Canada-based capital pool company Elephant Hill Capital Inc. and digital advertising company Podium Advertising Technologies Ltd., which operates under the commercial name ADCORE, signed a letter of intent that outlines the general terms and conditions of a transaction that will result in a reverse takeover of Elephant Hill by ADCORE's security holders.

The Aug. 14 letter states that the completion of the reverse takeover transaction is subject to a number of conditions, including a concurrent private placement to raise a minimum C$5 million through the issuance of subscription receipts of ADCORE at a price of 50 Canadian cents per subscription receipt. Following the completion of the financing, each subscription receipt will entitle the holder to receive one unit consisting of one common share and one half of one common share purchase warrant in the capital of the resulting issuer.

At any time prior to the closing of the financing, the agents will have the option to increase the size of the financing by up to 15% for a total offering size of up to about C$5.8 million.

Prior to completion of the transaction, Elephant Hill will consolidate its shares on a 0.4 for 1 basis, while ADCORE will split its shares on a 4048.26 for 1 basis. Pursuant to the deal, ADCORE shareholders will be issued 40,482,552 post-consolidation common shares of Elephant Hill at a deemed value of 50 cents per share, plus the number of additional common shares issuable upon completion of the financing.

Following completion of the transaction and the financing, former ADCORE shareholders will own approximately 74.85% of the outstanding resulting issuer shares. Upon completion of the proposed transaction, the board of the resulting issuer is expected to be comprised of four individuals, which will include one member of Elephant Hill's current board and three nominees of ADCORE.