TRAK Trakopolis IoT Corp

Trakopolis IoT Corp. (TSXV: TRAK) ("Trakopolis" or the "Company") announced today that on January 9, 2020 the Company and its subsidiary Trakopolis SaaS Corp. (“SaaS”) obtained a sale approval and vesting order (the “Approval and Vesting Order”) from the Court of Queen’s Bench of Alberta issued in connection with proceedings under the Bankruptcy and Insolvency Act (Canada) (the “Act”). 

The Approval and Vesting Order approved the transactions contemplated in the asset purchase agreement (the “Acquisition Agreement”) entered into as of December 20, 2019, among the Company, SaaS and a subsidiary of Geoforce, Inc. (“Geoforce”, and its subsidiary party to the Acquisition Agreement, the “Purchaser”).  Under the terms of the Acquisition Agreement, the Purchaser will acquire substantially all of the assets of SaaS.  On January 8, 2020, the Acquisition Agreement was amended to provide that Trakopolis and SaaS would continue to co-operate with the Purchaser in getting required customer consents until March 31, 2020.

The receipt of the Approval and Vesting Order represents an important milestone in a process that commenced approximately 18 months ago with the formation of a Special Committee of the Board of Directors of the Company (the " Special Committee") on June 28, 2018. The mandate of the Special Committee was to look at a variety of strategic options that might be available to the Company including a sale, strategic combination, refinancing and analogous transactions. Later in the process the Special Committee would be asked to take the lead in negotiations with the Company's secured lender. 

The Special Committee retained Canaccord Genuity Corp. ("Canaccord') as its financial advisor and with its assistance commenced the process of canvassing the market for parties potentially interested in a transaction. Over 50 parties were approached and six non-binding written proposals were received over the course of the Special Committee's process in Q1 2019. After discussions with the six parties, no viable transaction was able to be concluded. 

At the same time, the Board and Management pursued a strategy to achieve profitability as soon as possible. This initiative included significant headcount reductions and the implementation of other cost-saving measures and initiatives aimed at reducing operating expenses and cash burn. These measures achieved some level of success as evidenced by the Company's 2019 Q3 results.  Unfortunately, during this period, and as has been previously disclosed, the Company was not able to fully comply with all of the covenants under its secured credit facility and during the later part of the summer of 2019, the Company entered into negotiations with its secured lender in order to obtain covenant relief and an extension of the term of the facility. Canaccord advised that if the Company could demonstrate a sustained period of profitability it's chances of completing a successful transaction would be greatly enhanced. 

On August 2, 2019, the Company announced that it had reached an agreement with its secured lender that provided for covenant relief subject to certain conditions.  One of the conditions was that the Company raise additional capital to achieve a liquidity balance of not less than US$800,000 by August 12, 2019. The Company was successful in this regard and the additional funds came largely from management, members of the Board and certain friends of the Company.  Another of the conditions was that the Company develop a plan together with milestones that would see the secured lender repaid in full by September 30, 2019. This requirement resulted in an expedited process to surface an executable transaction. Discussions ensued with several parties and the Company engaged in advanced discussions in connection with both a sale transaction and a refinancing transaction.  On October 2, 2019, the Company announced that the amendments to the agreement with its secured lender noted above had expired.  Final terms in respect of the sale and refinancing transaction could not be reached prior to the Company receiving a formal demand for payment under its secured credit facility on November 1, 2019 which in turn compelled the Company to file an Intention to Make a Proposal under the Act, which it did in respect of itself and SaaS on November 7 and 9th, 2019, respectively (collectively, the "Filing")

Following the Filing, the Company received three additional non-binding proposals. After consultation with Canaccord and its external legal advisors, the Board concluded that the proposal made by Geoforce was superior to the other proposals and on December 10, 2019, the Company entered into a period of exclusive negotiation with Geoforce that resulted in the execution of the Acquisition Agreement.  It is important to note that the Acquisition Agreement contemplates the acquisition by the Purchaser of substantially all the assets of SaaS and not the Company's other assets.  Upon completion of the transaction contemplated by the Acquisition Agreement, it is anticipated that a substantial portion of SaaS' secured and unsecured indebtedness will be repaid but no funds will flow to the Company. The Company is actively pursuing other transactions in an effort to monetize its remaining assets but there can be no guarantee that it will be successful in that regard.

Closing of the acquisition is expected to occur on or before January 24, 2020, but remains subject to the satisfaction of certain conditions contemplated in the Acquisition Agreement.  No proceeds from the acquisition are expected to be distributed to the shareholders (or debt holders) of Trakopolis.

Upon closing of the acquisition, Trakopolis will no longer have any operating assets or active business.  Trakopolis expects that it will be delisted from the TSX Venture Exchange.  Following closing of the acquisition Geoforce will be integrating the assets purchased from SaaS with its world leading global traceability solutions to serve over 1,300 customers in industries with intensive field operations and remote equipment including oil & gas, agriculture, construction and transportation.

About Trakopolis

Trakopolis is a Software as a Service (SaaS) company with proprietary, cloud-based solutions for real-time tracking, data analysis and management of corporate assets such as equipment, devices, vehicles and workers. The Company’s asset management platform works across a variety of networks and devices. Trakopolis has a diversified revenue stream from many verticals including oil and gas, forestry, transportation, construction, rentals, urban services, mining, government and others.

About Geoforce

Combining a cloud-based software platform with ruggedized GPS tracking devices and global satellite and cellular networks, Geoforce’s Track and Trace solutions bring control to often chaotic field operations. With over 900 customers tracking more than 140,000 assets in 70+ countries, the company operates the world’s largest network of connected field equipment within the Oil & Gas industry, and its solutions are used in many other field operations intensive industries, including agriculture, construction, mining, transportation, logistics, and rail. Headquartered in Dallas, Texas, Geoforce has R&D offices in Bozeman, Montana, sales and support offices in Houston, Texas, Denver, Colorado, Arroyo Grande, California, Macae, Brazil, and Melbourne, Australia, and sales and service professionals in West Texas and South Louisiana. For more information, visit www.geoforce.com.

FOR FURTHER INFORMATION, PLEASE CONTACT

Richard Clarke, Chief Executive OfficerTrakopolis IoT Corp.Telephone: (403) 450-7854Email: rclarke@trakopolis.com

Forward-looking Statements

This news release includes certain “forward-looking statements” under applicable Canadian securities legislation that are not historical facts. Forward-looking statements involve risks, uncertainties, and other factors that could cause actual results, performance, prospects, and opportunities to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements in this news release include, but are not limited to, statements regarding the expectation that upon completion of the acquisition a substantial portion of SaaS’ secured and unsecured indebtedness will be repaid, timing and closing of the transaction, delisting from the TSX Venture Exchange and the status of operations following closing.  The statements are dependent on a number of assumptions and risk factors, including the ability of the Company to satisfy the conditions precedent to the transaction and its listing conditions. Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected effects on Trakopolis. These forward-looking statements are made as of the date of this press release. Except as required by applicable securities legislation, the Company assumes no obligation to update publicly or revise any forward-looking statements to reflect subsequent information, events, or circumstances.

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.