County Capital 2 Ltd. Provides Further Details of Its Qualifying Transaction with Givex Corporation

Toronto, Ontario--(Newsfile Corp. - October 5, 2021) - County Capital 2 Ltd. (TSXV: CTWO.P) (the "Corporation"), further to its press release dated September 8, 2021, is pleased to provide further details of its proposed qualifying transaction (the "Proposed Transaction") with Givex Corporation ("Givex"). In conjunction with the Proposed Transaction, Givex anticipates completing a brokered private placement for minimum gross proceeds of $10,000,000 (the "Concurrent Financing") of subscription receipts with the details to be announced at a later date.

Givex, incorporated under the International Business Companies Act (Bahamas), is a fintech company with a 20-year track record of sustainable, profitable growth that has developed and commercialized a cloud-based, omnichannel technology platform, seamlessly integrating gift and loyalty programs, point of sale systems and flexible payment services to enterprise level retail and hospitality merchants across the globe. With clients including some of the world's largest brands, Givex's platform is currently deployed in over 90,000 client locations across 70 countries.

THE PROPOSED TRANSACTION

On September 7, 2021, the Corporation entered into a binding engagement agreement with Givex and its founder, Don Gray, pursuant to which the Corporation shall acquire all of the issued and outstanding Givex common shares (the "Givex Shares") by way of merger, carried out pursuant to a business combination agreement. It is intended that the Proposed Transaction will constitute a reverse take-over of the Corporation by Givex inasmuch as the former shareholders of Givex will own, assuming completion of the Concurrent Financing up to 87.74% of the then outstanding non-diluted common shares in the capital of the Corporation (the "County Shares") and up to 97.47% together with the subscribers in the assumed completion of the Concurrent Financing. The Corporation following the completion of the Proposed Transaction is herein referred to as the "Resulting Issuer".

The Proposed Transaction will constitute the "Qualifying Transaction" of the Corporation as such term is defined in Policy 2.4 - Capital Pool Companies (the "CPC Policy") of the Exchange and it is anticipated that the County Shares will trade under the stock symbol "GIVX", subject to Exchange approval.

To the knowledge of the directors and executive officers of the Corporation, the only persons who currently beneficially own, directly or indirectly, or exercise control or direction over more than 10% of the Givex Shares is Mr. Don Gray, an individual resident of the Bahamas, who currently has voting control over approximately 68% of the outstanding Givex Shares, and JPE Trust, a venture fund that currently owns approximately 20.7% of the outstanding Givex Shares.

On or immediately prior to the closing of the Proposed Transaction, the Corporation will consolidate its outstanding share capital (the "Consolidation") on the basis of 1 new County Share for each 9.1871 existing County Shares. There are currently 23,886,500 County Shares outstanding which will result in 2,600,004 post-Consolidation County Shares issued and outstanding. The Consolidation will also affect the holders of the Corporation's outstanding warrants and options, as described below, on the same basis.

Prior to the closing of the Proposed Transaction, Givex will split its outstanding share capital (the "Split") on the basis of 20 Givex Shares for each of 1 existing Givex Share and there will be 90,214,300 Givex Shares and 9,786,700 restricted share units ("Givex RSUs") outstanding at such time.

In connection with the Proposed Transaction, the Corporation will incorporate a wholly-owned subsidiary under the International Business Company Act (Bahamas) which will then merge with Givex to form a merged Bahamian corporation and in connection with the merger, holders of Givex Shares (including prior holders of subscription receipts purchased in the Concurrent Financing) will each ultimately receive one Resulting Issuer Share in exchange for each Givex Share held and the Givex RSUs will be exchanged for restricted share units of the Resulting Issuer on the same terms ("Resulting Issuer RSUs").

Following the completion of the Proposed Transaction, the Consolidation, the Split and the Concurrent Financing (collectively, the "Transactions"), there will be approximately 102,813,300 common shares of the Resulting Issuer ("Resulting Issuer Shares") outstanding.

The Proposed Transaction will not constitute a "Non-Arm's Length Qualifying Transaction" (as such term is defined by the Exchange). In addition, the Proposed Transaction is not a "related party transaction" as such term is defined by Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions and is not subject to Policy 5.9 of the Exchange. As a result, no meeting of the shareholders of the Corporation is required pursuant to Policy 2.4 of the Exchange or applicable securities laws. An associate of Tyler Lang, President and Director of the Corporation currently beneficially owns 750,000 Givex Shares (or 0.075% of the outstanding Givex Shares and Givex RSUs). Mr. Lang currently owns 500,000 County Shares (on a pre-Consolidation basis), representing approximately 2.1% of the outstanding County Shares as of the date hereof.

The following table summarizes the proposed pro forma capitalization of the Resulting Issuer following completion of the Proposed Transaction, the Consolidation, the Split and the Concurrent Financing:

Resulting Issuer SharesSecurities Outstanding After Giving Effect to the Proposed Transaction (% of fully diluted)
Issued to Givex Shareholders pursuant to the Proposed Transaction90,213,30075.77%
Existing County Capital Shareholders2,600,0042.18%
Issued to investors on the Concurrent Financing(1)10,000,0008.40%
Resulting Issuer RSUs9,786,7008.22%
Total Resulting Issuer Shares (basic, including RSUs)112,600,00494.57%
Reserved for issuance upon the exercise of warrants to be issued on the Concurrent Financing (the "Warrants")5,000,0004.20%
Reserved for issuance upon the exercise of Broker Warrants (as defined below) and Finders Units (as defined below)(2)1,117,5000.94%
Reserved for issuance upon exercise of outstanding County Capital stock options and warrants (post-Consolidation)351,3090.30%
Total Resulting Issuer Shares (diluted)119,068,813100.00%

 

Notes:
(1) Assumes gross proceeds of $10,000,000 raised under the Concurrent Financing.
(2) It is anticipated that the agents in the Concurrent Financing will be issued broker warrants (each, a "Broker Warrant"), each exercisable to purchase one unit of Givex consisting of one Givex Share and one-half of one Warrant, to be exercisable for equivalent units of the Resulting Issuer following completion of the Proposed Transaction. These figures include (i) the Resulting Issuer Shares partially comprising the units issuable upon the exercise of the Broker Warrants and Finders Units; and (ii) the Resulting Issuer Shares issuable upon exercise of the warrants underlying the Broker Warrants and Finders Units.

FINDER'S FEE

In connection with the Proposed Transaction, conditional upon completion of the Proposed Transaction, Givex has agreed to pay a finder's fee to an arm's length party, WD Capital Markets Inc., of $45,000 payable in units of the Resulting Issuer consisting of one Resulting Issuer Share and one-half of one Resulting Issuer Share purchase warrant (the "Finders Units").

SELECTED FINANCIAL STATEMENT INFORMATION

The following tables present selected financial statement information on the financial condition and results of operations for the Corporation and Givex. Such information is derived from the unaudited financial statements of Givex for the period ended December 31, 2020 and the audited financial statements of the Corporation for the period ended November 30, 2020. The information provided herein should be read in conjunction with the financial statements of Givex for the period ended December 31, 2020, which will subsequently be audited and which have been prepared in accordance with IFRS, and which will be filed on SEDAR when the Corporation files its Filing Statement with respect to the Proposed Transaction. The Corporation's financial statements have been filed on SEDAR.

Givex
December 31, 2020
(unaudited)
County Capital 2
November 30, 2020
(audited)
Revenue$                                 51,525,626       $                                             -     
Expenses16,402,85254,146
Gross profit35,122,774(54,146)
Net income (loss)2,573,799(54,146)
Adjusted EBITDA9,003,232-     
   
Current assets28,204,9441,285,637
Other assets19,121,378-     
Total assets47,326,3221,285,637
Current liabilities14,495,81253,633
Other liabilities7,645,769-     
Total liabilities 22,141,58153,633
Shareholders' Equity25,184,7411,232,004
Total Liabilities and Shareholders' Equity$                                 47,326,322$                                  1,285,637

 

PROPOSED MANAGEMENT AND DIRECTORS OF THE RESULTING ISSUER

It is the intention of the Corporation and Givex to establish and maintain a board of directors of the Resulting Issuer with a combination of appropriate skill sets that is compliant with all regulatory and corporate governance requirements, including any applicable independence requirements. Upon completion of the Proposed Transaction, the board of the Resulting Issuer is expected to be comprised of four (5) individuals, which will include one (1) nominee of the Corporation and four (4) nominees of Givex. The following are brief descriptions of the proposed management and directors of the Resulting Issuer:

Don Gray: CEO and Chairman. Mr. Gray has been part of the Information Technology industry for over four decades. He has many years of experience in start-ups, turnarounds, acquisitions, and dispositions. He has been totally focused on Givex since starting the company in 1999. Mr. Gray's start-up experience includes point-of-sale (POS), Internet and Cloud Computing companies and has operating experience in special effects, gaming and hospitality. With subsidiaries in 10 countries and more than 250 employees, Mr. Gray has developed needed global operations expertise.

Jim Woodside: CFO, Corporate Secretary and Director. Mr. Woodside has over 25 years of senior financial experience including time with companies in the technology space. Mr. Woodside completed his CPA with KPMG and is also a CBV / Chartered Business Valuator. He has a BA from the University of Western Ontario and a BComm from the University of Windsor.

Michael Carr: Independent Director. Mr. Carr has over 25 years operating experience in the Internet, Cloud Computing and TravelTech industries. Currently, he is the CEO and Board Member of Amgine, a Toronto-based Digital Process Automation company servicing Business Travel Agencies. He is also a co-founder and board member of Matter365, a SaaS platform for legal firms. Previously, he was COO of Ingram Micro's Cloud Business Unit after selling his Cloud Computing business to Ingram in 2013. He is a Canadian citizen and resident and holds a BA from York University.

Miles Evans: Independent Director. Mr. Evans has over 20 years experience working as a director, professional trustee and advising family offices. He is a Fellow of the Family Firm Institute where he holds an Advanced Certificate in Family Wealth Advising and is a member of the National Association of Corporate Directors. He serves on the Boards of the Association of International Banks and Trust Companies and the Lyford Cay International School. A British and Bahamian national, who has lived in England, The Bahamas and France, he speaks English and French and is a founder and CEO of an international trust company and multifamily office. Mr. Evans holds a BSc (Hons) from the University of St. Andrews in Scotland and a BA in Financial Studies from UMIST.

Robert Munro: Independent Director. Mr. Munro has over 20 years of experience with the Capital Pool Company ("CPC") program and has been directly involved in more than a dozen CPC transactions. Most recently, he was CEO, CFO, Director and Promoter of County Capital One Ltd., a CPC which completed its Qualifying Transaction in May, 2019 with Adcore Inc., a leading e-commerce advertising management and automation platform based in Tel-Aviv, Israel. Mr. Munro holds a BA degree from Huron College, the founding college of the University of Western Ontario.

Brittain Brown: President. Mr. Brown joined Givex in 2003. As President, Mr. Brown is tasked with being a collaborator and team builder, responsible for building relationships with partners and industry leaders. He has overseen the successful integrations of new additions to the Givex family of companies internationally. His leadership and passion for people have been instrumental in the company's continued growth. Mr. Brown graduated from Queen's University with a BA (Hons) in Economics.

Graham Campbell: Chief Operating Officer. Mr. Campbell is a technology executive with over 15 years of experience in the payment, e-commerce and point of sale sectors. Since joining Givex in 2006, he has held positions including: VP of Projects & Implementations, VP and General Manager of GivexPOS, as well as SVP of Product Development. Mr. Campbell is passionate about delivering valuable new forward thinking, end-user focused products to market that scale. Campbell has a well-rounded background including specialties within operations, product management, project management, user experience and user interface design. Mr. Campbell attended Queen's University, where he received his BA in Political Sciences, then went on to receive his BAH. in Philosophy. He also holds an honours diploma in Producing & Engineering from Harris Institute for the Arts.

Mo Chaar: Chief Commercial Officer. Mr. Chaar oversees commercial strategy and development worldwide as well as managing sales teams within North America. Since joining Givex in 2007, his experience in gift card, loyalty, and POS has played a pivotal role in the success of some of Givex's largest partners.

SIGNIFICANT CONDITIONS TO CLOSING

The completion of the Proposed Transaction is subject to a number of conditions, including but not limited to completion of the Concurrent Financing, satisfactory due diligence reviews, approval by both boards of directors, approval of Givex's shareholders, obtaining necessary governmental and third-party approvals and Exchange acceptance. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the non-offering prospectus prepared in connection with the Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

SPONSORSHIP

The Corporation intends to apply for a waiver from the sponsorship requirement. There is no guarantee that such waiver can be obtained.

ARM'S LENGTH QUALIFYING TRANSACTION

The control persons of Givex are not (and their associates and affiliates are not) control persons in the Corporation. Accordingly, the acquisition by the Corporation of all the issued and outstanding shares of Givex is not a Non-Arm's Length Qualifying Transaction for the purposes of Exchange policies. As a result, the Proposed Transaction will not be subject to approval of the shareholders of the Corporation and therefore no meeting of the shareholders of the Corporation is required as a condition to the completion of the Proposed Transaction.

INSIDERS OF THE RESULTING ISSUER

Other than has been previously referred to in this press release, and to the knowledge of the directors and senior officers of the Corporation or Givex, no person will become an insider of the Resulting Issuer as a result or upon completion of the Proposed Transaction.

USE OF NON-IFRS MEASURES

Adjusted EBITDA

Management uses adjusted earnings before interest, income taxes, depreciation and amortization ("Adjusted EBITDA") as a key financial metric to evaluate Givex's operating performance and for planning and forecasting future business operations. Adjusted EBITDA excludes significant items which are non-operating in nature (including finance costs, acquisition, integration and severance costs, share-based compensation expense, gain / loss on foreign exchange, settlement costs related to legal proceedings and other various costs) in order to evaluate Givex's core operating performance against prior periods. Adjusted EBITDA is not a measure of financial performance under GAAP and should be considered in addition to, and not as a substitute for net earnings, overall change in cash or liquidity of the business as a whole. Management believes the use of Adjusted EBITDA allows investors and analysts to understand the results of the continuing operations of Givex and its subsidiaries, by excluding certain items that have a disproportionate impact on Givex's results for a particular period. Management's method of determining non-GAAP financial measures are evaluated periodically and may differ from other companies' methods and therefore may not be comparable to those used by other companies.

The following table presents Givex's Adjusted EBITDA for the year ended December 31, 2020:

December 31, 2020
(unaudited)
Net Income$                                                     2,573,799     
Adjustments:
Income Tax Expense129,269     
Net Interest Expense607,353     
Depreciation and amortization5,650,411     
Foreign Exchange Loss42,400     
Total Adjustments6,429,433     
  
Adjusted EBITDA$                                                      9,003,232     

 

ABOUT COUNTY CAPITAL

County Capital brings together an elite group of industry leaders with a mandate to create and complete a series of professionally managed Capital Pool Companies. For more information about County Capital and the CPC Program, please visit www.countycapital.ca.

FORWARD-LOOKING STATEMENTS

This press release contains certain forward-looking statements, including statements about the Corporation's future plans and intentions and completion of the Proposed Transaction. Wherever possible, words such as "may", "will", "should", "could", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict" or "potential" or the negative or other variations of these words, or similar words or phrases, have been used to identify these forward-looking statements. These statements reflect management's current beliefs and are based on information currently available to management as at the date hereof.

Forward-looking statements involve significant risk, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. These factors should be considered carefully and readers should not place undue reliance on the forward-looking statements. Although the forward-looking statements contained in this press release are based upon what management believes to be reasonable assumptions, the Corporation cannot assure readers that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this press release, and the Corporation assumes no obligation to update or revise them to reflect new events or circumstances, except as required by law.

For further information please contact:

County Capital 2 Ltd. 
Robert Munro, CEO & CFO
Telephone: 416.272.1140
Email: rob@countycapital.ca
Website: www.countycapital.ca

Givex Corporation
Don Gray, CEO
Telephone: 416.350.9660 ext. 2227
Email: don@givex.com
Website: www.givex.com

Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this release.

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 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 a capital pool company 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 press release.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/98629

info