TAAL Agrees to Purchase Assets Supporting Blockchain Transaction Processing Operations

TAAL Distributed Information Technologies Inc. is pleased to announce that it has entered into an asset purchase agreement with Tansley Equipment Limited, Fractical Sense Limited and Laser Lollypop Limited, three companies affiliated with Mr. Calvin Ayre, to acquire over 50,000 non-operational cloud computing units located in the United States.

The aggregate purchase price payable by TAAL to the Sellers for the North American cloud computing assets to be acquired is approximately US$4,093,374. Closing of the Transaction is expected to occur on or about March 9, 2020. On the Closing Date, TAAL intends to satisfy the Purchase Price by issuing to Mr. Ayre that number of non-voting participating shares in the capital of TAAL that is equal to the total Purchase Price divided by the volume weighted average price of the common shares in the capital of TAAL trading on the Canadian Stock Exchange over the ten (10) trading days preceding the Closing Date. For purposes of determining the VWAP in United States dollars, reference will be made to the daily exchange rate for Canadian dollars quoted by the Bank of Canada on the Closing Date. As of May 2, 2020, the date after which the convertible debenture currently held by Mr. Ayre and due May 1, 2020 is converted into Common Shares, the NVPS held by Mr. Ayre will be subject to an exchange agreement providing that, at any time Mr. Ayre’s holdings of Common Shares falls below 40% of the issued and outstanding Common Shares of TAAL, that number of NVPS that brings his holdings of Common Shares to 45% will be exchanged until such time that there are no more NVPS held by him available for exchange.

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At Closing, TAAL is expected to pay certain prepayments to the hosting providers who act as custodian for the cloud computing assets to be acquired pursuant to the Transaction. Such prepayments are expected to be reimbursed by the Sellers, at their option, in fiat currency, Bitcoin Core (BTC) coins or Bitcoin Satoshi Vision (BSV) coins on or about April 12, 2020. In addition, the Sellers are expected to reimburse TAAL for de-racking and packing expenses to prepare the cloud computing assets for shipping. Additionally, Mr. Ayre has agreed to a three (3) month lock‐up of the NVPS issued to him in connection with the Transaction, subject to exceptions for private or over‐the‐counter trades outside of the facilities of the CSE or pledging arrangements to secure debt.

Closing is subject to customary conditions, including no material adverse change in respect of TAAL having occurred, receipt of required consents and approval of the CSE (including with respect to the listing and posting for trading of the Common Shares exchangeable for the NVPS).

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The purpose of the Transaction is to use the acquired cloud computing assets to support TAAL’s ongoing operations and blockchain infrastructure in order to generate cash proceeds. TAAL intends to upgrade the cloud computing assets acquired in the Transaction with TAAL’s custom components and to optimize them using TAAL’s proprietary techniques, enhancing their performance and efficiency. The cloud computing assets are expected to be deployed to support ongoing blockchain transaction processing operations and establish a significant operational footprint within North America. The cloud computing assets to be acquired in the Transaction are expected to be utilized by TAAL to offer specialized services to enterprises that require large volumes of transactions processed within North America indelibly on a reliable blockchain (also known as ‘block building’).  TAAL expects that Bitcoin SV (BSV) is the best blockchain to support such specialized services to enterprises for large transaction volumes because of BSV’s massive scaling and microtransaction capabilities.  Further to TAAL’s press release of January 28, 2020, TAAL has been seeking partners to host up to 90 megawatts of computing power. The North American cloud computing assets are expected to provide that computing power.

Subsequent to TAAL’s upgrade and optimization program, the North American cloud computing assets are expected to be deployed after the passing of a Bitcoin network wide event termed the “Halving” which takes place approximately every 4 years. Upon Halving, the subsidy component of the block creation reward is reduced by one-half. The subsidy is expected to decrease from its current 12.5 coins to 6.25 coins per block successfully processed on the Bitcoin SV (BSV) network in April 2020, and on the Bitcoin Core (BTC) network in May 2020. Deployment of the North American fleet will occur after the Halving to ensure SHA-256 based blockchain networks have stabilized after such event and to preserve capital resources.

TAAL has recently invested US$3.2 million within the last two quarters to upgrade, enhance and optimize the performance of its currently owned assets operating in Kazakhstan. TAAL expects to continue its upgrade and optimization program.

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