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Shell Summary for Oct. 8, 2014

2014-10-08 20:23 ET - Market Summary

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by Stockwatch Business Reporter

The TSX Venture Exchange fell 6.16 points to 848.67 Wednesday. Mike Belantis's QE2 Acquisition Corp., the qualifying transaction target of Gordon McCormack's capital pool shell, Crowsnest Acquisition Corp. (CAW), has closed a $1.29-million convertible debenture financing. That is nearly $400,000 more than the agreed-upon $900,000 minimum to complete this QT. The debentures pay 12 per cent a year, mature in two years and will be convertible into QE2 shares at 50 cents. Canaccord Genuity Corp. sold the private placement. The shell has already filed all the paperwork for the deal and is now waiting for approval from the TSX-V, which should arrive shortly. Crowsnest will then issue 21,912,766 shares to QE2 shareholders, change its name to that of its target and resume trading under the ticker symbol QE.

The target buys profitable businesses in the infrastructure and utility service sectors in Alberta. So far, it has all of two companies in its portfolio, Pillar Contracting Ltd. and Candesto Enterprises Inc. Pillar, which changes light bulbs in street lights and maintains traffic lights for municipalities, earned $388,159 on revenue of $3.78-million in the fiscal year ended Sept. 30, 2013. Candesto, which installs road signs and guard rails for municipalities and utility companies, earned $1.09-million on revenue of $4.51-million in the fiscal year ended Jan. 31, 2014. QE2 charges the companies in its portfolio management fees for revenue so it can pay salaries to its management, pay interest on debt, and acquire more private companies. Mr. Belantis, who will take over as chief executive officer following the QT and become the largest shareholder with six million shares, earns $120,000 a year, as does Dr. Fletcher Morgan, QE2's executive vice-president (and a non-practising veterinarian). As well, Rob Harding, QE2's chief financial officer, earns $204,000 a year. The salaries of these three men add up to $444,000 a year, which is not enough to worry QE2's new debentureholders.

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