Mysquar Regulatory News (MYSQ)

20 June 2018

MySQUAR Limited

("MySQUAR" or the "Company")

Acquisition and Corporate Update

MySQUAR, the Myanmar-language social media, entertainment and payments platform whose principal activity is to design, develop and commercialise Myanmar-focused internet-based mobile applications, is pleased to announce the acquisition of the entire share capital of MyPay Myanmar Limited ("MPM") from MyPay Limited ("MyPay") (the "Acquisition").

MPM is a company incorporated in Myanmar in 2016 to establish a payments and remittance business and is in the process of applying to the Central Bank of Myanmar for a payments license.

The Acquisition will streamline the Company's development of smartphone payments systems, which are anticipated to provide substantial revenues going forward. With few bank branches, Myanmar is a largely cash-based society and the Company believes that smartphone payments will be an intrinsic part of the country's modernisation and commercialisation.

Background to the Acquisition

In October 2015 the Company entered into a services agreement ("Services Agreement") with MyPay under which:

· the Company and MyPay agreed to collaborate and integrate MyPay's services into the Company's MyCHAT product to permit MyPay to deliver its services to the Company's users and vice versa;

· MyPay would register every user of MyCHAT and the Company would register every user of MyPay;

· IP developed under the Services Agreement, if any, would remain vested in the party that developed it; and

· revenues generated by MyPay under the Services Agreement would be shared equally;

The Services Agreement has an initial term expiring on 13 December 2020. Under the Services Agreement the Company was paid integration fees of USD 750,000.The Services Agreement was subsequently novated from MyPay to MPM.

MPM has applied to the Central Bank of Myanmar for a payments licence.

The Company expects a minimum capital requirement of not less than 6bn Myanmar Kyat (approximately USD 2.2m) to be a condition of the grant of a payments licence.

MPM incurred a loss of USD 253,421 during the 12 month period to 31 March 2017.

Reasons for the Acquisition

The Board considers that the Acquisition will bring the following benefits to the Company:

· creating the opportunity for a direct regulatory relationship between the MySQUAR group and the Central Bank of Myanmar;

· the Acquisition will terminate the effective shared ownership of users which has impeded the Company's freedom to enter into agreements with new prospective joint venture partners;

· the Acquisition will relieve the Company of the revenue sharing provisions in the remittances market; and

· in addition, the Chairman of MyPay and one of the directors of MPM, Nicolas Nyugen, is expected to join MySQUAR and be appointed Chief Financial Officer of the Group subject to the completion of appropriate regulatory diligence.

Terms of the Acquisition

The consideration for the entire issued share capital of MPM is GBP 1.0m in cash to be paid on completion and the issue of 72,463,768 ordinary shares in the capital of the Company ("Consideration Shares") reflecting a total aggregate cash and share based consideration of GBP 2.0m based on the last price at which the Company issued shares (being 1.38p) and GBP 2.14m based on the Company's closing mid share price of 1.575p as at 18 June 2018.

As noted in the Company's interim results announced on 29 March 2018, USD 822,000 (approximately GBP 619,000) of the cash consideration was already held on deposit with an adviser with the balance of approximately GBP 381,000 due to be paid from the Company's existing cash resources.

The Company has also announced today the issue of GBP 2,222,222 par value convertible bonds the proceeds of which will strengthen its balance sheet ahead of the Company's financial year end on 30 June 2018 and to provide working capital for the ongoing costs of the business.

Application will be made for the Consideration Shares, which will rank pari passu with the Company's existing issued Ordinary Shares, to be admitted to trading on AIM. It is expected that admission will become effective and that trading in the Consideration Shares will commence on or around 26 June 2018 ("Admission").

Following Admission the Company will have 845,872,653 Ordinary Shares in issue, none of which are held in Treasury. Therefore, the total number of voting rights in the Company is 845,872,653.

The above figure of 845,872,653 may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

Significant shareholding

Following the issue of the Consideration Shares, MyPay Limited is interested in a total of 72,463,768 Ordinary Shares which represents approximately 8.6% per cent. of the enlarged issued share capital of the Company.

Nicolas Nguyen

Nicolas, aged 47, is a senior executive with international management experience in Asia and Europe. He holds a bachelor's degree in Mathematics and Computer Science and a master's degree in Mathematics and Finance. He was Director, Deputy Head of Equity Derivatives at the Hong Kong branch of Commerzbank AG and has been regulated by the Financial Conduct Authority in the UK, the Securities and Futures Commission in Hong Kong and the Hong Kong Monetary Authority as an executive officer. Mr Nguyen was a director of Rising Dragon Capital, Limited, (a holder of 5.3% of the shares in the Company) and MyPay. Yesterday on completion of the Acquisition he resigned from both of these directorships.

Mr Nguyen is to be employed as Group Chief Financial Officer by MySQUAR PTE Ltd, the Company's Singapore incorporated subsidiary.

Related Party Transaction

At the time the Company entered into the Services Agreement, MyPay was considered to be a related party of the Company due an indirect controlling interest in MyPay held by Eric Schaer, CEO of the Company. Mr. Schaer no longer holds an indirect controlling interest in MyPay having disposed of such during 2017 however the Company is treating the Acquisition as a Related Party Transaction as set out in Rule 13 of the AIM Rules for Companies. Accordingly, the Directors considered to be independent of the Acquisition, being Piers Pottinger and Neil Osborn, having consulted with the Company's Nominated Advisor, SP Angel Corporate Finance LLP, believe the that the terms of the Acquisition are fair and reasonable insofar as the Company's shareholders are concerned.

Corporate Update

Further to the update provided in the Company's interim results in respect of the approach received from another organisation which may or may not lead to a takeover offer, the Company can report that there having been no further developments the Company considers these talks to have terminated.

The Group continues to discuss a number of commercial and investment opportunities with various regional participants in its markets and further announcements will be made should these discussions progress to firm proposals.

Commenting on the Acquisition, Eric Schaer, CEO, said:

"The acquisition of MyPay Myanmar enhances our drive to be the leading directly regulated mobile payments facility for remittances back into Myanmar. The Acquisition significantly enhances the economics for the Company by buying back in the revenue sharing agreement and positions us to help millions of Myanmar citizens significantly reduce the cost to remit funds back to Myanmar.

We also welcome Nicolas Nyugen to the Company's management team."

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

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