Gains Instant Legitimacy

Never say that the days of good ole ingenuity are dead. Ltd. found its
way onto the Nasdaq Tuesday with its reverse acquisition of Toronto-based Networks North Inc..

Networks North paid
$28.6 million in stock for’s ASP assets, investments and
operating infrastructure. The name “Networks North” will be replaced by
“Chell Merchant Capital Group,” and the entire management team and staff
will be succeeded by’s own management team and staff.

Peter Rona, Networks North president and chief executive officer, will be
replaced after he buys out His successor: Cameron Chell,
president and chief executive officer of will also be
the majority shareholder in the new

Sound confusing? At first glance, it looks like Networks North just paid to take over its business. In essence, that’s exactly what happened.

Networks North is a popular 15-year-old interactive television service
located throughout the U.S. and Canada. If you’ve ever been to a sports
bar featuring live trivia contests on the television, chances are its
Networks North programming you’re watching. The company also provides
television programming for more than 200 hotels.

Taking a bricks-and-mortar company specializing in analog signal
transmissions and molding it into a streamlined ASP juggernaut takes a lot
of time, effort and money, resources Networks North didn’t want to expend

Rona said his company has seen the potential in the ASP industry for a
couple of years now, but didn’t know where to start. That’s where Chell
and his team came in.

“Our companies have had similar goals, and we started to recognize that
software, as well as applications, take a lot of effort to build up,” Rona
said. “We decided to leave it to the experts. You can see that the trend
with a lot of brick-and-mortar companies is going from building its own
infrastructure and server farms to getting an outside source to do it for

However, things didn’t start smoothly between the companies. On April 3,
Chell’s intentions towards Networks North became clear when the Chell
Merchant Capital Group bought out the largest outside shareholder. It was
only until after talks began that Rona realized what the ASP had to offer.

“As we came together for talks, we recognized what we had with Chell,” Rona
said. “We recognized we had someone who was successful with other ASP
companies, helping them achieve an amazing market cap in a relatively short

It’s a pretty mature outlook for a company that’s been around 14 years
before even launched its incubator service. It’s like a teenager
asking advice from a one-year-old, but that’s why Rona and his shareholders
sold the company in stock. They’re banking on Chell to take their business
to greater financial heights.

Networks North is now part of Chell’s “strategy bank,” which includes other
hopefuls cMeRun Corp. and JAWS Technologies, Inc.. It’s $28.6 million entry fee gives the company a big
minority stake in all ventures.

An integration team has been formed to determine the best fit for everyone
involved in the new company. After the changeover is finalized Sept. 8,
Rona expects to see his company’s $25 million market cap to jump
significantly once it’s amalgamated into the Chell incubator. The new
stock symbol on the Nasdaq exchange will then be announced.

“We believe this strategic transaction gives us the ability to transition
into leading strategic aspects of the ASP industry,” Rona said. “As a
result, all the companies in our portfolio will have the opportunity to
become market leaders in the ASP industry.”


is no stranger when it comes to the reverse acquisition. He has
already done the same in the past with FutureLink Corp.
and cMeRun. FutureLink got its exchange status from a Colorado mining
company while cMeRun found Nasdaq with its reverse takeover of a chocolate
malt corporation. At that time, and now, there was a very good reason:
instant legitimacy.

“Back in 1996, people thought ASPs were stupid,” Chell said. “The hardware
companies didn’t like it, the investors didn’t like it, no one did. The
only way to raise funding was to acquire an existing company on the stock
market. It just made sense to do it this way.”

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