Mr. Ted Mann reports

SLYCE ANNOUNCES SALE OF OPERATING ASSETS

Slyce Inc. has entered into a definitive agreement to sell its operating assets to an affiliate of Anzu Partners LLC, a private equity firm based in Washington.

Overview of asset sale

The consideration to be received by the company for the business includes:

1. $2,835,000 in cash;
2. A 7.5-per-cent economic interest in the purchaser;
3. Assumption of certain liabilities totalling approximately $329,000;
4. Offers of employment to substantially all employees and assumption of certain financial obligations related to employees that accept employment with the purchaser;
5. Fully paid, worldwide rights to use of four provisional patents;
6. Fully paid licence for mobile app that enables users to scan product images and complete purchases in app;
7. Approximately $45,000 (U.S.) per month related to provision of transition support services.

Completion of the transaction is subject to customary conditions for a transaction of this nature, including shareholder and applicable regulatory approvals. A special meeting of shareholders has been scheduled for Dec. 21, 2016, to consider a resolution to approve the transaction.

Slyce's name transfers with the business and, upon consummation of the transaction, the company's name will be changed to Pounce Technologies Inc.

Background leading to sale of assets

Although Slyce has sustained success in attracting and providing services to clients, it has not yet scaled to generate sufficient cash flow to satisfy its liabilities as they become due, and it was not anticipated that the company would achieve cash flow break-even until the end of 2017. Slyce's current liabilities are approximately $3.4-million (and increasing), and cash on hand is immaterial.

The company expended significant effort since late 2015 to secure equity and/or debt financing. While some success resulted from this effort, inadequate financing during recent months resulted in an erosion of the company's financial position to its current state.

In September, 2016, Slyce's board of directors appointed a special committee to consider strategic alternatives and recommend a course of action aimed at maximizing shareholder value. The special committee engaged Acumen Capital Finance Partners Ltd. as Slyce's financial adviser. The special committee and Acumen reviewed several alternatives and concluded that, in the current equity-financing environment, a sale of the business or its assets was the best alternative for shareholders. Discussions were held with several firms that expressed interest in Slyce.

After reviewing the alternatives, Slyce began exclusive negotiations with Anzu Partners, leading to a comprehensive, non-binding letter of intent and term sheet in October, 2016. Due diligence was completed and the definitive agreement was entered into by Slyce and Anzu Partners.

Anticipated benefits of the transaction

Upon consummation of the transaction, the company will have enough proceeds to retire its trade payables and accrued liabilities. The company will have limited revenues and minimal expenses. The transaction is expected to provide the company with sufficient resourcing to leverage its expertise by repurposing the Pounce app and becoming a technology integrator in an adjacent market, which the company believes can ultimately be converted into additional shareholder value, augmented by unrecorded tax assets arising from accumulated loss carryforwards for Canadian tax purposes. If the transaction was not consummated, current market conditions to raise capital given the company's current debt load and historical cash consumption have made the likelihood of continued financing at the times needed very unlikely.

The company will continue to benefit from participation in the core business that it created through a 7.5-per-cent economic interest in the purchaser, which will be adequately financed to properly execute on its business plan.

It is intended that the company will, upon completion of the transaction, delist from the TSX Venture Exchange, in part to save the expense to sustain a TSX-V listing. The company will apply for a lower-cost NEX listing to provide a continuing public market for its shares. There is, however, no assurance that the company will transfer to the NEX upon the completion of the transaction.

Shareholder approval authorizing the transaction and board recommendation

The special committee has considered the advice of its legal advisers and its financial adviser, Acumen, regarding the potential risks and benefits of the transaction. In addition, the board of directors carefully reviewed and considered the terms and conditions of the definitive agreement. Following the completion of a thorough process and considering the financial time constraints, Acumen advised the special committee that the offer from Anzu Partners presented the best opportunity for shareholders, as compared with all other alternatives available to the company, and recommended to the special committee that the board of directors recommend that the shareholders vote for the asset sale resolution.

Acumen provided a fairness opinion to the special committee to the effect that, as of the date of such opinion and subject to the assumptions, limitations and qualifications contained therein, the consideration to be received by the company for the business pursuant to the definitive agreement is fair, from a financial point of view, to the company and its shareholders.

Additional information on the transaction, including a copy of Acumen's fairness opinion, is provided in a management information circular being distributed to the company's shareholders on Nov. 28, 2016.

To date, certain directors and officers of the company and other significant shareholders who collectively own approximately 22 per cent of the outstanding Slyce common shares have entered into shareholder support agreements wherein they have agreed to vote their shares in favour of the transaction.

About Slyce

Slyce, based in Calgary, Alta., delivers sophisticated visual search technologies and is currently focused on enabling a powerful sales channel for major retailers and their customers. The company delivers its technology both as a white-label visual search platform and as a suite of consumer mobile apps.

We seek Safe Harbor.