TIMIA Capital to Acquire Pivot Financial

~TIMIA to acquire Canadian-based private lender to small and medium businesses; Combined company pro forma assets surpass $100 million~

VANCOUVER, BC, Sept. 10, 2021 /CNW/ - TIMIA Capital Corporation ("TIMIA" or the "Company") (TSXV:TCA) (OTCQB: TIMCF) is pleased to announce that it has entered into a series of agreements to acquire the business of Pivot Financial ("Pivot"), a Canadian-based private lender focused on creative financing solutions for the small and medium business market, for a purchase price of approximately $6.0 million plus working capital comprised of a combination of common shares ("Common Shares") with a deemed value of $0.30 per share, series A preferred shares ("Preferred Shares") with a deemed value of $1.00 per share and cash (the "Transaction").

Pivot Financial has successfully grown to profitability over the past 6 years and is now looking to accelerate its growth via this combination with TIMIA.  The Pivot management team is excited to continue growing Pivot and the TIMIA team is excited to welcome them into the broader group.  Ken Thomson, CEO of Pivot, will take on a senior leadership role with TIMIA Capital as Chief Strategy Officer as well as joining the Board of Directors of TIMIA, while Dan Flaro, President of Pivot, will continue in his role with respect to the Pivot business.

"TIMIA's fintech-based loan origination and underwriting platform is complementary to the lending profile of Pivot Financial," said Mike Walkinshaw, CEO of TIMIA.  "TIMIA and Pivot service two distinct markets seeking growth capital with little or no overlap. As a result, this combination provides synergies from which we can each continue to build our portfolios while mutually leveraging our technology platform to drive efficiency and profit."   

"Over the past 6 years, we have been successful at building our business by focusing on the borrowing needs of small to mid sized Canadian enterprises with up to 100 employees and $50 million in revenue," said Ken Thomson, CEO of Pivot. "Joining TIMIA Capital provides access to a more diverse capital pool, a combined larger portfolio of assets under management, and a proven technology-based loan origination and management platform. Moving forward we will leverage the strengths of each company with a goal of becoming a leading specialty lending company in North America."

Details of the Transaction

Pursuant to the Transaction, TIMIA will:

• Acquire the loan book and other assets, and assume specific related debt of Pivot Financial Inc. ("PFI")
• Acquire all of the outstanding common shares of Pivot Financial Services Inc. ("PFSI")
• Establish a new wholly-owned limited partnership to manage the loan book, other assets, and specific related debt of PFI

Aggregate consideration payable by TIMIA under the Transaction is comprised of:

• 5,000,000 Common Shares (at a deemed price of $0.30 per Common Share), 2,000,000 Preferred Shares (at a deemed price of $1.00 per Preferred Share) and the payment of $1.0 million in cash (subject to post-closing working capital adjustments) to Ken Thomson ("Thomson"), the sole shareholder of PFSI
• 1,500,000 Preferred Shares (at a deemed price of $1.00 per Preferred Share) issuable to PFI

Highlights of the combined company and key financial metrics¹ include:

• 52.5 million common shares total outstanding post transaction
• 68.2 million common shares fully diluted post transaction
• 10.5 million Preferred A Shares total outstanding post transaction
• Insider ownership of approximately 37%.
• Pro forma combined assets would have been approximately $100 million with a further $42 million of assets under administration had the acquisition been completed by August 31, 2021.
• Pro Forma revenue for the combined entity for the first half of Fiscal 2021 would have been $4.3 million, assuming the transaction closed on August 31, 2021. This pro forma revenue for the combined entity is an increase of 39% over TIMIA's consolidated revenue for the first half of Fiscal 2021.
• Pivot generated $431,000 in normalized net income for the first half of fiscal 2021.

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¹ Note Pivot's past financial results have not been subject to an external financial audit.

Additionally, the Company wishes to announce that, concurrent with closing of the Transaction, it proposes to complete a private placement of 1,666,667 Common Shares at a price of $0.30 per Common Share and 500,000 Preferred Shares at a price of $1.00 per Preferred Share with Dan Flaro ("Flaro"), a key employee of PFSI, for gross proceeds of $1,000,000 (the "Investment Transaction"). The Company anticipates using proceeds of the Investment Transaction for general corporate purposes.

On closing of the Transaction expected to be on or about September 21, 2021, the Company will enter into voting agreements with Thomson, PFI and Flaro, whereby, among other things, these parties will agree to vote Common Shares held by them in favour of matters proposed by management of the Company for a period of 24 months, subject to certain standard exceptions (the "Voting Agreements").

On closing of the Transaction, the Company will appoint Thomson as a member of the board of directors of TIMIA and will grant Thomson 100,000 stock options exercisable at a price of $0.30 per share for a period of 5 years. Flaro will receive 150,000 stock options exercisable at a price of $0.30 per share for a period of 5 years. Thomson and Flaro will each enter into employment agreements with the Company.

Completion of the Transaction is subject to the following conditions:

• Receipt of approval of the TSX Venture Exchange (the "TSXV") for the Transaction and the Investment Transaction
• Receipt of all necessary third party consents, including the consent of lenders to Pivot.
• Completion of the Investment Transaction
• Entry into the Voting Agreements
• Other customary closing conditions

Following completion of the Transaction and the Investment Transaction, Thomson (including shares issuable to PFI) will hold an aggregate of 5,000,000 Common Shares (representing 9.52% of the outstanding Common Shares on an undiluted basis) and 3,500,000 Preferred Shares. On a partially diluted basis (assuming conversion of stock options and Preferred Shares controlled by him), Thomson will hold an aggregate of 8,500,000 Common Shares (representing 15.32% of the outstanding Common Shares on a partially diluted basis).

The Company is at arm's length with PFI, PFSI, Thomson and Flaro. No finder's fee will be payable in connection with the Transaction and the Investment Transaction.

Ken Thomson, CEO and founder of Pivot Financial, will serve as CEO of the wholly-owned subsidiary, Pivot Financial Services Inc and will serve as Chief Strategy Officer and Board Member of TIMIA.  Mr. Thomson has over 20 years of experience in the investment industry and in managing and growing businesses. He serves on the board of several private companies including two other private lenders, Chairs the board of a North American manufacturing business, and was a member of the Board of Directors, Audit Committee and Independent Review Committee of a family of TSX-listed investment funds. Mr. Thomson is a member of the Independent Review Committees of Hazelview  Securities Inc., Algonquin Capital and Goodwood Inc. and is Chair of the Independent Review Committee of Educators Financial Group. He holds an Honours Business Administration degree from the Richard Ivey School of Business and has completed the Partners', Directors' and Officers' Course offered by the Investment Funds Institute of Canada.

In other matters, the Company wishes to confirm that it previously closed the second tranche of its private placement of its over-subscribed private placement as announced in April, 2021. The second tranche consisted of an additional 500,000 series A preferred shares, for a total of $1,250,000 in aggregate proceeds.

About Pivot Financial
Pivot is an asset manager that deploys funds on behalf of institutions, retail investors, high net worth individuals, its management team and shareholders. We seek out favourable risk return lending opportunities through prudent credit assessment and diversification targeting lower mid market borrowers in Canada. We manage all aspects of borrower relationships including origination, underwriting and ongoing portfolio management. For more information please visit: www.pivotfinancial.com

About TIMIA Capital Corporation
TIMIA Capital Corporation has developed a proprietary loan origination platform that services private market, high-yield loan opportunities, thereby earning recurring fees and a share of the profit.  While focusing on the fast growing, global, business-to-business Software-as-a-Service (or SaaS) segment, TIMIA's automated loan origination system is applicable to multiple technology sectors, it creates scalable and profitable growth for TIMIA's stakeholders. For more information about TIMIA Capital Corporation, please visit www.timiacapital.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 and Investment Transaction, the future performance of the combined companies, the conditions of closing the transaction, including the approval of the TSXV, making further disbursements upon the completion of certain milestones, future value creation for shareholders, the growth of the company's investment portfolio and expectations regarding making further investments in the coming months. 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.

Darren Seed, Vice President, Capital Markets & Communications, Mike Walkinshaw, CEO, TIMIA Capital Corporation, [phone], [email protected]

Related Links

http://www.timiacapital.com/