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Title: HashChain Technology Inc. Announces Proposed Reverse Takeover Transaction with Digihost International, Inc.
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HashChain Technology Inc. Announces Proposed Reverse Takeover Transaction with Digihost International, Inc.

Tickers: XTSX:KASH, XOTC:HSSHF
Tags: #Technology, #Blockchain



Vancouver, BC / TheNewswire / March 28, 2019 -HashChain Technology Inc. ("HashChain" or the "Company") (TSXV: KASH; OTCQB: HSSHF) is pleased to announce that it has entered into an agreement dated March 28, 2019 (the "Definitive Agreement") with shareholders of Digihost International, Inc. ("Digihost") whereby the business and assets of HashChain and Digihost will be combined by way of a share exchange between HashChain and shareholders of Digihost, constituting a "reverse-takeover" of HashChain by Digihost under the policies of the TSX Venture Exchange (the "Proposed Transaction"). Upon completion of the Proposed Transaction, the issuer resulting from the Proposed Transaction (the "Resulting Issuer") will carry on the business previously carried on by HashChain. It is anticipated that upon completion of the Proposed Transaction, the Resulting Issuer will be listed as Tier 2 Technology Issuer under the policies of the TSX Venture Exchange (the "TSXV" or the "Exchange").

General Information About HashChain and Digihost

Digihost is a private company focused on providing cryptocurrency hosting services to cryptocurrency miners. Digihost has its registered office in Wilmington, Delaware and was incorporated under the laws of the State of Delaware on October 9, 2018. Since incorporation, Digihost has entered into agreements to purchase equipment for the purposes of providing cryptocurrency hosting services. Concurrent with the closing of the Proposed Transaction, it is anticipated Digihost will complete acquisitions pursuant to asset purchase and assignment agreements with Bit.Management LLC ("Bit.Management"), Bit Mining International LLC and NYAM LLC, to acquire hosting infrastructure and equipment, assume a lease agreement for two warehouses used for cryptocurrency mining operations located in Buffalo, NY, and assume a power contract for the supply of electricity for cryptocurrency operations at the Buffalo warehouses.

HashChain was incorporated on February 18, 2017 under the laws of the Province of British Columbia, and its registered office is located in Vancouver, British Columbia. HashChain's principal business is cryptocurrency mining. During the Company's first full year of operations, strategic acquisitions were made in order to increase its inventory of mining rigs. Now with 11,895 Bitcoin mining rigs in inventory, the Company has the ability to extend its digital currency mining footprint to 17.5 megawatts of computing power. In order to address continued volatility in the cryptocurrency market, the Company remains focused on seeking means to reduce its cost of mining, which is the primary driver of the Proposed Transaction.

Cryptocurrency mining is the process of confirming transactions to be added on a blockchain by solving complex, computation puzzles using high performance computers referred to as "rigs". Mining is critical to the continuing functioning and security of the cryptocurrency network and, to incentivize this activity, a miner that verifies and solves a new block is awarded newly generated quantity of "coins". Once the coins are mined, the Company may exchange a portion of coins earned through its mining operations for fiat currencies, such as Canadian dollars or US dollars.

The Proposed Transaction

HashChain's mining center is hosted in two warehouses located in Buffalo, NY, for which it pays Bit.Management rent for the physical space of its rigs and for the electricity used in its cryptocurrency operations. Due to increasing costs of cryptocurrency mining and volatility in the valuation of mined-cryptocurrencies, the hosting expenses paid by HashChain to Bit.Management per coin mined are presently greater than the value of the coins mined. Completion of the Proposed Transaction will vertically integrate the hosting business to be acquired by Digihost with the mining operations of HashChain, such that the cost of mining is significantly reduced.

The Proposed Transaction is anticipated to be completed by way of share exchange. HashChain currently has 260,281,263 common shares issued and outstanding. All existing stock options of HashChain will be cancelled and will not be exchanged for corresponding securities of the Resulting Issuer. Assuming completion of the Proposed Transaction and HashChain Share Consolidation (as defined hereinafter), existing HashChain shareholders will hold approximately 18% of the then issued and outstanding common shares in the capital of the Resulting Issuer (the "Resulting Issuer Shares"). Holders of existing common share purchase warrants shall receive common share purchase warrants in the capital of the Resulting Issuer on equivalent terms and conditions, after adjustment with respect to the HashChain Share Consolidation.

Assuming completion of the Proposed Transaction, a number of Resulting Issuer Shares representing 82% of the total Resulting Issuer Shares will be issued to Digihost shareholders, and Digihost will become a wholly owned subsidiary of HashChain.

Each Resulting Issuer Share issued to the holders of Digihost shares is currently expected to be issued at a deemed price of approximately $0.96 per Resulting Issuer Share for aggregate deemed consideration of approximately $16 million.

HashChain Shareholder Meeting

It is anticipated that HashChain will hold a special meeting of its shareholders (the "HashChain Meeting") to pass resolutions to: (i) approve the Proposed Transaction and issuance of the Resulting Issuer Shares; (ii) consolidate the issued and outstanding common shares of HashChain (the "HashChain Shares") on the basis of forty (40) pre-consolidation HashChain Shares for each one (1) post consolidation HashChain Share (the "HashChain Share Consolidation"); and (iii) approve the new equity incentive plan of the Company to take effect after completion of the Proposed Transaction.

It is not anticipated that the Proposed Transaction will be subject to approval of the Digihost shareholders at this time. The shareholders of HashChain will be required to approve the Proposed Transaction in accordance with the provisions of the Business Corporations Act (British Columbia).

Management Team, Board of Directors and Other Insiders

As of the date of this press release, it is anticipated that no person will own or exercise control, directly or indirectly, of more than 10% of the voting rights attached to the Resulting Issuer Shares other than Michel Amar, Alec Amar and NYAM LLC, a corporation controlled by Michel Amar and existing under the laws of the State of California, and Bit Management LLC (collectively, the "NYAM Group"). The Persons comprising the NYAM Group are Non-Arm's Length Parties to Digihost and the Target Assets as such terms are defined in TSXV Policy 5.2 - Changes of Business and Reverse Takeovers ("Policy 5.2").

It is anticipated the NYAM Group will hold Resulting Issuer Shares representing 37% of the Resulting Issuer Shares outstanding immediately following completion of the Proposed Transaction.

Upon completion of the Proposed Transaction, it is anticipated that all of the directors and officers of HashChain will resign and be replaced by nominees of Digihost. Details regarding the anticipated directors and officers of the Resulting Issuer are set forth below. Additional directors or officers may be added to the board of directors or management of the Resulting Issuer in the normal course and once identified, information with respect to the proposed additional directors or officers will be included in a subsequent news release.

Michel Amar-Los Angeles, California -Chief Executive Officer and Chairman

Michel Amar is a French-American businessman and entrepreneur known for his success in innovative technology, such as blockchain and electronics, as well as developing branded fashion. With a Bachelor's degree in accounting and business management, Michel has worked and consulted with some of the most famous international brands, playing a vital role in their profitability and continued relevance. In 2019, Michel partnered with Brookstone, a novelty retailer, in developing exclusive, technologically advanced products for their consumer electronics market.

Alec Amar -Los Angeles, California -President & Director

Alec Amar is an entrepreneur who has achieved success in both product development and licensing, as well as blockchain solutions. After graduating from the University of Southern California, with a degree in economics and digital entrepreneurship, Alec devised and headed a blockchain operation, building out highly efficient and productive mining facilities. In addition to blockchain success, Alec's product licensing company, MAT, a versatile R&D incubator, has partnered with notable brands such as Brookstone, in developing innovative electronics. As one of the sole licensees of Brookstone, Alec is actively curating a collection of intelligent, proprietary consumer electronics.

Brian Fleming - Los Angeles, Chief Financial Officer

Brian Fleming has over 35 years of experience as a Chief Financial Officer with extensive public and private company experience in finance, real estate and consumer-based business operations. He has diverse experience in retail operations, wholesale sales, fashion, apparel manufacturing, distribution and licensing, working capital and secured financing arrangements and strategic planning. Brian has served as Chief Financial Officer of NYAM, LLC since 2016. From 2001 to 2015, Brian was Chief Financial Officer of BCBG Max Azria Group, LLC, a global fashion brand and retailer, with worldwide sales approaching $2 billion. From 1998 to 2000, Brian was Executive Vice President and CFO of Guess Inc. (NYSE). Brian graduated from the University of Southern California with a Bachelor of Science in Accounting and initially worked for PWC. He was a CPA in the State of California.

Jon Williams - Buffalo, New York -Director

Jon M. Williams is an entrepreneur who founded OSC Holding, Inc. in 1997 as a comprehensive specialty contracting provider. Today, OSC operates across North America with corporate offices in Buffalo, New York and a divisional office in Toronto, Ontario, Canada. OSC works mostly for private chemical and industrial manufacturing firms with contracting requirements in the areas of environmental remediation and brownfield redevelopment. He developed the first brownfield redevelopment in upstate New York which resulted in the construction of a new manufacturing plant nearly 25 years ago. Since then he purchased, remediated and put back into sustainable and productive use over 1,000 acres of former industrial and mostly inactive brownfield properties.

Adam Rossman - Los Angeles, -Director

Adam S. Rossman is a business and real estate attorney. He is a member of the California Bar since 1995. Mr. Rossman has handled transactions throughout the United States relating to commercial real estate and trademark licensing. Mr. Rossman maintains offices in Beverly Hills, CA. Mr. Rossman received his JD from Loyola Law School, Los Angeles in 1994, a MA in Rhetoric in 1990 and a BA in Rhetoric in 1988 both from University of California at Berkeley.

Selected Consolidated Financial Information of Digihost

Financial information with respect to Digihost will be disclosed in a subsequent news release.

Escrow Matters

Certain "Principal Securities" will be subject to escrow requirements in accordance with TSXV Policy 5.4 -Escrow, Vendor Consideration and Resale Restrictions. Further details regarding the escrow of Resulting Issuer Shares issued to shareholders of Digihost will be disclosed in a subsequent news release.

Sponsorship

Sponsorship of the Proposed Transaction may be required by the TSXV unless an exemption or waiver from this requirement can be obtained in accordance with the policies of the TSXV. There is no assurance that a waiver from this requirement can or will be obtained.

Trading Halt

The HashChain Shares are currently halted from trading and are not expected to resume trading until completion of the Proposed Transaction.

Conditions to Completion of the Proposed Transaction and Regulatory Matters

The parties to the Proposed Transaction are at arm's length and therefore it is anticipated that the Proposed Transaction will not be a "Non-Arm's Length Transaction" for the purposes of TSXV Policy 5.2 as none of the directors, officers or insiders of HashChain, or any of their respective associates or affiliates, own any securities of Digihost.

Completion of the Proposed Transaction is subject to a number of conditions including, but not limited to:

  1. i)HashChain shareholders approving the Proposed Transaction and the HashChain Share Consolidation;

  1. ii)the resignation of all directors and officers of HashChain and appointment of new officers and director to be determined by Digihost;

  1. iii)the completion of certain asset purchases and assignments by Digihost from Bit.Management, Bit Mining International LLC and NYAM LLC on or before the date of closing of the Proposed Transaction;

  1. iv)approvals of all regulatory bodies having jurisdiction in connection with the Proposed Transaction, including TSXV acceptance; and

  1. v)closing conditions customary in a transaction of this nature.

Where applicable, the Proposed Transaction cannot close until the required shareholder approvals are obtained and there can be no assurance that the Proposed 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 Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of HashChain should be considered highly speculative.

The Exchange has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this press release.

Additional Information

For further information, please contact:

HashChain Technology Inc.

Larry Heinzlmeir, Vice President, Marketing & Communications

T: 604-537-8676

Digihost International, Inc.

Angie Ihler, Media Inquiries

T: 917-242-6549

Cautionary Statements:

This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements relate, among other things, to: the terms and conditions of the Proposed Transaction, the pro forma capitalization of the Resulting Issuer, the anticipated type and number of securities to be issued thereunder, the HashChain Shareholder Meeting, the HashChain Share Consolidation, the Digihost shareholder meeting (if required), the business and operations of Digihost and the Resulting Issuer, the go-forward management of the Resulting Issuer and the trading of the Resulting Issuer Shares and the development of the Resulting Issuer's business and operations. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; and the delay or failure to receive board, shareholder, court or regulatory approvals. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Except as required by law, HashChain and Digihost assume no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.

This press release is not an offer of the securities for sale in the United States. The securities have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful.

Neither the TSX Venture Exchange, Inc. nor its Regulation Services Provider (as that term is defined in the polices of the TSX Venture Exchange) has in any way passed upon the merits of the Proposed Transaction and associated transactions and neither of the foregoing entities has in any way approved or disapproved of the contents of this press release.

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.

Not for distribution to U.S. Newswire Services or for release, publication, distribution or dissemination directly, or indirectly, in whole or in part, in or into the United States.

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