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Banxa Holdings Inc. (formerly, A-Labs Capital I Corp.) Announces Closing of Qualifying Transaction





VANCOUVER, BC – TheNewswire - December 24, 2020 - BANXA HOLDINGS INC. (TSXV:BNXA) (the “Corporation” or “Banxa”; formerly, A-Labs Capital I Corp.) is pleased to announce that it has completed its previously announced “Qualifying Transaction” (“QT”), as defined by Policy 2.4 of the TSXV Venture Exchange (the “Exchange” or “TSXV”), with BTC Corporation Holding Pty Ltd. (“BTC”) and the shareholders of BTC. The Corporation now owns 100% of the outstanding ordinary shares of BTC.

The Corporation will obtain final approval to list its Common Shares (defined below) on the Exchange as a Tier 2 Technology Issuer upon the issuance of the Final Exchange Bulletin by the Exchange. The Common Shares are expected to commence trading under the trading symbol “BNXA” at the opening of the markets on or about January 6, 2021.

The Qualifying Transaction

The QT was completed pursuant to the terms of the previously announced share sale agreement dated February 18, 2020, as amended on August 18, 2020, as further amended on November 2020 (the “Share Sale Agreement”) among the Corporation, BTC and the shareholders of BTC.

Immediately prior to the closing of the QT, the Corporation continued its jurisdiction of incorporation from the federal jurisdiction of Canada to the provincial jurisdiction of British Columbia in order to become subject to the Business Corporations Act (British Columbia) and changed its name from “A-Labs Capital I Corp.” to “Banxa Holdings Inc.”.

In addition, immediately prior to closing of the QT, the Corporation consolidated (the “Consolidation”) its issued and outstanding common shares on a 4.66667 to 1 basis (each post-consolidation common share, a “Common Share”), resulting in 1,199,994 Common Shares outstanding following the Consolidation, but prior to taking into account the completion of the QT and related transactions.

Pursuant to the QT, the Corporation acquired all of the ordinary shares of BTC that were issued and outstanding immediately prior to the QT in exchange for the issuance of 38,314,210 Common Shares, on the basis of 1,738 Common Shares for each one ordinary share of BTC (the “Exchange Ratio”), at a deemed transaction price of $1.00 per Common Share. Such ordinary shares of BTC include those which were issued by BTC upon the conversion of the Subscription Receipts (defined below) immediately prior to the completion of the QT.

In addition, pursuant to the QT and related transactions, the following additional securities of the Corporation were issued or are issuable at closing of the QT:

  • - 1,186,500 Common Shares, representing advisory fees payable by BTC equal to CAD$1,186,500, in satisfaction of certain advisory services rendered by the previously disclosed arrangers of BTC. Such shares are subject to a four month hold period which expires on April 24, 2021. From the aggregate amount, 711,900 Common Shares were issued to Mr. Lichtenwald, as a nominee of Zeus Capital Ltd., a corporation controlled and directed by Mr. Konstantin Lichtenwald, the CFO of the Corporation. Such 711,900 Common Shares will be subject to an Exchange Tier 2 Surplus Security Escrow Agreement at the terms described below.

    - up to 492,941 Common Shares are issuable on exercise of convertible notes of BTC in the principal amount of CAD$419,000, which convertible notes were issued pursuant to the previously announced convertible note financing of BTC. The principal amount of such convertible notes is exercisable, at the discretion of the holder, into Common Shares at a conversion price of $0.85 per share until June 22, 2022, at which point, if still outstanding, the convertible notes will automatically convert.

    - 492,941 Common Share purchase warrants, each such warrant entitling the holder to acquire one Common Share at $1.00 per share until December 23, 2022, which warrants were issuable in connection with the previously announced convertible note financing of BTC. Such warrants are subject to a four month hold period which expires on April 24, 2021.

    - 41,712 Common Shares purchase finder warrants issued in exchange for the warrants of BTC issued to Mackie Research Capital Corporation (the “Financing Advisor”) in connection with the previously announced convertible note financing of BTC, each such warrant entitles the holder to acquire one Common Share at $1.00 per share until June 22, 2022.

    - 10,000 Common Shares, in satisfaction of a CAD$10,000 advisor fee incurred by BTC to the Financing Advisor, and 79,948 Common Share purchase finder warrants to the Financing Advisor, representing an advisor fee equal to approximately 2% of the gross proceeds raised under the previously announced concurrent financing of BTC. Each such warrant entitles the holder to acquire one Common Share at $1.00 per share until December 23, 2022. Such Common Shares and warrants are subject to a four month hold period which expires on April 24, 2021.

Upon completion of the QT, the issued and outstanding capital of the Corporation consists of 40,710,704 Common Shares, outstanding options to acquire 3,703,888 Common Shares, outstanding warrants to acquire 614,601 Common Shares.  

Concurrent Financing

As previously announced, BTC previously closed its private placement (the “Concurrent Financing”) for the maximum amount of offered subscription receipts of BTC (each, a “Subscription Receipt”), being 2,316 Subscription Receipts at AUD$1,825 (CAD$1,738) per Subscription Receipt, for aggregate gross proceeds of approximately AUD$4,226,700 (CAD$4,025,208).

Immediately prior to the closing of the QT, each Subscription Receipt automatically converted, without additional payment, into one ordinary share of BTC upon satisfaction of the escrow release conditions governing the Subscription Receipts. Such shares were then exchanged pursuant to the QT for Common Shares at the Exchange Ratio for an aggregate amount of 4,025,208 Common Shares.

Incentive Stock Options

In accordance with the terms of its stock option plan, the Corporation’s board of directors expects to grant approximately 3,583,888 incentive stock options to certain directors, officers, employees and consultants. Each option entitles the holder to acquire one Common Share at $1.00 per share and expires five years from the date of grant. It is expected that 12.50% of the options held by each option holder will vest every 3 months over a 2-year period commencing on January 1, 2021.

In addition, there are 120,000 outstanding stock options (after taking into account the Consolidation) that were previously granted to the directors and officers of the Corporation at completion of its initial public offering, with each such option entitling the holder to acquire one Common Share at $0.47 per share until October 31, 2023, subject to the Exchange policies.

Escrow Securities and Seed Share Resale Restrictions

Pursuant to the terms of an Exchange Tier 2 Surplus Security Escrow Agreement dated December 22, 2020 among the Corporation, TSX Trust Company and certain Principals of the Corporation (as defined in the Exchange policies), an aggregate of 8,638,918 Common Shares are held in escrow in accordance with the following 36-month escrow release schedule: (i) 5% of the escrowed Common Shares will be released at the time of the Final Exchange Bulletin; (ii) a further 5% of the escrowed Common Shares will be released in 6 months; (iii) a further 10% of the escrowed Common Shares will be released in 12 months and again in 18 months; (iv) a further 15% of the escrowed Common Shares will be released in 24 months and again in 30 months; and (v) the remaining 40% will be released in 36 months.

In addition, an aggregate of 771,423 Common Shares are held in escrow pursuant to an Exchange CPC Escrow Agreement dated September 27, 2018 among the Corporation, TSX Trust Company, and certain former and current Principals of the Corporation, in accordance with the following 36-month escrow release schedule: (i) 10% of the escrowed Common Shares will be released at the time of the Final Exchange Bulletin; and (ii) an additional 15% will be released every 6 months thereafter.

On completion of the QT, an aggregate of 420,596 Common Shares held by certain non-Principal shareholders of the Corporation are subject to seed share resale restrictions pursuant to the Exchange Policy 5.4. Upon completion of the QT and every 3 months thereafter, 20% of such Common Shares will become freely tradeable over a total 12-month period.

In addition, an aggregate of 2,348,038 Common Shares held by certain non-Principal shareholders of the Corporation are subject to seed share resale restrictions pursuant to the Exchange Policy 5.4. Of such Common Shares: (i) 10% will become freely tradeable at the time of the Final Exchange Bulletin; and (ii) an additional 15% will become freely tradeable every 6 months thereafter, together, over a total 36-month period.

Directors and Officers

At closing of the QT, the Corporation’s officers and directors (other than Mr. Doron Cohen, who will remain on as a director) resigned, and the board of directors has been reconstituted to be comprised of the following individuals: (i) Mr. Domenic Carosa; (ii) Mr. Matthew Cain; (iii) Mr. Joshua (Jim) Landau; and (iv) Mr. Doron Cohen.

In addition, the board has appointed Mr. Carosa as Chairman, Mr. Holger Arians as Chief Executive Officer, and Mr. Konstantin Lichtenwald as Chief Financial Officer.

About Banxa

Banxa is a global Payment Service Provider (PSP) for the digital asset industry – it helps connect the existing ‘fiat’ financial world with the new digital asset world. Banxa provides an internationally compliant fiat-to-crypto gateway solution for exchanges, wallets and other cryptocurrency businesses. Banxa offers global and local payment methods like credit cards and retail store networks. With an easy to integrate API, exchanges, wallet providers and other industry players can offer their customers an easy and secure way to buy cryptocurrency. Banxa takes care of all regulations, payment network integrations, operational overheads, and fraud management.

Additional Information for Shareholders:

Full details of the QT are set out in the Corporation’s filing statement dated November 30, 2020 (the “Filing Statement”) and its news releases dated February 19, 2020, August 20, 2020, November 18, 2020 and December 4, 2020, which are available under the Corporation’s SEDAR profile at www.sedar.com.

Banxa Holdings Inc.

Domenic Carosa

Director & Chairman

+61411196979

dom@banxa.com

TSX Venture Exchange

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

 

Early Warning Disclosure as a result of Completion of the Qualifying Transaction

As a result of closing the QT, Mr. Carosa, a director and Chairman of the Corporation acquired beneficial ownership and control over (i) 135,564 Common Shares, through the issuance of such shares to Dominet Digital Corporation Pty. Ltd. (“Dominet Corporation”); and (ii) 6,096,904 Common Shares, through the issuance of such shares to Dominet Digital Investments Pty. Ltd. (“Dominet Investments”), each being entities controlled by Mr. Carosa, and all of which were issued in exchange for the ordinary shares of BTC held by Dominet Corporation and Dominet Investments prior to completion of the QT; and (iii) and (iii) options to be granted, not yet effective, to acquire 688,888 Common Shares through the issuance of such options to Mr. Carosa. On a non-diluted basis, Mr. Carosa has beneficial ownership and exercises control over 6,232,468 (15.31%) of the Common Shares. On a non-diluted basis, Mr. Carosa has beneficial ownership and exercises control over 6,232,468 (15.31%) of the Common Shares. On a partially-diluted basis, assuming the exercise of all aforementioned stock options, Mr. Carosa exercises control over 6,921,356 Common Shares (17.00%) of the issued and outstanding Common Shares. Prior to the completion of the QT, Mr. Carosa had no ownership or control over any securities of the Corporation. Mr. Carosa currently does not have any plan to acquire or dispose of additional securities of the Corporation. However, Mr. Carosa may acquire additional securities of the Corporation, dispose of some or all of the existing or additional securities he holds or will hold, or may continue to hold his current position, depending on market conditions, reformulation of plans and/or other relevant factors.

As a result of closing the QT, Mr. Cohen, a director and former CEO of the Corporation, and its joint actor A-Labs Finance and Advisory Ltd. (“A-Labs Advisory”), ceased to beneficial own or control an amount of Common Shares exceeding 10% or more of the outstanding class of Common Shares. Accordingly, following the filing of the early warning report referenced herein, Mr. Cohen and A-Labs Advisory will no longer file early warning reports in respect of their ownership of the Corporation’s securities, except as may be required by applicable law.

Immediately prior to the QT, Mr. Cohen, together with A-Labs Advisory, had beneficial ownership and control over (I) 407,143 Common Shares (or 1,900,000 pre-Consolidation common shares) held by A-Labs Advisory; and (ii) 12,000 post-Consolidation stock options (or 56,000 pre-Consolidation stock options) to acquire Common Shares, which were granted to Mr. Cohen, directly, pursuant to the Corporation’s initial public offering, as of the prior early warning report dated November 1, 2018, representing approximately 33.93% of the outstanding pre-Consolidation common shares of the Corporation, on a non-diluted basis, and approximately 34.93%, on a partially-diluted basis, assuming the exercise of all aforementioned stock options. Immediately after the closing of the QT, Mr. Cohen, together with A-Labs Advisory, continue to beneficially own and control (a) 407,143 Common Shares; and (ii) 12,000 post-Consolidation stock options, representing approximately <0.1% of the outstanding Common Shares, on a non-diluted basis, and approximately <0.1%, on a partially diluted basis, assuming the exercise of all aforementioned stock options.

Mr. Cohen, together with A-Labs, currently do not have any plans to acquire or dispose of additional securities of the Corporation. However, Mr. Cohen and his joint actor may acquire additional securities of the Corporation, dispose of some or all of the existing or additional securities they respectively hold or will hold, or may continue to hold their current position, depending on market conditions, reformulation of plans and/or other relevant factors.

The foregoing disclosure regarding Mr. Carosa and Mr. Cohen, together with his joint actor, is being disseminated pursuant to National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting. Copies of the early warning reports with respect to the foregoing individuals will appear on the Corporation's profile on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com and may also be obtained, with respect to (i) the Chairman and director, Mr. Carosa, at dom@banxa.com or +61411196979; and if to (ii) the director, Mr. Cohen, or his joint actor, A-Labs Advisory, at doron@alabs.co or +972-545-224-017.

All information contained in this news release with respect to Mr. Carosa’s and Mr. Cohen’s securityholdings, respectively, was supplied by each for inclusion herein, without independent review by the Corporation.

 

Caution Regarding Forward-Looking Information

This news release contains “forward-looking information” within the meaning of applicable securities laws relating to the plans, intentions, beliefs and current expectations of the Corporation with respect to future business activities and operating performance. Forward-looking statements are often identified by the words “may”, “expects”, “will” or similar expressions and including information related to the closing of the QT and the listing of the Corporation’s Common Shares on the TSXV. These statements are based upon assumptions that are subject to significant risks and uncertainties. Because of these risks and uncertainties and as a result of a variety of factors, including with respect to governmental restrictions or adverse economic conditions resulting from the COVID-19 pandemic and receipt of the final bulletin from the TSXV, the actual results, expectations, achievements or performance may differ materially from those anticipated and indicated by these forward-looking statements. Although the Corporation believes that the expectations reflected in forward looking statements are reasonable, it can give no assurances that the expectations of any forward-looking statement will prove to be correct. The statements in this news release are made as of the date of this release. Except as required by law, the Corporation disclaims any intention and assumes no obligation to update or revise any forward-looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward-looking statements or otherwise.

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