Cuspis Capital II Ltd. and 11197894 Canada Ltd. Enter Into Letter of Intent for Qualifying Transaction

(TheNewswire)

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Toronto, Ontario / TheNewswire / March 5, 2024 – Cuspis Capital II Ltd. (TSXV:CCII.P) (“Cuspis” or the “Corporation”), a capital pool company as defined under TSX Venture Exchange (“TSXV” or the “Exchange”) Policy 2.4 – Capital Pool Companies (“Policy 2.4”), is pleased to announce it has entered into a letter of intent dated March 4, 2024 (the “LOI”) with 11197894 Canada Ltd. (“IC Group”), a private company incorporated under the laws of Canada, whereby Cuspis and IC Group will complete an arrangement, amalgamation, share exchange, or similar transaction to ultimately form the resulting issuer (the “Resulting Issuer”) that will continue on the business of IC Group (the “Transaction”), subject to the terms and conditions outlined below. Cuspis intends that the Transaction will constitute its Qualifying Transaction, as such term is defined in the policies of the Exchange. Following completion of the Transaction, the Resulting Issuer intends to list as a Tier 1 Technology Issuer on the Exchange.

Cuspis completed its initial public offering in December, 2020. The common shares of Cuspis (the “Cuspis Shares”) are listed for trading on the TSXV under the stock symbol “CCII.P”. Cuspis has not commenced commercial operations and has no assets other than cash. Cuspis was incorporated under the laws of the Province of Ontario.

IC Group is a leading marketing services technology company with over 30 years’ experience delivering impactful digital promotions, loyalty, rebate, messaging, and specialty insurance solutions for Fortune 500 brands in global jurisdictions. IC Group,  headquartered in Winnipeg, Manitoba, is the product of a July 31, 2023 amalgamation that consolidated entities that have  effectively been in active business since 1989.

Cuspis’ management believes that IC Group's track record of profitability, combined with the growth prospects of its recent and pending acquisitions, make it an attractive company to bring to the public market.  The company is led by a seasoned management team focused on generating positive cash flows, and synergistic acquisitions.   We believe the combination of Cuspis Capital II Ltd. and IC Group creates a solid platform for IC Group's continued success in digital marketing services, as well as the growth of its novel strategies and services that digitally engage consumers for Fortune 500 brands in global markets. For its year ended December 31, 2023, IC Group had total assets of $24.78 million and total liabilities of $22.31 million, for shareholders equity of $2.47 million. (Included in both assets and liabilities is approximately $8 million of offsetting amounts that relate to prizing activities that are held on behalf of/owed to others). IC Group had $12.36 million revenues in its fiscal 2023, and net income (loss) of $(0.41) million. IC Group recently acquired the assets of a tier-one mobile aggregator in Canada as of November 1, 2023. The Transaction also involves the acquisition of two additional businesses in conjunction with the Concurrent Financing. The combined pro forma revenue of the businesses is approximately $17.82 million for 2023. All figures are unaudited.

The LOI was negotiated at arm’s length and is effective as of March 4, 2024. None of the current directors or officers of Cuspis hold any securities of IC Group, nor do any of them hold a director or management position with IC Group. The Transaction does not constitute a Non-Arm’s Length Qualifying Transaction, and the approval of the shareholders of Cuspis will not be required. In the event that approval from the shareholders of IC Group is required, such approval will be sought as a condition to the closing of the Transaction.

The material terms and conditions outlined in the LOI are non-binding on the parties.  The Transaction described in the LOI is, among other things, conditional on the execution of a definitive agreement (the “Definitive Agreement”) to be negotiated between the parties. It is currently anticipated that, immediately prior to the completion of the Transaction, Cuspis will effect a share consolidation (the “Consolidation”) on a basis to be determined.

The LOI contemplates that as a condition of closing of the Transaction, the parties will complete a private placement of equity securities for gross proceeds of a minimum of $3,000,000 (the “Concurrent Financing”). Pursuant to the Transaction, post-Consolidation Cuspis Shares, in an amount and in a ratio to be determined, will be issued in exchange for outstanding common shares of IC Group (such ratio being the “Exchange Ratio”). The Exchange Ratio will be determined by negotiation between the parties once the proportionate ownership of the resulting issuer has been established, which will be a function of the Concurrent Financing. The value of Cuspis has been established at $2.90 million, or $0.232 per share.

The LOI contemplates that the Transaction will be completed no later than April 30, 2024, or such other date as may be mutually agreed to in writing between Cuspis and IC Group. There can be no assurance that a Definitive Agreement will be successfully negotiated or entered into, or that the Concurrent Financing or the Transaction will be completed.

Upon completion of the Transaction, the parties intend for the following individuals to comprise the board of directors and management of the Resulting Issuer.   Cuspis may, at their option, nominate an additional director acceptable to IC Group, and Cuspis and IC Group may also jointly agree to nominate an additional director.

Director, President  & CEO: Duncan McCready
Oakville, Ontario

Duncan, with more than 30 years of brand-activation, and promotion-tech experience working with global brands, is a co-founder of IC Group and Insured Creativity, and provides overall leadership and strategic direction. Duncan led the MBO of IC Group in 2015, prior successful exits in 1997 and 2006, and more recently led the acquisition by IC Group of 2 marketing service businesses. Outside of IC Group, Duncan supports the development of new startups through mentorship and board level participation.  Duncan has been on IC Group’s board since 2015.

Director: Marc Caron
Winnipeg, Manitoba

Marc is a senior executive (BSc. EE, P.Eng., MBA, CMC, ISACA-CRISC) with over 30 years’ of international business and M&A experience bridging the disciplines of operations, information technology, data security and business leadership.  Marc mentors new entrepreneurs and business startups in the community, playing active board and advisory roles to support growth. Marc has been on IC Group’s board since 2015 and leads IC Group’s delivery, technology, and information security teams.

Director: Michael Svetkoff

Toronto, Ontario

Mike is a director and investor in IC Group and brings 30 years of senior executive experience in corporate finance and private equity. Mike has been involved in 100+ transactions and $1B of private equity. Mike has been on IC Group’s board since 2015.

IC Group’s management team currently consists of Duncan McCready as President & Chief Executive Officer, Marc Caron, as Chief Operating Officer, John Penhale, of Oakville, Ontario, as Chief Financial Officer.   John is a finance executive (CPA,CA) with over 30 years’ experience leading Finance, Treasury and Risk Management functions for Private and Public companies. John was a past senior executive of CIBC’s multi-billion-dollar private equity business, managing and adjudicating equity and mezzanine debt  investments.

Principal Shareholders

5304709 Manitoba Ltd. owns 39% of the issued and outstanding common shares of IC Group.

Echo Bay Strategic Yield Fund owns 17% of the issued and outstanding common shares of IC Group.

No other shareholder of IC Group holds 10% or more of its outstanding voting securities.

Conditions to the Transaction

Completion of the Transaction is subject to a number of conditions, including but not limited to, acceptance by the TSXV, approval of certain matters by the holders of the Cuspis Shares and other customary conditions including:

• completion of the Concurrent Financing; 

• entry into the Definitive Agreement on or before March 31, 2024; 

• receipt of all director, shareholder, third party and requisite regulatory approvals (including IC Group shareholder approval) relating to the negotiation and execution of a Definitive Agreement in respect of the Transaction and as may be contemplated by the Definitive Agreement; 

• preparation and filing of a disclosure document, as required by the TSXV, (the Disclosure Document”) outlining the definitive terms of the Transaction and describing the business to be conducted by Cuspis following completion of the Transaction, in accordance with the policies of the TSXV; 

• receipt by the TSXV of a Sponsor Report (as defined in the policies of the TSXV), if required, satisfactory to the TSXV; and 

• completion of the Consolidation. 

There can be no assurance that the Transaction will be completed as proposed or at all.

Sponsorship

Cuspis intends to make an application for exemption from the sponsorship requirements of the TSXV in connection with the Transaction, however there is no assurance that the TSXV will exempt Cuspis from all or part of applicable sponsorship requirements.

Further Information

Cuspis will provide further details in respect of the Transaction and the Concurrent Financing by way of updating press releases as the Transaction advances, in accordance with the policies of the TSXV.

All information contained in this press release with respect to IC Group and Cuspis (but excluding the terms of the Transaction) was supplied by the parties respectively, for inclusion herein, without independent review by the other party, and each party and its directors and officers have relied on the other party for any information concerning the other party.

Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable pursuant to TSXV 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 Disclosure Document 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 TSXV has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the contents of this press release.

Trading in the listed securities of the Corporation will remain halted pursuant to Policy 2.4 Section 2.3(b).

For further information:

William Ollerhead

Cuspis Capital II Ltd.

[email protected]

Tel. (416) 214-0876

Forward-Looking Information

This press release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this press release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected” “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”. “estimates”, “believes” or intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this press release, forward-looking statements relate, among other things, to: the Transaction and certain terms and conditions thereof; the business of IC Group; the Concurrent Financing; the Consolidation of Cuspis Shares; the Exchange Ratio; TSXV sponsorship requirements and intended application for exemption therefrom; shareholder, director and regulatory approvals; and future press releases and disclosure. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; and the delay or failure to receive shareholder, director or regulatory approvals. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this press release. Except as required by law, Cuspis assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.

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.

This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States unless registered under the U.S. Securities Act and applicable state securities laws, unless an exemption from such registration is available.

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