Stratton Capital Corp.
NEX BOARD : SNK.H

May 16, 2016 09:15 ET

Stratton Capital Corp. Enters Into a Definitive Securities Purchase Agreement With Pro Gaming League Inc. for Reverse Takeover

TORONTO, ONTARIO--(Marketwired - May 16, 2016) - Stratton Capital Corp. (NEX:SNK.H) ("Stratton") is pleased to announce that it has entered into a securities purchase agreement (the "Securities Purchase Agreement") with Pro Gaming League Inc., a corporation existing under the laws of Ontario ("PGL"), pursuant to which Stratton will acquire all of the securities of PGL (the "Transaction"). The Securities Purchase Agreement was negotiated at arm's length.

The Transaction is subject to requisite regulatory approval, including the approval of the TSX Venture Exchange (the "TSXV") and a number of additional closing conditions, including completion of financing by PGL for gross proceeds of no less than $3 million and completion of due diligence investigations to the satisfaction of Stratton, as well as the conditions described below.

Stratton is incorporated under the provisions of the Business Corporations Act (Ontario) with its registered and head office in Toronto, Ontario. It is a capital pool company and intends for the Transaction to constitute its "Qualifying Transaction" as such term is defined in the policies of the TSXV. Stratton is a "reporting issuer" in the provinces of Ontario, British Columbia and Alberta.

Since the Transaction is not a non-arm's length transaction, Stratton is not required to obtain shareholder approval for the Transaction.

Trading in the common shares of Stratton remains halted. It is unlikely that the common shares of Stratton will resume trading until the Transaction is completed and approved by the TSXV.

Conditions to Transaction

Prior to completion of the Transaction (and as conditions of closing, among other things):

  • PGL must complete a private placement financing (the "Offering") for minimum gross proceeds of not less than $3 million. The Offering will be comprised of up to 40,000,000 common shares of PGL to be issued at a price of $0.10 per share.

  • Completion by Stratton of a due diligence review of PGL, the results of which are satisfactory to Stratton.

  • The parties will prepare a filing statement in accordance with the rules of the TSXV, outlining the terms of the Transaction.

  • Stratton must complete a consolidation of the outstanding Stratton Shares on a 4-for-1 basis.

  • All requisite regulatory approvals relating to the Transaction, including, without limitation, TSXV approval, will have been obtained.

The Proposed Transaction

Pre-Closing Capitalization of Stratton

As of the date hereof, Stratton has 7,256,176 common shares ("Stratton Shares") issued and outstanding and options to acquire an aggregate of 715,793 additional Stratton Shares at an exercise price of $0.10 per Stratton Share.

Pre-Closing Capitalization of PGL

As of the date hereof, PGL's authorized capital consists of an unlimited number of common shares ("PGL Shares"), of which 21,675,000 are issued and outstanding. PGL has 5,375,000 common share purchase warrants (the "PGL Warrants") which will be exercised on or before closing of the Transaction on cashless basis, such that holders of the PGL Warrants will receive one PGL Share for every two PGL Warrants. PGL also has approximately $1,200,000 in principal of convertible debt ("Convertible Debt") which is convertible into PGL Shares at a conversion price of $0.10 per PGL Share. Additionally, for each dollar of Convertible Debt converted, the holder is entitled to receive two common share purchase warrants of PGL, with each warrant exercisable into a PGL Share at an exercise price of $0.05 for a period of three years (the "Debenture Warrants").

Terms of the Transaction

Stratton will acquire all of the securities of PGL on a 1-for-1 basis, including the shares issued upon the cashless exercise of the PGL Warrants. Additionally, the principal amount of the Convertible Debt will, on completion of the Transaction, automatically convert into Stratton Shares at a conversion price of $0.10 and the holders of Convertible Debt will receive warrants of Stratton on identical terms as the Debenture Warrants. Prior to completion of the Transaction, Stratton shall complete a consolidation of its current outstanding shares on a 4 old shares for 1 new share basis. Stratton's shareholders approved the consolidation at Stratton's last annual meeting of shareholders.

About PGL

PGL is a digital entertainment company with a clear focus on eSports. PGL operates ProGamingLeague.com, an eSports platform and online community, which provides gamers with a variety of online competitions, leagues and ladders giving them an opportunity to win prizes and garner recognition within the global eSports community. PGL was launched in 2013 with the ultimate goal to unite the most popular eSports communities on a single entertainment platform and has quickly become a favoured online destination for eSports players and enthusiasts from around the globe.

In addition, Pro Gaming League hosts and broadcasts live tournaments and eSports initiatives throughout venues across North America including its soon to be opened eSports Arena in Las Vegas, Nevada. PGL provides turnkey solutions in an effort to give game publishers, consumer brands and other partners exposure and influence on a targeted audience, thereby enabling them to generate new revenue streams by leveraging this unique and highly sought after global demographic.

Insiders, Officers and Board of Directors of the Resulting Issuer

There are two persons that control 10% or more of PGL's voting equity. David Westlake of Oshawa, Ontario owns approximately 13.4% of PGL's issued and outstanding shares and Chad Larsson of Toronto, Ontario owns approximately 18% of PGL's issued and outstanding shares.

Upon completion of the Transaction, the current officers and directors of Stratton will resign and be replaced by Alex Igelman, Chad Larsson, David Fawcett, Seth Schorr and Ronald R. Spoehel, who will serve as directors until Stratton's next annual general meeting. Alex Igelman will be appointed as the Chief Executive Officer, Chad Larsson as President and Adam Morrison as Chief Technology Officer.

Sponsorship

Sponsorship of a qualifying transaction of a capital pool company is required by the TSXV unless exempt in accordance with TSXV policies. Mackie Research has been engaged to provide sponsorship for the Transaction.

All information contained in this news release with respect to Stratton and PGL was supplied by the parties respectively, for inclusion herein, and each party and its directors and officers have relied on the other party for any information concerning the other party.

Stratton will issue additional press releases related to the Transaction, officers and directors of the resulting issuer and other material information as it becomes available.

Completion of the transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and, if applicable, pursuant to the requirements of the TSXV, 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 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. 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.

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.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain "forward-looking statements" under applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to: the terms and conditions of the proposed Transaction; the terms and conditions of the proposed Offering; future developments; use of funds; and the business and operations of the Resulting Issuer after the proposed transaction. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; delay or failure to receive board, shareholder or regulatory approvals; and the results of continued development, marketing and sales. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Stratton and PGL disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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