Company Announcements

Acquisition expected to bring EMERGE to cash flow positive

• Tee 2 Green Ltd.("T2G") generated revenue of $6.4M and net income of $700K in 2024 (unaudited)
• Purchase price of $2.2M, including $1.1M cash on closing, $900K deferred consideration over a 5-year payment plan, and $200K in EMERGE shares issued at $0.065/ share or higher (subject to a 180-day escrow)
• Acquisition funded with cash on hand
• Inclusive of T2G, EMERGE expects to achieve positive cash flow in 2025
• As part of the deal, EMERGE is also acquiring a minimum of $2.3M inventory on closing under an 8-year payment plan, providing a sizable cash flow advantage in 2025

TORONTO , March 27, 2025 /CNW/ - EMERGE Commerce Ltd. (TSXV: ECOM) ("EMERGE" or the "Company"), a premium e-commerce brand portfolio, is pleased to announce the signing of a definitive agreement dated effective March 27, 2025, to acquire all issued and outstanding shares of Tee 2 Green Ltd. ("T2G") (the "Transaction").

T2G is a profitable, discount golf apparel and equipment business with a 38-year track record of operations, focused on the Canadian market. T2G achieved revenue of $6.4M, Adjusted EBITDA⁽¹⁾ of $1M and positive net income of $700K in 2024 (unaudited). T2G is based in Ontario, Canada and was founded in 1987 by Robert J. Fell, who will continue to support T2G under EMERGE in his capacity as a consultant. T2G has a diversified revenue stream comprising two retail stores, dozens of roadshows, an online store, and a private label golf apparel brand, NORTHERN SPIRIT.

Ghassan Halazon, founder and CEO of EMERGE commented, "Following a year of tremendous progress, including 3 consecutive quarters of re-igniting positive organic growth, we are pleased to announce the immediately accretive and highly synergistic acquisition of Tee 2 Green, a profitable business with a multi-decade track record that complements our growing golf vertical. Importantly, the deal is expected to bring EMERGE to cash flow positive moving forward."

Bob Fell, founder and CEO of Tee 2 Green commented, "Over the past 38 years, we've built a reputable name for ourselves in the golf space, along with our loyal customers and valued vendors whom we are extremely grateful for. We take immense pride that our business was 100% bootstrapped, and has been profitable for years. Joining EMERGE enables T2G to access one of the most substantial golf customer databases in North America, deeper online expertise, and a much wider range of marketing and analytics. The T2G team looks forward to taking our combined golf business to new heights."

Acquisition Funded with Cash on Hand

Given EMERGE's recently bolstered cash position from the sale of the SHOP domains to Shopify (TSX: SHOP) and the sale of the Carnivore Club assets announced in January 2025, as well as the flexible deal structure negotiated with T2G, the Company intends to close the transaction utilizing existing cash on hand.

Immediate Synergies

T2G will benefit from EMERGE's extensive golf business, which includes UnderPar and JustGolfStuff, an organically growing and profitable vertical for EMERGE in 2024. T2G and EMERGE's golf business already have a multi-year history of partnership and collaboration. EMERGE expects to utilize its 400,000+ golf subscriber database to help scale T2G's business cost-effectively.

"We have seen great success with JustGolfStuff, our golf apparel and products business that we have grown nearly 10x over the last 5 years since acquiring it alongside UnderPar in late 2019. We already work closely with T2G, and the teams are intimately familiar and collaborative, thus reducing operational risk. The addition of T2G, expands our strategic golf roadmap which will now include discounted golf experiences, apparel, and products, both online and offline," commented Maurice Finn, COO of EMERGE's Golf business.

Transaction Overview

Pursuant to the Agreement and in consideration for the Transaction, EMERGE has agreed to pay to T2G, cash consideration of $1.1M on closing of the Transaction ("Closing"), and $900K in deferred cash consideration over a 5-year period.

EMERGE will also be issuing common shares in the capital of EMERGE (the "Common Shares" and the Common Shares issued pursuant to the Transaction, the "Compensation Shares") worth $200,000, which will be issued a deemed price pers share equal to the higher of (i) $0.065 and (ii) lowest deemed value per Compensation Share permissible pursuant to applicable securities laws and the policies of the TSX Venture Exchange. All shares issued in relation to the Transaction will be subject to restrictions from trading for 180 days from date of issuance.

As part of the transaction, EMERGE is also acquiring a minimum of $2.3M inventory over an 8-year payment plan. At December 31, 2024, T2G had total assets of $5.3M (including $2.9M in inventory) and total liabilities of $1.1M.

No finder's fees are expected to be paid in connection with the Transaction.

Subject to the satisfaction of all conditions precedent to the completion of the Transaction, including receipt of TSXV approval, Closing is expected to occur prior to April 30, 2025 or such other date as EMERGE and T2G may mutually agree.

The Transaction constituted an Expedited Acquisition in accordance with Policy 5.3 of the TSX Venture Exchange; however, remains subject to the approval of the TSX Venture Exchange as of the date of this news release.

Go Forward Business

Following the Transaction, EMERGE will retain 4 brands across 2 main verticals. truLOCAL is our flagship grocery brand, a Canadian meat and seafood subscription service, and the golf vertical, which will now include UnderPar, JustGolfStuff, and Tee 2 Green.

T2G is expected to bring EMERGE to substantially enhance the Company's profitability and cash flow profile, and in the process, strengthen its balance sheet, and potentially improve its cost of capital over time.

"This acquisition marks the beginning of EMERGE's next chapter which entails combining our organically growing business with this accretive, profitable, bolt-on acquisition, at favorable terms, and with clear "Day 1" synergies," continued Halazon.

About EMERGE

EMERGE is a premium e-commerce brand portfolio based in Canada. Our subscription and marketplace e-commerce properties provide our members with access to offerings across our grocery and golf verticals. truLOCAL is our premium, Canadian meat and seafood subscription service, connecting local farmers with a health-conscious audience. Our golf businesses include UnderPar, our discounted tee-times/ experiences brand, and JustGolfStuff, our discounted golf apparel and products brand.

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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.

Non-GAAP Measures

This press release makes reference to certain non-GAAP measures. These non-GAAP measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing a further understanding of results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the financial information of the Company reported under IFRS. Adjusted EBITDA should not be construed as an alternative to net income/loss determined in accordance with IFRS. Adjusted EBITDA does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers.

Adjusted EBITDA as defined by management means earnings before interest and financing costs, income taxes, depreciation and amortization, transaction costs, foreign exchange gains/losses, discontinued operations, unrealized gains/losses on contingent consideration and share-based compensation. Management believes that Adjusted EBITDA is a useful measure because it provides information about the operating and financial performance of EMERGE and its ability to generate ongoing operating cash flow to fund future working capital needs and fund future capital expenditures or acquisitions.

Notice regarding forward-looking statements

This press release may contain certain forward-looking information and statements ("forward-looking information") within the meaning of applicable Canadian securities legislation, that are not based on historical fact, including, without limitation, statements related to the closing of the Transaction and the timing thereof, the satisfaction of all conditions precedent to the closing of the Transaction, including, without limitation, TSXV approval in respect of the Transaction, any benefit that may be derived by the Company from the Transaction, including, without limitation, any material benefit to the working capital or financial position of the Company as a result of the Transaction, expectations regarding cash flow both as a result of the Transaction and in general, as well as other statements containing the words "believes", "anticipates", "plans", "intends", "will", "should", "expects", "continue", "estimate", "forecasts" and other similar expressions. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements. There is no guarantee the Transaction will be completed as contemplated or at all, and the forward-looking information contained herein is based on the assumptions of management of the Company as of the date hereof including, without limitation, assumptions with respect to the financial position, cash flow, and working capital of the Company, the ability of the Company to obtain TSXV approval for the Transaction and the satisfaction of any other conditions thereto, and the conditions of the financial markets and the e-commerce markets generally, among others. The Company undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of the Company, its securities, or financial or operating results (as applicable). Although the Company believes that the expectations reflected in forward-looking information in this press release are reasonable, such forward-looking information has been based on expectations, factors and assumptions concerning future events which may prove to be inaccurate and are subject to numerous risks and uncertainties, certain of which are beyond the Company's control, including risks related to the disposition of a operating business by the Company, risks that the benefits derived from the Transaction may not be as expected or that the Company may not see any benefit from the Transaction, risks that each party to the Agreement may not satisfy its obligations or covenants, risks that the Company may be subject to litigation as a result of the Transaction including allegations of misrepresentation or breach of conditions or covenants, risks that the TSXV may not approve the Transaction, as well as the risk factors discussed in the Company's MD&A, which is available through SEDAR+ at www.sedarplus.ca . The forward-looking information contained in this press release are expressly qualified by this cautionary statement and are made as of the date hereof. The Company disclaims any intention and has no obligation or responsibility, except as required by law, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

On Behalf of the Board
Ghassan Halazon
Director, President, and CEO
EMERGE Commerce Ltd.

SOURCE Emerge Commerce Ltd.