Mr. Richard Matthews reports

BIG WIND CAPITAL SIGNS LOI WITH MILITARY-GRADE, CYBER SECURITY COMPANY, HILL TOP SECURITY INC.

Big Wind Capital Inc. has entered into a letter of intent with Hill Top Security Inc. (HTSI), which has a unique, military-grade cybersecurity platform for small- to medium-sized businesses (SMBs), comprising blockchain event validation, cybertagging, incident response and rapid restoration. Pursuant to the letter of intent, the company intends to acquire various interests in HTSI and its assets, including 100 per cent of assets outside of those currently used by the U.S. government.

Hill Top security highlights -- military grade, holistic and unique

• Military-grade cybersecurity platform, called Vauban, originally developed for government and big business, now being made available to the SMB sector;
• One of the world's first and only solutions compliant with FIPS-FIAR (financial improvement plans -- financial improvement and audit readiness), a rigorous financial transaction and compliance standard required by the Department of Defense;
• New product development incorporates blockchain technology to provide enhanced security for industry-specific crypto-currency applications;
• The platform has been developed by a team of security experts with substantial military and commercial experience, including the U.S. Army, Marine Corps and Wall Street;
• The company currently holds a top-secret clearance based on the work it currently carries out for the government.

SMB cybersecurity statistics

• Small- to medium-sized businesses have become the top target for cybercriminals;
• Estimated $75-billion per year is lost to ransomware attackers alone;
• Average hourly cost to small businesses being $8,581 per hour in lost productivity;
• SMBs (2,500 employees or less) number over 27 million;
• Total addressable market expected to exceed $2.2-billion by 2020.

Dev Randhawa, chief executive officer of Big Wind, commented: "The cybersecurity market for small- to medium-sized business is both large and growing rapidly. The market is also underserved in terms of the security required to deal with today's cyberthreats. Hill Top's military-grade solution, called Vauban, uses customized blockchain, cybertagging and rapid restoration to upscale company defences in line with current threats. Just as exciting is the new product development potential, combining the platform with crypto-currency and blockchain technology for industry-specific applications."

Corby Marshall, chief executive officer of Hill Top Security, said, "Our advanced product set addresses aspects of the cyberlandscape that many of our competitors have missed, and we look forward to working with Big Wind to fully unlock the value of our military-grade cybersecurity solutions through our current product offering and through future development."

Financial improvement plans -- financial improvement and audit readiness

Under the letter of intent, the parties have agreed to negotiate in good faith and enter into a definitive agreement, which upon execution will supersede the letter of intent.

Pursuant to the terms of the letter of intent, in consideration of the transaction, the company will initially acquire a 25-per-cent interest in HTSI for an aggregate cash payment of $660,000 (U.S.) (a 15-per-cent interest to be acquired from an existing shareholder of HTSI for a cash payment of $160,000 (U.S.) and an additional 10-per-cent interest in HTSI to be acquired by investing $500,000 (U.S.) into HTSI).

The company will have the exclusive right and option to acquire 100 per cent of HTSI's assets, other than the government-purposed assets, which will remain in HTSI, for an additional cash investment in HTSI of $1.5-million (U.S.) as well as issuing such number of common shares of the company equal to 45 per cent (postissuance) of the issued and outstanding common shares of the company. The company will acquire up to a 49-per-cent interest (an additional 24 per cent) in HTSI, thus allowing HTSI to retain its U.S.-owned status. The acquisition of the assets will be determined based on securities, tax and corporate law considerations, including the possibility of an asset acquisition or a licence agreement.

The company has also agreed to advance to HTSI the sum of $100,000 (U.S.) by July 6, 2017, which must be used for further development of the software platform and for general working capital purposes. The advance will reduce dollar for dollar the amount to be paid to acquire the initial 24-per-cent interest in HTSI.

The transaction is subject to the company completing an equity financing for gross proceeds of not less than $1-million at a price of 15 cents per common share. The parties acknowledge that the funds from the concurrent financing will be held in escrow and not released until the Canadian Securities Exchange approves the transaction on such terms to be more particularly described in the definitive agreement. The company may pay finders' fees in connection with the concurrent financing. The net proceeds from the concurrent financing will be used to finance the $660,000 (U.S.) cash payment, with the balance to be used for development of the business and general working capital.

The definitive agreement will incorporate the principal terms of the transaction described herein and, in addition, such other terms and provisions of a more detailed structure and nature as the parties may agree upon after receiving further tax, legal and financial advice from their respective advisers. However, there is no assurance that the definitive agreement will be successfully negotiated or entered into.

Completion of the transaction is subject to a number of other conditions, including, but not limited to, acceptance by the CSE and completion of mutual due diligence. There can be no assurance that the transaction will be completed as proposed or at all.

Additional information

Further details about the proposed transaction will be provided in a comprehensive news release if and when the parties enter into a definitive agreement. If completed, the transaction will constitute a fundamental change pursuant to CSE policies.

We seek Safe Harbor.