Conscience Capital Enters into Definitive Agreement with Hashoff LLC for Qualifying Transaction

PRESS RELEASE Accesswire
Jan. 6, 2020, 06:18 AM

Not for distribution in the U.S. or over U.S. newswires

TORONTO, ON / ACCESSWIRE / January 6, 2020 / Conscience Capital Inc. ("Conscience") (TSXV:DGTL.P), a capital pool company, is pleased to announce that it has entered into a definitive agreement dated December 23, 2019 (the "Definitive Agreement") with Hashoff LLC ("Hashoff"), a privately held company, to provide for the completion of a business combination with Conscience (the "Transaction"), as more particularly described below.

In connection with the Transaction, Conscience will complete a private placement (the "Offering") to close concurrently with closing of the Transaction of up to 11,428,571 subscription receipts ("Subscription Receipts") at a price of $0.35 per Subscription Receipt for gross proceeds of up to $4,000,000. Each Subscription Receipt is automatically exchangeable into common shares ("Common Shares") of the Company, on the basis of one Common Share for each Subscription Receipt, upon the occurrence of certain events, including without limitation, the Company having received all approvals of the TSX Venture Exchange (the "TSXV") to the Transaction.

The Transaction is subject to a number of terms and conditions as set forth in the Definitive Agreement, including (among other things) the approval of the TSXV. If completed, the Transaction will constitute Conscience's "Qualifying Transaction" (as such term is defined in TSXV Policy 2.4 - Capital Pool Companies).

About Hashoff

Hashoff LLC is an enterprise level advertising technology company with proprietary artificial intelligence and machine learning software. Hashoff's 100% owned AI-ML technology is a full-service, turn-key NLP (Native Language Programming) platform, designed to empower global brands, and advertising agencies, by identifying, optimizing, engaging, managing, and tracking top ranked freelance social media content publishers for hyper-localized brand influencer marketing campaigns. Hashoff's flagship solutions "IAM" and "Create Marketplace" allow brands to scan, identify, profile, prequalify, geo-locate, connect and command, top ranked social media content creators in real time. Hashoff's SaaS (software-as-a-service) technologies are fully commercialized and currently serve numerous Fortune 500 level brands by providing them direct access to the new global gig economy of over 140 million freelance content creators.

Hashoff was organized in 2013 as a limited liability company in the state of Delaware under the Delaware Limited Liability Company Act. The company is headquartered in New York, New York, USA.

Based on the Definitive Agreement, Hashoff currently has 311,539 units outstanding (collectively, the "Hashoff Unitholders"), inclusive of 187,306 units that were or are subject to vesting pursuant to the Transaction. Hashoff currently has two shareholders holding more than 10% of its issued and outstanding units: (a) Thomas Jessiman owning 31.9%; and (b) Joel Wright owing 26%. Each of Messrs. Wright and Jessiman are residents of the United States.

The Qualifying Transaction and Private Placement

Pursuant to the Transaction, Conscience will acquire all of the issued and outstanding units in the capital of Hashoff (the "Acquisition") from the Hashoff Unitholders in exchange for the payment of cash and the issuance of Preferred Shares (as described below) of the Company.

Prior to the Acquisition, a shareholders' meeting of Conscience will be held pursuant to which Conscience will seek approval from shareholders to change its corporate name and to form a class of preferred shares (the "Preferred Shares") of Conscience which shall provide, among other things, that they: (i) are non-voting; (ii) are convertible into Common Shares on a one for one basis, subject to customary adjustments; (iii) shall entitle the holder to an annual cumulative fixed dividend of 4%; (iv) have priority rights with respect to preference as to dividends, distributions and payments upon the liquidation, dissolution and winding up of Conscience; and (v) are redeemable by Conscience at a price of $0.70 per share plus all declared and accrued dividends.

Pursuant to the Acquisition, all of the outstanding Hashoff units will be exchanged by the Hashoff Unitholders pro rata in proportion to their holdings at the time of closing in exchange for:

  1. US$500,000, payable at closing;
     
  2. US$1,500,000 payable pursuant to a 30-month deferred payment schedule, payable every 6 months following closing, provided that Hashoff meets certain revenue targets in such 30-month period; and
     
  3. 8,425,532 Preferred Shares, such Preferred Shares being issued at a deemed value of $0.47 per Preferred Share for aggregate consideration of $3,960,000 ("Deemed Payment Share Value").

Certain Hashoff Unitholders representing less than 2% of the total number of units of Hashoff do not qualify as "accredited investors" under the applicable securities laws of the United States, so shall receive an amount of cash equal to the Deemed Payment Share Value multiplied by the number of Preferred Shares that would have otherwise been issuable to such Hashoff Unitholder.

The Acquisition will result in the existing holders of Hashoff units becoming holders of Conscience equity post-Transaction. Hashoff will be a wholly-owned subsidiary of Conscience post-Transaction and Conscience on a post-Transaction basis will be the "Resulting Issuer".

Material conditions required to be fulfilled prior to completion of the Transaction include the following: (i) completion of the shareholders' meeting of Conscience approving the creation of the Preferred Shares and the change in the name of Conscience to "Digital Growth Technologies Inc." as mentioned above; (ii) the Resulting Issuer meeting the applicable minimum listing requirements, including, without limitation, the public float requirements of the TSXV; (iii) the TSXV having conditionally approved the listing of the Resulting Issuer shares issuable pursuant to the Acquisition and the Offering; (iv) the receipt of all regulatory, shareholder and third-party approvals, if any, required in connection with the Transaction; (iv) Conscience being satisfied with the audited financial statements of the business of Hashoff for the fiscal years ended 2017 and 2018; (v) the Offering being completed for minimum gross proceeds of $1,300,000; and (vi) certain other conditions including customary closing conditions for a transaction of this nature.

The parties will be seeking an exemption from the requirement for sponsorship of the Transaction, but in the event an exemption is not available, will seek a sponsorship relationship for this Transaction and will update the market accordingly.

No Conscience director, officer or insider or controlling person of Conscience currently has any direct or indirect beneficial interest in the assets of Hashoff, are insiders of Hashoff for purposes of applicable securities laws or have a relationship with non-arm's length parties to the Qualifying Transaction. The Qualifying Transaction will not constitute a "Non-Arm's Length Qualifying Transaction" (as such term is defined in TSXV Policy 2.4 - Capital Pool Companies) and is not subject to shareholder approval.

In due course, Conscience intends to prepare and submit a Filing Statement in connection with the Transaction and a more comprehensive press release with further details relating to the Transaction including the Offering will be issued in accordance with the policies of the TSXV.

ABOUT CONSCIENCE

Conscience is a capital pool company (CPC) formed under the TSXV CPC program. Conscience's common shares will remain halted until Conscience satisfies the requirements of the TSXV for resuming the trading of the Conscience shares or until completion of the Transaction.

Completion of the Transaction is subject to a number of conditions including, but not limited to, TSXV acceptance. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all. Investors are cautioned that, except as disclosed in the Filing Statement and/or an Information Circular 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. Trading in the securities of a capital pool company should be considered highly speculative.

All information in this press release concerning Hashoff has been provided for inclusion herein by Conscience. Although Conscience has no knowledge that would indicate that any information contained herein concerning Hashoff is untrue or incomplete, Conscience assumes no responsibility for the accuracy or completeness of any such information.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this Press Release.

FORWARD-LOOKING STATEMENTS

This news release contains "forward-looking information" within the meaning of applicable securities laws relating to the proposal to complete the Transaction and associated transactions, including statements regarding the terms and conditions of the Transaction and associated transactions. Any such forward-looking statements may be identified by words such as "expects", "anticipates", "believes", "projects", "plans" and similar expressions. Readers are cautioned not to place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the Transaction and associated transactions, that the ultimate terms of the Transaction and associated transactions will differ from those that currently are contemplated, and that the Transaction and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The statements in this news release are made as of the date of this release. Conscience undertakes no obligation to update any such forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on any such forward-looking statements. Conscience undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of Conscience and Hashoff, or their respective financial or operating results or (as applicable), their securities.

FOR FURTHER INFORMATION PLEASE CONTACT:

Conscience Capital Inc.
Michael Racic
Chief Executive Officer
Phone: (516) 672-9496

Hashoff LLC
Joel Wright
Chief Executive Officer
Phone: (720) 441-4242

SOURCE: Conscience Capital Inc.



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