Mukuba Resources Limited and ANM, Inc. Enter Into Letter of Intent for a Business Combination

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

TORONTO, Sept. 22, 2017 (GLOBE NEWSWIRE) -- Mukuba Resources Limited (“Mukuba” or the “Company”) (TSXV:MKU.H) and ANM, Inc. (“ANM”) (doing business as Halo Labs) are pleased to announce that they have entered into a binding letter of intent (“LOI”) to complete a business combination transaction (the “Transaction”). Upon completion of the Transaction, the combined entity (the “Resulting Issuer”) will continue to carry on the business of ANM. The closing of the Transaction is subject to the receipt of all necessary regulatory and third party consents and approvals, including without limitation, the listing of the common shares of the combined entity (the “Resulting Issuer Shares”) on the Canadian Securities Exchange (the “Exchange”) and the concurrent delisting of the common shares of Mukuba (the “Mukuba Shares”) from the TSX Venture Exchange (the “TSXV”). The Transaction is expected to close in January 2018.

About ANM

ANM is a leading manufacturer of cannabis oil and concentrates in the state of Oregon.  ANM’s science driven and integrated business cultivates cannabis plants and utilizes its proprietary technology to process cannabis to extract oils and manufacture concentrates. ANM is uniquely positioned to benefit from the rapidly growing concentrates market and is seeking to actively expand its footprint in the United States and Canada having already acquired use of licenses and rented facilities in California and Nevada.

As of June 30, 2017, ANM had assets of approximately US$7.7 million (unaudited) and liabilities of approximately US$4.5 million (unaudited).  For the 6 month period ending June 30, 2017, ANM had net sales of approximately US$4.7 million (unaudited).

Terms of the Transaction

As of the date hereof, the following Mukuba securities are issued and outstanding: (i) 3,318,051 Mukuba Shares; and (ii) nil securities subject to issuance, for a total of 3,318,051 Mukuba Shares on a fully diluted basis. As of the date hereof, the following ANM securities are issued and outstanding: (i) 20,406,214 common shares of ANM (“ANM Shares”); (ii) 2,256,250 stock options (“ANM Options”) exercisable into ANM Shares; (iii) 5,685,000 warrants (“ANM Warrants”) exercisable into ANM Shares, (iv) convertible notes convertible into up to 2,811,044 ANM Shares (subject to adjustment based on the terms of the Private Placement and closing of the Transaction, and (v) a promissory note issued in connection with the acquisition of a California license that is convertible into up to 1,064,609 ANM Shares, for a total of 32,223,117 ANM Shares on a fully diluted basis.

The Transaction is expected to be completed by way of a triangular merger between ANM, Mukuba and a wholly-owned subsidiary of Mukuba to be incorporated under the laws of Delaware, pursuant to which all of the issued and outstanding common shares of ANM will be converted into Resulting Issuer Shares on the basis of 1.10602 Resulting Issuer Share for each ANM Share.

As a condition to completing the Transaction, Mukuba will complete a consolidation of the Mukuba Shares on a four (4) for one (1) basis (the “Mukuba Consolidation”).

The terms of the Transaction will also provide that each issued and outstanding ANM Warrant and ANM Option will be exchanged for a warrant or option, as applicable, of the Resulting Issuer on equivalent terms after having given effect to the Transaction.

It has been agreed by both ANM and Mukuba that the proposed structure may be revised to accommodate tax considerations, accounting treatments and applicable legal and regulatory requirements.

Mukuba and ANM are also pleased to announce the signing of an engagement letter with Canaccord Genuity Corp. (“Canaccord”) pursuant to which, prior to the completion of the Transaction, ANM will complete a private placement financing (the “Private Placement”) of subscription receipts (the “Subscription Receipts”) at a price of C$1.60 per Subscription Receipt for aggregate gross proceeds of up to C$10,000,000 on a commercially reasonable efforts basis (as further described below).

The following table sets forth the pro forma capitalization of the Resulting Issuer after giving effect to the Transaction, the Private Placement and the Mukuba Consolidation:

1. Expressed on a non-diluted basis
2. Including ANM Shares underlying certain convertible notes of ANM that will automatically convert into ANM Shares immediately prior to closing of  the Transaction
3. Assumes the Private Placement is completed for aggregate gross proceeds of C$10,000,000 and excludes any shares of the Resulting Issuer issuable in connection with the exercise of Broker Warrants

A meeting of Mukuba shareholders will be held prior to the closing of the Transaction to obtain shareholder approval for: (i) the Mukuba Consolidation; (ii) the Transaction; (iii) the listing of the Resulting Issuer Shares on the Exchange; (iv) the concurrent delisting of the Mukuba Shares from the TSXV; and (v) the changing of the name of Mukuba to “Halo Labs Inc.”

Mukuba will also seek approval for 6 new board members of Mukuba (“New Board Members”) who will replace the existing board members and be the directors of the Resulting Issuer upon the closing of the Transaction. The proposed New Board Members are expected to be:

Kiran Sidhu, Chief Executive Officer and Director: Kiran Sidhu is the Chief Executive Officer of ANM.  Mr. Sidhu graduated with honors in computer science from Brown University and an MBA in Finance from the Wharton School of Business. Mr. Sidhu was a manager with Pricewaterhouse Cooper’s strategic consulting group in Los Angeles and a senior associate with Merrill Lynch Capital Markets in mergers and acquisitions in New York. Mr. Sidhu served as CFO of On Stage Entertainment and oversaw its initial public offering on NASDAQ.  Mr. Sidhu is currently a director of Namaste Technologies Inc. (“Namaste”) (CSE:N) an online seller of cannabis peripherals operating 24 websites in 20 countries.  Upon completion of the Transaction, Mr. Sidhu will be appointed Chief Executive Officer of the Resulting Issuer.

Fred Leigh, Director: Fred Leigh has over 35 years of experience in the junior resource sector including founding Siwash Holdings Ltd. Mr. Leigh is currently the chairman of QMX Gold Corporation (TSXV:QMX) a Canadian-based mineral exploration company and the president of Routemaster Capital Inc. (TSXV:RM) an investment company with royalties and several investments in public mining companies.

Andreas Met, Chief Marketing Officer and Director: Andreas Met is the Chief Marketing Officer of ANM.  Mr. Met graduated with an MBA in Product and Price Marketing from the University of Wisconsin.  Mr. Met was a Senior Merchant at Walmart where he managed the Household Chemicals desk.  Prior to joining ANM, Mr. Met was the head of sales and marketing at Golden Leaf Holdings Ltd. (CSE:GLH).

Gilbert Sharp, Director: Gilbert Sharp graduated with a BA from the University of Toronto and LLP and LLB from Osgoode Hall Law School.  Mr. Sharp has over 40 years of legal experience including roles as a partner in prominent Toronto law firms, the Director of the Legal Branch of the Ontario Ministry of Health (General Counsel) and a professor in the Faculty of Law at the University of Toronto.  Mr. Sharp has also acted as a special adviser on healthcare projects for the World Bank, Inter-American Bank, and the World Health Organization.  Mr. Sharp is a recipient of the Philippe Pinel Award for outstanding contribution in the fields of law and mental health, awarded by the International Academy of Law and Mental Health.

J. Francisco Turner, Director: J. Francisco Turner graduated with a BA from Harvard University.  Mr. Turner has over 20 years of experience as a finance and investment professional, including roles as the president and chief financial officer of Banc of California (a Forbes 100 Bank with 1900 employees, with total assets of US$11.2 billion) and managing director of Bancorp Bank.  Mr. Turner also held director positions with Transact Network Limited, Meridiano 520 S.L., and Kappa Corporation and was an Olympic athlete in track and field.

Philip van den Berg, Director: Philip van den Berg graduated cum laude in economics from the University of Amsterdam.  After graduating, Mr. van den Berg joined Pierson, Heldring & Pierson in the Netherlands as an investment analyst and subsequently became a director in Goldman Sach’s European equities division. Mr. van den Berg was co-founder of Olympus Capital Management, one of the first European hedge funds (long short equity) and Taler Asset Management, a wealth management company based in Gibraltar.  Mr. van den Berg is currently the Chief Financial Officer of Namaste.

The transaction terms outlined in the LOI are binding on the parties and the LOI is expected to be superseded by a definitive agreement (the “Definitive Agreement”) to be signed between the parties on or before November 3, 2017.

The Transaction is subject to regulatory approval, and the satisfaction of customary closing conditions, including:

• the approval of the Definitive Agreement and the Transaction by the board directors of each of Mukuba and ANM;
• the completion of due diligence investigations to the satisfaction of each of Mukuba and ANM;
• the receipt of all required shareholder approvals;
• the completion of the Private Placement for minimum gross proceeds of C$5,000,000; and
• the Resulting Issuer being in compliance with the initial listing requirements of the Exchange.

The Private Placement

ANM and Mukuba have entered into an engagement agreement with Canaccord to act as the lead manager and sole bookrunner in connection with the Private Placement financing to be completed on a commercially reasonable efforts basis.

Each Subscription Receipt issued pursuant to the Concurrent Private Placement will be exchanged for one unit of ANM (a “Unit”), with each Unit being comprised of (1) common share of ANM (“Underlying Share”) and one (1) common share purchase warrant of ANM (“Underlying Warrant”) immediately prior to closing of the Transaction for no additional consideration. Each Underlying Warrant shall be exercisable for one ANM Share at a price of C$2.40 for a period of 24 months. Upon closing of the Transaction, the Underlying Shares will be exchanged for Resulting Issuer Shares and the Underlying Warrants will be exchanged for warrants exercisable for Resulting Issuer Shares on equivalent terms after having given effect to the Transaction. All proceeds from the Private Placement will be held in escrow pending satisfaction of all the escrow release conditions, including the completion of the Transaction (the “Escrow Release Conditions”).

Pursuant to the terms of the engagement letter with the Canaccord, ANM has agreed to pay to Cannacord, a cash commission equal to 7% of the gross proceeds raised in the Private Placement; provided that a commission equal to 3.5% shall be payable with respect to the first C$1,000,000 of proceeds raised in connection with the sale of Subscription Receipts to certain purchasers introduced to Canaccord by ANM (each a “President’s List Purchaser”).

In addition, Canaccord will receive broker warrants (the “Broker Warrants”) entitling Canaccord to subscribe for the number of Units as is equal to 7% of the aggregate number of Subscription Receipts sold pursuant to the Private Placement; provided that broker warrants equal to 3.5% of the number of Subscription Receipts shall be issued in connection with the first C$1,000,000 of aggregate gross proceeds from sales made to President’s List Purchasers. Each Broker Warrant shall be exercisable at a price of C$1.60 for a period of 24 months commencing upon satisfaction of the Escrow Release Conditions.

Further Information

Mukuba and ANM will provide further details in respect of the Transaction including a summary of financial information in due course once available by way of press release. Trading in Mukuba Shares has been halted pursuant to the policies of the TSXV.  There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon.

The Exchange has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the contents of this press release.

For more information, please contact:

Daniel Crandall
President and Chief Executive Officer
Tel. +1 (416) 848-9407
info@mukubaresources.com

Kiran Sidhu
Chief Executive Officer
Tel:  +1 (941) 840-4495
kiran@halocanna.com

Forward Looking Information

This news release contains certain forward-looking statements that reflect the current views and/or expectations of management with respect to performance, business and future events, including but not limited to express or implied statements and assumptions regarding the Company’s intention to negotiate for or complete the Transaction. Forward-looking statements are based on the then-current expectations, beliefs, assumptions, estimates and forecasts about the business and the industry and markets in which the Company operates. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. In particular, there is no guarantee that the parties will successfully negotiate and enter into the Definitive Agreement or complete the Transaction contemplated herein, that the Company’s due diligence will be satisfactory or that the Company will obtain any required shareholder or regulatory approvals, including the listing of the Resulting Issuer Shares on the Exchange and the concurrent delisting of the Mukuba Shares from the TSXV. Accordingly, readers should not place undue reliance on forward-looking statements and information, which are qualified in their entirety by this cautionary statement. The Company does not undertake any obligations to release publicly any revisions for updating any voluntary forward-looking statements, except as required by applicable securities law.

This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available. Not for distribution to U.S. newswire services or for dissemination in the United States. Any failure to comply with this restriction may constitute a violation of U.S. securities laws.

All information contained in this press release with respect to ANM, its business and proposed corporate reorganization and financing was supplied by ANM for inclusion herein. Mukuba has not conducted due diligence on the information provided and does not assume any responsibility for the accuracy or completeness of such information.

Trading in the securities of Mukuba Resources Limited should be considered highly speculative. The TSXV has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.