Mr. Richard Lee reports

SPACKMAN EQUITIES GROUP INC. PROVIDES UPDATE ON REVERSE TAKE-OVER WITH CRYSTAL PLANET LIMITED

Spackman Equities Group Inc. has provided an update on the reverse takeover with Crystal Planet Ltd. (CPL) described in the press release of the company dated Feb. 6, 2023.

Share exchange agreement

The company and CPL have agreed to amend the share exchange agreement, pursuant to which Spackman will acquire all of the issued and outstanding shares in the capital of CPL from the shareholders of CPL. The amended agreement will be available on the company's SEDAR profile, and the disclosure in this press release reflects the current agreement. In addition to the details noted below, the company wishes to note that the outside date for completion of the RTO has been extended from June 30, 2023, to Oct. 31, 2023.

About Crystal Planet Ltd.

CPL is a private company incorporated under the laws of Hong Kong with two wholly owned subsidiaries, SBD Entertainment Inc. and MSTeam Entertainment Co. Ltd., that operate full-service talent agencies, representing some of the top artists in the Korean entertainment industry. CPL leverages its portfolio of artists as a platform to develop, produce, finance and own the highest quality of entertainment content projects, including theatrical motion pictures and TV dramas. This platform also creates and derives opportunities to provide entertainment media consulting services, as well as to make strategic investments in development-stage businesses that can collaborate with represented artists. The target's revenue is derived mainly from talent management services, including the artists' participation in advertisements, television programs and other entertainment content projects, including artists' appearances at fan-meeting events, and is based on contractual arrangements between the target and the artists it manages.

The attached table sets out certain selected audited financial information of CPL for the year ended Dec. 31, 2022. All figures are presented in U.S. dollars.

 
       SELECTED AUDITED FINANCIAL INFORMATION OF CPL        

Revenue                                          $16,159,528
Total expenses                                  ($13,864,366)
Net income (loss) before income taxes             $2,295,162
Comprehensive income (loss)                       $1,692,801
Earnings (loss) per share -- basic and diluted        $0.209
Weighted-average number of shares outstanding     11,000,000
Total assets                                     $11,179,510
Total liabilities                                 $7,671,103
Working capital*1                                  ($936,538)
Adjusted working capital*2                        $1,430,699
Shareholders equity                               $3,508,407

*1 Current assets minus current liabilities.
*2 Current assets minus current liabilities plus time 
deposits*3.
*3 Time deposits refer to funds placed in a financial 
institution for a specified period, with the intention 
of earning interest income. These deposits can be 
withdrawn at any point, if necessary.

About Spackman Equities Group Inc.

Spackman is a Canadian-based investment holding company that invests into and develops small/medium-sized growth companies that possess industry-specific know-how or proprietary technologies, primarily in Asia. Spackman also makes investments in selected publicly traded companies that Spackman believes are attractive investment propositions. The objectives of Spackman are to: (i) invest in or acquire businesses with compelling growth potential at attractive valuations; (ii) build a diversified and balanced portfolio of investments; and (iii) deliver the collective value derived from the performance of its portfolio of investments to its shareholders. Spackman is currently a reporting issuer in each of the provinces of Canada, and its common shares trade on the TSX Venture Exchange under the symbol SQG.

The reverse takeover

The RTO will be completed pursuant to the terms of the agreement, which will result in CPL becoming a wholly owned subsidiary of Spackman. Upon completion of the RTO, Spackman will own all of the issued and outstanding shares of CPL, and the vendors will receive such number of common shares to be determined based on a certain formula.

The RTO involves share-based consideration only. Prior to completion of the RTO, Spackman will complete a share consolidation on the basis of one postconsolidation common share for every five preconsolidation common shares.

The resulting issuer

After completion of the RTO, the resulting issuer will carry on the business currently carried on by CPL, as described above. On completion of the RTO, it is anticipated, subject to TSX Venture Exchange approval, that the resulting issuer's board of directors and management team will be reconstituted to include the individuals listed below.

Richard Lee, chairman and chief executive officer

Mr. Lee is the current chairman and interim chief executive officer of the company. Over the past three decades, Mr. Lee has worked in private equity, equity research, equity sales, and mergers and acquisitions for institutions, including BNP Paribas, HSBC Private Equity, CIMB Securities and CLSA Securities. Mr. Lee graduated with a degree of bachelor of arts from Harvard College.

Alex Falconer, chief financial officer

Alex Falconer, CPA, CA, obtained his bachelor of commerce (honours) from Laurentian University in 1982. After graduation, he obtained his chartered accountant designation in 1990 and worked for Ernst & Young, prior to starting his own business providing consulting services for public and private corporations.

Kyoungwon Na, director

Mr. Na is currently the chief executive officer of Spackman Entertainment Group Ltd. (SEGL). Prior to joining SEGL, Mr. Na worked at KPMG, specializing in audit, tax and advisory services for nine years. He is a member of the Institute of Singapore Chartered Accountants and a member of the Korean Institution of Certified Public Accountants. Mr. Na graduated with a master of science in business administration (majoring in accounting) and a bachelor of science in engineering from Seoul National University.

William Hale, director

Mr. Hale is a current member of the board of directors of the company. Mr. Hale also currently serves as the renewables project manager for Hatch Ltd., an engineering, project delivery and construction management company. Mr. Hale has over 25 years of management and project development experience in the manufacturing and renewable energy sectors, and holds a BSc in mechanical engineering from the University of Waterloo and an MBA from the University of Oxford.

Yim Kun Hyok, director

Mr. Hyok is currently a senior professional in the production operation group of Samsung Electronics Co. Ltd. He has been working with Samsung Electronics since January, 2001. He graduated with a bachelor of industrial chemistry from Hanyang University located in Republic of Korea.

Concurrent financing

As a condition to completing the RTO, the agreement contemplates: (i) a brokered private placement financing by Hampton Securities Ltd. of subscription receipts of Spackman at a postconsolidation price of 20 Canadian cents (15 U.S. cents) per subscription receipt; and (ii) a non-brokered private placement of ordinary shares of the target at a price of $2.72 (U.S.) per ordinary share for aggregate gross proceeds from the sale of the subscription receipts and the ordinary shares of the target of a minimum of $3.4-million (U.S.) and a maximum of $20-million (U.S.).

In addition, the company will grant the agent an option, exercisable in whole or in part, to arrange for the sale of such number of additional subscription receipts as is equal to 15.0 per cent of the number of subscription receipts sold under the Spackman concurrent financing at the same price (20 cents) for a period of up to two days prior to the closing of the Spackman concurrent financing.

Each subscription receipt shall entitle the holder thereof to receive, upon automatic exchange, without payment of additional consideration or further action on the part of the holder thereof, and subject to adjustment, one unit upon the satisfaction or waiver (to the extent such waiver is permitted) of certain conditions, including: (i) completion of the RTO being satisfied to the satisfaction of, or waived by, the agent; and (ii) the receipt of all required shareholder, regulatory and third party approvals, including, without limitation, the conditional approval of the TSX Venture Exchange for the RTO and the concurrent financing, at or before the date that is 120 days after the closing date of the Spackman concurrent financing. Each unit will be composed of one postconsolidation common share and one-half of one warrant. Each whole warrant will entitle the holder to acquire one postconsolidation common share at a price of 30 cents per share for a period of three years following the escrow release date, subject to adjustment in certain events. The expiry date of the warrants may be accelerated by the company at any time following the four-month anniversary of the escrow release date and prior to the expiry date of the warrants in the event the volume-weighted average price of the postconsolidation common shares on the TSX-V is greater than 50 cents for any 30 consecutive trading days.

The proceeds of the Spackman concurrent financing will be held in escrow, pending the satisfaction or waiver (where permitted) of the escrow release conditions. In the event that the escrow release conditions are not fulfilled or waived at or before the escrow release deadline, each subscription receipt will be cancelled, and the subscription funds will be returned to the subscribers. The company will be responsible and liable to the holders of subscription receipts for any shortfall between the aggregate subscription price and the escrowed funds.

Pursuant to the Spackman concurrent financing, the company paid the agent a due diligence fee of $35,000. In addition, the company will pay to the agent a cash commission equal to 6 per cent of the gross proceeds of the Spackman concurrent financing, 50 per cent of which shall be payable to the agent on the closing date of the Spackman concurrent financing and 50 per cent shall be deposited in escrow and form part of the escrowed funds.

As additional compensation, the company will grant to the agent, on the date the escrow release conditions are satisfied, warrants exercisable to acquire such number of common shares as is equal to 6 per cent of the number of common shares issuable under the subscription receipts, exercisable at a price of 30 cents per warrant for a period of 36 months from the date the escrow release conditions are satisfied.

In the event that the Spackman concurrent financing is $500,000 or more, the agent will also be paid a $35,000 success fee, payable in cash on the date the escrow release conditions are satisfied.

In regard to the CPL concurrent financing, the target will maintain in its primary bank account a minimum of 50 per cent of the proceeds from the CPL concurrent financing pending the satisfaction or waiver (where permitted) of the escrow release conditions.

On a case-by-case basis, the target plans to pay success-based agency fees of up to 6 per cent of the gross proceeds of the CPL concurrent financing to certain arm's-length third parties which have advised the target on identifying investors.

The resulting issuer will use the proceeds of the concurrent financing for general working capital, entertainment content development and production, investments and acquisitions, and debt repayments.

Sponsorship

Sponsorship of an RTO is required by the TSX-V unless an exemption or waiver from the sponsorship requirements in accordance with TSX-V policies is granted. The company intends to apply for an exemption from the sponsorship requirements of the TSX-V. There is no assurance that the company will be able to obtain such an exemption.

RTO process and next steps

The full particulars of the RTO, the transferred assets and the resulting issuer will be described in the information circular to be prepared in accordance with the policies of the TSX-V for the purpose of the meeting of the shareholders of Spackman at which approval for the RTO will be sought. A copy of the circular will be available electronically on SEDAR under Spackman's issuer profile in due course.

The agreement contains customary representations and warranties for a transaction of this kind, and was approved by the board of directors of each of Spackman and CPL. Completion of the RTO is subject to a number of conditions in addition to those described elsewhere in this press release, including, but not limited to, TSX-V acceptance and, if applicable, disinterested shareholder approval. Where applicable, the RTO cannot close until the required shareholder approval is obtained, in addition to required regulatory and other approvals. There can be no assurance that the RTO will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the RTO, any information released or received with respect to the RTO may not be accurate or complete and should not be relied upon. Trading in the securities of Spackman should be considered highly speculative.

Trading in the common shares of Spackman is currently halted, and it is not anticipated that trading in the common shares of Spackman will resume prior to the completion of the RTO.

We seek Safe Harbor.