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Pounce Technologies Inc
Symbol POI
Shares Issued 24,400,905
Close 2018-09-27 C$ 0.135
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Pounce enters LOI to acquire Trax One

2018-10-02 18:34 ET - News Release

Mr. Cameron Chell reports

POUNCE TECHNOLOGIES ENTERS INTO LETTER OF INTENT TO ACQUIRE TRAX ONE, INC.

Pounce Technologies Inc. has entered into a letter of intent dated Oct. 1, 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 hyperlocal 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 hypertargeted 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 geopatterns of devices. Trax's focus is to deliver the right message to the right device at the right time. Trax is a private company incorporated under the laws of Delaware. Since incorporation on Sept. 20, 2016, Trax has been focused on development and operations and has not generated revenue from its operations. For the fiscal year ended Sept. 30, 2017, on an unaudited basis, Trax had a net loss of $580,060 and a comprehensive loss of $610,332. As at Sept. 30, 2017, on an unaudited basis, Trax had $374,869 in total assets (of which $81,757 was current assets) and $138,290 in total liabilities (all of which were current).

Pursuant to the LOI, the company will, directly or indirectly through a subsidiary, acquire all of the issued and outstanding securities of Trax in exchange for the issuance of an aggregate of 20,884,416 common shares of the company at a deemed price of 15 cents per consideration share, 72,000 share purchase warrants of the company with each consideration warrant being exercisable into one common share of the company at an exercise price of 15 cents per share and 500,000 stock options of the company with each consideration option being exercisable into one share at an exercise price of 15 cents per share.

The acquisition, upon completion, will constitute a change of business for the company and is expected to be the basis for the reactivation of the company from NEX. On closing, the company is expected to list its shares on the Canadian Securities Exchange, subject to approval of the CSE and the TSX Venture Exchange. The LOI is non-binding, and more detailed terms are expected to be negotiated and set out in a definitive agreement for the acquisition to be entered into by the company and Trax.

In connection with the acquisition, the company intends to complete a private placement of shares or subscription receipts to raise gross proceeds of at least $1.2-million on terms to be determined in reference to market conditions and CSE policies, subject to the securities having a minimum subscription price of 15 cents per share or subscription receipt.

Also in connection with the acquisition, Trax plans to seek an unsecured bridge loan in the amount of $300,000 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 cent per annum, (b) a maturity date of one year following the date the bridge loan is advanced, (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 12 cents 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 and will be escrowed from closing of the acquisition and not released until the first anniversary of closing.

The board of directors of the company is expected to be reconstituted on closing to be composed of four directors, including one nominee of Trax. Additional information will be provided regarding the proposed directors of the resulting issuer when available. 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 per cent of the issued and outstanding shares of the company from time to time.

The acquisition will constitute a non-arm's-length transaction as Cameron Chell and Erika Racicot, directors of the company, are also directors or officers and indirect shareholders of Business Instincts Group Inc. (BIG). BIG is the largest shareholder of Trax. Accordingly, the acquisition and the delisting, if required by the TSX-V, will be subject to approval of the majority of minority shareholders and other corresponding requirements in accordance with TSX-V Policy 5.9 (Protection of Minority Security Holders in Special Transactions) and Multilateral Instrument 61-101 (Protection of Minority Security Holders in Special Transactions).

The completion of the acquisition and transactions contemplated by the LOI remains subject to a number of conditions, including that the parties be satisfied with their respective due diligence, completion of the concurrent financing, execution of the acquisition agreement and the execution of the escrow agreement by all securityholders of Trax, all requisite approvals being obtained, including approval of the majority of minority shareholders, TSX-V and CSE, and other customary conditions. The company seeks to enter into the acquisition agreement by Oct. 31, 2018, and to complete the acquisition and ancillary transactions on or before Dec. 14, 2018. Trax has agreed not to entertain transaction proposals from any other party until such time as the acquisition agreement has been entered into or the LOI has been terminated.

Completion of the transaction is subject to a number of conditions, including, but not limited to, TSX-V acceptance and, if applicable, disinterested shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained.

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.

We seek Safe Harbor.

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