Personas Provides Additional Information Relating to the Proposed Transaction with Mii.TV

Rhea-AI Summary

Personas Social Incorporated (TSXV: PRSN) has provided additional information regarding the proposed sale of its 'Peeks Social' platform to Mii.TV Inc. for $4,540,000. The transaction involves a 50% upfront payment and the remainder paid over 36 months. A Special Committee, formed to evaluate the sale, negotiated with Mii.TV and CEO Mark Itwaru, who initially expressed interest in acquiring the assets.

The Special Committee, comprised of Bill Lavin and James Westlake, rejected an initial offer of ~$2 million and engaged Lynch & Associates for a valuation report. The final purchase price of $4,540,000 was based on the medium valuation provided in the report. The Special Committee concluded that the transaction was fair, appropriate, and in the best interests of the company, allowing Personas to focus on developing its new Keeks Social platform.

Positive

• Sale of Peeks Assets for $4,540,000, providing capital for the company
• Independent valuation report supporting the transaction price
• Special Committee formed to protect minority shareholders' interests
• Company plans to focus resources on developing new Keeks Social platform

Negative

• Company unable to secure external financing for new services
• 50% of purchase price to be paid over 36 months, creating potential risk
• Potential conflict of interest with CEO's initial interest in acquiring assets
• Adjustment clause could reduce future payments if Peeks Asset ceases to operate

Toronto, Ontario--(Newsfile Corp. - September 23, 2024) - Personas Social Incorporated (TSXV: PRSN) ("Personas" or the "Company") announces that the purpose of this press release is to provide certain supplemental disclosure to the Company's management information circular and proxy statement dated August 19, 2024 (the "Circular") in respect of the Annual and Special Meeting of the Shareholders of the Company to be held on October 1, 2024 (the "Meeting"), and specifically in regards to the negotiations and discussions that took place between the Special Committee (defined below), on behalf of the Company as seller and Mii.TV Inc. ("Mii.TV"), as purchaser, for the proposed sale of the Company's 'Peeks Social' web and app based platform ("Peeks Assets") (the "Transaction").

This release should be read in conjunction with the Circular as a whole. Capitalized terms not otherwise defined herein have the meaning ascribed to such terms in the Circular.

Background of the Transaction

The Company entered into an agreement dated August 19, 2024 (the "Transaction Agreement"), with Mii.TV. Pursuant to the Transaction Agreement and upon receipt of the requisite director, shareholder, regulatory and stock exchange approvals, Personas will sell the Peeks Assets to Mii.TV.

The Company plans to sell 100% of the Peeks Assets to Mii.TV for a purchase price of $4,540,000 ("Purchase Price"). The Transaction is structured whereby 50% of the Purchase Price will be paid on closing ($2,270,000) ("Closing Amount") and this Closing Amount will be made up of the sum of $1,056,280 which consists of accounts payable of the Peeks Assets that will be assumed by Mii.TV and the sum of $1,160,720 representing debt deposits owed to customer of the Peeks Assets, and the remaining amount of $53,000 will be paid in cash on closing. The remaining 50% of the Purchase Price will be paid over the course of the next 36 months from the date of closing with 16.6% ($756,666) of the Purchase Price being paid on or before the first anniversary of the closing of the Transaction, 16.6% ($756,666) of the Purchase Price to be paid on or before the second anniversary of the closing of the Transaction and the remaining 16.8% ($756,668) of the Purchase Price to be paid within 36 months from the date of closing of the Transaction (collectively, these amounts are the "Remaining Purchase Price Payments"), subject to the following adjustment that have been agreed to by the parties - following the closing of the sale of the Peeks Asset from the Company to Mii.TV, if the Peeks Asset ceases to operate, indefinitely as agreed to by the Company and Mii.TV in writing, due to third party matters, decisions or rulings, regulatory, banking or otherwise, Mii.TV shall only be required to pay a pro-rata amount of the Remaining Purchase Price Payments based on the date and time of when the Peaks Asset ceased to operate following closing of the Transaction, and for greater certainty, if there are interruption(s) in the business of the Peaks Asset, as agreed to by the Company and Mii.TV in writing, the Remaining Purchase Price Payments will still be owed, due and payable.

Special Committee

In December 2023, informal and verbal discussions were had by the Board of Directors of the Company and a consultant of the Company, who provides accounting and management services to the Company ("Consultant") on a regular basis, regarding potential sales options of the Peeks Assets. The Consultant, then and now, renders services to the Company and is compensated by the Company. In late December 2023 and early January 2024, Mr. Mark Itwaru (CEO and Director of the Company) informally expressed his interest to the Board of Directors in acquiring the Peeks Assets and at this time it was recognized by all parties that this type of transaction would raise a conflict of interest for Mr. Itwaru and constitute a related party transaction, if consummated. On January 8, 2024 a special committee of Directors of the Company ("Special Committee") was comprised and made up of Bill Lavin (CFO and Director) and James Westlake (Director) to evaluate potential sales of the Peeks Assets. Between February and March of 2024, the Special Committee began to engage in informal and verbal discussions with Mr. Itwaru regarding a potential transaction for the Peeks Assets, and at the same time began to consider potential alternatives including, without limitation, maintaining the status quo.

Negotiations and Discussions of Purchaser and Special Committee

By way of background, the Company was unable to secure external financing to launch its new re-launched Keek's services. As a result of this, Mr. Mark Itwaru (CEO and Director) advised the Board of Directors that the Company should pursue the sale of the Peeks Asset to strengthen its financial position and better its opportunity to obtain financing. The Company was unable to find a buyer that would pay an amount of money for the Peeks Assets that would be sufficient to keep operations of the Company going for a prolong period of time.

At the beginning of April 2024, Mr. Mark Itwaru on behalf of Riavera/Mii.TV initially offered to buy the Peeks Assets from Personas for ~$2 million ("Initial Offer Price") but the Special Committee did not accept this Initial Offer Price as they wanted to obtain detailed and informative information on the value of the Peeks Assets. At the end of April 2024, a summary memo ("Summary Memo") was drafted by the Consultant based on new terms provided by Mr. Itwaru for the Special Committee to review regarding a potential sale of the Peeks Assets with an approximate purchase price of $4.5 million. The Summary Memo was provided to the Special Committee for their review and discussion. As disclosed in the Circular and herein, the Board of Directors of Personas had constituted the Special Committee to negotiate potential transactions and hired Lynch & Associates Forensic Accountants ("Lynch") to provide them with a valuation report and fairness opinion regarding the Peeks Assets (the "Report"). The Report provided a medium valuation of the Peeks Assets at $4,540,000, which was significantly higher than the Initial Offer Price but was in line with the terms of the Summary Memo.

During April 2024 and before the LOI (defined below) was executed, the Special Committee and Mr. Itwaru had a number of verbal discussions and negotiations regarding the purchase price for the Transaction. The Special Committee was charged with ensuring that the terms of the Transaction were negotiated in a manner which provided protection to minority shareholders. The Special Committee was comprised of Messrs. Bill Lavin and James Westlake, each of whom are directors of the Company, have no interest in nor are they related parties to Mii.TV. Ultimately the Special Committee decided that a fair and reasonable purchase price would be the medium valuation amount of $4,540,000 provided from the Report, and this amount, after negotiations, formed the purchase price acceptable to Mr. Itwaru and Riavera/Mii.TV as well and was used as the final Purchase Price in the letter of intent (the "LOI") that was entered into between the Company and Mii.TV on May 8, 2024 and the Transaction Agreement.

Conclusion of the Special Committee

Upon finalization of the Purchase Price and terms of the Transaction, the members of the Special Committee viewed that the Transaction was desirable, that the agreed upon final pricing terms was fair and that the terms of the Transaction were appropriate and consistent with non-arm's length transactions of similar size and scope.

The summary view of the Special Committee is that, in their best business judgement, the Transaction is in the best interests of the Company because the Company plans to devote its resources to the development of its new and re-launched Keeks Social web and app based platform, which offers users the chance to share their lives and connect with others through both short-form and long-form videos. The Special Committee has relied upon its business judgement which was confirmed by the advice of Lynch that the pricing and terms of the Transaction are fair.

For further information, please contact:
Personas Social Incorporated
Mark Itwaru
Chairman & Chief Executive Officer
Phone: 647.789.0074
Email: mark@personas.com

Forward-Looking Statements

This news release contains forward-looking statements relating to the Transaction. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's expectations are risks detailed from time to time in the Circular and filings made by the Company with securities regulations. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release and the Company will update or revise publicly any of the included forward-looking statements as expressly required by Canadian securities law.

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

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/224232

FAQ

What is the purchase price for Personas Social's (PRSNF) Peeks Assets in the proposed transaction with Mii.TV?

The purchase price for Personas Social's (PRSNF) Peeks Assets in the proposed transaction with Mii.TV is $4,540,000.

How will the payment for Personas Social's (PRSNF) Peeks Assets be structured in the Mii.TV transaction?

The payment for Personas Social's (PRSNF) Peeks Assets will be structured with 50% ($2,270,000) paid at closing and the remaining 50% paid over 36 months in three installments.

Who comprised the Special Committee for Personas Social (PRSNF) to evaluate the sale of Peeks Assets?

The Special Committee for Personas Social (PRSNF) to evaluate the sale of Peeks Assets was comprised of Bill Lavin (CFO and Director) and James Westlake (Director).

What was the initial offer price for Personas Social's (PRSNF) Peeks Assets before the final agreement?

The initial offer price for Personas Social's (PRSNF) Peeks Assets before the final agreement was approximately $2 million, which was rejected by the Special Committee.