Vancouver, British Columbia – TheNewswire – September 17, 2021 – Germinate Capital Ltd. (TSXV:GCAP.P) (“Germinate” or the “Company”) is pleased to announce that further to its news release of July 6, 2021 (the “Initial News Release”), it has entered into a definitive share exchange agreement dated September 14, 2021 (the "Definitive Agreement"), with Beacon Hill Innovations Ltd. ("Target" or “BEACN”) and the shareholders of Target, pursuant to which Germinate will acquire all of the issued and outstanding securities of Target (the "Transaction"). Target was incorporated under the Business Corporations Act (British Columbia) on February 7, 2020 and is a streaming and gaming technology products company based in Victoria, B.C.

Transaction Summary

In connection with the Transaction, Germinate will acquire all of the issued and outstanding common shares of Target (the “Target Shares”) through the issuance of 32,151,003 common shares in the capital of the Company (the “Shares”), pursuant to which Target will become a wholly-owned subsidiary of Germinate. Germinate will be renamed as “Beacon Hill Technology Ltd.” (the “Resulting Issuer”) upon completion of the Transaction and a new trading symbol will be assigned. No finder’s fees are payable in connection with the Transaction.

In connection with the Transaction, Germinate proposes to raise $2 million through a Concurrent Offering (as defined herein). Upon completion of the Transaction and the closing of the Concurrent Offering, the Resulting Issuer will have approximately 41,951,003 Shares issued and outstanding. Germinate does not anticipate making any advances to BEACN prior to closing of the Transaction.

The management team of the Resulting Issuer will be led by Mr. Craig Fraser as Chief Executive Officer, Mr. Daniel Davies as President and Chief Technology Officer, and Mr. Robert J. Doyle., CPA, CA, as Chief Financial Officer and Corporate Secretary. Mr. Alexandre Heath will resign from the board of the Resulting Issuer upon completion of the Transaction and is graciously thanked for assisting with founding Germinate and carrying the Company to its present position. It is anticipated that the board of directors of the Resulting Issuer will be comprised of Mr. Craig Fraser, Mr. Daniel Davies, Mr. Mark T. Brown, and Ms. Sarah Weber.

It is anticipated that following completion of the Transaction, the Resulting Issuer will be a Tier 2 issuer in the technology sector.

BEACN Hill Innovations

 

The founders and team at BEACN have spent much of their careers developing vocal effects products for the music industry. In 2020 the team got together to design and build a new line of modern products that take advantage of their personal technical and sound knowledge targeted at the rapidly growing online gaming and streaming market. Since that time, the team has raised approximately $3 million for the development of three      key products and designed several others for the future. The initial products include two audio mixers (“BEACN Mix” and “BEACN Mix Create”) and a high-tech microphone (“BEACN MIC”) with certain features that are more advanced than other products found on the market today. BEACN builds world-class equipment for creators, from podcasters to live streamers and more. BEACN has assembled an exceptional team of technology enthusiasts to design and manufacture products that help the users of their products get to making better content quickly and effectively. BEACN’s mission is to help an average user produce like a pro, without spending needless time tinkering with dozens of settings. BEACN has approximately $1 million in cash and is ready to begin the commercialization phase of the initial products with plans to begin sales through online channels they have used in the past by the fourth quarter of 2021. The funds raised in conjunction with the Transaction, along with cash on hand, will help fund inventory purchases for the initial three products and allow BEACN to begin working on the development of their next big idea. The gaming and online streaming markets have exploded during the pandemic. While the sales of similar products in this industry are already hitting record levels, they continue to grow rapidly. Having the coolest and best tech is key for the success of any streamer, and many follow their lead in buying tech products. The BEACN team has contact with these leaders including direct access to the market and has established online sales channels for their products, as well as the manufacturing to allow for just-in-time, direct delivery, sales.

Financial Information about Target

The following table sets out selected financial information with respect to BEACN as at the dates noted. The selected financial information is derived from BEACN's unaudited financial statements for the periods noted which have been prepared in accordance with International Financial Reporting Standards, issued by the International Accounting Standards Board.

Balance Sheet Data	As at June 30, 2021
Cash and Cash Equivalents	$978,647
Inventory	$758,153
Other Current Assets	$331,853
Non-Current Assets	$287,070
Total Assets	$2,355,723
Current Liabilities	$496,696
Non-Current Liabilities	$275,000
Total Liabilities	$771,696
Total Shareholders’ Equity	$1,584,027

 

Income Statement Data	For the period from the date of incorporation on February 7, 2020 to December 31, 2020	For the six months ended June 30, 2021
Research and Development Expenditures	$453,481	$304,270
Other Expenses	$325,715	$363,038
SR&ED tax credit	-	($283,021)
Net Loss	$779,196	$384,287

 

The Definitive Agreement

Completion of the Transaction is subject to the satisfaction of certain conditions set forth in the Definitive Agreement, including but not limited to: (i) receipt of all requisite regulatory approvals, orders, notices and consents to implement the Transaction including those of the Exchange; (ii) no material change occurring to the business of any of the parties; (iii) completion of the Concurrent Offering (as defined below); (iv) completion of the aforementioned director and management changes; (v) the satisfaction of obligations under the Definitive Agreement relating to each of the parties; (vi) the delivery by each of the parties of customary closing documents; and (vii) completion of the Transaction on or before the date that is 90 days following closing of the Private Placement.

Concurrent Offering

Germinate will complete a "best efforts" non-brokered private placement of subscription receipts of the Company (the “Subscription Receipts”) at a price of $0.30 per Subscription Receipt for gross proceeds of $1,500,000 (the “Private Placement”), with each Subscription Receipt automatically convertible for no additional consideration into one unit of the Company (a “Unit”) upon satisfaction of the Escrow Release Conditions (as defined below).  Each Unit will be comprised of one Share and one-half of one Share purchase warrant (each full warrant, a “Warrant”). Each Warrant will be exercisable to acquire one Share at a price of $0.60 per Share for a period of two years from the date of issuance.

The Subscription Receipts will convert automatically for no additional consideration into Units upon the occurrence of the following events (collectively, the “Escrow Release Conditions”): (i) all conditions to the TSX Venture Exchange’s (the “Exchange”) conditional approval of the Transaction having been satisfied or waived; (ii) all conditions to the Exchange’s conditional approval for the listing of the Shares to be issued pursuant to the Concurrent Offering and the Shares underlying the Warrants having been satisfied or waived; and (iii) the closing of the transactions contemplated by the Share Exchange Agreement.

Germinate expects to pay to certain arm’s length finders an aggregate cash finder’s fee in connection with the Private Placement of $23,242.52 and 77,475 non-transferrable warrants (“Finder Warrants”). Each Finder Warrant will entitle the holder to acquire one Share at a price of $0.30 for a period of two years from closing of the Transaction. 

In addition to the Private Placement of Subscription Receipts, Germinate has arranged a $500,000 convertible note (the “Note” together with the Private Placement, the “Concurrent Offering”) which will be issued by BEACN so that the funds are available to BEACN immediately. Upon closing of the Transaction, these Notes will be convertible into the Units of Germinate under the same terms as the Private Placement for a term of 18 months (the “Maturity Date”). Should the Transaction not close for any reason before the Maturity Date, the Notes will be convertible into Target Shares at a price equal to BEACN’s most recent financing at the time of such conversion, or be repaid in full. The share price of BEACN’s most recent financing as at the date of this news release was $0.20 per Target Share.  

The Company anticipates closing of the Private Placement will occur shortly, subject to receipt of approval of the Exchange.

Sponsorship

The Company has made an application to the Exchange for a waiver from the sponsorship requirements in connection with the Transaction. There is no assurance that such waiver will be granted.

Trading Halt

The Shares are currently halted from trading, and the trading of the Shares is expected to remain halted pending completion of the Transaction.

Cautionary Note

Neither the 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.

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 Germinate Capital Ltd. 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.

For further information, please contact:

Germinate Capital Ltd.

Mark T. Brown, CEO and Director
Email: mtbrown@pacificopportunity.com
Telephone: (604)-687-3520

Forward Looking Information    

This press release contains forward-looking statements and information that are based on the beliefs of management and reflect Germinate's current expectations. When used in this press release, the words "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may" or "should" and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information.

The forward-looking statements and information in this press release include information relating to the business plans of Germinate, Target and the Resulting Issuer, the Concurrent Offering and the use of proceeds thereof, the pro forma capital structure of the Resulting Issuer, and the Transaction (including Exchange approval and the closing of the Transaction).

Such statements and information reflect the current view of Germinate. Risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following risks:

• - there is no assurance that the Private Placement will be completed or as to the actual gross proceeds to be raised in connection with the Private Placement;

  - there is no assurance that Germinate and Target will obtain all requisite approvals for the Transaction, including the approval of the Exchange for the Transaction (which may be conditional upon amendments to the terms of the Transaction);

  - following completion of the Transaction, the Resulting Issuer may require additional financing from time to time in order to continue its operations. Financing may not be available when needed or on terms and conditions acceptable to the Resulting Issuer;

  - new laws or regulations could adversely affect the Resulting Issuer's business and results of operations; and

  - the stock markets have experienced volatility that often has been unrelated to the performance of companies. These fluctuations may adversely affect the price of the Resulting Issuer's securities, regardless of its operating performance.

There are a number of important factors that could cause the Resulting Issuer's actual results to differ materially from those indicated or implied by forward-looking statements and information. Such factors include, among others: limited business history of Target; the risk that future results of operation of Target do not meet expectations, disruptions or changes in the credit or security markets; results of operation activities; unanticipated costs and expenses, and general market and industry conditions.

Germinate cautions that the foregoing list of material factors is not exhaustive. When relying on the Company's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Germinate has assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.

The forward-looking information contained in this press release represents the expectations of Germinate as of the date of this press release and, accordingly, is subject to change after such date. Readers should not place undue importance on forward looking information and should not rely upon this information as of any other date. While Germinate may elect to, it does not undertake to update this information at any particular time except as required in accordance with applicable laws.