Karam Minerals and Alpha North Esports & Entertainment Inc. Enter into Letter of Intent for Proposed Reverse Takeover Transaction


VANCOUVER, BC / ACCESSWIRE / May 25, 2020 / Karam Minerals Inc. (the “Company” or “KMI“) (CSE:KMI) and Alpha North Esports & Entertainment Inc. (“Alpha North“) are pleased to announce that they have entered into a letter of intent (the “LOI“) to complete a business combination by way of a reverse takeover (the “RTO Transaction“) of KMI by the shareholders of Alpha North. Upon completion of the RTO Transaction, the combined entity (the “Resulting Issuer“) will continue to carry on the business of Alpha North. The RTO Transaction will constitute a change of business of KMI under the rules of the Canadian Securities Exchange (the “Exchange“). The closing of the RTO Transaction (the “Closing“) is subject to the receipt of all necessary approvals, including without limitation Exchange approval for the listing of the common shares of the Resulting Issuer (the “Resulting Issuer Shares“) on the Exchange. The LOI was negotiated at arm’s length and is effective May 22, 2020.

Description of Alpha North

Alpha North is a multi-fold, vertically integrated esports company with competitive social gaming at its core. Alpha North’s ecosystem conducts operations in several sub-sectors to satisfy the emerging needs of the esports industry in the short and long term. These include real estate assets, IP creation with an online tournaments platform, production & broadcasting, charity fundraising, celebrity and industry influencer agreements and publishing.

A summary of financial information for Alpha North will be included in a subsequent news release.

Terms of the RTO Transaction

The RTO Transaction is expected to be completed by way of a share exchange agreement between KMI and Alpha North or an amalgamation between Alpha North and a subsidiary of KMI, following which the Resulting Issuer will continue the business of Alpha North. The final legal structure for the RTO Transaction will be determined after the parties have considered all applicable tax, securities law, and accounting efficiencies. The parties anticipate entering into a definitive agreement in respect of the RTO Transaction (the “Definitive Agreement“) by the end of July 2020, following the completion of satisfactory due diligence.

As of the date hereof, and not including securities to be issued under the Offering (defined below), KMI has 17,351,000 common shares (“KMI Shares“) outstanding, as well as an aggregate of 1,240,000 incentive stock options to acquire KMI Shares.

Immediately prior to the Closing, Alpha North will have 36,740,328 Class A voting common shares (“Alpha North Voting Shares“) outstanding. Upon completion of the RTO Transaction, the holders of Alpha North Voting Shares will receive one Resulting Issuer Share for every Alpha North Voting Share held.

Any convertible securities of Alpha North outstanding at Closing will be exchanged for equivalent securities of the Resulting Issuer.

Subject to the receipt of applicable regulatory approvals, KMI will pay a finder’s fee of 3,000,000 KMI Shares to certain third parties in connection with the RTO Transaction.

Management and Directors of the Resulting Issuer

When the RTO Transaction is completed, it is anticipated that the board of directors of the Resulting Issuer will be reconstituted to consist of the CEO of Alpha North and two additional directors appointed by each of KMI and Alpha North. The officers of KMI will resign and be replaced with officers appointed by the new board of directors. Further details will be provided in subsequent news releases.

Conditions to the RTO Transaction

The RTO Transaction is subject to the satisfaction of customary closing condition for similar transactions, including the following:

  • execution of the Definitive Agreement;
  • satisfactory completion of due diligence by each of the parties prior to signing the Definitive Agreement;
  • closing of the Offering (as defined below);
  • no material adverse change having occurred in the business, results of operations, assets, liabilities, financial condition, or affairs of each of the parties, between the date of the LOI and the date of Closing;
  • no material breach of the obligations of the parties as contained in the Definitive Agreement;
  • the representations and warranties of each of the parties in the Definitive Agreement being true and correct in all material respects as of the date of Closing; and
  • receipt of all required regulatory, corporate, shareholder, and third-party approvals including Exchange approval, and compliance with all applicable regulatory requirements and conditions necessary to complete the Transaction.

Private Placement of KMI Units

In connection with the RTO Transaction, KMI intends to complete a private placement of units of its securities (the “Units“) at $0.15 per Unit to raise aggregate gross proceeds of not less than C$1,500,000 (the “Offering“). Each Unit will be comprised of one KMI Share and one whole share purchase warrant (each a “Warrant“) to acquire one KMI Share (or Resulting Issuer Share) at a price of $0.50 per share for a period of two years from the date of issuance. The Warrants will be subject to accelerated expiry where the price of the KMI Shares (or Resulting Issuer Shares) trades above a specified price for a specified period.

The final terms of the Offering remain subject to final negotiation between KMI and the private placement investors. Net proceeds of the Offering will be used to continue development of Alpha North’s proprietary gaming platforms, expansion of Alpha North’s product offerings and realization of its core business functions, and for general working capital purposes.

The securities being offered have not been, nor will they be registered under the United States Securities Act of 1933, as amended, or state securities laws and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. federal and state registration or an applicable exemption from the U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.

Forward-looking Information

This news release contains forward-looking information and forward-looking statements (collectively, “forward-looking statements”) within the meaning of applicable Canadian and U.S. securities legislation, including the United States Private Securities Litigation Reform Act of 1995. All statements in this presentation that are not purely historical are forward-looking statements and include statements regarding beliefs, plans, expectations, and orientations regarding the future, including without limitation statements related the Company’s prospect of success in executing its proposed plans, including its plans to complete the RTO Transaction and the Offering and carry on the business of the Resulting Issuer. Forward-looking statements can often be identified by words such as “will”, “plans”, “expects”, “may”, “intends”, “anticipates”, “believes”, proposes” or variations of such words including negative variations thereof and phrases that refer to certain actions, events or results that may, could, would, might or will occur or be taken or achieved. Forward-looking statements are based on certain assumptions by management regarding the Company and the Resulting Issuer, including, without limitation, investor interest in the Offering, and the Company’s ability to complete the RTO transaction and obtain required Exchange and shareholder and other regulatory approvals, and the timing for all of these events. Actual results could differ from those projected in any forward-looking statements because of any of numerous factors including, risks and uncertainties relating to the inability of the Company, to, among other things, obtain any required governmental, regulatory or stock exchange approvals, permits, consents or authorizations required to execute its proposed business plans, and obtain the financing required to carry out its planned future activities. Other factors such as general economic, market or business conditions or changes in laws, regulations and policies affecting the Company’s operations may also adversely affect the future results or performance of the Company. The Company can provide no guarantee that it will be successful in completing the RTO Transaction or the Offering. Investors are cautioned that forward looking statements are not guarantees of future performance or events and, accordingly investors should not put undue reliance on forward-looking statements because of the inherent uncertainty of such statements. The forward-looking statements included in this news release are made as of the date hereof and the Company does not intend to update or revise any forward-looking statements, except as expressly required by law.

For further information please contact:

Michael Sadhra
Chief Executive Officer
Phone: 604-218-6281
Email: msadhra@sadhrachow.com


SOURCE: Karam Minerals Inc.

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