2018-11-08 14:45 ET - News Release
Mr. Cameron Chell reports
POUNCE TECHNOLOGIES ENTERS INTO DEFINITIVE AGREEMENT TO ACQUIRE TRAX ONE, INC.
Pounce Technologies Inc. has entered into a securities exchange agreement dated Nov. 7, 2018, whereby the company will acquire all of the outstanding securities of Trax One Inc. in consideration for the issuance of securities of the company. Trax is an advanced digital advertising platform enabling hyper local and target advertising directly to connected devices, in particular mobile phones. On completion of the Acquisition, the business of Trax will be the primary business of the Company. Also in connection with the Acquisition, the Company seeks to transfer the listing of its shares from the NEX board of the TSX Venture Exchange (the "TSXV") to the Canadian Securities Exchange (the "CSE") and to raise gross proceeds of up to $1.2 million pursuant to a private placement (the "Concurrent Financing").
Trax One, Inc.
Trax is an advanced digital advertising platform enabling hyper local and target advertising directly to connected devices, in particular mobile phones. The Trax platform is also designed to enable localized advertising compliance helping ensure regulated products and services can advertise to their own hyper targeted audience while remaining in compliance with local, state and federal advertising requirements. Trax enables its customers to target and advertise to devices based on very specific demographics of a device user and the geolocations and geo-patterns of devices. Trax focus is to deliver the right message to the right device at the right time. For additional information on Trax, see the Company's news release dated October 2, 2018.
The Acquisition
The Company and Trax have agreed to complete the Acquisition on the terms and conditions of the Agreement. The Agreement supersedes the Letter of Intent previously entered into between the parties and disclosed in the Company's news release dated October 2, 2018. A copy of the Agreement is available under the Company's profile at www.sedar.com.
Pursuant to the Agreement, in consideration for the acquisition of all of the issued and outstanding securities of Trax (collectively, the "Target Securities"), the Company will issue an aggregate of 20,884,416 common shares of the Company (each, a "Consideration Share") at a deemed price of $0.15 per Consideration Share, 72,000 share purchase warrants of the Company (each, a "Consideration Warrant") with each Consideration Warrant being exercisable into one common share of the Company (a "Share") at an exercise price of $0.15 per Share, and 500,000 stock options of the Company (each, a "Consideration Option", and together with the Consideration Shares and Consideration Warrants, the "Consideration Securities") with each Consideration Option being exercisable into one Share at an exercise price of $0.15 per Share.
Also in connection with the Acquisition, Trax plans to seek an unsecured bridge loan in the amount of $300,000 (the "Bridge Loan") from third party lenders, subject to the negotiation and execution of the applicable loan documentation. The Bridge Loan is expected to be advanced within five days of entry into the Acquisition Agreement on substantially the following terms: (a) an interest rate of 10% per annum, (b) a maturity date of one year following the date the Bridge Loan is advanced (the "Maturity Date"), (c) principal and accrued interest payable on the Maturity Date, and (d) covenants limiting Trax's ability to use the proceeds from the Bridge Loan for purposes other than maintenance of working capital. On Closing, the Bridge Loan and accrued interest thereon will be converted into common shares of the Company at a deemed price of $0.12 per share. Additional information regarding the Bridge Loan, the lenders and terms will be disclosed once confirmed.
The Consideration Securities and other securities issued in connection with the Acquisition, Concurrent Financing and Bridge Loan will be subject to a statutory hold period expiring four months and one day after their issuance. Also, in addition to any escrow which may be required by the policies of the CSE, the Consideration Securities will be subject to a voluntary escrow agreement (the "Escrow Agreement") and will be escrowed from closing of the Acquisition and not released until the first anniversary of closing.
On Closing, a nominee of Trax is expected to be added to the board of directors of the Company, such that the directors of the Company will be: Cameron Chell: Mr. Chell has been the Chief Executive Officer and a director of the Company since January 24, 2017. Mr. Chell is also a founder of Trax and continues to be involved as a director. Mr. Chell has also been the Chairman and a director of ICOX Innovations Inc. since August 21, 2017, a director and secretary of Ryde Holding Inc. (formerly WENN Digital Inc.) from December 2017 and the Chairman of Ryde Holding Inc. from February 2018. He has also been the Chief Executive Officer of Business Instincts Group Inc. ("BIG"), a venture creation firm focused on high-tech start-ups since November 2009.
Erica Racicot: Ms. Racicot has been the Chief Operations Officer and a director of the Company since November 15, 2011 and June 24, 2014, respectively. Ms. Racicot has also been the Chief Operating Officer of Trax since January 24, 2017. She has been the President of BIG since February 2009. Prior to that, she worked in Operations at 1-800-Got- Junk? during their explosive growth, a time that solidified them as the industry leader in the junk removal industry
Kurram Qureshi: Mr. Qureshi has been an independent director of the Company since July 17, 2017. Mr. Qureshi, CA, CPA became a Chartered Accountant in 1990 and has been working in the field of accounting and corporate finance for past 27 years. In 1996, he started his consulting firm working with companies that planned to go public through initial public offerings where his role was to prepare the target company for audits, corporate governance, stock option plans, policies and procedures for operations. Over the past 15 years, Mr. Qureshi has served as the CFO for several corporations in the technology and publishing sector and resources sector. Currently, Mr. Qureshi is a senior partner at CQK Chartered Accountants LLP, a boutique accounting firm based in the Greater Toronto Area.
Michael Morris: Mr. Morris has been nominated for appointment as a director of the Company following completion of the Acquisition. Additional information regarding the proposed directors of the resulting issuer will be included in the information circular to be provided to shareholders for approval of the Acquisition.
Also on Closing, the Company plans to adopt an incentive stock option plan which will provide for the grant of stock options in an amount equal to 10% of the issued and outstanding shares of the Company from time to time.
The Acquisition will constitute a non-arm's length transaction as the Company and Trax have certain directors and officers in common. Cameron Chell, the Chief Executive Officer and a director of the Company, is also the founder and sole director of Trax and the Chief Executive Officer of BIG, the largest shareholder of Trax. Erika Racicot, a director and the Chief Operating Officer of the Company, is also the Chief Operating Officer of Trax and the President of BIG. Accordingly, the Acquisition will be subject to approval of the majority of minority shareholders in accordance with Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions.
The completion of the Acquisition and transactions contemplated by the Agreement remain subject to a number of conditions, including that the parties be satisfied with their respective due diligence, completion of the Concurrent Financing, the execution of the Escrow Agreement by all security holders of Trax as applicable, funding of the Bridge Loan, all requisite approvals being obtained, including: approval of the majority of minority shareholders for the completion of the Acquisition and the delisting of the Company from the TSXV, the approval of the TSXV for the delisting, the approval of the CSE for the listing of the Company, and other customary conditions.
Concurrent Financing
In connection with the Acquisition, the Company intends to complete the Concurrent Financing to raise up to $1.2 million by the issuance of up to 8,000,000 common shares of the Company at a subscription price of $0.15 per share. The shares issued pursuant to the Concurrent Financing will be subject to a hold period expiring four months and one day from the date of issuance. Finders fees may be paid in connection with the Concurrent Financing and there may be insider participation, although this information is unknown at this time.
CSE Listing and TSXV Delisting
Immediately prior to Closing of the Acquisition, and subject to approval of the majority of minority shareholders of the Company and to approval of the TSXV, the Company is expected to have its common shares delisted from trading on the TSXV. Subsequently, subject to approval of the majority of minority shareholders of the Company and satisfaction of the other conditions of the Agreement, the Company is expected to complete the Acquisition. Following closing of the Acquisition, subject to approval of the CSE, the resulting issuer is expected to list its common shares on the CSE (the "Listing").
Completion of the transaction is subject to a number of conditions, including but not limited to disinterested shareholder approval. The transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of the Company should be considered highly speculative.