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Venzee Technologies Inc. Provides Update on Previously Announced Software Right-of-Use Purchase Transaction With Digital Commerce Payments Inc. and Announces Option and Debenture Amendments

VANCOUVER, British Columbia–(BUSINESS WIRE)–Venzee Technologies Inc. (TSXV: VENZ) (“Venzee” or the “Company”) is pleased to provide an update, in accordance with the policies of the TSX Venture Exchange (the “TSXV”), of its transaction (the “Transaction”) with Digital Commerce Payments Inc. (“DCP”), previously announced on May 17, 2024, which has been conditionally approved by the TSXV.


Pursuant to a software right-of-use agreement (the “Agreement”) with DCP, an existing consultant of Venzee, dated May 16, 2024, Venzee agreed to acquire the exclusive right to use certain e-commerce shelf capability software (the “DCP Software”) developed by DCP for consideration of CDN$4,250,000 (the “Purchase Price”), payable in cash or common shares (“Shares”) in the capital of Venzee (the “Transaction”). Venzee anticipates paying the Purchase Price by issuing 19,318,182 Shares (the “Consideration Shares”) at a deemed issue price of CDN$0.22 per Consideration Share to DCP pursuant to the policies of TSXV.

Shareholder Meeting

Venzee expects to hold an annual and special meeting (the “Meeting”) of holders of Shares (“Shareholders”) to approve the Transaction and other matters on August 8, 2024. Additional information on the items to be approved at the Meeting will be set out in the management information circular (the “Circular”) relating to the Meeting and to be sent to Shareholders of record as at July 8, 2024. For more information regarding the Transaction, please see the Company’s news release dated May 17, 2024.

Options Amendment

In addition, Venzee announces that it has submitted an application to the TSXV for conditional approval of an amendment (the “Options Amendment”) to the terms of all of its 690,000 outstanding stock options (“Options”) of the Company to purchase up to 640,000 Shares of the Company at exercise prices ranging from of $0.75 to $1.30 per Common Share, granted under the Company’s omnibus long term incentive plan dated October 30, 2020 (the “Plan”), pursuant to TSXV Policy 4.4 – Security Based Compensation (“Policy 4.4”). The Options Amendment will reduce the exercise price of all outstanding Options to $0.35 per Share, and is intended to incentivize the holders of Options to exercise such Options to more closely align their interests with those of Shareholders in light of the current market price of the Shares.

Pursuant to the terms of the Plan and Policy 4.4, the Company intends to seek disinterested Shareholder approval at the Meeting for the Options Amendment as it pertains to the 625,000 Options held by Insiders of the Company (the “Insider Options”), which will exclude the vote of Shareholders who hold the Insider Options from voting on the resolution approving the Options Amendment. To the best of the Company’s knowledge, 1,997,667 Shares, representing approximately 6.46% of the issued and outstanding Shares, will be excluded for the purposes of determining whether the required level of disinterested Shareholder approval is obtained for such resolution.

Debenture Amendment

The Company also announces that it has submitted an application to the TSXV for its conditional approval of an amendment (the “Debenture Amendment”) to the terms of the Company’s existing $470,000 aggregate principal amount of convertible debentures (“Convertible Debentures”), bearing interest at a rate of 5% per annum that are convertible into units of the Company (“Debenture Units”), pursuant to TSXV Policy 4.1 – Private Placements (“Policy 4.1”). The closings of the private placement offerings through which the Convertible Debentures were issued were announced in the news releases of the Company dated February 2, April 4, and June 9, 2023.

The Convertible Debentures are currently convertible into Debenture Units at a conversion price of $1.00 per Debenture Unit, with each Debenture Unit comprised of one Share and one Share purchase warrant (each, a “Debenture Warrant”), with each Debenture Warrant exercisable into one Share for a period of five years from the date of issuance of the Convertible Debentures at a price of $0.80 per Share. The Debenture Amendment will reduce the conversion price of the Convertible Debentures from $1.00 to $0.30 per Debenture Unit (the “Revised Conversion Price”) and reduce the exercise price of the Debenture Warrants to $0.48 per Share. The purpose of the Debenture Amendment is to align the conversion price of the Convertible Debentures more with the current market price of the Shares in order to incentivize holders of the Convertible Debentures to convert their Convertible Debentures into Debenture Units rather than the Company continuing to bear the financial burden of payment of the principal and interest.

The Company will be seeking disinterested shareholder approval at the Meeting for the Debenture Amendment in connection with the Transaction in light of the fact that Pateno Payments Inc. (“Pateno”), a joint actor of DCP and Mr. Jeffrey J. Smith, the Chief Executive Officer and chairman of the board of directors of DCP and current director of Venzee, who is also expected to become a Control Person (as such term is defined in the policies of the TSXV) as a result of the Transaction (“Mr. Smith” and together with Pateno, the “Joint Actors”), owns, or exercises control or direction over, an aggregate of $290,000 principal amount of the Convertible Debentures. The votes attaching to Shares held by DCP and its Joint Actors and all other arm’s length third party Convertible Debentureholders will not be counted towards the votes of the resolution approving the Debenture Amendment. To the best of the Company’s knowledge, in order to obtain disinterested shareholder approval of the Debenture Amendment, the votes relating to a total of 6,583,439 Shares, representing approximately 21.28% of the issued and outstanding Shares will be excluded.

Share Ownership of DCP and Joint Actors

As a result of the closing of the Transaction, and assuming the completion of the Debenture Amendment, is expected that DCP and its Joint Actors will collectively own, or exercise control or direction over, approximately 44% of the issued and outstanding Common Shares, or 46.5% on a partially diluted basis, assuming full conversion of the Convertible Debentures at the Revised Conversion Price and exercise of the Debenture Warrants issuable upon conversion of the Convertible Debentures. As at the date hereof, DCP and its Joint Actors own, or exercise control over, 2,955,954 Shares on a non-diluted basis, representing approximately 9.56% of the issued and outstanding Shares, or 3,569,864 Shares on a partially-diluted basis assuming the conversion of the Convertible Debentures and exercise of the Debenture Warrants at their current conversion and exercise prices, representing approximately 11.32% of the total issued and outstanding Shares. The above amended Share ownership figures include the 1,800,000 Shares owned by DCP that were excluded from the from the Share ownership figures in the Company’s news release dated May 17, 2024 in error.

Shareholder Approval Matters

The Transaction will be considered a “related-party transaction” within the meaning of TSXV Policy 5.9 – Protection of Minority Security Holders in Special Transactions (“Policy 5.9“) and Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101“). The Transaction will also be considered a “Change of Control” within the meaning of TSXV Policy 1.1 – Interpretation. Venzee shall seek disinterested shareholder approval for the Transaction pursuant to TSXV Policy 5.6 – Acquisitions and Dispositions of Non-Cash Assets and minority shareholder approval for the Transaction pursuant to MI 61-101 and TSXV Policy 5.9 – Protection of Minority Security Holders in Special Transactions, which approvals shall each exclude the voting of any Shares held by DCP and its Joint Actors. The Company shall rely on the exemption in Section 5.5(b) of MI 61-101 with respect to not obtaining a formal valuation for the DCP Software.

The Options Amendment and Debenture Amendment are also considered “related party transactions” under Policy 5.9 and MI 61-101. The Company will be seeking disinterested shareholder approval for each of the Options Amendment and Debenture Amendment, which approvals shall exclude the voting of any Shares held by any parties with an interest in such transactions pursuant to the Policies of the TSXV. The Company shall also seek minority approval for the Debenture Amendment as it may be considered a “connected transaction” to the Transaction under MI 61-101 and will rely on the exemption set out in Section 5.7(a) of MI 61-101 from the minority Shareholder approval requirement for the Options Amendment.

Additional information concerning Shareholder approval matters will be set out in the Circular.

About Venzee

Venzee unlocks shareholder value by carrying out its mission to create intelligent technology that removes friction from the global supply chain. Its Mesh Connector™ product disrupts and displaces inefficient manual processes in favor of integrated, machine-driven solutions. To learn more about the Venzee platform, visit https://venzee.com.

About DCP

In a world where innovation and disruption are key to success, DCP is leading the charge with cutting-edge digital payment solutions. From seamless integrations to fully customizable options, DCP helps its customers put fast, reliable solutions at the heart of their businesses. DCP was incorporated under the laws of the Province of Alberta and is not a “reporting issuer” under applicable securities legislation in any jurisdiction and its securities are not listed for trading on any stock exchange. To learn more about DCP, visit https://dc-payments.ca/.

Further Information

All information contained in this news release with respect to Venzee and DCP 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, final TSXV approval and disinterested shareholder approval. 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 Venzee should be considered highly speculative.

The TSXV has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this news release. Neither the TSXV nor its Regulation Service Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Information

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking information in this press release includes, but is not limited to statements with respect to: (i) the anticipated completion of the Transaction; and (ii) TSXV and Shareholders’ approval of the Transaction.

Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Venzee to be materially different from those expressed or implied by such forward-looking information, including but not limited to: (i) Venzee’s ability to obtain necessary shareholder, regulatory, and final TSXV approvals for the Transaction; (ii) Venzee’s ability to fund the ongoing costs associated with the integration of the DCP Software in its existing operations, which may negatively impact Venzee’s ability to achieve its expected financial projections and targets following the completion of the Transaction; (iii) global financial conditions, and the related impact of geopolitical and social uncertainties, and fluctuating conditions in respect of the market for e-commerce software solutions, which may impact Venzee’s ability to achieve the Financial Projections; (iv) the number of Convertible Debentures that may be converted into Debenture Units, which may impact the number of Shares held by DCP following the completion of the Transaction on a partially-diluted basis; and (v) Venzee’s ability to obtain final approval from the TSXV for the Transaction.

Certain assumptions were made in preparing the forward-looking information concerning: (i) the performance of the DCP Software at the desired efficiency once integrated with the Venzee Software, and its ability to address existing performance deficiencies in the Venzee Software; (ii) the sufficiency of capital resources available for the integration of the DCP Software and Venzee’s operations overall; (iii) ongoing consumer demand for e-commerce software solutions; and (iv) Venzee’s ability to maintain its status as a going concern. Additional information about assumptions and risks and uncertainties is contained under “Risk Factors and Uncertainties” in Venzee’s management’s discussion and analysis for the financial year ended March 31, 2024, which is available under Venzee’s SEDAR+ profile at www.sedarplus.ca, and in other filings that Venzee has made and may make with applicable securities authorities in the future.

Although Venzee has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information 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 forward-looking information. The forward-looking information contained in this news release is expressly qualified in its entirety by this cautionary statement. Venzee does not undertake to update any forward-looking information, except as required by applicable securities laws.

Contacts

For further information regarding the Transaction, please contact:

Peter Montross

Chief Executive Officer

Venzee Technologies, Inc.

[email protected]
503-320-8046

Jeffrey J. Smith

Chief Executive Officer

Digital Commerce Payments Inc.

[email protected]

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