Tuesday, November 21, 2017

Clarocity Corporation Announces Q1 Results, Shares for Services and Clarifies Repayment of Convertible Debentures

BWW News Desk
May 19, 2017

CARLSBAD, CALIFORNIA - Clarocity Corporation (TSX VENTURE:CLY) (the "Company" or "Clarocity") today announced its first quarter (Q1) financial results for the three months ended March 31, 2017.

"I am very pleased with the 81% revenue growth we achieved on a year over year basis," said Shane Copeland, CEO of Clarocity Corporation. "Over the course of the first quarter we announced six new contracts and subsequently another three. With nine new contracts in 2017 alone, it has become very apparent that the valuation industry is experiencing a paradigm shift and moving directly towards products like the ones we offer."

Mr. Copeland continued, "We have been continuously onboarding these new clients over the last five months and have been working diligently to ensure that we are able to accommodate each one's unique needs while strengthening each relationship to ensure future business from these clients. We have taken all the right steps to build a fundamentally strong business, while diligently working with our capital markets partners to strengthen our capital structure. As a result, we strongly believe that our operational performance will result in higher valuation for our shareholders."

Financial Highlights

  • Total revenue was $3.23 million for the three months ended March 31, 2017, compared to 1.79 million for the same period in 2015, an increase of 81%.
  • Net and comprehensive loss of $2.60 million ($0.01 per share) for the three months ended March 31, 2017 compared to a net loss of $2.26 million ($0.01 per share) for the same period in 2016.
  • As at March 31, 2017, the Company's cash position was $1.26 million, compared to a cash position of $0.66 million on March 31, 2016.

Operational Highlights

During the quarter Clarocity announced:

  • Contract with top 10 internet lending company.
  • New contract to perform next phase of valuation services for U.S. government asset sales.
  • Contract to perform valuation services for Guild Mortgage.
  • It was selected for 2017 HousingWire Tech 100™ list.
  • Contract with nationwide online hard money lender.
  • Contract with U.S. agency for its MarketValue Pro to value asset portfolio.
  • Contract with large regional bank for its MarketValue Pro to support equity lending.

Subsequent to the quarter the Company announced:

  • Completed acquisition of intellectual property assets.
  • Contract with U.S. agency to use the Company's MarketValue Pro to value asset portfolio.
  • Subsequent order from large regional bank for its MarketValue Pro to support equity lending.
  • Contract with top 10 credit union.
  • Reorganization of valuation services division.
  • Closing of initial tranche of standby facility for $4 million and repayment of convertible debentures.

Fiscal Advisory/Consulting Agreement and Shares for Services

Clarocity entered into a fiscal advisory/consulting agreement ("Fiscal Consulting Agreement") with StableView Asset Management Inc. ("StableView") effective as of March 28, 2016 retaining StableView to advise and assist on capital structure issues and rationalization and capital markets matters, to provide strategy and process and design and implementation assistance to bring the capital structure to a desired rationalized future state.

As compensation for the services of StableView, Clarocity agreed to pay StableView 1/10th of one share of Clarocity for each share of Clarocity underlying: (i) outstanding warrants, (ii) warrants issuable upon conversion of outstanding securities or (iii) outstanding convertible securities, surrendered, terminated, early exercised, early converted, accelerated expired or otherwise expired.

Pursuant to the Fiscal Consulting Agreement, StableView designed and implemented the early termination of 13,600,000 warrants of Clarocity previously announced (see press releases dated April 22, 2016 and May 4, 2016), and thereby reducing shareholder dilution and in respect of which Clarocity will issue to StableView 1,360,000 shares.

Pursuant to the Fiscal Consulting Agreement, StableView designed, implemented and arranged the previously announced standby debt facility (see press releases dated August 31, 2016 and May 10, 2017) to ensure repayment upon maturity on May 9, 2017 of all outstanding convertible debentures, resulting in the conversion of convertible debentures by holders to continue as investors in the Company and repayment of the balance of $2,861,000 of convertible debentures that were otherwise convertible into 23,841,667 common shares and warrants exercisable for a further 23,841,667 common shares eliminating 47,683,334 common shares (23,841,667 common shares and 23,841,667 common shares underlying warrants) from the fully diluted share count, significantly reducing shareholder dilution and in respect of which Clarocity will issue to StableView 4,768,334 shares.

Issuance of shares under this agreement are subject to approval by the TSX Venture Exchange.

Related Party Transaction Exempt

The issuance of shares to StableView pursuant to the fiscal advisory agreement is a related party transaction exempt from the formal valuation and minority approval provisions of Multilateral Instrument - Protection of Minority Security Holders in Special Transactions ("MI 61-101") in reliance on either ss. 5.5 (a) Fair Market Value Not More Than 25% of Market Capitalization or ss. 5.5 (b) Issuer Not Listed On Specified Exchange and ss. 5.7(a) ) Fair Market Value Not More Than 25% of Market Capitalization based on a determination that the securities of Clarocity are only listed on the TSX Venture Exchange and that the aggregate fair market value of the shares, insofar as interested parties are involved, does not exceed 25% of the market capitalization of the Company.

Correction: Principal Amount of Convertible Debentures Repaid on Maturity

The outstanding principal balance of convertible debentures which matured May 9, 2017, was $2,861,000, otherwise convertible into 23,841,667 common shares and warrants exercisable for a further 23,841,667 common shares.

For further information, visit www.clarocity.com.

About Clarocity Corporation

Clarocity Corporation provides real estate valuation solutions and platform technologies designed to address today's dynamic housing market. Our innovative platform is driving the next-generation of valuation solutions such as MarketValue Pro (MVP) and BPOMerge and setting new standards in real estate valuation quality and reliability.

Every day GSE, banking, and investor clients rely on our proprietary solutions to value assets, fund loans, and securitize portfolios. As a fully integrated technology and valuation services company, Clarocity provides a full spectrum of appraisal and alternative valuation solutions. For more information, visit www.clarocity.com.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Information

This news release contains forward-looking statements which may include financial and business prospects, as well as statements regarding the Company's future plans, objectives or economic performance and financial outlooks. Such statements are subject to risk factors associated with the real estate industry, the overall economy in both Canada and the United States. The Company believes that the expectations reflected in this news release are reasonable but actual results may be affected by a variety of variables and may be materially different from the results or events predicted in the forward-looking statements. Readers are therefore cautioned not to place undue reliance on these forward- looking statements. In evaluating forward-looking statements readers should consider the risk factors which could cause actual results or events to differ materially from those indicated by such forward-looking statements. These forward-looking statements are made as of the date hereof, and unless otherwise required by applicable securities laws, the Company does not intend nor does it undertake any obligation to update or revise any forward-looking statements.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities of the Company will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act, and may not be offered or sold within the United States or to, or for the account or benefit of U.S. persons except in certain transactions exempt from the registration requirements of the U.S. Securities Act)

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