RHC Royal Helium Ltd

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RHC Capital Corporation (“RHC” or the “Company”) (TSXV: RHC) is pleased to announce that it has entered into a non-binding letter of intent (the “LOI”) dated August 20, 2018 with Skrumble Technologies Inc. (“Skrumble”) in connection with a proposed reverse take-over transaction involving Skrumble wherein RHC will, among other things, acquire all of the common shares of Skrumble in exchange for common shares of RHC (on a post-consolidation basis) and RHC will continue the business and operations of Skrumble (the “Transaction”).  In conjunction with the Transaction, RHC will divest 100% of the shares of its wholly-owned subsidiary, Royal Helium Corporation (“Royal Helium”), to its shareholders proportionate to their ownership interest in RHC and Royal Helium will continue operating as a separate and private helium exploration company.

Andrew Davidson, Chairman of the Board of Directors of RHC stated: “The proposed Transaction presents RHC and all of its shareholders the opportunity to participate in the growth and success of Skrumble and its innovative blockchain and communication technologies. Moreover, it will allow Royal Helium to continue exploration and exploitation of its substantial helium land holdings in Saskatchewan unencumbered by the administration and costs associated with a public listing.”

About Skrumble Technologies Inc.

Skrumble is a privately held company that was incorporated under the Business Corporations Act (Ontario). Skrumble is a blockchain and communication technology company, licensing its technology and servicing companies globally who are implementing it. Since its launch in 2014, Skrumble has filed 46 global patent claims and established relationships with Fortune 500 companies, and its blockchain and communication technologies decentralize products and services resulting in verified and immutable data, unrestricted global access, and trust. Skrumble’s proprietary technology is implemented in Smart City, Security and Government, Internet of Things “IOT”, Unified Communication, Remote Business, and Social Applications. Skrumble is a global leader in blockchain and communication technologies and its head office is located in Toronto, Canada, with global offices and operations in Latin America, Asia and the Caribbean.

Based on the draft unaudited interim financial statements of Skrumble for the six month period ended June 30, 2018, Skrumble had revenues of $16,015,095 and had a net profit of $8,321,746. In addition, as at June 30, 2018, Skrumble had total assets of $12,838,772, total liabilities of $1,862,651 and shareholders’ equity of $10,976,121.

The Proposed Transaction

It is currently anticipated that the Transaction will be completed by way of a three-cornered amalgamation or other similar form of acquisition transaction as agreed to by the parties, which will result in each Skrumble common share being exchanged for one post-consolidation Resulting Issuer (as such term is defined in the policies of the TSX Venture Exchange (the “Exchange”)) common share (the “Resulting Issuer Shares”). Each outstanding convertible security of Skrumble will remain outstanding and be adjusted in accordance with their terms or be exchanged for convertible securities of the Resulting Issuer, as applicable, on substantially the same economic terms and conditions as the existing convertible securities of Skrumble.

As at the date hereof, RHC has 151,031,947 common shares issued and outstanding, as well as 6,136,568 options and 17,774,352 warrants outstanding, each exercisable to acquire one RHC common share. As at the date hereof, Skrumble has 21,191,095 common shares issued and outstanding, as well as 3,503,769 options outstanding, each exercisable to acquire one Skrumble common share.

The Resulting Issuer is expected to continue Skrumble’s current business and operations and intends to be listed as a technology issuer on the TSXV.

The LOI contemplates the negotiation and execution of a binding definitive agreement (the “Definitive Agreement”), and completion of the Transaction will be subject to a number of conditions precedent, including:

• RHC will have taken all steps necessary to cause all of its direct and incidental helium assets to be held solely by Royal Helium (the wholly-owned subsidiary of RHC), and Royal Helium will have completed a split of its shares into such number of shares that is reasonably required so that RHC can divest by way of dividend in kind all of the shares of Royal Helium to RHC shareholders on a pro-rata basis proportionate to their existing RHC shareholdings.
• Royal Helium shall have reasonably indemnified RHC and Skrumble for all liabilities relating to the helium business of Royal Helium, including without limitation, tax and environmental liabilities, on terms mutually agreed to by RHC and Skrumble.
• RHC will have completed a consolidation of its outstanding common shares prior to completion of the Transaction on a ratio of 1:10 such that each existing shareholder of RHC will receive one post-consolidation common share for each 10 pre-consolidation common shares held by such shareholder.
• RHC will have changed its name to “Skrumble”, or such other name as agreed to between the parties.
• Skrumble having completed the Offering (as defined below).
• Completion of mutually satisfactory due diligence investigations of Skrumble and RHC.
• Receipt of all required approvals of the board of directors and shareholders of Skrumble and RHC.
• Receipt of all required consents, waivers and approvals from the Exchange, any securities regulatory authority and any other necessary third parties.
• In accordance with their respective terms, all options, warrants and other convertible securities of RHC, as applicable, shall have been exercised, cancelled or otherwise exchanged for convertible securities of Royal Helium on substantially the same economic terms and conditions as the existing convertible securities of RHC, such that RHC shall only have common shares issued and outstanding immediately prior to completion of the Transaction.
• RHC will acquire all of the common shares of Skrumble in exchange for post-consolidation common shares of RHC at a deemed price of $0.15 per post-consolidation RHC share and a deemed Skrumble valuation of $48,750,000 (on a pre-Offering basis).

Private Placement

In conjunction with, or prior to the closing of the Transaction, Skrumble will undertake a brokered private placement of subscription receipts (the “Subscription Receipts”) at a price of $0.15 per Subscription Receipt to raise aggregate gross proceeds of a minimum of $2,000,000 and a maximum of $7,000,000 (the “Offering”).

Further details regarding the Offering, including the terms, use of proceeds and details of any finder’s fee or commission, will be provided in a subsequent press release once that information is available.

Arm’s Length Transaction and Shareholder Approval

The proposed Transaction will be an arm’s length transaction under the policies of the Exchange, and RHC will be seeking shareholder approval for the Transaction.

Proposed Management and Directors of the Resulting Issuer

The senior management team of the Resulting Issuer will include the following individuals:

• David Lifson of Ontario, Canada, CEO – Successful exits in ITC space, inventor of prepaid phone card, 1st Canadian long distance phone company.
• Tamir Wolfson of Ontario, Canada, COO – MBA, successful exits in technology and healthcare.
• James Phillipson of Ontario, Canada, CFO – CPA, CA, CFO for multiple private and public companies on the TSX, TSX Venture, CSE, and Nasdaq.
• Christine Guo of Ontario, Canada, VP Business Development – MFE, FRM – 7+ years investments and partnerships.
• Pamela Lifson of Ontario, Canada, Corporate Secretary

The board of directors of the Resulting Issuer will be nominated by Skrumble prior to the completion of the Transaction and in accordance with the requirements of the Exchange and applicable securities laws. The board of directors of the Resulting Issuer is anticipated to include David Lifson and four other individuals to be named at a later date.  A more detailed description regarding the professional backgrounds of the members of management and the board of directors will be included in a subsequent press release.

Sponsorship

RHC intends to make an application to the Exchange for an exemption from the sponsorship requirements, but there is no assurance that such an exemption will be granted. In the event that an exemption from the sponsorship requirement is not obtained, the Company will be required to engage a sponsor pursuant to the requirements of the Exchange.

Information Circular

In connection with the Transaction and pursuant to the requirements of the Exchange, RHC will file an information circular on its issuer profile on SEDAR (www.sedar.com), which will contain details regarding the Transaction, the Offering, RHC, Skrumble and the Resulting Issuer.

About RHC Capital Corporation

RHC is the first company focused on primary helium production listed on a Canadian stock exchange. RHC is currently the largest helium leaseholder in Canada. RHC’s land positions were acquired based on detailed evaluation of the highest known helium concentrations from existing well and geological data in Saskatchewan.

Due to the foregoing, RHC also announces that it has cancelled its non-brokered private placement offering. (See news releases of May 25, 2018 and July 20, 2018).

Trading in the shares of RHC will remain halted until the completion of the Transaction.

Royal Helium Corporation

Royal Helium has 572 sections (366,217 acres) of prospective helium land in Saskatchewan. All of Royal Helium’s lands are in close vicinity to highways, roads, cities and importantly, close to existing oil and gas infrastructure. With stable, rising prices and limited, non-renewable sources for helium worldwide, Royal Helium intends to become a leading North American producer of this high value commodity.

For more information, please contact Andrew Davidson, Chairman of the Company.

Andrew Davidson, ChairmanRHC Capital Corporation1(306) 281-9104adavidson@royalhelium.com

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable, disinterested 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 RHC Capital Corporation 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 news release.”

This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction. Any securities referred to herein have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to a U.S. Person absent registration or an applicable exemption from the registration requirements of the United States Securities Act of 1933, as amended, and applicable state securities laws.

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 structure, terms, conditions and proposed timing for completion of the Transaction and the Offering; the ability of Skrumble and RHC to complete the Transaction and the Offering; the consolidation of the common shares of RHC and the anticipated exchange ratio in connection with the Transaction; Skrumble, RHC and the Resulting Issuer’s future business operations; the receipt of all necessary shareholder, Exchange, securities regulatory authority and other third party consents and approvals; the receipt by RHC of an exemption from the sponsorship requirements of the Exchange; and the anticipated composition of the board of directors and management of the Resulting Issuer. 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 shareholders 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. RHC disclaims 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.