to elect directors by the December 31, 2018 deadline in breach of section
155 of the Canada Business Corporations Act.
URGENT ACTION
REQUIRED
Kuuhubb is "bleeding" when measured against all its
key performance indicators. Management and the Board don't
seem to care. The Concerned Shareholders call for immediate
triage by replacing the current Board with experts capable of
fixing the issues. The Concerned Shareholders call on all
shareholders to contact the Board, insist that the
requisitioned meeting be held promptly so that transition can take
place smoothly before it is too late. Shareholders should
further caution the Board against taking defensive steps that are
not in shareholders' best interests. The Concerned
Shareholders intend to prepare an Information Circular in support
of the requisitioned meeting that will provide further information
related to the issues Kuuhubb faces and the plan for addressing
them. In the meantime, shareholders may contact our
communications advisor Kingsdale Advisors by toll-free telephone in
North America at 1-866-228-8614,
by collect call outside North
America at 1-416-867-2272, or by email at
contactus@kingsdaleadvisors.com
Advisors
Kingsdale Advisors is acting as the strategic shareholder and
communications advisor and Fasken Martineau DuMoulin LLP is acting
as legal counsel to Marco
Durante.
Additional Information
Disclaimers
The Concerned Shareholders have not sought or obtained consent
from any third party to the use herein of previously published
information. Any such information should not be viewed as
indicating the support of such third party for the views expressed
herein.
Except for the historical information contained herein, the
matters addressed herein are forward-looking statements that
involve certain risks and uncertainties. One should be aware that
actual results could differ materially from those contained in the
forward-looking statements. The Concerned Shareholders do not
assume any obligation to update the forward-looking
information.
Information in Support of Public Broadcast
Solicitation
The Concerned Shareholders are relying on the exemption under
section 9.2(4) of National Instrument 51-102 - Continuous
Disclosure Obligations ("NI 51-102") to make this public
broadcast solicitation. The following information is provided in
accordance with corporate and securities laws applicable to public
broadcast solicitations. This solicitation is being made by the
Concerned Shareholders, and not by or on behalf of the management
of Kuuhubb. The head office of Kuuhubb is 1 First Canadian Place,
100 King Street West, Suite 7070, Toronto, Ontario, M5X 1E3, Canada.
This news release and any solicitation made by the Concerned
Shareholders in advance of the Meeting is, or will be, as
applicable, made by the Concerned Shareholders and not by or on
behalf of the management of Kuuhubb. All costs incurred for any
solicitation will be borne by the Concerned Shareholders, provided
that, subject to applicable law, the Concerned Shareholders may
seek reimbursement from Kuuhubb for his out-of-pocket expenses,
including proxy solicitation expenses and legal fees, incurred in
connection with a successful reconstitution of the Company's board
of directors.
Any proxies solicited by the Concerned Shareholders may be
solicited by way of public broadcast, including through news
releases, speeches or publications and by any other manner
permitted under applicable laws, including pursuant to a dissident
information circular sent to shareholders of Kuuhubb. Solicitations
may be made by or on behalf of the Concerned Shareholders, by mail,
telephone, fax, email or other electronic means, and in person by
directors, officers and employees of the Concerned Shareholders, as
applicable, or by the Nominees.
It is expected that any proxies solicited by the Concerned
Shareholders in connection with the Meeting may be revoked by
instrument in writing by the shareholder giving the proxy or by its
duly authorized officer or attorney, or in any other manner
permitted by law. The Concerned Shareholders have filed this news
release, which contains the information required by section
9.2(4)(c) of NI 51-102 and Form 51-102F5 Information Circular in
respect of the Nominees under Kuuhubb's company profile on SEDAR at
http://www.sedar.com .
None of the Nominees have been or are currently a director of
officer of the Company (with the exception of Mr. Richard Lachcik who was a director of a
predecessor, BRC Diamond Corporation). None of the Nominees
beneficially own, or control or direct, directly or indirectly, any
securities of Kuuhubb or any of its subsidiaries.
To the knowledge of the Concerned Shareholders, no Nominee is,
as at the date hereof, or has been, within 10 years before the date
hereof, a director, chief executive officer ("CEO") or chief
financial officer ("CFO") of any company (including the
Company) that was the subject, while the Nominee was acting in the
capacity as director, CEO or CFO of such company, of a cease trade
or similar order or an order that denied the relevant company
access to any exemption under securities legislation, that was in
effect for a period of more than 30 consecutive days or was subject
to a cease trade or similar order or an order that denied the
relevant company access to any exemption under securities
legislation, that was in effect for a period of more than 30
consecutive days, that was issued after the Nominee ceased to be a
director, CEO or CFO but which resulted from an event that occurred
while the Nominee was acting in the capacity as director, CEO or
CFO of such company; or is, as at the date hereof, or has been
within 10 years before the date hereof, a director or executive
officer of any company (including the Company) that, while that
person was acting in that capacity, or within a year of that person
ceasing to act in that capacity, became bankrupt, made a proposal
under any legislation relating to bankruptcy or insolvency or was
subject to or instituted any proceedings, arrangement or compromise
with creditors or had a receiver, receiver manager or trustee
appointed to hold its assets; or has, within the 10 years before
the date of this release, become bankrupt, made a proposal under
any legislation relating to bankruptcy or insolvency, or become
subject to or instituted any proceedings, arrangement or compromise
with creditors, or had a receiver, receiver manager or trustee
appointed to hold the assets of the proposed director.
To the knowledge of the Concerned Shareholders, no Nominee has
been subject to any penalties or sanctions imposed by a court
relating to securities legislation or by a securities regulatory
authority or has entered into a settlement agreement with a
securities regulatory authority; or has been subject to any
penalties or sanctions imposed by a court or regulatory body that
would likely be considered important to a reasonable securityholder
in deciding whether to vote for a proposed director.
Except as set out herein, to the knowledge of the Concerned
Shareholders, neither the Concerned Shareholders, nor any of the
Nominees or their respective associates or affiliates, have: (a)
any material interest, direct or indirect, in any transaction since
the commencement of the Company's most recently completed financial
year or in any proposed transaction which has materially affected
or will materially affect the Company or any of its subsidiaries;
or (b) any material interest, direct or indirect, by way of
beneficial ownership of securities or otherwise, in any matter
currently known to be acted on at the Meeting, other than the
election of directors.
Mr. Durante provided consulting services to the Company from
January to July 2018 and earned fees
of Cdn$5,000 per month in relation to
services provided.
The Concerned Shareholders are Marco
Durante, Josephine ("Josie") Durante, Antonio Paluzzi and Grazzia Paluzzi and Tymar Holdings Inc.
Media Contact:
Kingsdale Advisors
Ian Robertson
Executive Vice President Communication Strategy
Office: 416-867-2333
Cell: 647-621-2646
irobertson@kingsdaleadvisors.com