Vancouver, British Columbia--(Newsfile Corp. - January 5, 2018) - Kramer Capital Corp. (TSXV: KRM.H) (the "Corporation" or "Kramer") is pleased to announce it has entered into a binding letter of intent dated December 29, 2017 (the "Letter of Intent") with 48North Cannabis Corp. ("48North") pursuant to which Kramer has agreed to acquire all of the outstanding securities of 48North, a vertically integrated cannabis company licensed under the Access to Cannabis for Medical Purposes Regulations ("ACMPR"), which, subject to certain conditions and applicable shareholder, corporate and TSX Venture Exchange (the "Exchange") approvals will constitute the Corporation's "Qualifying Transaction" as such term is defined under the policies of the Exchange. Kramer, as the resulting entity following the completion of the Qualifying Transaction is referred to herein as the "Resulting Issuer".

The Letter of Intent

Pursuant to the terms of the Letter of Intent, the Qualifying Transaction is proposed to be completed by way of a three-cornered amalgamation, provided that the final structure and form will be as set forth in a definitive agreement incorporating the principal terms of the Letter of Intent. Kramer and 48North have undertaken to use their commercially reasonable efforts to negotiate in good faith and enter into a definitive agreement on or before February 28, 2018.

Under the terms of the Letter of Intent, it is proposed that, among other things, the following transactions will occur:

  • The completion by Kramer of a consolidation of its issued and outstanding common shares (the "Kramer Shares") on a 2:1 basis (which assumes the completion of the Current Financing (as defined herein)), provided that such ratio will be adjusted in the event a Follow-On Financing (as defined herein) is completed (see "Kramer Share Consolidation" below);

  • The completion by Kramer of a name change to "48North Cannabis Corp.";

  • The exchange of all issued and outstanding common shares of 48North (the "48North Shares") for common shares of the Resulting Issuer on a 1:1 basis; and

  • The exchange of all issued and outstanding options, warrants, broker warrants or other securities convertible into 48North Shares for securities of the Resulting Issuer on an economically equivalent basis.

Kramer Share Consolidation

Kramer currently has 1,775,000 Kramer Shares and 150,000 options issued and outstanding and intends to consolidate the Kramer Shares on a 2:1 basis (resulting in 887,500 post-consolidation Kramer Shares).

Pursuant to the terms of the Letter of Intent, it is contemplated that 48North may complete an additional brokered private placement of subscription receipts for proceeds of up to $20 million at an issue price between $1.00 to $1.50 (the "Follow-On Financing"). In the event a Follow-On Financing is completed, the consolidation ratio will be adjusted as set forth in the table below based on the issue price of the Follow-On Financing:

Follow-On
Financing Price		Consolidation
Ratio		Post-Consolidation
Shell shares
$1.002.25788,889
$1.102.50710,000
$1.202.75645,455
$1.303.00591,667
$1.403.25546,154
$1.503.50507,143

 

Further Details Regarding the Qualifying Transaction

Assuming the completion of the Current Financing for aggregate gross proceeds of $10 million, and that no Follow-On Financing is completed, the Corporation expects to issue 69,646,695 common shares, warrants exercisable to purchase 32,175,564 common shares and options exercisable to purchase 11,125,000 common shares (in each case on a post-consolidation basis), as consideration for the acquisition of all of the outstanding securities of 48North.

Upon completion of the Qualifying Transaction, the Resulting Issuer is expected to be listed as a Tier 1 Life Science or Industrial Issuer.

In connection with the transaction, Brian Bayley, Richard A. Graham and Sandra Lee will step down from the Corporation's board of directors in favour of nominees of 48North. In addition, Mr. Bayley will step down as the president, chief executive office, chief financial officer and corporate secretary of the company. It is expected that Alison Gordon will be named as chief executive officer; Kevin Helfand will be named chief operating officer; and Mirsad Jakubovic will be named chief financial officer of the Resulting Issuer:

Ms. Gordon is a veteran of the Canadian cannabis industry, bringing a unique depth of experience and relationships to the Resulting Issuer. A skilled marketer, she is celebrated for her unique ability to shift public opinion and consumer behaviour, and has been named one of Canada's Top 10 Marketers by Marketing Magazine. As co-founder of Rethink Breast Cancer, she is credited with growing a new generation of young breast cancer supporters, compelled by her ground-breaking communication and branding expertise.

Mr. Helfand has over 15 years of experience leading organizations in the banking, payments and technology industries. He has an in-depth understanding of the challenges faced by organizations poised for rapid growth, and has directed sales, compliance, operations, fulfillment, human resources and facilities in both functional and matrix structures. With a focus on corporate governance and operational efficiencies, he specializes in the navigation of complex operational ecosystems and dynamic regulatory regimes. Mr. Helfand holds an MBA and LL.B. from the University of Alberta and a B. Sc. in Economics and Psychology from the University of Toronto.

Mr. Jakubovic brings over 25 years of financial and management experience to 48North. He has grown and developed Canadian operations for several international businesses. His experience includes the CFO role for two publicly traded companies and he has worked for many years in Health Canada regulated industries. Mr. Mirsad is a CPA with an MBA degree from the Richard Ivey School of Business.

Additional information on nominee directors and proposed officers will be included in a future press release.

Completion of the Qualifying Transaction is subject to certain conditions, including among others: (i) execution of a definitive agreement, (ii) completion of the Current Financing, (iii) requisite shareholder approvals for the Qualifying Transaction, the consolidation and the name change by each of Kramer and 48North, as applicable (iv) receipt of conditional approval from the Exchange for the Qualifying Transaction and listing of the Resulting Issuer shares, and (v) the satisfaction or waiver of all other conditions precedent to the closing of the Qualifying Transaction.

The Qualifying Transaction will be carried out by parties dealing at arm's length to one another and therefore will not be considered to be a "Non-Arm's Length Qualifying Transaction" as such term is defined under the policies of the Exchange. As result, a meeting of the shareholders of the Corporation to approve the Qualifying Transaction is not a condition required to complete the Qualifying Transaction.

Current Financing

48North has entered into an engagement letter with Eight Capital to complete an underwritten brokered private placement of units (each a "Unit") at a price of $1,000 per Unit for aggregate gross proceeds of $10 million (the "Current Financing"). Each Unit will be comprised of one senior unsecured convertible debenture with a principal amount of $1,000 (each, a "Debenture") and 556 common share purchase warrants (each, a "Warrant"). Each Warrant will entitle the holder thereof to acquire one 48North Share at a price of $1.15 for a period of 24 months following the completion of the Qualifying Transaction. The Debentures will automatically convert into 48North Shares immediately prior to the completion of the Qualifying Transaction at a price of $0.90 per 48North Share.

Eight Capital has also been granted an option to purchase up to an additional 15% of the Units, exercisable up to 48 hours prior to the closing date. As consideration for their services in connection the Current Financing, Eight Capital will receive a cash commission equal to 7% of the aggregate gross proceeds of the Current Financing and will receive that number of compensation options equal to 7% of the aggregate gross proceeds of the Current Financing divided by $0.90. Each compensation option will be exercisable for one unit of 48North (a "compensation unit") at an exercise price of $0.90 for a period of 24 months following the completion of the Qualifying Transaction, with each compensation unit comprised of one 48North Share and one-half of one Warrant.

The net proceeds of the Current Financing will be used: (a) to fund the business plan of 48North; (b) for Qualifying Transaction expenses; and (c) for working capital and general corporate purposes. Closing of the Current Financing is anticipated to occur in January 2018.

48North currently has: (i) 58,535,584 48North Shares, (ii) warrants to purchase 26,226,364 48North Shares, and (iii) options to purchase 11,125,000 48North Shares, issued and outstanding. Assuming the completion of the Current Financing for $10 million, it is expected that there will be approximately (i) 58,535,584 48North Shares, (ii) warrants to purchase 31,786,364 48North Shares, (iii) options to purchase 11,125,000 48North Shares, (iv) compensation options to purchase 777,777 compensation units (1,166,665 underlying 48North Shares), and (v) a principal aggregate amount of $10 million Debentures (convertible into 11,111,111 48North Shares) issued and outstanding.

In connection with the completion of the Qualifying Transaction, all securities of 48North will be exchanged for securities of the Resulting Issuer on an economically equivalent basis.

Summary Information Relating to Kramer

Kramer was incorporated under the laws of Alberta, continued into British Columbia in August 2016 and is a "Capital Pool Company" as such term is defined under the policies of the Exchange. Kramer is a reporting issuer in the provinces of British Columbia, Alberta and Ontario and its common shares are listed and posted for trading on the NEX board of the Exchange. Kramer's head office in located in Vancouver, British Columbia.

Summary Information Relating to 48North

48North is a private, vertically integrated cannabis company with 150 shareholders. Its first ACMPR licensed facility (the "Facility") is located on 800 acres of owned land near Kirkland Lake, Ontario, and is operated by its wholly-owned subsidiary, DelShen Therapeutics Corp. ("DelShen"). 48North grows unique genetics sourced from MariPharm B.V., a Netherlands based phytopharmaceutical company with over 25 years of experience in the research and cultivation of cannabis for medical purposes. Its genetics are grown to exacting standards, ensuring patients can count on receiving the highest quality cannabis products. 48North's values are rooted in the land they're planted on, and it has entered into a first of its kind Community Benefits Agreement with certain of its First Nations investors.

DelShen was incorporated on November 18, 2013 under the laws of the Province of Ontario. The Company's head office, principal address and records are located at 76 Stafford Street, Suite 101, Toronto, Ontario, Canada, M6J 2S1.

DelShen is authorized by Health Canada as a licensed producer of dried and fresh cannabis and cannabis oil for medical purposes pursuant to the Access to Cannabis for Medical PurposesRegulations (the "ACMPR"). DelShen's license to produce cannabis was granted on February 28, 2017 and pertains to the Facility, a state-of-the-art, closed-box, 40,000 square foot building with an additional 200,000 square feet of production space planned within the current security perimeter.

DelShen planted its first two cannabis crops (the "Initial Crops") in June 2017 and harvested the Initial Crops in November 2017. The Initial Crops have been submitted to Health Canada for testing and, if approved, the Company will be granted a license to sell under the ACMPR.

DelShen's audited statements indicate a net loss and comprehensive loss of $7,178,100 for the year ended June 30, 2017. DelShen transferred the assets on the balance sheet from construction in progress to property, plant and equipment, reflecting a capitalized expenditure for the facility of approximately $12.5 million. As at June 30, 2017, DelShen has working capital of $4,191,841.

On December 19, 2017, 48North entered into a binding letter of intent (the "PFI LOI") with Pharmaflorx Inc. ("PFI"), a Quebec company. Pursuant to the PFI LOI, 48North will purchase all PFI's assets and liabilities, including but not limited to, 100% of PFI's right, title and interest in:

i.     PFI's application under the ACMPR;

ii.     plans, drawings and agreements related to the construction, lease and operation of a 75,000-square foot ACMPR approved cannabis production facility in Gatineau, Quebec; and

iii.     all other intellectual property owned by PFI.

48North's business is focused on Canada. 48North does not currently have any business interests in other jurisdictions. Additional information on 48North will be provided as the transaction proceeds.

Sponsorship of Qualifying Transaction

Sponsorship of a qualifying transaction is required by the Exchange unless exempt in accordance with Exchange policies. Kramer and 48North expect an exemption from sponsorship to be available.

Additional Information

In accordance with the policies of the Exchange, the Kramer Shares are currently halted from trading and will remain halted until further notice.

Kramer and 48North will provide further details in respect of the Qualifying Transaction, in due course once available, by way of press releases.

All information provided in this press release related to 48North has been provided by management of 48North and has not been independently verified by management of Kramer.

If and when a definitive agreement between 48North and Kramer is executed, Kramer will issue a subsequent press release in accordance with the policies of the Exchange containing details of the definitive agreement and additional terms of the Qualifying Transaction, including, but not limited to, information relating to 48North, sponsorship, summary financial information in respect of Kramer and 48North, additional information with respect to the Current Financing and further information regarding the proposed directors, officers, and insiders of the Resulting Issuer upon completion of the Qualifying Transaction.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Units in any state in which such offer, solicitation or sale would be unlawful. The Unitshave not been and will not be registered under the United States Securities Act of 1933, as amended and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Qualifying Transaction, any information released or received with respect to the Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

For Further Information, Please Contact:

Kramer Capital Corp.   
Richard Graham, Director
Telephone: (604) 689-1428

Cautionary statements

This press release contains "forward-looking information" within the meaning of applicable securities laws relating to the proposal to complete the Qualifying Transaction and associated transactions, including statements regarding the terms and conditions of the Qualifying Transaction, the CurrentFinancing, and the use of proceeds of the CurrentFinancing. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the Qualifying Transaction, the CurrentFinancing and associated transactions, that the ultimate terms of the Qualifying Transaction, CurrentFinancing and associated transactions will differ from those that currently are contemplated, and that the Qualifying Transaction, the CurrentFinancing and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The statements in this press release are made as of the date of this release. The Corporation undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of the Corporation, 48North, their securities, or their respective financial or operating results (as applicable).

"Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all. Investors are cautioned that, except as disclosed in themanagement 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. Trading in the securities of a capital pool company should be considered highly speculative. The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release."

The common shares have not been and will not be registered under the United States Securities Act of 1933, as amended and may not be offered or sold in the United States without registration or an applicable exemption from the registration requirement. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.