BLOCKSTRAIN TECHNOLOGY CORP. (TSX-V: DNAX) (OTC: BKKSF) is pleased to announce that it has entered into a letter of intent dated February 28, 2019 with Spark Digital Technologies Inc. Under the terms of the LOI, the parties have agreed to finalize and enter into a definitive agreement, whereby the Company will acquire all of the issued and outstanding securities of Spark and the business of Spark. In consideration for the Acquisition, the LOI contemplates the issuance of 15,000,000 common shares in the capital of the Company to the shareholders of Spark at a deemed price of $0.26 per share.

About Spark

Spark is the owner of its proprietary platform, IgnitePro™, which was built exclusively for the cannabis industry. The highlights of the IgnitePro™ software platform include:

• secure infrastructure powered by Microsoft Azure;
• robust APIs and web services for integration;
• inventory management and IgnitePro™ Smart Serialization™;
• document management, regulation and compliance reporting;
• a mobile companion app for tracking and monitoring; and
• sophisticated machine learning & AI capability.

The IgnitePro™ technology is connected globally and will be able to travel with cannabis plants and products as they move from cultivation to distribution. IgnitePro™ will produce reports, store documentation and track transports, and, when combined with Blockstrain, is expected to ensure regulation and compliance standards are being met and protected on the blockchain.

Terms of the Acquisition

The parties have agreed to undertake good faith efforts to enter into the definitive agreement on or before April 29, 2019. Entry into the definitive agreement and the closing thereof is subject to certain conditions including completion of each party’s satisfactory due diligence review of the other and receipt of all necessary regulatory approvals, including those of the applicable stock exchange. The Acquisition is a non-arm’s length transaction as Robert Galarza, the CEO of BLOCKStrain, is also a director and a controlling shareholder of Spark, and Tommy Stephenson, the Chief Technology Officer of BLOCKStrain, is also a director and controlling shareholder of Spark. The Acquisition is expected to constitute a reviewable transaction in accordance with Policy 5.3 of the TSX Venture Exchange. Upon closing of the Acquisition, it is expected that the former shareholders of Spark will hold approximately 15.8% of the outstanding common shares of the Company.

The Acquisition is expected to constitute a “related party transaction” as defined in within the meaning of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions as Robert Galarza, the CEO of BLOCKStrain, is also a director and a controlling shareholder of Spark, and Tommy Stephenson, the Chief Technology Officer of BLOCKStrain, is also a director and controlling shareholder of Spark.

Each issuance of Consideration Shares to a related party will be considered a “related party transaction” within the meaning of MI 61-101 but it is expected that each will be exempt from the valuation requirement of MI 61-101 by virtue of the exemption contained in section 5.5(b) as the Company’s shares are not listed on a specified market and from the minority shareholder approval requirements of MI 61-101 by virtue of the exemption contained in section 5.7(a) of MI 61-101 in that the fair market value of the consideration of the shares issued to each related party will not exceed 25% of the Company’s market capitalization.

None of the securities issued in connection with the Acquisition will be registered under the United States Securities Act of 1933, as amended (the “1933 Act“), and none of them may be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the 1933 Act. This press release shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of the securities in any state where such offer, solicitation, or sale would be unlawful.