EMERGE Completes Acquisition of Tee 2 Green, Amends Credit Facility, Adds Up to 24-Month Term

 Acquisition expected to bring EMERGE to cash flow positive

• Tee 2 Green Ltd. ("T2G") generated revenue of $6.4M, Adjusted EBITDA⁽¹⁾ of $1M, and net income of $700K in 2024 (unaudited)
• Purchase price of $2.2M, including $1.1M cash, $900K deferred consideration over a 5-year payment plan, and $200K in EMERGE shares issued at $0.065/ share (180-day escrow)
• In 2024, combined revenue (EMERGE + T2G) exceeded $25M with positive Adjusted EBITDA ⁽¹⁾
• EMERGE's portfolio now includes 4 brands across 2 verticals:
  • Grocery: truLOCAL (Meat & Seafood Subscription)
  • Golf: UnderPar, JustGolfStuff, and Tee 2 Green
• Alongside the Transaction, EMERGE entered into an amended credit facility with its existing lender offering an up to 24-month term
• Webcast: EMERGE CEO and Golf COO to host virtual webcast on Thursday, April 10, 2025 at 11.00am ET (Register Below)

TORONTO, April 7, 2025 /CNW/ - EMERGE Commerce Ltd. (TSXV: ECOM) ("EMERGE" or the "Company"), a premium e-commerce brand portfolio, is pleased to announce that it has closed the acquisition of all the issued and outstanding shares of Tee 2 Green Ltd. ("T2G"), effective April 4 (the "Transaction").

Ghassan Halazon, founder and CEO of EMERGE commented, "The acquisition of Tee 2 Green marks the beginning of our next chapter at EMERGE which entails combining our organically growing business with this accretive, profitable, bolt-on acquisition, at favorable terms, and immediate synergies with our golf brand portfolio. On behalf of the EMERGE team, we would like to extend a warm welcome to the dedicated Tee 2 Green staff joining us on this journey."

T2G is a profitable, discount golf apparel and equipment business with a 38-year track record of operations, focused on the Canadian market. T2G achieved revenue of $6.4M, Adjusted EBITDA⁽¹⁾ of $1M and net income of $700K in 2024 (unaudited). T2G is based in Ontario, Canada and was founded in 1987 by Robert J. Fell, who will continue to support T2G under EMERGE in his capacity as a consultant. T2G has a diversified revenue stream comprising two retail stores, dozens of roadshows, an online store, and a private label golf apparel brand, NORTHERN SPIRIT.

Immediate Synergies

T2G will benefit from EMERGE's extensive golf business, which includes UnderPar and JustGolfStuff, an organically growing and profitable vertical for EMERGE in 2024. T2G and EMERGE's golf business already have a multi-year history of partnership and collaboration. EMERGE expects to utilize its 400,000+ golf subscriber database to help scale T2G's business cost-effectively.

"We have seen great success with JustGolfStuff, our golf apparel and products business that we have grown nearly 10x over the last 5 years since acquiring it alongside UnderPar in late 2019. We already work closely with T2G, and the teams are intimately familiar and collaborative, thus reducing operational risk. The addition of T2G, expands our strategic golf roadmap which will now include discounted golf experiences, apparel, and products, both online and offline," commented Maurice Finn, COO of EMERGE's Golf business.

Acquisition Funded with Cash on Hand

Given EMERGE's recently bolstered cash position from the sale of the SHOP domains to Shopify (TSX: SHOP) and the sale of the Carnivore Club assets announced in January 2025, as well as the flexible deal structure negotiated with T2G, the Company closed the transaction utilizing existing cash on hand.

Transaction Overview

Pursuant to the Agreement and in consideration for the Transaction, EMERGE paid T2G cash consideration of $1.1M on closing of the Transaction ("Closing"), and will pay $900K in deferred cash consideration over a 5-year period.

EMERGE has issued 3,076,923 common shares in the capital of EMERGE (the "Common Shares" and the Common Shares issued pursuant to the Transaction, the "Compensation Shares") at a deemed price of $0.065 per Compensation Shares, with the aggregate approximate value of $200,000. All shares issued in relation to the Transaction are subject to a four months hold period pursuant to securities laws and additional restrictions from trading for 180 days from date of issuance pursuant to contractual lock ups.

As part of the transaction, EMERGE has also acquired approximately $2.4M inventory, over an 8-year payment plan. At December 31, 2024, T2G had total assets of $5.3M (including $2.9M in inventory) and total liabilities of $1.1M. Prior to the Closing, T2G has deposited $200,000 in a redeemable guaranteed investment certificate for a one-year term sold by the Royal Bank of Canada (the "GIC"). The parties agreed that on maturity of the GIC, the aggregate amount of the GIC (being principal plus interest) will be paid to the vendors.

No finder's fees are expected to be paid in connection with the Transaction.

All conditions precedent to the completion of the Transaction have been satisfied, including receipt of TSXV approval,

The Transaction constituted an Expedited Acquisition in accordance with Policy 5.3 of the TSX Venture Exchange.

Go Forward Business

Following the Transaction, EMERGE retains 4 brands across 2 main verticals. truLOCAL is our flagship grocery brand, a Canadian meat and seafood subscription service, and the golf vertical, which now includes UnderPar, JustGolfStuff, and Tee 2 Green.

T2G is expected to substantially enhance the Company's revenue, profitability and cash flow profile, and in the process, strengthen its balance sheet, and potentially improve its cost of capital over time.

Amended Credit Facility

Alongside the Transaction, the Company has also entered to enter into a first amendment (the "Amended Facility") to the second amended and restated credit agreement dated January 31,2024 with its existing lender, which amends the Company's current credit agreement.

The Amended Facility provides an 18-month extension, and an additional 6-month extension option provided that lender consent is obtained. Inclusive of the 6-month extension, the Amended Facility would mature in April 2027. The Company remains in good standing with existing lender, which it has worked with since November 2019.

The interest rate on the principal amount owing under the Amended Facility remains variable rate, unchanged at the greater of 9% per annum and the TD Prime Rate + 6.55% per annum.

"We are pleased to see our lender continue to support our progress and plans over the next 18-24 months, including the accretive acquisition of T2G. We intend to use this extended facility term to continue to drive organic growth, which we have achieved for 3 consecutive quarters, along with improved profitability and cash flow. As this is a variable-rate credit facility, the recent and anticipated interest rate cuts are expected to result in substantial interest savings, and in turn, enhance cash flow, in addition to the significant improvements expected from T2G's positive contribution," continued Halazon.

Webcast Details

EMERGE management will be hosting a virtual webcast on Thursday, April 10, 2025 at 11.00am EST to discuss the Company's recent acquisition, operational progress and upcoming plans. Registration details below:

Register: 
https://us06web.zoom.us/webinar/register/WN_oTHpkLGuTVaB7hGY0PI-Ow

Webinar (Zoom) ID: 832 9097 9100

Passcode: 015854

About EMERGE

EMERGE is a premium, Canadian e-commerce brand portfolio. Our subscription, marketplace, and retail businesses provide our members with access to offerings across our grocery and golf verticals. truLOCAL is our flagship Canadian meat and seafood subscription service, connecting local farmers with a health-conscious audience. Our golf vertical includes our discounted tee-times/ experiences brand, UnderPar, and our discounted golf apparel and equipment brands, JustGolfStuff and Tee 2 Green.

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

Non-GAAP Measures

This press release makes reference to certain non-GAAP measures. These non-GAAP measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing a further understanding of results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the financial information of the Company reported under IFRS. Adjusted EBITDA should not be construed as an alternative to net income/loss determined in accordance with IFRS. Adjusted EBITDA does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers.

Adjusted EBITDA as defined by management means earnings before interest and financing costs, income taxes, depreciation and amortization, transaction costs, foreign exchange gains/losses, discontinued operations, unrealized gains/losses on contingent consideration and share-based compensation. Management believes that Adjusted EBITDA is a useful measure because it provides information about the operating and financial performance of EMERGE and its ability to generate ongoing operating cash flow to fund future working capital needs and fund future capital expenditures or acquisitions.

Notice regarding forward-looking statements

This press release may contain certain forward-looking information and statements ("forward-looking information") within the meaning of applicable Canadian securities legislation, that are not based on historical fact, including, without limitation, statements related to the closing of the Transaction and the timing thereof, the satisfaction of all conditions precedent to the closing of the Transaction, including, without limitation, TSXV approval in respect of the Transaction, any benefit that may be derived by the Company from the Transaction, including, without limitation, any material benefit to the working capital or financial position of the Company as a result of the Transaction, expectations regarding cash flow both as a result of the Transaction and in general, as well as other statements containing the words "believes", "anticipates", "plans", "intends", "will", "should", "expects", "continue", "estimate", "forecasts" and other similar expressions. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements. There is no guarantee the Transaction will be completed as contemplated or at all, and the forward-looking information contained herein is based on the assumptions of management of the Company as of the date hereof including, without limitation, assumptions with respect to the financial position, cash flow, and working capital of the Company, the ability of the Company to obtain TSXV approval for the Transaction and the satisfaction of any other conditions thereto, and the conditions of the financial markets and the e-commerce markets generally, among others. The Company undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of the Company, its securities, or financial or operating results (as applicable). Although the Company believes that the expectations reflected in forward-looking information in this press release are reasonable, such forward-looking information has been based on expectations, factors and assumptions concerning future events which may prove to be inaccurate and are subject to numerous risks and uncertainties, certain of which are beyond the Company's control, including risks related to the disposition of a operating business by the Company, risks that the benefits derived from the Transaction may not be as expected or that the Company may not see any benefit from the Transaction, risks that each party to the Agreement may not satisfy its obligations or covenants, risks that the Company may be subject to litigation as a result of the Transaction including allegations of misrepresentation or breach of conditions or covenants, risks that the TSXV may not approve the Transaction, as well as the risk factors discussed in the Company's MD&A, which is available through SEDAR+ at www.sedarplus.ca. The forward-looking information contained in this press release are expressly qualified by this cautionary statement and are made as of the date hereof. The Company disclaims any intention and has no obligation or responsibility, except as required by law, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

On Behalf of the Board
Ghassan Halazon
Director, President, and CEO
EMERGE Commerce Ltd.

SOURCE Emerge Commerce Ltd.

For further information: Dasha Enenko, EMERGE Commerce Ltd., 416-479-9590, [email protected]