Mr. Vincent Wong reports

KONA BAY ANNOUNCES LETTER OF INTENT TO ACQUIRE ASIA INTERACTIVE SERVICES (HONG KONG) LIMITED.

Kona Bay Technologies Inc. has entered into a binding letter of intent dated March 8, 2019, with Asia Interactive Services (Hong Kong) Ltd. (PropGo), whereby Kona Bay is proposing to acquire 100 per cent of PropGo by way of a reverse takeover of Kona Bay by PropGo, with the resulting company operating under the name PropGo Media Technologies Corp., or such other name as may be approved by the board and the TSX Venture Exchange, and carrying on the business of PropGo as currently constituted. In connection with the proposed transaction, the resulting issuer will apply to list its common shares on the exchange as a technology company.

The proposed transaction is an arm's-length transaction.

About Asia Interactive Services (Hong Kong) Ltd. (PropGo)

PropGo is a Hong Kong-based leading real estate media and software company serving many large and influential real estate agencies and media companies. PropGo has built a suite of real estate agency enterprise software that allows real estate agencies to manage their entire business across multiple countries and geographies. These enterprise software solutions include CRM, data analytics, listing stock management and media distribution. PropGo counts many global and reputable companies among its client base, including the Financial Times, The New York Times China, Nikkei, Christies International Realty, Colliers, Savills and Sotheby's International Realty. PropGo offers a scalable software platform with proprietary technology (which is developed in house with no dependence on any third party platforms). PropGo's solutions are globally focused and can address multiple languages, countries and geographies on a single platform, now including China, Asia, the European Union and the United States. With a growing audience of over 50 million monthly visitors (through PropGo, PropGoLuxury and media partner sites), the company is able to reach and engage with property consumers around the world. PropGo is currently in the process of getting its most recent year-ends audited. For the year ended Dec. 31, 2018, the unaudited statements indicate revenue of $13,363,422 (Hong Kong) and net income of $3,832,777 (Hong Kong), with assets of $5,081,728 (Hong Kong) and liabilities of $707,776 (Hong Kong).

Transaction summary

Pursuant to the terms of the LOI, the proposed transaction is anticipated to proceed by way of a share exchange, amalgamation, scheme of arrangement or similar form of business combination, whereby the shareholders of PropGo will receive common shares in the capital of the resulting issuer in exchange for their securities of PropGo and shall become the majority shareholders of the resulting issuer. The final form of the transaction is expected to be set forth in a definitive agreement to be entered into among the parties that will replace and supersede the letter of intent.

An aggregate of 6,713,968 common shares of Kona Bay are currently issued and outstanding, and a further 4,591,269 common shares of Kona Bay are reserved for issuance under outstanding common share purchase warrants. Pursuant to the terms of the LOI, Kona Bay is expected to undertake a one-new-for-two-old consolidation of its outstanding common shares. As a result, there will be 3,356,984 Kona Bay shares on a postconsolidated basis and 2,295,634 Kona Bay share purchase warrants outstanding. It is expected that 49,532,377 postconsolidation shares of Kona Bay will be issued to the shareholders of PropGo to acquire PropGo, pursuant to the terms of the proposed transaction. In addition, there are currently 4,975,000 PropGo share purchase warrants outstanding that are expected to be exchanged for common share purchase warrants of the resulting issuer upon completion of the proposed transaction. In conjunction with the completion of the proposed transaction, there is expected to be 52,889,361 shares, excluding shares issued in the concurrent private placement (as defined herein).

Completion of the proposed transaction is subject to a number of conditions, including, but not limited to, completion of the share consolidation, exchange approval and shareholder approval, if required, pursuant to exchange or corporate law requirements. In addition, completion of the proposed transaction is subject to certain standard closing conditions, including the completion of due diligence investigations to the satisfaction of each of Kona Bay and PropGo, execution of the definitive agreement and there being no material adverse change in the business of Kona Bay or PropGo prior to completion of the proposed transaction.

Concurrent financing

In connection with the closing of the proposed transaction, the company is expected to carry out a private placement for aggregate gross proceeds of up to $5-million (U.S.) at a price of 40 U.S. cents per common share on a postconsolidated basis.

In connection with the proposed transaction, it is expected that there will be certain changes to Kona Bay's management and its board of directors (further details of such proposed appointments and nominees will be provided as the proposed transaction progresses and when the definitive agreement has been entered into). A new board of directors of the resulting issuer shall be nominated by PropGo; current directors and officers of Kona Bay shall resign at, or prior to, the closing of the proposed transaction.

The company intends to hold a special meeting of its shareholders with respect to the proposed transaction, if required, under securities law or exchange requirements.

Trading of the common shares of the company has been halted and will remain halted, in accordance with exchange policies, until all required documentation with respect to the proposed transaction has been received and the exchange is otherwise satisfied that the halt should be lifted.

No advances or deposits from Kona Bay to PropGo are anticipated.

Sponsorship of a reverse takeover is required by the exchange, unless an exemption from the sponsorship requirement is available. Kona Bay intends to apply for an exemption from sponsorship for this reverse takeover. There is no assurance that an exemption from this requirement will be obtained.

A press release with further particulars relating to the proposed transaction will follow, in accordance with the policies of the exchange, which will include a summary of the definitive agreement and transaction consideration, summary financial information of PropGo, biographical information on the proposed directors and officers of the resulting issuer, and other relevant information on the proposed transaction and related financings.

We seek Safe Harbor.