Galaxy Ventures Inc. Announces Proposed Qualifying Transaction to Acquire Herdwhistle Technologies Inc.

VANCOUVER, BC / ACCESSWIRE / April 3, 2023 / Galaxy Ventures Inc. (TSXV:GXY.P) ("Galaxy" or the "Company") is pleased to announce that it has entered into a letter of intent dated March 8, 2023 and amended March 31, 2023, with HerdWhistle Technologies Inc. ("HWT") regarding a proposed transaction to acquire all of the issued and outstanding securities of HWT (the "Transaction"). Upon completion of the Transaction, the combined entity (the "Resulting Issuer") will continue the business of HWT as a Tier 2 "technology" issuer. The Transaction is intended to constitute the "Qualifying Transaction" of Galaxy, as such term is defined in Policy 2.4 - "Capital Pool Companies" of the TSX Venture Exchange (the "Exchange").

The Transaction is not a "Non-Arm's Length Qualifying Transaction" pursuant to the policies of the Exchange and, as such, the Company is not required to obtain shareholder approval for the Transaction.

Adam Morand, Co-founder and CEO of HWT commented, "HerdWhistle is a provider of Electronic Livestock Identification and Traceability Solutions to facilitate livestock animal monitoring and create livestock animal health data analytics. Our technology is operational and being used across North America with clients in Canada and the USA. HerdWhistle has launched Amazon stores for the Canadian, US, Mexico, and Australian markets. We invite everyone to visit our online store https://store.herdwhistle.com/."

About HerdWhistle Technologies Inc.

HWT is a private company and was incorporated on January 6, 2021, by Certificate of Incorporation issued pursuant to the provisions of the Business Corporations Act (Alberta). HWT is a livestock technology company that provides beef producers with clear visibility and data-driven decisions to improve cattle performance. See www.herdwhistle.com for more information.

A summary of HWT's significant financial information over the last two fiscal years is as follows

Proposed Management and Board of Directors of the Resulting Issuer

Subject to Exchange approval, on completion of the Transaction, it is currently anticipated that the board of directors of the Resulting Issuer will consist of five (5) directors. Information with respect to the proposed directors, and proposed senior officers of the Resulting Issuer is set forth below:

Adam Morand, Founder, CEO & Director

Mr. Morand is the Co-founder, Chief Executive Officer, and a director of HWT. Mr. Morand is an Entrepreneurial Technologist passionate about innovation and industrial localisation of all basic human needs. Mr. Morand has founded 14 successful technology start-ups and has authored multiple patents on gaming systems, financial systems, inventory, and asset management systems.

Fortunate to have started at an early age with digital electronics and computer programming in the 1980's; and then moving to Vancouver in the 1990's to professionally experience the rise and fall of the dotcom era, Mr. Morand serendipitously landed in a myriad of early startups on the West Coast working with large data for casinos, entertainment and financial payment systems; travelling around the world setting up enterprise data systems, networks, banks and working with amazing teams of people. In 1999, Mr. Morand designed and wrote a competitive eSports patent for massive online multi-player game tournament and financial payment systems. Mr. Morand founded Moshpit Entertainment and Bloodmoney Universe, the world's first platform playing competitive games for cash.

Mr. Morand founded Illuminated Technologies in 2001 to build and deploy disruptive software platforms and support mission-critical enterprise data structures and high-volume data centre infrastructures. To better understand food, Mr. Morand retired in 2006 to be a farmer, experimenting with Aquaponics and agricultural technologies; which logically lead into IoT (Internet of Things) development and ERP (Enterprise Resource Planning) / MRP (Manufacturing Resource Planning) business systems. In 2009, Mr. Morand moved to Alberta for a new opportunity to turn around a stagnant national service company in the energy sector. He rewrote the business systems and technology platforms to facilitate growth and offer new enterprise data services; incorporated machine learning and algorithmic development to streamline resources while creating new digital services. He founded A4 Systems Corp in 2015 to specialise in Pan-Industrial Cyber-Physical systems development and deployment. He is involved with AgriPlay Ventures to create global food security.

Andrew Thomson, Director

Mr. Thomson is a retired senior investment advisor with over 23 years' experience with various investment firms in Vancouver, including Scotia McLeod, Canaccord Genuity, Raymond James and Haywood Securities, focusing primarily on venture capital market opportunities. Mr. Thomson facilitated raising capital for several TSX, and the Alternative Investment Market ("AIM"), listed companies, and structuring mergers. Mr. Thomson received a Bachelor of Arts Economics degree from University of Calgary.

Mr. Thomson departed the investment business in November 2019 to become Vice Chairman and Director of Global Air Cylinder Wheels Corporation ("GACW"), a privately held engineering company based in Chandler, Arizona. Mr. Thomson's specific duties under his contract included collaborating with secured lenders, lawyers, and investors in connection with a corporate restructure, renegotiation of the terms of the secured loan and procurement of funds to grow the business. With GACW, Mr. Thomson personally oversaw the raise of US $1.75 million over his 18-month contract, as well as negotiated a crowdfunding deal with StartEngine, which subsequently raised US $3.3 million.

Sheila Hillmer, Independent Director

Sheila Hillmer is a Key Account Manager with Elanco Canada. Elanco is a global animal health company that has grown significantly in this space in the past 5 years. Sheila works with corporate feedyards and is based in Southern Alberta.

Sheila and her family have a farming and ranching operation in Del Bonita, Alberta and her two sons are beginning the process of succession in the family business. She is a current and past director as well as serving on the Canadian Cattle Identification Agency (CCIA). Currently she is getting certified in coaching to further her leadership and development portfolio.

Luke Caplette, Independent Director

Luke Caplette is an innovative leader with a wealth of knowledge and expertise in both the technology and oilfield services sectors. Born in Calgary, Alberta, Luke received his Bachelor of Finance at Mount Royal University and continued his education journey by getting his CA designation shortly thereafter.

His drive and passion for scaling businesses was evident in his early years and he quickly landed a role at Ernst Young. After growing exponentially and even being the recipient of the companies' 40 under 40 award, he moved in-house to a publicly traded oil field services company. Through hard-work, dedication, and loyalty, he accelerated into the CFO role, where he continued to grow the organization.

Luke moved to a new role at an international technology company where he raised more than $26 million in equity and over $15 million in debt. Luke acquired companies all over the world in Zurich, Strasbourg, New York, Phoenix and Calgary - all within two short years.

Glenn Warkentin, Independent Director

For over 30 years, Glenn worked with public issuers, closely held corporations, limited partnerships, and trusts providing advice and direction regarding corporate structure, corporate reorganizations, regulatory compliance, and capital raising. His clients represent all manner of industries, including oil and gas exploration and development businesses, oil and gas service businesses, real estate investment trusts, investment funds, and agricultural supply and service businesses. He is a member of the Law Society of Alberta and the Canadian Bar Association.

Farida Saifee, Chief Financial Officer

Farida Saifee, CPA, CA was appointed HerdWhistle Technologies Inc.'s chief financial officer ("CFO") in 2022 after serving as a controller from inception.

As CFO, Ms. Saifee provides strategic leadership for the company's business and finance functions as well as management of its financial and capital resources. She oversees all financial related matters, including creating plans as defined by the board of directors, directing financing strategies, analysis, forecasting and budget management, and directing all aspects of accounting operations such as receivables, payables, payroll, and financial reporting. Ms. Saifee is highly collaborative across all functions to support the company's vision of innovation, growth, and creativity.

She is currently enrolled in her final year of In-depth Taxation, a premier tax training program at chartered professional accountants of Canada (3-year certification program), which focuses on keeping pace with the profession, rapidly changing technology, and emerging needs of CPAs.

Prior to her role with HWT, Ms. Saifee was in public practice for over 12 years, where she worked with small and medium-sized enterprises, to review, investigate and correct discrepancies and irregularities in financial entries, documents, and reports. She was actively engaged in advising clients on tax planning strategies, planning reorganizations, and preparing corporate and personal tax returns. During her time in public practice, she found mentoring and training junior chartered professional accountants rewarding and fulfilling.

Ms. Saifee is an entrepreneur at heart and appreciates the dedication and organization required to convert innovation ideas into productive services. In 2009 she co-founded Qasimi Exports, which exported heavy equipment overseas. Her role included tracking cash flows, financial planning, managing, and overseeing relationships with vendors and investors, identifying, and managing business risks and requirements.

Rob Carleton, Chief Operating Officer

A lawyer by trade and entrepreneur at heart, Mr. Carleton has worked with numerous private and public companies with the goal of positioning organizations for success. Mr. Carleton formerly practiced as a corporate and securities lawyer and has extensive experience assisting with strategic growth, governance and financing matters. Following his time in private practice he served as Executive Vice President, General Counsel and Corporate Secretary for a publicly listed company focused on the acquisition and management of alternative energy technologies. During his time there he oversaw the implementation of corporate strategy, advising the board of directors and upper management on matters relating to the execution of strategic initiatives, managing financings, negotiating transactions for acquisitions, setting up corporate structures for affiliates and subsidiaries, and undertaking restructuring and consolidation of acquired assets and entities. Mr. Carleton enjoys working with both early stage and established technologies, implementing strategic initiatives, and utilizing his legal background to oversee acquisitions and financings through to corporate reorganization. Mr. Carleton was one of the founding C-Suite executives of A4 Systems Corporation, the parent of HerdWhistle Technologies Inc. (HWT). In early 2022 Mr. Carleton transitioned to HWT to implement corporate plans to expand revenue opportunities, brand awareness and market visibility with a view to positioning HWT for future financing initiatives and strategic growth. Now turning his attention to furthering existing strategic relationships and evaluating acquisitions, Mr. Carleton focuses on advancing HWT's goal to be a preeminent company for livestock technologies benefiting identification, traceability, and animal health.

The Qualifying Transaction

Capitalization of HWT

As of the date hereof, HWT's authorized share capital consists of an unlimited number of common shares and an unlimited number of preferred shares, issuable in series, of which 10,000,000 common shares and no preferred shares are issued and outstanding. In addition, HWT currently has $200,000 aggregate principal amount of convertible debentures issued and outstanding which, based on the below terms of the Transaction, are convertible into 1,250,000 Payment Shares of Galaxy.

Capitalization of Galaxy

As of the date hereof, Galaxy's authorized share capital consists of an unlimited number of common shares and an unlimited number of preferred shares, issuable in series, of which 8,100,000 common shares are issued and outstanding. In addition, Galaxy has 625,000 stock options and 500,000 agent warrants issued and outstanding.

Terms of the Transaction

Subject to the execution of a definitive agreement ("Definitive Agreement"), Galaxy proposes to acquire from the shareholders of HWT all the issued and outstanding securities of HWT in exchange for securities of Galaxy. Upon closing of the Transaction ("Closing"), Galaxy will issue: (i) two and one-half (2.5) common shares of Galaxy ("Payment Shares") for each one (1) common share of HWT outstanding; and (ii) 1,250,000 Payment Shares to the HWT convertible debenture holders to redeem all outstanding HWT convertible debentures. The parties anticipate a total of 25,000,000 Payment Shares will be issued to the shareholders of HWT with a deemed issuance price of $0.20 per Payment Share, representing a deemed valuation of HWT of C$5,000,000. Together with up to 1,250,000 Payment Shares to be issued to the convertible debenture holders, an aggregate total of 26,250,000 Payment Shares are expected to be issued in connection with the Transaction.

Escrow Provisions

1. Payment Shares issued by GXY to the shareholders of HWT will be subject to escrow under Policy 2.4 of the Exchange.
2. In additionto the Exchange escrow terms, 10,000,000 Payment Shares will be subject to a further escrow to a maximum period of 36 months total (i.e., if Exchange imposes 18 monthescrow period, 10,000,000 Payment Shares will be subject to a further escrow for an additional 18 month escrow period).
3. In addition to the Exchange escrow terms, 15,000,000Payment Shares ("Performance Shares") Performance Shares will be subject to a further escrow to January 31, 2027 subject to earlier release on the occurrence of HWT meeting certain milestones as follows:
   1. 2,000,000 Performance Shares released upon HWT having achieved sales of $1 million for the period beginning January 31, 2023;
   2. 3,000,000 Performance Shares released upon HWT having achieved sales of $6 million for the period beginning January 31, 2023;
   3. 4,000,000 PerformanceShares released upon HWT having achieved sales of $16 million for the period beginning January 31, 2023; and
   4. 6,000,000 PerformanceShares released upon HWT having achieved sales of $36 million for the period beginning January 31, 2023;

provided that if one or more of the target revenue levels is not reached by January 31, 2027; then the Performance Shares still in escrow relating to that missed target will be cancelled and returned to treasury.
d. During both sets of further escrow provisions in paragraphs (b) and (c) above, conditions similar to the conditions in Part 4 of CPC Form 2F allowing for voting of and dividends on the Performance Shares, but not trading or pledging the Performance Shares would apply.
e. If there is a sale of the Resulting Issuer at a value in excess of the equivalent of $0.20/Payment Share, then all Payment Shares and Performance Shares subject to the escrow provisions in in paragraphs (b) and (c) above will be released from such escrow provisions.

It will be a condition of Closing that immediately prior to Closing there will not be any securities convertible into shares of HWT outstanding other than up to $200,000 of the convertible debentures which will be redeemed on Closing. A finder's fee of $50,000 will be paid to Kirk Exner of Langley, BC, an arm's finder, in connection with the Transaction comprised of 200,000 common shares and $10,000 cash.

Pursuant to the letter of intent, and in connection with the Transaction, the Company will complete a non-brokered private placement of units (the "Concurrent Financing") on closing to raise a minimum of $2,000,000 at a price of $0.20 per unit. Each unit will consist of one common share and one half of a common share purchase warrant. Each whole warrant (a "Financing Warrant") will be exercisable into a common share of Galaxy at an exercise price of $0.35 for a period of two years from closing of the Concurrent Financing. The Company may pay finders' fees to eligible parties in completion of the Concurrent Financing. The Transaction is conditional upon, among other things:

(i) receipt of all necessary regulatory and third-party consents, approvals and authorizations as may be required in respect of the Transaction, including, but without limitation, acceptance of the Exchange;

(ii) completion of due diligence to the satisfaction of the parties;

(iii) approval of the board of directors of each of Galaxy and HWT to final terms and conditions of the Transaction as set forth in the Definitive Agreement and all other necessary matters related thereto prior to the signing of the Definitive Agreement;

(iv) the signing of the Definitive Agreement;

(v) completion of all matters, and the satisfaction of all conditions (unless waived in writing), under the Definitive Agreement required to be completed or satisfied on or before closing of the Transaction including but not limited to the completion of the Concurrent Financing; and

(vi) approval of the Transaction by the shareholders of HWT.

The conditions precedent in favour of Galaxy may be waived in whole or in part by Galaxy and the conditions precedent in favour of HWT may be waived in whole or in part by HWT.

The completion of the Transaction is expected to occur as soon as is practicable following the satisfaction or waiver of the conditions precedent (other than those conditions to be completed concurrent with closing) or such other date as mutually agreed to by the Parties, save and except for regulatory, corporate and/or third party approvals that are beyond the control of the parties.

Waivers Sought

Galaxy intends to make an application for an exemption from the Exchange's sponsorship requirements.

Other Information

Upon completion of the Transaction, it is expected that the resulting issuer will meet

the public distribution requirements of an Exchange Tier 2 issuer. Principals of Galaxy and the resulting issuer will be subject to applicable Exchange escrow policies.

All fees and expenses incurred in connection with the Transaction will be borne by the party incurring such expenses. In the event that either party terminates the Transaction without cause, such party will be responsible for all the costs of this Transaction.

In the event that HWT terminates the Transaction due to accepting a buy out offer from a third party, HWT will pay Galaxy a break fee of two hundred and fifty thousand dollars ($250,000),

Galaxy will issue additional news releases related to the final legal structure and terms of the Transaction, post-closing capitalization of the Resulting Issuer, financial information regarding HWT, the names and background of insiders of the Resulting Issuer and other material information as it becomes available.

Trading in the common shares of Galaxy is presently halted. The parties are of the view that the common shares of Galaxy will remain halted until the Transaction is completed and approved by the Exchange.

Contact Information

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein in the United States. The securities described herein have not been registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities law and may not be offered or sold in the "United States", as such term is defined in Regulation S promulgated under the U.S. Securities Act, unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration requirements is available.

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, 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 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 the securities of a capital pool company should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements

Certain statements in this news release are forward-looking statements or information, which include completion of the Transaction and related Concurrent Financing, development of technologies, future plans, regulatory approvals and other matters. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such information can generally be identified by the use of forwarding-looking wording such as "may", "expect", "estimate", "anticipate", "intend", "believe" and "continue" or the negative thereof or similar variations. The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company, including but not limited to, business, economic and capital market conditions, the ability to manage operating expenses, security threats, and dependence on key personnel. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which the Company will operate in the future, including the demand for its products, anticipated costs, and the ability to achieve goals. Factors that could cause the actual results to differ materially from those in forward-looking statements include, failure to obtain regulatory approval, the continued availability of capital and financing, litigation, increase in operating costs, the impact of Covid-19 or other viruses and diseases on the Company's ability to operate, failure of counterparties to perform their contractual obligations, government regulations, loss of key employees and consultants, and general economic, market or business conditions. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The reader is cautioned not to place undue reliance on any forward-looking information.

There can be no assurance that the Transaction or Concurrent Financing will be completed or, if completed, will be successful.

The forward-looking statements contained in this news release are made as of the date of this news release. Except as required by law, the Company disclaims any intention and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, the Company undertakes no obligation to comment on the expectations of, or statements made by, third parties in respect of the matters discussed above.

Not for distribution to United States newswire services or for dissemination in the United States

SOURCE: Galaxy Ventures Inc.