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Early Warning Report Issued Pursuant to National Instrument 62-103 Acquisition of Securities of Ackroo Inc.

·3 min read

/NOT FOR DISTRIBUTION TO UNITED STATES OF AMERICA WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES OF AMERICA/

TORONTO, Nov. 13, 2020 /CNW/ - This press release is being disseminated as required by National Instrument 62–103 - The Early Warning System and Related Take Over Bids and Insider Reporting Issuers in connection with the filing of an early warning report (the "Early Warning Report") regarding the acquisition of securities of Ackroo Inc. (TSXV: AKR) (the "Issuer"), with its head office located at 1250 South Service Road, Unit A3-1 (3rd Floor), Hamilton, Ontario, L8E 5R9, by Shen Capital Fund I L.P., by its General Partner, Shen Capital Management Inc. ("Shen Capital"), with its head office located at 130 Bloor Street West, Suite 905, Toronto, Ontario, M5S 1N5.

On November 12, 2020 (the "Closing Date"), Shen Capital entered into a subscription agreement to purchase 17,500,000 units of the Issuer ("Units", and individually, a "Unit") for $0.12 per Unit, each Unit to consist of one Common Share and one warrant of the Issuer (a "Warrant"), for aggregate proceeds of $2,100,000 (the "Private Placement"). Each Warrant is exercisable until November 12, 2023 and entitles Shen Capital to purchase an additional Common Share at an exercise price of $0.18 per share, subject to accelerated expiry in the event the closing trading price of the Common Shares on the TSX Venture Exchange ("TSXV") equals or exceeds $0.28 per Common Share for a period of 20 consecutive trading days at any time on or after the 18th month from the Closing Date.

Prior to the Private Placement, Shen Capital owned, directly and indirectly, no Common Shares. Following the Private Placement, Shen Capital owns, directly and indirectly, 17,500,000 Common Shares, representing approximately 17.1% of the outstanding Common Shares, and 17,500,000 Warrants.

Shen Capital has agreed that, until the TSXV approves Shen Capital as a Control Person, which is expected to occur at the next meeting of shareholders of the Issuer to take place on or before June 30, 2021 (the "20% TSXV Approval"), Shen Capital will not exercise the Warrant if it results in owning 20% or more of the issued capital of the Issuer. Accordingly, on a partially diluted basis, Shen Capital holds 19.99% of the outstanding Common Shares. Following receipt of the 20% TSXV Approval and the exercise in full of the 17,500,000 Warrants to purchase Common Shares, Shen Capital's ownership would represent approximately 29.3% of the outstanding Common Shares on a partially diluted basis.

In addition to the foregoing, Shen Capital may increase or decrease its beneficial ownership or control depending on market or other conditions.

Pursuant to a Nominating Rights Agreement dated October 30, 2020 among the Issuer and Shen Capital, for so long as Shen Capital owns at least 5% percent of the outstanding issued capital of the Issuer, Shen Capital shall have the right to appoint such number of board members in proportion to its ownership percentage, rounded upwards to the nearest whole number, but shall at all times have the right to appoint one member, who shall initially be Francis Shen, the President of Shen Capital. In addition, for so long as Shen Capital owns at least 5% percent of the outstanding issued capital of the Issuer, it shall be entitled to appoint one individual to attend as an observer all meetings of the board or committees thereof, who shall initially be Andrew Shen, the Vice-President of Shen Capital.

A copy of the Early Warning Report with additional information in respect of the foregoing matters may be found on www.SEDAR.com.

SOURCE Shen Capital Management Inc.

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View original content: http://www.newswire.ca/en/releases/archive/November2020/13/c1358.html