Ann: Details of the Proposed Acquisition of Isity Global, page-2

IHNI
he Directors of Kollakorn Corporation Limited (ASX: KKL) wish to announce the details of the proposed acquisition of all the issued capital of Isity Global Pte Limited (“Isity”) (“Acquisition”). It is proposed by the directors of KKL that they will hold an Extraordinary General Meeting (“EGM”) in February 2017 to consider the detailed terms of the Acquisition however in order to lift the suspension of trading of the Shares in KKL (“Shares”) the Directors give this preliminary announcement to Shareholders pursuant to ASX Listing Rules, Guidance Note 12. 1. Isity Global Pte Limited Isity Global Pte Ltd (Isity) is a company incorporated under the laws of the Republic of Singapore with offices situated at 96 Robinson Road,16-01 SIF Building, Singapore 068899. 2. The Proposal KKL is proposing to acquire all the issued share capital of Isity by way of issue of Shares in the capital of KKL as follows: 2.1 Preliminary to the Transaction: 2.1.1 Subject to the approval of the Transaction at the EGM, the Directors will issue 187,500,000 Shares (pre-consolidation) at $0.008 (0.8 cents) per Share to raise $1.5 million for working capital for KKL and to provide capital for Isity to meet its proposed objectives (“Capital Raising”). This Capital Raising will be a pre-condition to the completion of the Transaction. 2.1.2 Subject to the approval of the Transaction at the EGM and the completion of the Capital Raising, the Directors will convert the Convertible Notes to Shares at $0.008 (0.8 cents) per Share (preconsolidation) on the terms previously agreed for the conversion of the Convertible Notes in the Convertible Note Agreement (“Conversion of Convertible Notes”). Page 2 2.1.3 Subject to the approval of the Transaction at the EGM, the completion of the Capital Raising and the Conversion of Convertible Notes the, Directors’ shall payout the Related Party loans by way of issue of Shares at $0.008 (0.8 cents) per Share (pre-consolidation) (“Payment of Related Party Loans”); 2.1.4 Subject to the approval of the Transaction at the EGM, the completion of the Capital Raising, the Conversion of Convertible Notes and the payment of the Related Party Loans, the Directors will consolidate all the Shares on the basis of 1 consolidated Share for every 10 preconsolidation Shares (“10:1 Share Consolidation”); (Together referred to as the “Preliminary Transactions”) 2.2 The Transaction Subject to the approval of the Transaction at the EGM and the completion of the Preliminary Transactions, the Directors of KKL will: 2.2.1 Issue to the Shareholders of Isity 31,250,000 Shares (post consolidation) at $0.08 (8 cents) per Share valued at $2.5 million in consideration for the acquisition of all the issued capital of Isity; and 2.2.2 Issue 75,000,000 Options (Performance Options) to the Shareholders of Isity on the terms and conditions set out in Section 4 of this announcement (final details to be confirmed). 2.3 Total Shares on Issue in KKL after the Completion of the Transaction Shares Pre Acquisition Post Acquisition Post Performance Options Issued Capital Pre-Acquisition 1,064,009,231 62.91% 53.10% 38.64% Shares issued as a result of converting Convertible Notes, Repaying Related Party Loans and the exercise of Performance Options held by the Convertible Note Holders 427,390,703 25.27% 21.33% 15.52% Capital Raisings 200,000,000 11.82% 9.36% 6.81% 1,691,399,934 10:1 Consolidation 169,139,993 Issue of Shares to Purchase Isity 31,250,000 15.59% Conversion of Performance Options 75,000,000 38.58% 275,389,993 100% 99% 100% Figure 1: Table showing the issued capital of KKL before and after the Transaction and the Preliminary Transactions and explaining how the capital restructure that will be conducted Page 3 3. Additional Information 3.1 Charles Hunting, a Director of KKL is a director and shareholder of Isity and will receive Shares as part of this Transaction. 3.2 The minimum issue of Shares for the Transaction will be 31,250,000 Shares (post consolidation) at $0.08 (8 cents) per Share on execution of the Transaction. 3.3 The maximum issue of Shares will be 106,250,000 Shares (post consolidation) at $0.08 (8 cents) per Share assuming that all the Performance Options are exercised. 3.4 No individual party will acquire control of, or voting power of 20% or more in KKL as a result of the Transaction. 3.5 The Transaction is conditional upon KKL raising $1.5 million additional equity prior to the Transaction. The Directors of KKL believe that there is a reasonable likelihood that this will be achieved however this capital raising requires the approval of the Shareholders under ASX Listing Rule 7.1 and therefore the Transaction may not proceed if that approval is not forthcoming 3.6 The Directors’ of KKL do not propose any changes to senior management other than the addition of the relevant Isity managers to the KKL management team (refer section 5.1). The Directors’ of KKL have agreed with the Isity directors that the appointment of an additional director would strengthen the board and will therefore consider recommendations from the directors of Isity. 3.7 The Directors’ of KKL will commission an Independent Expert’s Report on the Transaction in order to solicit an opinion on whether the transaction is “Fair and Reasonable to the Existing Shareholders of KKL”. This report will be available to all Shareholders as part of the Notice of Meeting for the EGM. 3.8 It is expected that the Notice of Meeting will be sent to Shareholders in late January 2017 with a date for an EGM to be in February 2017 (this may be subject to change). 3.9 Assuming that the KKL Shareholders provide all the required approvals at the EGM, it is anticipated that the capital raising referred to in section 2.1.1 and the completion of the Preliminary Transactions and the Transaction will take place within 3 months from the date of the EGM, in accordance with the requirements of the ASX Listing Rule 7.3.2. The exception to the above will be the issue of Shares to Related Parties referred to in Section 2.1.3 which will take place within 1 month after the date of the EGM, in accordance with ASX Listing Rule 10.13.3. 3.10 The allotment of securities pursuant to the Preliminary Transactions and the Transaction requires the approval of the KKL Shareholders under ASX Listing Rule 7.1 and therefore neither the Preliminary Transactions nor the Transaction may proceed if that approval is not forthcoming at the EGM.