Halifax, Nova Scotia--(Newsfile Corp. - March 26, 2019) - Further to its news release dated February 15, 2019, eXeBlock
Technology Corporation (CSE: XBLK) ("eXeBlock" or the "Company") is providing an update on the sale of assets
transaction with Peerplays Blockchain Standards Association ("PBSA"), Data Security Node Inc., Fallout Complex Inc.,
10353027 Canada Corporation ("10353027"), and Jonathan Baha'i.
Transaction Terms
The material terms of the transaction include:
- Sale of software including 50/50 Labs, Sidechain and eXeChain (collectively, the "Software") to PBSA for the payment
to eXeBlock of $250,000 in cash plus applicable taxes, on closing;
- the assumption by PBSA of amounts owing by eXeBlock to a third party developer in the development of the Software totaling
$463,419 USD;
- the return of up to 9,965,000 common shares of eXeBlock ("Shares") held by 10353027, an entity wholly-owned by
Jonathan Baha'i (which represents approximately 16.2% of the Company's Shares outstanding as of February 11, 2019) to treasury
for cancellation by the Company, and the parties recently agreed that there would be no consideration paid for this
purchase;
- the termination of the software development agreement between eXeBlock and PBSA on closing and release by eXeBlock in any
interest in any consideration, including any PPY tokens, if any, which were to be transferred as payment for software development
under such agreement;
- the forgiveness of amounts owing by eXeBlock to each of Data Security Node Inc., Fallout Complex Inc., and Jonathan Baha'i
for certain equipment, furniture, fixtures and Company expenses totaling $74,912.35; and
- the termination of the bunker lease between eXeBlock and Fallout Complex Inc. on closing,
(collectively, the "Transaction").
Update on Regulatory Approvals
eXeBlock has concluded that the return of eXeBlock Shares to its treasury for cancellation will not be an "issuer bid", and no
regulatory approvals will be sought under issuer bid rules.
10353027 currently holds an aggregate of 9,965,000 Shares of eXeBlock, including 6,000,000 Shares that remain in escrow. The
escrowed Shares are scheduled for release in tranches between May 2019 and November 2020. eXeBlock may seek the necessary
regulatory approval from the British Columbia Securities Commission (the "BCSC") to allow for the accelerated release and
purchase of the escrowed Shares. The Transaction agreements contemplate that eXeBlock can obtain the escrowed Shares over time as
they are released from escrow.
Related Party Transaction
The Company understands that Mr. Baha'i controls each of 10353027, Data Security Node Inc. and Fallout Complex Inc. Through his
control of 10353027, Mr. Baha'i beneficially owns approximately 16.2% of the outstanding Shares. eXeBlock is required to treat Mr.
Baha'i as a "related party" under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions
("MI 61-101") and treat the Transaction as a "related party transaction" under MI 61-101.
If the 3,965,000 Shares that are not escrowed Shares are repurchased for cancellation at closing, the issued and outstanding
Shares will be reduced to 57,476,531 of which Mr. Baha'i will indirectly own approximately 10.4% which will be subject to the
Company's rights to acquire additional Shares, as permitted by law. If the 9,965,000 maximum purchased Shares are repurchased for
cancellation, the issued and outstanding Shares of the Company will be reduced to 51,476,531 of which Mr. Baha'i will own none.
The Transaction is exempt from the formal valuation requirements provided in section 5.5(b) of MI 61-101, as the Shares are only
listed on the Canadian Stock Exchange and not on any of the markets specified in section 5.5(b) of MI 61-101. There have been no
prior valuations, as such term is defined in MI 61-101, in the 24 months prior to the date of this Material Change Report.
The Transaction will be subject to minority approval. For the purposes of the Transaction, the minority approval will exclude
the 9,965,000 Shares beneficially owned by Mr. Baha'i.
The Company did not establish a special committee of the Board of Directors (the "Board"), as the Board consists of only
three directors all of whom are independent of the Purchaser. The Board concluded that a separate special committee was not
necessary and that the negotiations were arms-length. Mr. Baha'i resigned as a director and officer of eXeBlock in November 2017
and undertook to the BCSC that his Shares would not be voted for a 5-year period commencing on November 10, 2017. Mr. Baha'i's only
role at eXeBlock since November 2017 was as an employee, and that relationship ended in December 2019.
Transaction Background
The Board of eXeBlock has considered all relevant factors and unanimously determined that the Transaction is in the best
interests of the Company and its shareholders. The Board unanimously recommends that its shareholders vote in favour of the
Transaction. After an extensive review of the Software along with a considerable effort to sell or partner with others, it was
decided that the direction of the Company would be better served if the capital remaining was protected and other opportunities
explored. The decentralized blockchain business, while perhaps a viable opportunity for certain groups, seems less attractive for
eXeBlock especially given the time and costs to produce the assets and the long-term return on investment. The open nature of
decentralized blockchain and its reliance on large scale adoption of the tokenomics structure would likely work better for a
consortium group that may also bring traction to bear. The Company is currently looking at other opportunities within the private
blockchain space.
Management had reached out to no less than 15 -20 firms or possible partners in attempt to determine whether there were
potential purchasers for these assets. The number of organizations interested in the specific assets is very limited. eXeBlock then
approached PBSA and determined that PBSA may have an interest. The negotiations were fairly fluid and progressed with multiple
meetings and discussions and the parameters of the deal changed from strictly a monetary transaction to a transaction that included
the relief of outstanding debt, the assumption of liability to a third party contractor, the cancellation of the facility lease,
the return of shares and the cancellation of the software development agreement between the two parties as well as a monetary
payment and the acceptance of Mr. Baha'i's resignation. The parties eventually reached agreement in February.
Meeting and Other Information
The annual and special meeting of the Company has been called for April 2, 2019 (the "Meeting") and will be held at 1969
Upper Water Street, Suite 2001, Purdy's Wharf Tower II, Halifax, Nova Scotia B3J 3R7 at 2:00 p.m. (Halifax Time). At the Meeting,
the shareholders will be asked to consider a resolution approving and authorizing the Transaction.
Further details regarding the Transactions are provided in a management information circular mailed to the Company's
shareholders in March 2019 and an updated material change report dated today. Copies of the management information circular, the
updated material change report and the Agreement are available at www.sedar.com.
About eXeBlock
eXeBlock Technology Corp (CSE: BLK) is a designer of custom, state-of-the-art blockchain based software applications that
provide profitable, secure and efficient solutions to businesses and markets globally.
To receive regular updates on the business, follow them on Twitter @eXeBlock or visit www.exeblock.com.
For more information please contact:
eXeBlock Technologies Corporation
Jamie Davison CEO
902.334-1699
jdavison@exeblock.com
Neither the CSE nor its Regulation Services Provider (as that term is defined in the policies of the CSE) accepts responsibility
for the adequacy or accuracy of this release.
FORWARD-LOOKING INFORMATION
This press release contains forward-looking statements and information that are based on the beliefs of management and reflect
the Company's current expectations. When used in this press release, the words 'estimate', 'project', 'belief', 'will',
'anticipate', 'intend', 'expect', 'plan', 'predict', 'may' or 'should'
and the negative of these words or such variations or comparable terminology are intended to identify forward-looking statements
and information. More particularly and without limitation, this news release contains forward-looking information relating to, the
anticipated completion of the Transaction including satisfaction of the conditions thereto, including receipt of regulatory
approvals and the approval of the Company's shareholders and the anticipated timing for completion of these matters. Such
statements and information reflect the current view of the Company with respect to risks and uncertainties that may cause actual
results to differ materially from those contemplated in those forward-looking statements and information. By their nature,
forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results,
performance or achievements, or other future events, to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. There are no assurances the Transaction will be completed on
the terms and timeline anticipated, or at all. Forward looking statements are made based on management's beliefs, estimates and
opinions on the date that statements are made and the Company undertakes no obligation to update forward-looking statements if
these beliefs, estimates and opinions or other circumstances should change. Investors are cautioned against attributing undue
certainty to forward-looking statements. There are a number of important risk factors that could cause the Company's actual results
to differ materially from those indicated or implied by forward-looking statements and information. For a more detailed discussion
of risk factors, refer to the Company's management discussion and analysis dated as of January 28, 2019 filed under the Company's
profile on SEDAR (www.sedar.com) and on the CSE's website. The Company
cautions that the aforementioned list of material risk factors is not exhaustive. When relying on the Company's forward-looking
statements and information to make decisions, investors and others should carefully consider the foregoing risk factors and other
uncertainties and potential events.
THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS PRESS RELEASE REPRESENTS THE EXPECTATIONS OF THE COMPANY AS OF THE DATE OF
THIS PRESS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON
FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE THE COMPANY MAY ELECT TO, IT DOES
NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME EXCEPT AS REQUIRED IN ACCORDANCE WITH APPLICABLE LAWS.
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