Looking Glass Labs Ltd. (“LGL” or the “Company”) (NEO: NFTX) (AQSE: NFTX) (OTC: LGSLF) (FRA: H1N), a leading Web3 platform specializing in immersive metaverse environments, play-to-earn tokenization and blockchain monetization strategies, announces that, further to its announcement on March 20, 2023, the Company has completed the sale (the “Transaction”) of its subsidiary, GenZeroes Productions Inc. (“GenZeroes”), the GenX smart contract (“GenX”) and all associated intellectual property (the “Related IP”) (collectively, the “Assets”), to GZU Entertainment Inc.i (the “Purchaser”).
The Purchaser’s team is led by Aleks Paunovic, an actor and producer as well as a cast member of GenZeroes; Rick Dugdale, a director and producer, and founder of Enderby Entertainment; and Neil Stevenson-Moore, the Chief Product Officer of LGL. Concurrent with the closing of the proposed sale of the Assets, Neil Stevenson-Moore has resigned from the Company to focus on developing GenZeroes as a member of the Purchaser’s team.
GenZeroes is the owner and producer of a live-action series consisting of live-action episodes and comics in the science fiction genre, with lore that includes references to the GenX collection (a collection of robot characters created by artists). The live-action series may be viewed at the following link: https://genzeroes.com/. The GenX smart contract stores the data representing the approximately 10,000 robot character avatars.
As the new owner of the Assets, the Purchaser intends to leverage the experience of its leadership team to further develop GenZeroes and also explore opportunities to monetize the other Assets in the film and entertainment industries. Based on the Purchaser’s strong relationships within the aforementioned sectors, it is viewed by LGL management as being well positioned to maximize the value of GenZeroes and GenX for the mutual benefit of the Purchaser, the Company as well as the respective GenZeroes and GenX communities.
As consideration for the Assets the Company received a promissory note (the “Note”) for CA$800,000 bearing an interest rate of prime rate plus 1% and a five-year term to maturity, with the option by the Purchaser to extend the term for an additional five years. The Company shall also retain a 50% royalty in perpetuity on all net proceeds from the content owned by the entity GenZeroes Productions Inc., which relates to the already completed first season of the GenZeroes series. The Note shall be secured against the shares of GenZeroes Productions Inc. and the Related IP. As a condition of closing the Transaction, the Purchaser has also granted to the Company a non-exclusive and royalty-free license (the "IP License") to use the GenX collection’s intellectual property for its metaverse product branded as Pocket Dimension and video game branded as Overlords. The term of the IP License is for a period from the closing date until the Note is fully paid.
Related Party Transaction
Due to Neil Stevenson-Moore’s position as an officer of the Company and position as shareholder of the Purchaser, the Board determined that the purchase of the Assets by the Purchaser and the Transactions may constitute a "related party transaction" under Multilateral Instrument 61-10 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Company is relying on exemptions from the formal valuation and minority approval requirements of MI 61-101, specifically: (i) the valuation requirement of MI 61-101 by virtue of the exemption contained in Section 5.5(a), as the fair market value of the Transactions does not exceed 25% of the Company’s market capitalization (as determined under MI 61-101), and (ii) the minority shareholder approval requirement of MI 61-101 by virtue of the exemption contained in Section 5.7(1)(a) of MI 61-101, as the fair market value of the Transactions does not exceed 25% of the Company’s market capitalization (as determined under MI 61-101).
