VANCOUVER, BC, Nov. 11, 2020 /CNW/ - LEAF Mobile Inc. (TSXV:
LEAF) ("LEAF" or the "Company") provides the
following update regarding its proposed acquisition of EastSide
Games Inc. (the "Acquisition"), previously announced on
October 7, 2020.
The Acquisition
Acquisition Agreement
LEAF, EastSide Games Inc. ("ESG") and the securityholders
of ESG have entered into a purchase agreement dated October 31, 2020 (the "Acquisition
Agreement"), which formalizes the terms and conditions of
LEAF's acquisition of all outstanding securities of ESG (the
"Acquisition").
In consideration, LEAF will pay the ESG securityholders (a)
$50 million in cash, subject to
adjustments, and (b) that number of LEAF common shares ("LEAF
Shares") that will be equal to 50% of the issued and
outstanding LEAF Shares upon completion of the Offering (as
described below), calculated on a fully-diluted basis but without
taking into consideration any LEAF shares issued or issuable in
connection with the Over-Allotment Option (also described
below). As at the date of this news release, it is
anticipated that 479,435,755 LEAF Shares will be issued under the
Acquisition.
Completion of the Acquisition is subject to a number of
conditions, including but not limited to acceptance of the TSX
Venture Exchange ("TSXV"), majority of the minority LEAF
shareholder approval, and receipt of Toronto Stock Exchange
approval to list the LEAF Shares for trading upon completion of the
Acquisition. The Acquisition cannot close until the required
shareholder approval is obtained at a special meeting of LEAF
shareholders to be held on December 11,
2020. There can be no assurance that the Acquisition will be
completed as proposed or at all.
Further discussion of the Acquisition can be found in LEAF's
management proxy information circular dated November 4, 2020, available online under LEAF's
profile on SEDAR. Investors are cautioned that, except as
disclosed in the management information circular prepared in
connection with the Acquisition, any information released or
received with respect to the Acquisition may not be accurate or
complete and should not be relied upon. Trading in the securities
of LEAF should be considered highly speculative.
Offering
In connection with the Acquisition, LEAF has filed in each of
the provinces of Canada and
received a receipt for a preliminary short form prospectus (the
"Prospectus") with respect to a public offering (the
"Offering") of 240,000,000 subscription receipts (the
"Subscription Receipts") at a price of $0.225 per Subscription Receipt, to be completed
on a best-efforts basis for gross proceeds of $54 million.
Eight Capital is acting as the lead agent (the "Lead
Agent") in connection with the Offering, with a syndicate of
agents to be determined in due course (together with the Lead
Agent, the "Agents").
The Subscription Receipts will be governed by a subscription
receipt agreement (the "Subscription Receipt Agreement") to
be entered into among LEAF, the Lead Agent (on behalf of the
Agents) and Odyssey Trust Company. Each Subscription Receipt
will entitle the holder thereof to receive, upon satisfaction of
certain release and issuance conditions as set out in the
Prospectus, one LEAF Share.
LEAF has agreed to pay the Agents a cash commission of 6% of the
gross proceeds received under the Offering. Additionally, the
Agents will receive compensation warrants (the "Compensation
Warrants"), each Compensation Warrant entitling the holder
thereof to acquire one LEAF Share at a price of $0.225 per share for a period of 24 months from
issuance. The Agents will receive that number of Compensation
Warrants that will allow the holders thereof to acquire, in the
aggregate, that number of LEAF Shares that is equal to 6% of the
LEAF Shares issued in exchange for Subscription Receipts sold under
the Offering (including any Subscription Receipts or LEAF Shares
issued pursuant to the exercise of the Over-Allotment Option).
In addition, the Agents will be granted an over-allotment option
(the "Over-Allotment Option"), exerciseable at any time, in
whole or in part, to purchase up to an additional 15% of the total
Subscription Receipts sold under the Offering, for a 30 day period
commencing upon the closing of the Offering, for a maximum of
36,000,000 Subscription Receipts, at $0.225 per Subscription Receipt, for additional
gross proceeds of $8.1 million.
If the Over-Allotment Option is exercised after the conversion of
the Subscription Receipts into LEAF Shares, LEAF will issue LEAF
Shares in lieu of additional Subscription Receipts.
LEAF intends to use the net proceeds of the Offering primarily
to fund the cash consideration payable under the Acquisition.
Completion of the Acquisition is conditional upon completion of the
Offering.
A copy of the Prospectus is available online under LEAF's
profile on SEDAR.
A preliminary short form prospectus containing important
information relating to these securities has been filed with
securities commissions or similar authorities in each of the
provinces of Canada. The
preliminary short form prospectus is still subject to completion or
amendment. Copies of the preliminary short form prospectus may be
obtained from the Lead Agent. There will not be any sale or any
acceptance of an offer to buy the securities until a receipt for
the final short form prospectus has been issued.
Consolidation
LEAF intends to proceed with a consolidation of the LEAF Shares
on the basis of up to ten "old" shares for every one "new" shares
(the "Consolidation"), to be effected immediately after the
completion of the Acquisition and the Offering. As such, LEAF
Shares issued under the Acquisition or on conversion of the
Subscription Receipts sold under the Offering will be subject to
the Consolidation. Completion of the Consolidation is subject
to LEAF obtaining all required shareholder approvals and the prior
approval of the TSXV. The Consolidation will not be
implemented if the Acquisition and Offering are not completed.
Additional information in connection with the Acquisition and
the Offering will be provided in subsequent news releases.
The TSXV has in no way passed upon the merits of the proposed
Acquisition and has neither approved nor disapproved of the
contents of this news release.
About LEAF
LEAF Mobile Inc. (TSX.V: LEAF) is a leading creator of
counterculture mobile games. Headquartered in Vancouver, with a premier development studio,
LDRLY, based in Nanaimo, British
Columbia, the Company is highly skilled in intellectual
property, mobile game development, marketing and publishing. LEAF's
culture is anchored in creativity, data insights and execution,
delivering highly engaging games that produce enduring player
enjoyment. With over a decade of experience in game development and
marketing, LEAF has consistently delivered high-grossing original
and licensed IP titles that include Cheech & Chong Bud Farm, Bud Farm Idle Tycoon,
Bud Farm Grass Roots and
Bud Farm 420. Our game titles
are available worldwide on the App Store and Google Play. LEAF
leverages successes in platform, IP, marketing, development and
data analysis to maximize value for our global network of
constituents, from players to talent to shareholders and
beyond.
For more information and to keep current on LEAF, visit
www.leafmobile.io and join our online communities at Linkedin,
Twitter, Facebook, and Instagram.
ON BEHALF OF THE BOARD
Darcy Taylor
CEO
Forward-looking statements:
Certain statements in this release are forward-looking
statements, which reflect the expectations of management regarding
the Offering and the Acquisition. Forward-looking statements
consist of statements that are not purely historical, including any
statements regarding beliefs, plans, expectations or intentions
regarding the future. Such statements are subject to risks and
uncertainties that may cause actual results, performance or
developments to differ materially from those contained in the
statements. No assurance can be given that any of the events
anticipated by the forward-looking statements will occur or, if
they do occur, what benefits the Company will obtain from
them. In particular, the Company cautions that the timing or
completion of the Acquisition and the Offering cannot be predicted
with certainty, and there can be no assurance at this time that all
required or desirable approvals and consents to effect the
Acquisition or the Offering will be completed in the manner noted
above or at all. These forward-looking statements reflect
management's current views and are based on certain expectations,
estimates and assumptions which may prove to be incorrect. A number
of risks and uncertainties could cause our actual results to differ
materially from those expressed or implied by the forward-looking
statements, including factors beyond the Company's control. These
forward-looking statements are made as of the date of this news
release.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Leaf Mobile Inc.