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Discovery One Investment Corporation Qualifying Transaction Update



 

VANCOUVER, B.C. - TheNewswire - March 10, 2021Discovery One Investment Corporation (the “Corporation” or “DOIT”) (TSXV:DOIT.P) Further to the Corporation’s press releases dated October 6,  December 2 and December 18, 2020, the Corporation wishes to update shareholders regarding its proposed acquisition of Pacific Frontier Investments Inc. (“PFI”) (the “Transaction”).  Several positive developments have recently occurred including:

  • - Signing of an Amalgamation Agreement between DOIT and PFI;

    - Closing of an oversubscribed non-brokered private placement by PFI that has raised gross proceeds of over $5.2 million;

    - Closing by PFI on the acquisition of three campgrounds in southern British Columbia;

    - Launch of new website and online booking system under the Pathfinder Camp Resorts nameplate (https://pathfindercampresorts.com/)  that is expected to generate significant revenues from booking fees;

    - Pending filing of Filing Statement and associated disclosure documents with the Exchange for approval of the Qualifying Transaction;

    - Signing of Consent Agreement whereby DOIT will receive $250,972 as repayment of an outstanding loan with Current Energy and Renewables Corp. (the “CER loan repayment funds”);

    - Notice of Special General Meeting on April 21, 2021 to approve DOIT’s transition to the new TSX Venture Exchange (the “Exchange”) CPC Policy 2.4.

 

DOIT is a capital pool company and the Transaction is intended to constitute the Corporation’s qualifying transaction ("Qualifying Transaction") under Policy 2.4 of the TSX Venture Exchange (the "Exchange").  All amounts noted in this press release are in Canadian dollars.  The Transaction does not constitute a Non-Arm's Length Qualifying Transaction (as defined in Policy 2.4 of the Exchange) and accordingly will not require the approval of DOIT’s shareholders.  As at the date hereof, DOIT has $1.07 million in excess cash and receivables, which funds will fund the costs associated with completing the Transaction and for general working capital of the Resulting Issuer (as defined below).

Amalgamation Agreement

DOIT, PFI and 1231986 B.C. Ltd. (“Newco”) (a wholly-owned subsidiary of DOIT) have entered into a definitive Amalgamation Agreement dated March 9, 2021.  Under the terms of the Amalgamation Agreement, on the effective date of the Amalgamation, DOIT and PFI will complete a business combination by way of an amalgamation (the “Amalgamation”) whereby DOIT will acquire all the common shares of PFI and the business of PFI will become the business of the resulting issuer (“Resulting Issuer”).  

Prior to closing, the shares of DOIT will be consolidated on (i) a 2.3:1 basis if the CER loan repayment funds have been released by the BC Supreme Court or (ii) on a 2.5:1 basis if the CER loan repayment funds have not been released by the BC Supreme Court within seven days of the effective date of the amalgamation.  The shareholders of PFI will either receive 0.452398 post-consolidated common share of DOIT for every common share of PFI currently held under scenario (i) or 0.44221881 post-consolidated common share of DOIT for every common share of PFI currently held under scenario (ii) (the “Transaction Shares”).  As of the date hereof, PFI has 104,139,954 common shares outstanding and DOIT has 20,064,350 common shares outstanding. As a result of the Transaction, DOIT anticipates it will issue 47,112,682 Transaction Shares to PFI’s current shareholders in consideration of all the current outstanding shares of PFI under scenario (i) or 46,052,646 Transaction Shares under scenario (ii).  The Resulting Issuer will have either 55,836,312 or 54,078,386 shares outstanding upon completion of the Transaction, depending on which scenario occurs.

 

The Transaction Shares will be issued to the shareholders of PFI pursuant to exemptions from the registration and prospectus requirements of applicable securities laws.  Upon completion of the Transaction: (i) all DOIT common shares to be issued to the holders of PFI’s common shares may be subject to resale restrictions under securities laws and the policies of the Exchange, as applicable, and (ii) all common shares held by Principals (as such term is defined in the policies of the Exchange) of DOIT and the Resulting Issuer will be held in escrow in accordance with the policies of the Exchange.

 

Immediately before the closing of the Transaction, DOIT will change its name to a new name suitable to the business of PFI such as “Pacific Frontier Investment Corp.” or such other name as accepted by the B.C. Registrar of Companies and acceptable to the Exchange.  

 

Upon completion of the Transaction, the parties anticipate that the Resulting Issuer will be listed as a Tier 2 Industrial Issuer on the Exchange and the Company has reserved the share ticker symbol “RV” with the Exchange for the Resulting Issuer.

 

Conditions Precedent

 

Completion of the transaction is subject to a number of conditions precedent that are similar to a transaction of this nature, including but not limited to the following:

 
  1. a)completion of all due diligence by DOIT; 

  2. b)all necessary approvals of the Exchange and all other regulatory authorities and third parties to the Transaction being obtained; 

  3. c)receipt of an independent third-party valuation of PFI acceptable to DOIT, PFI and the TSXV; 

  4. d)approval of the Amalgamation by shareholders of PFI; 

  5. e)no material adverse change occurring with respect to DOIT or PFI; 

  6. f)Exchange approval; and 

  7. g)other customary conditions. 

 

Pursuant to Section 4.2(h) of TSXV Policy 5.4, the Qualifying Transaction will not be considered a related  party transaction or combination.  No DOIT Non-Arm’s length party has any relationship with any Non-Arm’s length party of PFI.  Pursuant to Section 11.2(e)(i),(ii) and (iii) of Policy 2.4, the Non-Arm’s length parties of DOIT are not insiders of PFI and none have a direct or indirect beneficial interest in PFI or it’s business with the exception that the President and CEO of DOIT purchased 100,000 shares ($7,000) in the private placement of PFI several months after the original October 6, 2020 press release.

Sponsorship

 

Sponsorship of a Qualifying Transaction is required by the Exchange unless exempt in accordance with the Exchange’s policies. DOIT intends to apply to the Exchange for a waiver of the Exchange's sponsorship requirements; however, there is no assurance that DOIT will ultimately obtain an exemption or waiver from sponsorship.

 

About PFI

 

PFI was incorporated by articles of incorporation dated November 1, 2019 under the Business Corporations Act (British Columbia). PFI’s head offices are located in Vancouver, B.C. and it is in the business of acquiring, updating and operating private campgrounds and RV parks in British Columbia.

 

The management of PFI have over 150 years of combined experience in business, investing, real estate development and hospitality, and PFI is set to carefully grow its portfolio into a network of year-round, family-friendly RV resorts and campgrounds in the most desirable locations.

 

PFI is taking advantage of the overwhelming trend for Canadians to experience the great outdoors through camping.  With 2021 projected to be another record year for Recreational Vehicle (“RV”) sales in Canada and with government campgrounds in B.C. parks chronically over-booked, PFI’s acquisitions should enjoy robust occupancy rates.  In addition, there is a marked and growing trend for Canadian snowbirds to spend their winters in the friendly climate of southern British Columbia.  

Acquisition of three B.C. RV parks and campgrounds

As of December 31, 2020, PFI closed the acquisition of three RV parks and campground facilities in south-western British Columbia and is well advanced in completing planned renovations of the Agassiz and Parksville sites totalling approximately CDN$5M.  The three sites have a combined capacity of 343 campsites, 15 cabins and 10 mobile homes:

 

Campground/Name

Location

Description

Purchase Date

Purchase Price

Pathfinder Camp Resorts (Agassiz) Inc.

Agassiz, B.C.

34 campsites, 10 cabin units

October 29, 2020

CDN$1.984M

Fort Camping by Pathfinder Camp Resorts*

Langley, B.C.

156 campsites, 5 family tent cabins

December 1, 2020

CDN$1.0M

Pathfinder Camp Resorts (Parksville)

Parksville, B.C.

128 RV sites; 25 campsites; 10 mobile home sites

December 15, 2020

CDN$3.45M

*operated under license granted by the Metro Vancouver Regional District

PFI has aggressive plans to roll-up the private campground and RV park industry into a national chain of branded resorts under the Pathfinder Camp Resorts name.

 

Management of PFI are committed to updating available on-site services and implementing superior technology solutions in order to improve customer satisfaction and increase revenue streams at their RV parks and campgrounds.  PFI is also committed to modernizing the site booking, management and control systems to improve operating efficiency in a more scalable framework than is possible with individually owned campgrounds.  In this regard, PFI has just launched a new website and online booking system under the Pathfinder Camp Resorts nameplate:

 

https://pathfindercampresorts.com/

 

Through a long-term strategy of acquiring individually owned private campgrounds in desirable locations, PFI projects positive earnings and capital appreciation based on RV and campground site rentals, membership sales, store and service fee revenue as well as land value appreciation.

 

Unaudited Financial Information

 

PFI has prepared unaudited financial statements for the period from inception on November 1, 2019 to December 31, 2019 and for the year ending December 31, 2020.  These statements are currently being audited by PFI’s auditors, SMYTHE LLP.  The statements reflect only a short period of operations as PFI’s three campground acquisitions all closed in Q4 2020.  In addition, the final tranche of PFI’s non-brokered private placement of approximately $2.2 million are not reflected in the statements.

 

At December 31, 2020 (subject to any final audit adjustments), PFI had current assets of $1,563,477 and total assets of $8,751,130 along with current liabilities of $3,321,682 and total liabilities of $5,046,682.  PFI had gross revenues of $120,559 with operating expenses of $674,709 partially offset by one-time gains on bargain purchases of $69,268 that provided a loss and comprehensive loss of ($484,882) or $0.03 cents per share for the year ended December 31, 2020, subject to any final audit adjustments).

 

Management and Board of Directors

 

Upon completion of the Qualifying Transaction, it is expected that all members of the DOIT board and certain senior officers of DOIT will resign and the board of directors and management team of the Resulting Issuer will be reconstituted with nominees put forth by PFI, which are expected to include the following, all of whom are residents of British Columbia:

 

Joe Bleackley, Chief Executive Officer, Director and Corporate Secretary

 

Joe is an entrepreneur and business leader who has built and led successful teams through several growth stages.  Joe has been involved with significant fundraising efforts in the capital markets and has served in senior leadership roles.

 

Cam Watt, President, Director

 

Mr. Watt combines over 30 years of successful business negotiation and strategic leadership experience in various industries, with a talent for developing, launching and managing businesses. Cam has an extensive history in the hospitality sector where he has owned and operated many successful businesses including restaurants, hotels and resorts.

 

Stan Duckworth, Chief Operating Officer

 

Stan is an accomplished leader with 20+ years of consulting and senior management experience in the campground and vacation rental industry, with proven success in planning, implementation, management and evaluation of small, medium and large multi-faceted tourism operations. 

 

Darren Prins, Chief Financial Officer

 

Darren is a Partner at Invictus Accounting Group with extensive experience in corporate development, capital markets, mergers & acquisitions, financial reporting, auditing, risk management, budgeting, forecasting and international tax planning. Darren has served as Chief Financial Officer for private, TSX, TSX Venture and NYSE listed companies.

 

Mike Iverson, Director

 

Mike owns a private investment and consulting company and has been a director and executive officer of numerous public companies since 1998. Mike developed and sold Niogold to Osisko Mining and was previously the President, CEO and Founder of Fortuna Silver Mines (FVI.T) where he was integral at building the Company into a silver producer worth over $1.5 Billion dollars.

Private Placement

On February 15, 2021, PFI closed the final tranche of an oversubscribed private placement of shares, issuing a total of 75,374,811 shares at a price of $0.07 per share to raise total gross proceeds of $5,276,237.

All securities issued in the Private Placement will be subject to a hold period of four months and one day following the closing date of the Qualifying Transaction between DOIT and PFI.  This hold period is in addition to any resale restrictions required under Policy 5.4 (seed share resale restrictions).

PFI paid finders fees of $263,172 and issued 3,759,600 finder’s warrants (the “Finder’s Warrants”) to Canaccord Genuity Corp., Leede Jones Gable Inc., Hampton Securities Ltd., Mackie Research Capital Corporation, Vision Capital Corporation and Haywood Securities Inc.  The Finder’s Warrants are non-transferable and exercisable for a period of two years from the date of issue at a price of $0.10 per Warrant.

The Company has used the gross proceeds of the Private Placement for the purchase and renovation of its three B.C campgrounds.  The funds will also be used for continuing due diligence costs, marketing and general working capital.

Complete details regarding PFI, the Amalgamation and the Financing will be contained in a Filing Statement which DOIT and PFI  will submit to the Exchange  shortly and  which will be filed on SEDAR prior to closing.  

Trading in DOIT’s shares will remain halted until completion of the Amalgamation.

 

Repayment of outstanding loan with Current Energy and Renewables Corp. (“CER”)

 

On February 3, 2020, DOIT entered into a loan agreement with CER whereby DOIT advanced to CER an aggregate principal amount of $225,000. The loan accrued interest at a rate of 15% per annum, and all accrued interest on the loan is payable on the maturity date.

 

On August 18, 2020, in conjunction with the termination of an Amalgamation Agreement with CER, the Company gave notice to CER demanding repayment of the principal amount, plus all accrued interest.  

 

In November, 2020, the Company filed a Statement of Civil Claim in the Supreme Court of British Columbia (the “Court”) to seek repayment of the CER loan and outstanding interest.  The Company was granted a pre-judgement garnishee order from the Court and was able to garnishee the sum of $250,972 from the bank account of CER which amount was paid into Court.  

 

On February 5, 2021 DOIT  entered into a Consent Agreement with CER whereby CER consented to the release of $250,972 from the Court and DOIT returned a share certificate for 3,000,000 shares of CER that had been held as collateral in full and final satisfaction of the outstanding loan and interest payable.   DOIT is awaiting Court approval of the Consent Order and disbursement of the funds.  The COVID-19 pandemic has caused delays in the processing of documents at the Court however DOIT anticipates receiving the funds in March, 2021.

Notice of Special General Meeting

 

The Exchange announced on December 1, 2020 that it was implementing an amended and restated Policy 2.4 relating to Capital Pool Companies (the “New Policy”) to take effect on January 1, 2021, subject to regulatory approval.  The New Policy replaces the existing Policy dated June 24, 2010 (the “Old Policy”). A summary of the policy changes can be found here: https://www.tsx.com/resource/en/2466

Amongst the changes are a number of new policies that the Corporation would like to implement but that require disinterested shareholder approval. The Corporation wishes to put forward the following resolutions for approval by disinterested shareholders (in relation to each matter) at a Special General Meeting (the “Meeting”) to be held April 21, 2021 for shareholders of Record as at March 15, 2021.

At the Meeting, disinterested shareholders will be asked to consider and, if deemed appropriate, to pass an ordinary resolution removing the applicability of section 14.13 of the Old CPC Policy to reflect the New Policy, thereby removing the requirement of the Corporation to complete a Qualifying Transaction within 24 months of its date of listing on the Exchange and removing the associated consequences of not completing such requirement (the “24 Month Resolution”).

At the Meeting, shareholders will also be asked to consider and, if deemed appropriate, to pass an ordinary resolution of disinterested shareholders (the “Amended Escrow Agreement Resolution”), allowing the Corporation to make certain amendments to the Corporation’s escrow agreement dated July 26, 2018 (the “Escrow Agreement”) to reflect the New Policy.  For complete details, see DOIT’s proxy materials for the Meeting which will be available on SEDAR at www.sedar.com.

General

Completion of the qualifying 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 a capital pool company should be considered highly speculative.

The Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

We seek Safe Harbor.

For further information, please contact:

Discovery One Investment Corporation
Len Brownlie, Ph.D. – President, Chief Executive Officer, and Director
Phone: (604) 649-5724

Email: firstsilver@hotmail.com

Pacific Frontier Investments Inc.

Joe Bleackley– Chief Executive Officer, Founder and Director

Phone: (604) 914 2575

Email: ir@pacificfrontier.co

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 release. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

Forward-Looking Information Cautionary Statement

This news release contains forward-looking statements relating to the timing and completion of the Transaction, the future operations of the Corporation and other statements that are not historical facts. Forward-looking statements are often identified by terms such as "will", "may", "should", "anticipate", "expects" and similar expressions. All statements other than statements of historical fact, included in this release, including, without limitation, statements regarding the Transaction and the future plans and objectives of the Corporation, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Corporation's expectations include the failure to satisfy the conditions to completion of the Transaction set forth above and other risks detailed from time to time in the filings made by the Corporation with securities regulations.

The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Corporation. As a result, the Corporation cannot guarantee that the Transaction will be completed on the terms and within the time disclosed herein or at all.  The reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release and the Corporation will update or revise publicly any of the included forward-looking statements as expressly required by Canadian securities law.

In the case of PFI, this news release includes certain "forward-looking statements" which are particular to PFI and are not comprised of historical facts. Forward-looking statements include estimates and statements that describe PFI’s future plans, objectives or goals, including words to the effect that PFI or its management expects a stated condition or result to occur. Forward-looking statements may be identified by such terms as “believes”, “anticipates”, “expects”, “estimates”, “may”, “could”, “would”, “will”, or “plan”. Since forward-looking statements are based on assumptions and address future events and conditions, by their very nature they involve inherent risks and uncertainties. Although these statements are based on information currently available to PFI, PFI provides no assurance that actual results will meet management’s expectations. Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information. Forward looking information in this news release includes, but is not limited to, PFI’s objectives, goals or future plans, statements, its projected revenues and earnings, and anticipated future growth in new markets. Factors that could cause actual results to differ materially from such forward-looking information include, but are not limited to, the ability of the PFI to successfully implement its development strategy and whether this will yield the expected benefits; competitive factors in PFI’s industry sector; the success or failure of product development programs; currently existing applicable laws and regulations or future applicable laws and regulations that may affect PFI’ s business; decisions of regulatory authorities and the timing thereof; Covid-19 related risks, availability of properties; the economic circumstances surrounding PFI’s business, including general economic conditions in Canada, the US and worldwide; changes in exchange rates; changes in the equity market; inflation; uncertainties relating to the availability and costs of financing needed in the future; and those other risks to be disclosed in the filing statement or other disclosure document to be prepared in connection with the Transaction.  Although PFI believes that the assumptions and factors used in preparing the forward-looking information in this news release are reasonable, undue reliance should not be placed on such information, which only applies as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. PFI disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by law.