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VANCOUVER, British Columbia, Jan. 23, 2018 (GLOBE NEWSWIRE) -- Mukuba Resources Limited (“Mukuba” or the “Company”) (TSXV:MKU.H) is pleased to announce that it has entered into a Letter of Intent dated January 22, 2018 (the “LOI”) with FogChain, Inc. (“FogChain”), a private corporation existing under the laws of Delaware, with its head office in San Carlos, California. Pursuant to the terms of the LOI, Mukuba is proposing to complete a business combination with FogChain by way of share exchange, merger, amalgamation, arrangement or similar form business combination (the “Proposed Transaction”), whereby the security holders of FogChain will become majority security holders of the combined entity (the “Resulting Issuer”). Upon completion of the Proposed Transaction the Resulting Issuer will continue to carry on the business of FogChain as currently constituted, under a new name approved by the board of directors and shareholders (if required) of the Resulting Issuer and the Canadian Securities Exchange (the “CSE” or the “Exchange”). The Proposed Transaction is an arm’s length transaction and will constitute a reverse takeover of Mukuba by FogChain, pursuant to the Exchange policies. In connection with the Proposed Transaction, the Company intends to apply to delist its common shares from the TSX Venture Exchange (the “TSXV”) and the Resulting Issuer intends to apply to list its common shares on the Exchange.

About FogChain

FogChain is a private company, incorporated under the laws of Delaware. FogChain is based in San Carlos, California. FogChain provides a secure and efficiently distributed “ground up” Blockchain platform for software development, leveraging the best of both worlds: the inherent security of Blockchain combined with the ubiquity and performance of the Fog (decentralized computing resources).

FogChain is a decentralized software development suite that allows any company of any size to accelerate their software deployment leveraging the Blockchain. FogChain anticipates generating revenue through licensing and delivering Software as a Service (SaaS) on a monthly and yearly subscription basis, as well as through application development of Blockchain software tailored to large enterprise clients.

James Cerna, California, holds a controlling interest in FogChain.

Insiders, Officers and Board of Directors of the Resulting Issuer

The board of directors of the Resulting Issuer upon completion of the Transaction will be appointed by FogChain. It is anticipated that upon completion of the Transaction, the following persons will be officers and directors of the Resulting Issuer. In addition, it is anticipated upon completion of the Transaction, that James Cerna will be an insider as a result of holding more than 10 percent of the issued and outstanding Resulting Issuer Shares.

James Cerna (California, USA), Chief Executive Officer and Director – Mr. Cerna was previously the CEO and CFO of SauceLabs, the world's largest automation cloud for testing web and native mobile applications, the CEO and founder of NetCurrents, the CEO and founder of Lucas Energy and has been involved in multiple successful start-up ventures.

Charles Berman (California, USA), Director – Mr. Berman has been active for 50 years in IP prosecution, counseling, transactions, opinions, and litigation support in all areas of U.S. and international patents.  Mr. Berman is a Founding Fellow of the American Intellectual Property Law Association (AIPLA,) and has been President of LAIPLA, and is a member of the liaison Counsel US Bar/EPO and US Bar/JPO, and has served on numerous committees.  Mr. Berman also served as Chair of the Fellows of the AIPLA where he held several prominent positions over the past several years.  A frequently invited speaker, he has also written many articles on intellectual property issues. 

Mukuba will issue an additional news release including further information with respect to the incoming board of directors and other officers of the Resulting Issuer as soon as such titles are formally determined.

Transaction Summary

It is currently anticipated that the existing security holders of FogChain will receive common shares in the capital of the Resulting Issuer in exchange for their securities of FogChain on a 1 for 1 basis.  The final terms and structure of the Proposed Transaction will be set forth in a definitive agreement to be entered into among the parties that will supersede and replace the LOI (the “Definitive Agreement”).

An aggregate of 3,318,051 common shares of Mukuba are currently issued and outstanding. Mukuba will undertake a 1.66 for 1 consolidation of its common shares in conjunction with the Proposed Transaction (the “Share Consolidation”). As a result, there will be 2,678,570 Mukuba common shares issued and outstanding on a post-consolidated basis and subsequent to certain obligations of the Mukuba being satisfied through the issuance of common shares of Mukuba. It is expected that 54,000,000 post-consolidation common shares of Mukuba will be issued to the shareholders of FogChain as consideration for 100% of the issued and outstanding common shares of FogChain. FogChain also has a US$400,000 convertible note which will convert into 9,000,000 post-consolidated common shares of Mukuba upon closing of the Proposed Transaction. Upon completion of the Proposed Transaction there will be 65,678,670 common shares issued and outstanding in the Resulting Issuer, (excluding securities issued pursuant to the Concurrent Private Placement described below and excluding the finder’s fee described below), of which security holders of FogChain will own 63,000,000 common shares and security holders of Mukuba will own 2,678,570 common shares.

Certain shares of the Resulting Issuer will be subject to escrow provisions imposed by policies of the Exchange.

Completion of the Proposed Transaction is subject to a number of conditions, including, but not limited to, completion of the Share Consolidation, Exchange approval, and the approval of shareholders of Mukuba (if required).  In addition, completion of the Proposed Transaction is subject to certain standard closing conditions customary of a transaction of this nature, including the completion of due diligence investigations to the satisfaction of each of Mukuba and FogChain, execution of a Definitive Agreement, and there being no material adverse change in the business of Mukuba or FogChain prior to completion of the Proposed Transaction.

Private Placement

Prior to the completion of the Proposed Transaction, FogChain has agreed to complete a private placement of subscription receipts (each a “Subscription Receipt”)  for gross proceeds of up to US$10,000,000 (the “Concurrent Private Placement”).

Each Subscription Receipt issued pursuant to the Concurrent Private Placement will be exchanged for one common share of FogChain (“Underlying Share”) immediately prior to closing of the Proposed Transaction for no additional consideration. Upon closing of the Proposed Transaction, the Underlying Shares will be exchanged for shares of Resulting Issuer. All proceeds from the Concurrent Private Placement will be held in escrow pending satisfaction of all the escrow release conditions, including the completion of the Proposed Transaction (the “Escrow Release Conditions”).

FogChain has engaged Canaccord Genuity Inc. (the “Agent”) to act as the exclusive financial advisor and sole bookrunner in respect of this Concurrent Private Placement on a best efforts basis, pursuant to the terms of an engagement agreement dated January 11, 2018 (the “Engagement Agreement”). Pursuant to the terms of the Engagement Agreement, FogChain agreed to pay the Agent a cash commission of 7% of the gross proceeds of the Concurrent Private Placement. FogChain further agreed to issue the Agent that number of warrants which is equal to 7% of the securities sold pursuant to the Concurrent Private Placement to be exercisable for a period of 24 months from the date of satisfaction of the Escrow Release Conditions, to acquire one common share of the Resulting Issuer at the offering price.

The net proceeds of the Concurrent Private Placement will be used for business development and working capital purposes. Further details regarding the Concurrent Private Placement will be included in a subsequent news release once additional details become available.

The Company intends to hold a special meeting of its shareholders with respect to the Proposed Transaction if required under securities laws, corporate laws or the requirements of the Exchange or the TSXV.  

Trading of the common shares of the Company has been halted and will remain halted in accordance with Exchange policies until all required documentation with respect to the Proposed Transaction has been received and the Exchange and securities regulatory authorities are otherwise satisfied that the halt should be lifted.

A finder’s fee of 3,150,000 common shares of the Resulting Issuer will be issued at the completion of the Proposed Transaction.

A press release setting out further particulars relating to the Proposed Transaction will follow in accordance with the policies of the Exchange, which will include a summary of the Definitive Agreement and transaction consideration, summary financial information of FogChain, biographical information on the proposed directors and officers of the Resulting Issuer, and other relevant information regarding the Proposed Transaction and related financings.

Daniel Crandall, President & CEO of Mukuba, stated, “Mukuba is excited to have this opportunity to work with FogChain.  Mukuba believes that the FogChain software development platform will create shareholder value by allowing businesses to benefit from blockchain applications without large capital and time investment.”

ON BEHALF OF THE BOARD of DIRECTORS

MUKUBA RESOURCE LIMITED

“Daniel Crandall”

Daniel Crandall
President and Chief Executive Officer
Tel. +1 (416) 848-9407
info@mukubaresources.com

FOGCHAIN, INC.

“James Cerna”

James Cerna
CEO

Cautionary Statement

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 the management information circular or Listing 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 Mukuba should be considered highly speculative.

The TSX Venture Exchange Inc. and CSE has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Forward-Looking Statements

This news release contains forward-looking statements relating to the timing and completion of the Proposed Transaction, the future operations of the Company and other statements that are not historical facts. Forward-looking statements are often identified by terms such as "will", "may", "should", "anticipate", "expects" and similar expressions. All statements other than statements of historical fact, included in this release, including, without limitation, statements regarding the Proposed Transaction and the future plans and objectives of the Company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from expectations include the failure to satisfy the conditions to completion of the Proposed Transaction set forth above and other risks detailed from time to time in the filings made by the Company with securities regulators. 

The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company. As a result, the Company cannot guarantee that the Proposed Transaction will be completed on the terms and within the time disclosed herein or at all.  The reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release and the Company will update or revise publicly any of the included forward-looking statements as expressly required by Canadian securities law.