Focused Capital II Signs Definitive Business Combination Agreement With Fortress Blockchain
Further Details Regarding the Transaction
On or immediately prior to the completion of the Transaction, it is anticipated that Focused Capital II will effect: (i) the continuation of the Company under the laws of the Business Corporations Act (British Columbia) (the "Continuation"); (ii) the consolidation of all outstanding common shares of Focused Capital II (the "Company Shares") on 1 for 3.25077 basis resulting in an aggregate of 1,900,000 (subject to rounding) Company Shares outstanding post-consolidation (the "Consolidation"); and (iii) a name change of the Company to "Fortress Blockchain Corp." or such other name as determined by Fortress Blockchain (the "Name Change").
The Definitive Agreement provides that, if determined by Fortress, the Parties shall use their commercially reasonable efforts to cause Fortress to complete a private placement for the issuance of Fortress common shares ("Fortress Shares") or units comprised of Fortress Shares and warrants exercisable to purchase Fortress Shares immediately prior to the closing of the Transaction at an offering price per security of not less than $0.60 (the “Potential Financing”). The terms of any Potential Financing will be announced if entered into by Fortress Blockchain, though there is no certainty that any Potential Financing will be sought or completed.
Pursuant to the terms of the Transaction, the holders of Fortress Blockchain securities (including those held by investors in the Potential Financing subsequent to the completion thereof, if applicable) will receive one (1) equivalent security of the Resulting Issuer (on a post-Consolidation basis) in exchange for each outstanding Fortress Blockchain security. As at the date of this press release, Focused Capital II has 6,176,470 Company Shares outstanding and 450,000 stock options outstanding, each exercisable to acquire one Company Share at an exercise price of $0.20 per Company Share (on a pre-Consolidation basis). As at the date this press release, Fortress Blockchain has the following securities issued and outstanding: 69,277,981 Fortress Shares; 2,102,500 incentive stock options each exercisable into one Fortress Share at a price of $0.50 per Fortress Share; 1,050,000 broker compensation options each exercisable into one Fortress Share at a price of $0.50 per Fortress Share; and 18,200,000 warrants each exercisable into one Fortress Share at a price of $0.50 per Fortress Share. In addition, Fortress Blockchain and Focused Capital II anticipate issuing an aggregate of approximately 162,000 new stock options each exercisable to acquire one Company Share at an exercise price that is not less than $0.60 per share, subject to TSX-V approval, to certain directors, officers, employees and/or consultants of the Resulting Issuer on completion of the Transaction. On completion of the Transaction, and assuming no Potential Financing is completed in connection therewith, it is anticipated that there will be an aggregate of approximately 71,177,981 common shares of the Resulting Issuer (“Resulting Issuer Shares”) issued and outstanding and an additional 21,652,928 convertible securities of the Resulting Issuer exercisable into Resulting Issuer Shares.
Proposed Management and Board of Directors of the Resulting Issuer
Upon completion of the Transaction, it is anticipated that the persons identified below will serve as directors and officers of the Resulting Issuer, subject to acceptance by the TSX-V. The proposed Chief Financial Officer and Corporate Secretary of the Resulting Issuer after giving effect to the Transaction will be announced shortly.
Aydin Kilic – President, Chief Executive Officer and a Director
Mr. Kilic is an experienced management consultant and expert analyst with a deep understanding of cryptocurrency mining algorithms and is a partner in a commercial scale cryptocurrency mine in Canada. Mr. Kilic holds a Bachelor of Science degree In Engineering Science from Simon Fraser University with a specialization in high frequency electronics, mathematical modelling and physics. He has underwritten over $200 million in land acquisitions for property developers and has managed and secured over $100 million in construction financing.
Michael Ages – Chief Technical Officer
Mr. Ages is systems engineer and an expert in engineering technical specifications and advanced testing development and qualification, with extensive experience investigating engineering failure modes. Mr. Ages has eight years of experience as an engineer in the cutting-edge world of automotive fuel cells. While working for Automotive Fuel Cell Cooperation as part of Daimler AG's hydrogen fuel cell vehicle program, Mr. Ages ran a testing lab focused on stress tests on small scale fuel cells. Prior thereto, Mr. Ages worked on the systems engineering team where he managed the technical specifications for the fuel cell and developed the operating strategy for fuel cell vehicles. Mr. Ages holds a Bachelors Degree in Engineering Physics with a specialization in electronics from Simon Fraser University.
Roy Sebag – Director (Chairman)
Mr. Sebag has served as the President, Chief Executive Officer and a director of Goldmoney Inc. (TSX), a company that he co-founded, since 2014. Mr. Sebag previously served as Managing Principal of Braavos Capital, Ltd. an international private investment organization engaged in value-oriented investments across a variety of asset classes and industries, which he founded.
Joshua Crumb – Director
Mr. Crumb has served as the Chief Strategy Officer and a director of Goldmoney Inc. (TSX), a company that he co-founded, since 2014. Mr. Crumb was previously the Senior Metals Strategist at Goldman Sachs in the Global Economics, Commodities and Strategies research division in London. Mr. Crumb is also currently a director of Solitario Zinc Corp. (TSX). Mr. Crumb holds a Master of Science degree in Mineral Economics, a Graduate Certificate in International Political Economy and Bachelor of Science degree in Engineering from the Colorado School of Mines.
Kent Wakeford – Director
Mr. Wakeford has held senior management positions with and has co-founded several companies. He specializes in M&A and executive management. He is currently the Chief Operating Officer and a director of KSV eSports International, Ltd., an eSports management company that he co-founded. Mr. Wakeford holds a law degree from the University of Southern California.
David Jaques – Director
Mr. Jaques has held senior financial positions in banking, corporate and venture capital. He was the founding Chief Financial Officer of PayPal from 1999 to 2001 and the Chief Financial Officer of BlueRun Ventures from 2000 to 2008. He currently provides Chief Financial Officer consulting services through Greenough Consulting Group and is a director of Katipult Technology Corp. (TSX-V). Mr. Jaques holds a Higher National Diploma in Business Administration from Polytechnic of the South Bank, London, and is a UK Chartered Certified Accountant (inactive).
Upon completion of the Transaction, it is anticipated that Fidelity Investments Canada ULC will beneficially own or control, directly or indirectly, approximately 14.6% of the outstanding common shares of the Resulting Issuer and will be considered an insider of the Resulting Issuer pursuant to the policies of the TSX-V.
No person directly or indirectly holds a controlling interest in Fortress Blockchain.
Financial Information of Fortress Blockchain
Based on the draft audited financial statements of Fortress Blockchain for the financial period ended December 31, 2017, Fortress Blockchain had no earnings and incurred a net loss of $66,021, which was comprised of G&A expenses. In addition, as at December 31, 2017, Fortress Blockchain had total assets of $4,850,357, total liabilities of $4,893,433 ($4,761,582 of which consisted of share subscriptions received in advance), and shareholders' equity of $(43,076). Since December 31, 2017, Fortress Blockchain raised gross proceeds of approximately $20,033,394 from the sale of securities on a private placement basis.
Arm's Length Transaction
The Transaction is an arm’s length transaction in accordance with the policies of the TSX-V.
The Transaction is subject to completion of certain conditions set forth in the Definitive Agreement, including, without limitation, receipt of all necessary regulatory (including TSX-V) and third party approvals, approval of the Company's shareholders with respect to the Consolidation, Name Change and Continuation and approval of Fortress Blockchain's shareholders with respect to the amalgamation that will facilitate the completion of the Transaction.
Focused Capital II intends to make an application to the TSX-V for an exemption from sponsorship requirements, but there is no assurance that such an exemption will be granted.
In connection with the Transaction and pursuant to the requirements of the TSX-V, Focused Capital II will file a filing statement on its issuer profile on SEDAR (www.sedar.com), which will contain details regarding the Transaction, Focused Capital II, Fortress Blockchain and the Resulting Issuer.
Completion of the Transaction is subject to a number of conditions, including but not limited to, TSX-V acceptance and if applicable pursuant to the requirements of the TSX-V, majority of the minority shareholder approval. 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 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.
The TSX-V has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
About Fortress Blockchain Corp.
Fortress Blockchain Corp. is a technology-oriented blockchain mining company committed to operating in low cost North American green-energy regions. Fortress Blockchain’s resources are currently dedicated to achieving peak operational efficiency in industrial scale Bitcoin mining, to ultimately deliver an industry leading competitive advantage in performance. Fortress Blockchain is strategically acquiring state-of-the-art mining facilities, including a seminal Washington State facility which has been in continuous operation since 2014, which will also serve as an R&D facility going forward to optimize and build out the next generation of highly scalable blockchain mining infrastructure.About Focused Capital II Corp.
Focused Capital II, a capital pool company within the meaning of the policies of the TSX-V, was listed on the TSX-V on December 28, 2011. Since April 9, 2014, the common shares of Focused Capital II have traded on the NEX trading board of the TSX-V. Focused Capital II does not have any operations and has no assets other than cash. Focused Capital II’s business is to identify and evaluate businesses and assets with a view to completing a qualifying transaction under the policies of the TSX-V.The information provided in this press release regarding Fortress Blockchain has been provided to Focused Capital II by Fortress Blockchain and has not been independently verified by Focused Capital II.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.