/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE
TORONTO, Oct. 8 /CNW/ - ZipLocal Inc. ("ZipLocal" or the "Company") has
entered into arrangements to obtain up to an additional $750,000 in secured
debt financing from members of the J.L. Albright Ventures group of funds. The
participating funds are J.L. Albright IV Venture Fund L.P., J.L. Albright IV
Venture Parallel Fund L.P. and J.L. Albright IV Venture Parallel II Fund L.P.
(collectively, "JLA Ventures").
The Company is able to draw-down on the facility in $250,000 monthly
installments commencing on October 15, 2008 at the Company's sole discretion.
Interest is 12% (increasing to 20% upon default) per year and is payable
monthly until maturity. The loan matures on May 19, 2009. It is secured
against all of the personal property of the Company and supported by a secured
guarantee from ZipLocal's subsidiary, Zip411 Enterprises Inc. JLA Ventures is
entitled to receive a fee of $30,000 for each drawdown made by the Company.
The Company intends to use the proceeds of the loan as working capital for
The loan from JLA Ventures is a related party transaction under
applicable securities laws. John L. Albright, a director and Chairman of the
Board of ZipLocal, is the Managing Partner of the general partner of JLA
Ventures. In addition, JLA Ventures holds approximately 21.1 million common
shares of the Company (representing approximately 26.5% of the outstanding
shares of ZipLocal) and is an insider of the Company. The loan is exempt from
the formal valuation and shareholder approval requirements to which related
party transactions are subject because it represents less than 25% of the
The loan is subject to TSX Venture Exchange acceptance.
In addition, ZipLocal has taken steps to significantly reduce expenses in
response to the difficult economic environment. ZipLocal is reducing its
workforce by approximately 45%, primarily in the areas of administration,
sales and marketing. Stephen Matyasfalvi, Vice President of Operations, is
among those departing the Company. The Company will have approximately 28
employees after giving effect to the restructuring. The Company believes that
the restructuring will help it adapt to changing market conditions and with
its progression to profitability.
"We would like to thank all of ZipLocal's employees, including those
departing the Company, for their dedicated service," stated Elaine Kunda,
President and CEO of ZipLocal.
ZipLocal expects the cost reductions to yield annualized savings of
approximately $1.3 million. The cost of the restructuring is estimated to be
approximately $100,000 and will be recorded in the second quarter of fiscal
ZipLocal currently has 79,757,515 common shares issued and outstanding.
About ZipLocal Inc.
ZipLocal Inc. (www.ziplocal.com; TSX Venture: ZIP) is Canada's online
directory, providing a rich, user-defined local search experience. ZipLocal
provides relevant search results from over 1.3 million businesses with maps
and capability for user-generated content. ZipLocal is focused on creating the
most comprehensive and engaging search experience at the neighbourhood and
This document may contain forward-looking statements relating to ZipLocal
Inc.'s operations or to the environment in which it operates, which are based
on ZipLocal Inc.'s operations, estimates, forecasts and projections. These
statements are not guarantees of future performance and involve risks and
uncertainties that are difficult to predict, and/or are beyond ZipLocal Inc.'s
control. A number of important factors could cause actual outcomes and results
to differ materially from those expressed in these forward-looking statements.
Consequently, readers should not place any undue reliance on such
forward-looking statements. ZipLocal Inc. disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
The TSX Venture Exchange has neither approved nor disapproved the
contents of this press release.
For further information:
For further information: Stephen McDonald, Chief Financial Officer,
ZipLocal Inc., Email: email@example.com, Phone: (416) 987-2135