Doxa En­ergy to ac­quire ProS­tar as QT

Stockwatch Daily - - ENERGY - Mr. John Harvi­son re­ports

DOXA EN­ERGY Ltd. and ProS­tar Geo­corp Inc. have en­tered into a bind­ing let­ter agree­ment dated Oct. 26, 2018, whereby Doxa will ac­quire all of the is­sued and out­stand­ing se­cu­ri­ties of ProS­tar.

Upon suc­cess­ful com­ple­tion of the pro­posed ac­qui­si­tion, it is an­tic­i­pated that the com­pany will be listed as a Tier 2 tech­nol­ogy is­suer on the TSX Ven­ture Ex­change and will carry on the busi­ness of ProS­tar. The trans­ac­tion con­sti­tutes a re­verse takeover of the com­pany.

Trans­ac­tion sum­mary

Pur­suant to the trans­ac­tion, the com­pany will is­sue com­mon shares to the hold­ers of com­mon shares in the cap­i­tal of ProS­tar on the ba­sis of ap­prox­i­mately four post­con­sol­i­da­tion Doxa shares for each ProS­tar share. It is an­tic­i­pated that ap­prox­i­mately 59.3 mil­lion Doxa shares will be is­sued pur­suant to the trans­ac­tion. It is a con­di­tion to the clos­ing of the trans­ac­tion that the ProS­tar share­hold­ers will hold at least 80.01 per cent of the is­sued and out­stand­ing Doxa shares on com­ple­tion of the trans­ac­tion, but prior to the com­ple­tion of a con­cur­rent fi­nanc­ing.

The trans­ac­tion is an arm’s-length trans­ac­tion. Upon the com­ple­tion of the trans­ac­tion, it is ex­pected that ProS­tar will be­come a wholly owned sub­sidiary of the com­pany.

ProS­tar will com­plete a pre­trans­ac­tion pri­vate place­ment through the is­suance of not more than 3.5 mil­lion ProS­tar shares and will set­tle a por­tion of its ex­ist­ing debt through the is­suance of not more than 2.4 mil­lion ProS­tar shares.

In­for­ma­tion con­cern­ing ProS­tar

ProS­tar is in­cor­po­rated un­der the laws of the State of Delaware and is a soft­ware-as-a-ser­vice (SaaS) com­pany that pro­vides patented Geospa­tial In­tel­li­gence Soft­ware. ProS­tar’s flag­ship so­lu­tion is Trans­par­ent Earth, a na­tively cloud and mo­bile so­lu­tion de­signed to cap­ture, record and dis­play the pre­cise lo­ca­tion of sub­sur­face as­sets, in­clud­ing buried util­i­ties and pipe­lines.

Man­age­ment and board of di­rec­tors of re­sult­ing is­suer

With the ex­cep­tion of Paul McKen­zie, all of the cur­rent mem­bers of the com­pany’s board of di­rec­tors will re­sign and the fol­low­ing in­di­vid­u­als will be ap­pointed as man­age­ment and di­rec­tors of the re­sult­ing is­suer:

• Page Tucker, chief ex­ec­u­tive of­fi­cer and di­rec­tor;

• Paul McKen­zie, di­rec­tor;

• Herb McKim, chair­man and di­rec­tor;

• Jonathan Richards, chief fi­nan­cial of­fi­cer and di­rec­tor.

Con­sol­i­da­tion

The com­ple­tion of the trans­ac­tion is sub­ject to the com­ple­tion by the com­pany of a con­sol­i­da­tion of its share cap­i­tal on a one-new-for-17old ba­sis.

Debt set­tle­ment

The par­ties to the trans­ac­tion have agreed that prior to or con­cur­rently with the clos­ing of the trans­ac­tion, t he com­pany will set­tle ap­prox­i­mately $3,490,396 in debt (in­clud­ing ac­crued and un­paid in­ter­est to Sept. 30, 2018) owed col­lec­tively to Ar­mada In­vest­ments Ltd. (a com­pany owned and con­trolled by chair­man and di­rec­tor G. Arnold Arm­strong) and Harvco LLC (a com­pany owned and con­trolled by pres­i­dent and chief ex­ec­u­tive of­fi­cer John Harvi­son) through the is­suance of 218,149,750 pre­con­sol­i­da­tion Doxa shares at a price of 1.6 cents per pre­con­sol­i­da­tion Doxa share.

The debt set­tle­ments will re­sult in the cre­ation of a new con­trol po­si­tion to be held by Harvco LLC, which will be is­sued 49,579,486 pre­con­sol­i­da­tion Doxa shares, rep­re­sent­ing 21 per cent of the com­pany, prior to the com­ple­tion of the trans­ac­tion and any pri­vate place­ment. The debt set­tle­ments are also re­lated party trans­ac­tions as de­fined un­der Mul­ti­lat­eral In­stru­ment 61101.

Pri­vate place­ment

It is a con­di­tion of the trans­ac­tion that the com­pany com­pletes a pri­vate place­ment of up to 10 mil­lion post­con­sol­i­da­tion Doxa shares or units at a price of 50 cents per post­con­sol­i­da­tion Doxa share. Ad­di­tional de­tails con­cern­ing the pri­vate place­ment will be pro­vided in a sub­se­quent press re­lease.

The com­pany in­tends to use the net pro­ceeds of the pri­vate place­ment to fi­nance the trans­ac­tion, to de­velop the busi­ness of the re­sult­ing is­suer and for work­ing cap­i­tal and gen­eral cor­po­rate pur­poses.

Dis­po­si­tion of oil and gas as­sets

At or prior to the clos­ing of the trans­ac­tion, the com­pany will dis­pose of its ex­ist­ing oil and gas in­ter­ests and re­lated equip­ment in as­sets through the sale of its U.S. sub­sidiary to Dy­namic Pro­duc­tion LLC, a com­pany con­trolled by Mr. Harvi­son, at their fair mar­ket value. As a con­di­tion of the dis­po­si­tion, the com­pany will be re­leased from the out­stand­ing re­volv­ing se­cured credit fa­cil­ity with UMB Fi­nan­cial Corp., of which $153,333 (U.S.) is cur­rently out­stand­ing and ma­tures on June 1, 2019, and ac­counts payable due to Dy­namic, of which $1,729,844 (U.S.) is cur­rently out­stand­ing. As it is ex­pected that the fair mar­ket value of the oil and gas as­sets is less than the out­stand­ing bal­ance of the credit fa­cil­ity, the dis­po­si­tion will not re­sult in any pay­ments to the com­pany.

Share­holder meet­ing

Ap­proval for the con­sol­i­da­tion, debt set­tle­ments and dis­po­si­tion will be sought from the com­pany’s share­hold­ers at its an­nual and spe­cial gen­eral meet­ing to be held on Dec. 12, 2018. The com­pany does not an­tic­i­pate seek­ing share­holder ap­proval for the trans­ac­tion.

Name change

Upon com­ple­tion of the trans­ac­tion, the com­pany in­tends to

change its name to ProS­tar Hold­ings Inc. or such other name as ProS­tar and the com­pany may de­ter­mine, and the par­ties ex­pect that the TSX-V will as­sign a new trad­ing sym­bol for the re­sult­ing is­suer.

We seek Safe Har­bor.

Erika Flores con­densed this news re­lease (erikaf@stock­watch.com).

Ge­orge Arnold Arm­strong, John Mark Bron­son, Daniel J Fred­erik­sen, Ger­ald H Gra­ham, John D Harvi­son, Paul T McKen­zie, Jonathon G Weiss

(DXA) Shares: 33,980,141

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