Active Growth Capital Inc.
TSX VENTURE : ACK

Active Growth Capital Inc.

July 21, 2016 15:15 ET

Active Growth Capital Announces Proposed Change of Business Transaction With SOCPRA

VAL D'OR, QUEBEC--(Marketwired - July 21, 2016) -

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Active Growth Capital Inc. (TSX VENTURE:ACK) ("ACK" or the "Corporation") announced today that it has entered into a binding letter of intent (the "LOI") dated July 20, 2016 with Société de commercialisation des produits de la recherche appliquée SOCPRA-Sciences et Génie S.E.C., also operating under the name of TransferTech Sherbrooke ("SOCPRA"), pursuant to which ACK would acquire all rights and interests in the quantum random number generator technological project (International application No. PCT/CA2015/050408) (the "Technology"), which is the result of the research and development work by Dr. Bertrand Reulet, SOCPRA and their collaborators (the "Transaction"). The Transaction, if completed, will constitute a "Change of Business" for ACK under Policy 5.2 of the TSX Venture Exchange (the "TSXV"). The Transaction will be an arm's length transaction.

SOCPRA AND THE QUANTUM RANDOM NUMBER GENERATOR TECHNOLOGY

SOCPRA is a partnership that manages the intellectual property issued from researches performed at the Université de Sherbrooke and its affiliated institutions and promotes the intellectual property in order to attract partners. SOCPRA also applies valuation strategies to commercialize technologies, either as licenses or spin-off businesses, thus generating returns for the community.

The Technology provides a simple, low cost, compact and adaptable quantum random number generator exploiting a physical source (not software) for the generation of randomness. The physical source exploits the power of quantum physics which provides the ultimate source randomness. Multiple commercial applications require random numbers: cryptography, gaming, machine to machine communication protocol, bank transactions, etc.

THE TRANSACTION

Pursuant to the terms of the LOI, subject to execution of an intellectual property assignment and royalty agreement (the "Definitive Agreement") and receipt of applicable regulatory and TSXV approvals, ACK will acquire the Technology in consideration of: (i) $300,000 payable by the issuance of an aggregate 6,000,000 ACK Shares in tranches of 1,200,000 to each of SOCPRA, Dr. Bertrand Reulet, Michel Delisle, Sébastien Plouffe and Pierre Miron, and (ii) the grant of a royalty to SOCPRA representing 5 % on all future sales of commercial applications incorporating the Technology, which ACK would have the option to buy back in consideration of $1,500,000, payable in cash or by the issuance of 10,000,000 ACK Share at the option of SOCPRA, within the first three (3) years following the closing of the Transaction.

Should ACK fail to find a commercial application for the Technology within three (3) year of the closing of the Transaction, 50% of the Technology shall be transferred back to SOCPRA and a 50%/50% joint venture shall be formed to cover all future costs relating to obtaining and maintaining as well as developing the rights forming part of the Technology.

The LOI is intended to be binding upon the parties until execution of the Definitive Agreement.

A finder's fee (the "Finder's Fee") of 10% of the value of the Transaction shall be paid to Éric Leboeuf, a non-arm's length party specifically commissioned by ACK and instrumental to the Transaction, by the issuance of 600,000 ACK Shares in connection with the Transaction, subject to the approval of the TSXV

FINANCING

In conjunction with the Transaction, and in order to have sufficient working capital to complete the Transaction and execute the business plan thereafter, ACK will complete two concurrent financings (together, the "Financing") for aggregate gross proceeds of a minimum of $800,000 (or such other minimum amount as may be required for ACK to satisfy the initial listing requirements of the TSXV) (the "Minimum Financing") and a maximum of $1,000,000.

An initial private placement financing of a minimum of $75,000 and a maximum of $150,000 (the "Bridge Financing"), of units of ACK at the subscription price of $0.05 per unit. Each unit shall consist of (i) one (1) ACK common share (an "ACK Share"), and (ii) one (1) transferable ACK Share purchase warrants with each such warrant entitling the holder thereof to acquire one (1) ACK Share at a price of $0.10 per ACK Share until the date that is 18 months from the closing of the financing. The closing of the Bridge Financing will not be conditional to the closing of the Transaction.

A private placement financing of a minimum of $650,000 in ACK units and a maximum of $925,000 (the "Concurrent Financing"), at the subscription price of $0.05 per unit. Each unit shall consist of (i) one (1) ACK Share, and (ii) one (1) transferable ACK Share purchase warrants with each such warrant entitling the holder thereof to acquire one (1) ACK Share at a price of $0.10 per share until the date that is 12 months from the closing of the financing. The Concurrent Financing.

In connection with the Transaction, the Parties will jointly agree to the appointment of an agent for the Concurrent Financing, or a sponsor, if required by the TSXV, at customary remuneration and terms for a transaction of similar size and scope.

All securities issued pursuant to the Transaction and the Financing will be subject to a four-month hold period.

A comprehensive press release with further particulars relating to the Transaction will follow in accordance with the policies of the TSXV upon the execution of the Definitive Agreement.

The ACK Shares are currently halted from trading and will remain so until such time as the TSXV provides its authorization to resume trading.

About Active Growth Capital

Active Growth is a TSX listed junior mineral exploration issuer whose long-term objective is to build a diversified company focused on the acquisition, exploration and development of mineral properties. Additional information about the Corporation is available on SEDAR at www.sedar.com.

Completion of the Transaction is subject to a number of conditions including, but not limited to: completion of satisfactory due diligence; completion of the Minimum Financing; execution of a definitive agreement in respect of the Transaction; receipt of requisite regulatory approvals; acceptance of the Transaction by the TSXV; receipt of all requisite approvals from the shareholders of each of ACK for the Transaction and ancillary matters relating thereto; and the completion of all other actions necessary to consummate the Transaction.

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 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. Trading in securities of ACK should be considered highly speculative. The TSX-V has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the contents of this press release.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this press release. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.

Contact Information

  • Active Growth Capital Inc.
    Marc Labrecque
    President and CEO
    (819) 825-0001