TIMIA Capital to Acquire Brightpath Capital

~TIMIA to acquire one of Canada's leading private providers of residential mortgages focused on Ontario and British Columbia; Combined company pro forma assets surpass $200 million~

VANCOUVER, BC, May 5, 2022 /CNW/ - TIMIA Capital Corporation ("TIMIA" or the "Company") (TSXV: TCA) (OTCQB: TIMCF)  a leading innovator in specialty  private credit, is pleased to announce that it has entered into a non-binding letter of intent (the "LOI"), dated April 29^th, 2022 and effective May 4^th, 2022,  pursuant to which it has agreed to acquire Brightpath Capital Corporation and Brightpath Residential Mortgage LP I (collectively, "Brightpath"), one of Canada's leading private providers of residential mortgages focused on Ontario and British Columbia, for a purchase price of approximately $30.5 million comprised of a combination of 31,250,000 common shares ("Common Shares") with a deemed value of $0.40 per share and 18,000,000 series A preferred shares ("Preferred Shares") with a deemed value of $1.00 per share (the "Transaction").

Brightpath is a leading private provider of residential mortgages in Canada specializing in arranging mortgages for those who are seeking alternatives to traditional banking institutions. Over the past 10 years Brightpath has grown significantly by offering private credit to individuals who are self-employed, experiencing credit issues, or looking at real estate renovation or development projects. Brightpath expects to accelerate its growth through the combination with TIMIA.  The Brightpath management team will continue to operate the mortgage lending company.

Highlights of the combined company and related financial metrics include:

• The acquisition is expected to be immediately accretive for TIMIA shareholders
• Combined insider ownership of approximately 54.5%
• Pro forma combined assets of approximately $210 million
• Key 2021 pro forma amounts for the combined entity:
• Revenue of approximately $24.0 million, an increase over TIMIA's consolidated revenue of $9.7 million for Fiscal 2021
• Operating expenses of approximately $13.3 million, an increase over TIMIA's consolidated operating expenses of $6.7 million for Fiscal 2021.
• Net income after taxes of $5.1 million, an increase over TIMIA's consolidated net income $2.4 million.
• Brightpath generated $2.4 million in normalized net income for fiscal 2021

"Brightpath Capital significantly increases our size and profitability and opens our private credit business model to the lucrative real-estate mortgage markets in Canada," said Mike Walkinshaw, CEO of TIMIA. "TIMIA began as a specialist in SaaS revenue based lending but has quickly grown to offering a broad spectrum of specialized private credit opportunities to Canadian investors.  Our technology driven loan origination and underwriting platform allows us to offer scalability and transparency to other vertical segments of the private credit industry, opening up a traditionally restricted asset class to a broader range of investors.  "   

"TIMIA is a great fit for Brightpath as we prepare for our next growth phase of successfully providing mortgages to those in need," said Blake Albright, President of Brightpath Capital Corporation. "TIMIA's proven technology-based loan origination and management platform and access to capital will benefit both companies."

Details of the Transaction

Pursuant to the Transaction, TIMIA will directly or indirectly:

• Acquire all of the outstanding common shares of Brightpath Capital Corporation, and
• Acquire all of the outstanding limited partnership units of Brightpath Residential Mortgage LP I.

Subject to adjustment, aggregate consideration payable by TIMIA under the Transaction is comprised of:

• 31,250,000 Common Shares (at a deemed price of $0.40 per Common Share)
• 18,000,000 Series A Preferred Shares (at a deemed price of $1.00 per Preferred Share).

Additional highlights of the combined company include:

• 90.85 million common shares total outstanding post-transaction
• 28.5 million series A Preferred shares total outstanding post-transaction
• 108.85 million common shares fully diluted post transaction
• Continuity of management for Brightpath and the appointment of Mr. Blake Albright as Chief Capital Officer of TIMIA on closing.

Completion of the Transaction is subject to the following conditions:

• Execution of definitive agreements for the Transaction
• Receipt of approval of the TSX Venture Exchange (the "TSXV") for the Transaction
• Receipt of approval of the disinterested shareholders of TIMIA Capital Corp. at its upcoming annual and special shareholders meeting scheduled for June 7th, 2022 (the "Meeting")
• Receipt of all necessary third party consents, including the consent of lenders to Brightpath
• Entry into voting agreements by certain of the vendors of Brightpath
• Other customary closing conditions
• Expected closing in June 2022.

The vendors of Brightpath include Fiona Elder and companies controlled by Blake Albright, Sabrina Kyle and Ken Thomson. Mr. Ken Thomson ("Thomson"), is a director of the Company. The other vendors are at arm's length to the Company. See "Related Party Transaction Details" below.

As part of its deliberations, the board of directors obtained a fairness opinion from MNP LLP (the "Fairness Opinion"). The Fairness Opinion provided that, as of May 2nd, 2022, based upon the and subject to the assumptions, limitations and qualifications set forth therein, the Transaction is fair, from a financial point of view, to the shareholders of the Corporation. In addition, the directors formed a special committee of independent directors to review and consider the potential acquisition of Brightpath. A copy of the Fairness Opinion is available for review upon request.

Thomson declared his interest in the Acquisition and abstained from voting on approving the LOI and proceeding with the Transaction. Thomson also was absent from discussions and deliberations amongst the special committee, the remaining directors and management. The board unanimously approved a recommendation of the special committee and management to proceed with the Transaction. Further information regarding the board review process will be available for review in the circular for the Meeting.

Related Party Transaction Details

Thomson indirectly owns or controls approximately 33% of Brightpath Capital and a material limited partnership interest in Brightpath Mortgage LP (together the "Brightpath Securities") and he will receive 12,500,000 Common Shares and 4,000,000 Preferred Shares in exchange for his Brightpath Securities on closing of the Transaction, subject to adjustment. Accordingly, the Transaction will be considered a "related party transaction" under MI 61-101 (as defined below) and will require Majority of Minority Shareholder Approval (as defined below) prior to closing. If Majority of Minority Shareholder Approval (as defined below) for the Transaction is obtained at the Meeting and the other closing conditions for the Transaction are met, the Company proposes to close the Transaction in June 2022

Multilateral Instrument 61-101 - Protection of Minority Holders in Special Transactions ("MI 61-101") was adopted by the Ontario Securities Commission, the Alberta Securities Commission and certain other securities regulatory authorities in Canada to govern transactions that raise the potential for conflicts of interest and that may affect the interests of minority securityholders. In addition, the TSXV has adopted the provisions of MI 61-101 in its Policy 5.9 - Protection of Minority Holders in Special Transactions ("Policy 5.9").  MI 61-101 and Policy 5.9 are intended to regulate insider bids, issuer bids, business combinations and related party transactions to ensure equality of treatment among securityholders, generally by requiring enhanced disclosure, minority securityholder approval, and, in certain instances, independent valuations, as well as approval and oversight of certain transactions by a special committee of independent directors.

Under MI 61-101, a "related party" of an entity includes, among others, a control person of the entity, directors and senior officers of an entity, as well as shareholders holding over 10% of the voting rights attached to the voting securities of the Company (a "Related Party"). Thomson is a director and beneficial shareholder of both the Company and Brightpath. Accordingly, Mr. Thomson is a "related party" pursuant to MI 61-101.

A "related party transaction" under MI 61-101 includes, among others, transactions where an issuer: (i) purchases or acquires an asset from a Related Party for valuable consideration; or (ii) issues a security to a Related Party. Pursuant to the Transaction, the Company will acquire the Brightpath Securities in consideration for the issuance of Common Shares and Preferred Shares, thereby making the Transaction a "related party transaction" under MI 61-101.

MI 61-101 permits issuers to complete related party transactions provided that certain disclosure is made regarding the Transaction and the Related Party, including disclosure included in this news release and the circular for the Meeting. In addition, unless an exemption is available, issuers contemplating a related party transaction must obtain (1) a formal valuation with respect to the transaction, and (2) minority shareholder approval for the transaction ("Majority of Minority Shareholder Approval"). With respect to the Transaction, the Company need not obtain a formal valuation because it is an issuer listed on the TSX Venture Exchange and may rely on the exemption available to it pursuant to section 5.5(b) of MI 61-101 Issuer Not Listed on Specified Markets. There is no exemption available to the Company with respect to the Majority of Minority Shareholder Approval requirement under MI 61-101 and as such, the Corporation must obtain minority shareholder approval.

In relation to the approval of the Transaction, "minority approval" requires the approval of a simple majority (50% +1) of the holders of each of the Common Shares and Preferred Shares, excluding those Common Shares and Preferred Shares beneficially owned, or over which control or direction is exercised by: (a) the issuer; (b) an interested party; (c) a "related party" to such interested party within the meaning of 61-101 (subject to certain exceptions); and (d) any person that is a joint actor with any party referred to in (b) or (c) (collectively, the "Excluded Shareholders"). In connection with the Transaction, there is one Excluded Shareholder, Thomson.  Thomson directly and indirectly owns and controls 5,000,000 Common Shares, representing 8.4% of the outstanding Common Shares of the Corporation and 3,500,000 Preferred Shares, representing 33.4% of the outstanding Preferred Shares of the Corporation.

Further information regarding the Majority of Minority Shareholder Approval requirements for the Transaction will be set forth in the circular for the Meeting.

About the Meeting:

The Company confirms its Annual General and Special Meeting will be held on June 7, 2022, at 10:00am, at Room C300, UBC Robson Square 800 Robson Street, Vancouver, British Columbia. The record date for the shareholders entitled to vote at the Meeting has been set as shareholders of record as at the close of business on May 2, 2022. Business at the Meeting includes setting the number of and electing directors of the Company, appointing auditors for the ensuing year, approving an equity incentive plan and approving the Transaction. A copy of the notice of meeting, proxy and management information circular for the Meeting will be available on the Company's SEDAR profile at www.sedar.com.

About Brightpath Capital

Brightpath specializes in arranging mortgages for people who are self-employed, new to the country, experiencing credit issues, or looking at renovation/flip projects. Our knowledge and experience, efficient service, and common sense approach to lending are just a few of the reasons to select Brightpath Capital for financing needs. We also offer bridge financing for residential properties with flexible terms. Private mortgages at very competitive terms. Interest only payments. Fully open terms.  For more information please visit: www.brightpath.ca

About TIMIA Capital Corporation

The Company democratizes private credit for investors by offering a broad range of speciality private credit opportunities with transparency and efficiency, facilitated by the Company's proprietary technology platform.  These high-yield loan opportunities are delivered through two operating divisions: TIMIA Capital which offers revenue-based investment to fast growing, business-to-business Software-as-a-Service (or SaaS) businesses in North America, and Pivot Financial which specializes in asset-based private credit targeting mid-market borrowers in Canada. The Corporation deploys funds on behalf of limited partnerships, institutions, retail investors, high net worth individuals, its management team and shareholders. For more information about TIMIA and SaaS lending, please visit www.timiacapital.com. For more information about specialized private credit and Pivot please visit: www.pivotfinancial.com

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

Forward-Looking Information

Certain information and statements in this news release contain and constitute forward-looking information or forward-looking statements as defined under applicable securities laws (collectively, "forward-looking statements"). Forward-looking statements normally contain words like 'believe', 'expect', 'anticipate', 'plan', 'intend', 'continue', 'estimate', 'may', 'will', 'should', 'ongoing' and similar expressions, and within this news release include any statements (express or implied) respecting the completion of the Transaction, the future performance of the combined companies, the execution of definitive transaction documentation, the conditions of closing the transaction, including the approval of the TSXV and approval of the shareholders of the Company, future value creation for shareholders, the creation of value for shareholders following completion of the Transaction, growth of the company's investment portfolio and expectations regarding making further investments in the coming months, the execution of voting agreements by certain vendors of Brightpath and the appointment of additional officers of the Company. Forward-looking statements are not guarantees of future performance, actions, or developments and are based on expectations, assumptions and other factors that management currently believes are relevant, reasonable and appropriate in the circumstances, including, without limitation, the following assumptions: that the conditions to the completion of the Transaction and Investment Transaction will be satisfied, that the Company and its investee companies are able to meet their respective future objectives and priorities, assumptions concerning general economic growth and the absence of unforeseen changes in the legislative and regulatory framework for the Company.

Although management believes that the forward-looking statements are reasonable, actual results could be substantially different due to the risks and uncertainties associated with and inherent to Timia's business. Material risks and uncertainties applicable to the forward-looking statements set out herein include, but are not limited to, the conditions of the Transaction and Investment Transaction not being satisfied, the Company having insufficient financial resources to achieve its objectives; availability of further investments that are appropriate for the Company on terms that it finds acceptable or at all; successful completion of exits from investments on terms that constitute a gain when no such exits are currently anticipated; intense competition in all aspects of business; reliance on limited management resources; general economic risks; new laws and regulations and risk of litigation. Although Timia has attempted to identify factors that may cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, predicted, estimated or intended. Also, many of the factors are beyond the control of Timia. Accordingly, readers should not place undue reliance on forward-looking statements. Timia undertakes no obligation to reissue or update any forward-looking statements as a result of new information or events after the date hereof except as may be required by law. All forward-looking statements contained in this news release are qualified by this cautionary statement.

SOURCE TIMIA Capital Corp.

Tim McNulty / Darren Seed, Incite Capital Markets, [phone], [email protected]; Mike Walkinshaw, CEO, TIMIA Capital Corporation