Kona Bay Technologies Inc.
TSX VENTURE : KBY

Kona Bay Technologies Inc.

January 12, 2017 14:00 ET

Kona Bay Technologies Announces Proposed Spin Off

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Jan. 12, 2017) - Kona Bay Technologies Inc. (the "Company") (TSX VENTURE:KBY) announces that its board of directors has approved the proposed spin off of each of the Company's online advertising and software as a service businesses into independent publicly traded companies (the "Arrangement"). The name of each new company will be determined at a later date but for the purposes herein are referred to as "Ad Co" and "SaaS Co".

The board of directors believes that spinning off Ad Co and SaaS Co will help attract an investor base for each entity's specific business and thereby maximizing shareholder value.

Proposed Terms of the Arrangement

Under the proposed terms of the Arrangement: (1) the shareholders of the Company will receive one share of Ad Co and SaaS Co for each share of the Company, (2) the terms of the existing warrants will be amended to entitle the holder to receive, upon due exercise of the warrants, one share of the Company, Ad Co and SaaS Co for each share of the Company that the holder was entitled to receive on exercise of the warrants prior to the Arrangement, and (3) the terms of the existing debentures will be amended to entitle the holder to receive, upon due conversion of the debentures, one share of the Company, Ad Co and SaaS Co for each share of the Company that the holder was entitled to receive on conversion of the debentures prior to the Arrangement.

The proposed board of directors and officers of Ad Co and SaaS Co will be set forth in the Company's management information circular, which will be filed on SEDAR in due course. The Company expects to complete the Arrangement in the first half of 2017. The Arrangement is subject to customary conditions, regulatory approvals and tax considerations.

About Ad Co

Upon closing of the Arrangement, Ad Co will be a technology company specializing in digital customer acquisition. Ad Co's customers are primarily higher education institutions that promote campus and online degree programs to consumers through digital media such as websites, mobile apps, social media networks, and direct e-mail. Ad Co's vision is expand beyond the education industry into other vertical markets to deliver qualified inquiries to advertiser clients at scale and according to the client's targeted return on investment.

About SaaS Co

Upon closing of the Arrangement, SaaS Co will be a software development company that specializes in online testing platforms for training and high-stakes applications. SaaS Co designs, develops, and manages the platform for higher education clients with multiple campus locations and complex requirements. The testing platform is highly flexible and supports a wide range of question content types incorporating multimedia elements for reading, writing, speaking, and listening assessments. Higher education clients use the platform to deliver practice tests, high-stakes assessments, and professional training.

Upon completion of the Arrangement, the Company will retain its consumer-oriented Internet Applications business unit and focus on expanding into high-growth opportunities in the e-commerce and mobile commerce sectors.

Kona Bay Technologies Inc.

Kona Bay Technologies is a global provider of Online Customer Acquisition software and services. We acquire, manage, and build Online Customer Acquisition businesses that address the specific client acquisition needs of our customers in particular vertical markets.

FORWARD-LOOKING STATEMENTS: Except for statements of historical fact, all statements in this news release - including, without limitation, statements regarding future plans and objectives of Kona Bay Technologies Inc. - are forward-looking statements that are subject to various risks and uncertainties. Forward-looking statements are based on current expectations and analyses, including the effects of anticipated product, service, and distribution changes and the potential benefits of such efforts and activities on the Company's results of operations in future periods. There can be no assurance that such statements will prove to be accurate; actual results and future events could differ materially from those anticipated in such statements.

Neither 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 release.

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