FOBI AI Inc., an industry leader in harnessing AI and data intelligence to enable digital transformation, is pleased to announce that further to its press release dated February 27, 2023, the company has closed the transactions contemplated by the share purchase agreement (the “SPA”) with Francisco Fiúza Da Silva Beirâo Belo (the “Vendor”), pursuant to which the Company acquired all of the issued and outstanding shares (the “Target Shares”) of Passworks S.A. (the “Target”) from the Vendor (the “Transaction”). Passworks is a leading European digital wallet and mobile marketing company with international clients such as luxury fashion retailer Hugo Boss, global coupon giant Catalina Marketing Corporation, and digital advertising leader Publicis.

“This strategic acquisition of Passworks gives us access to a number of key Tier 1 customers and agency relationships, which will help drive immediate revenue and strengthen our brand.”

— Rob Anson, CEO and Chairman of Fobi

Francisco Belo, CEO of Passworks, states: “We at Passworks are very happy to join Fobi and be part of a larger organization with a clear focus on Mobile Wallet solutions, together with data and digital transformation. The synergies of the two companies will definitely strengthen Fobi’s position as a leader in the mobile wallet space.”

Rob Anson, CEO of Fobi, states: “The acquisition of Passworks will give us further scale and strengthen our position as a global wallet pass leader. This strategic acquisition also gives us access to a number of key Tier 1 customers and agency relationships, which will help drive immediate revenue and strengthen our brand.”

REVISED DEFINITIVE ACQUISITION AGREEMENTS WITH RESPECT TO ACQUISITION OF PASSWORKS S.A.

The aggregate purchase price for the Target Shares was €500,000, paid by the issuance of 1,674,264 common shares of the Company (the “Consideration Shares”) at a price of $0.44 per Consideration Share. The Consideration Shares are subject to a contractual escrow, whereby, 20% of the Consideration Shares was released on the date of issuance, 25% will be released 3 months following issuance, 35% will be released 6 months following issuance, and 20% will be released 9 months following issuance.

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As additional consideration of the Target Shares and in addition to the Consideration Shares, subject to applicable laws, in the event the gross revenue of the Target and/or other affiliates of the Company from sales originating from existing clients of the Target and/or new clients originating as a result of the Vendor’s efforts meets or exceeds €300,000 during the one year period from the Closing Date, the Company has agreed to pay to the vendor an additional €50,000 (the “Earn-Out Share Value”), payable in common shares of the Company (the “Earn-Out Shares”).
The number of Earn-Out Shares issuable will be that number of common shares of the Company as is equal to a fraction, the numerator of which is the Earn-Out Share Value converted into Canadian funds using the Bank of Canada daily exchange rate on the date that is five TSXV trading days prior to the date of the Earn-Out Notice (as defined in the SPA), and the denominator of which is the greater of (i) the VWAP of the common shares of the Company existing at the time of calculation on the TSXV for the ten TSXV trading day period ending five TSXV trading days prior to the date of the Earn-Out Notice, and (ii) the lowest price permissible under the policies of the TSXV, being $0.44.

The parties to the SPA are Arm’s Length Parties (as defined In the policies of the TSXV) and there are no finder’s fees payable pursuant to the Transaction.

On the Closing Date, the Company also entered into a one-year term service agreement (the “Service Agreement”) with Sortido Cinzento, Unipessoal, LDA (the “Service Provider”), a sole shareholder company that is wholly owned and controlled by the Vendor, pursuant to which, the Company engaged the services of the Vendor on a full time basis. Pursuant to the Service Agreement, the Company has agreed to pay to the Service Provider a monthly fee of €10,000 (plus applicable taxes) for the term of the Service Agreement, issue to the Service Provider, €60,000 in common shares of the Company (“Common Shares”) on the one month anniversary of the Service Agreement (the “Initial Shares”) which such number of Initial Shares shall be calculated by dividing the Canadian dollar equivalent of €60,000 using the Bank of Canada daily exchange rate for the third business day before the date of issuance by the greater of: (i) the VWAP for the ten TSXV trading day period ending five TSXV trading days before the date of issuance; (ii) a 15% discount to the applicable market price of the Common Shares on the TSXV; and (iii) the minimum price permissible under the policies of the TSXV. Additionally, the Service Provider will receive a pro rata payment of up to €40,000 payable in Common Shares (the “First Anniversary Shares”) based on the number of actual months worked by the Service Provider. The First Anniversary Shares shall be due and payable on the one (1) year anniversary of the date of the Service Agreement (the “First Anniversary Issuance Date”) and the number of such First Anniversary Shares being issued calculated by dividing the Canadian dollar equivalent of €40,000 using the Bank of Canada daily exchange rate for the third business day before the First Anniversary Issuance Date by the greater of: (i) the VWAP for the ten TSXV trading day period ending five TSXV trading days before the First Anniversary Issuance Date; (ii) a 15% discount to the applicable market price of the Common Shares on the TSXV; and (iii) the minimum price permissible under the policies of the TSXV. The issuance of the First Anniversary Shares remain subject to TSXV approval.

All Common Shares are subject to a hold period of four months from the date of issuance thereof in accordance with applicable securities laws. The Transaction has received conditional approval of the TSXV.

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