TerrAscend to Acquire Gage Cannabis


NEWS PROVIDED BYTerrAscend 

Sep 01, 2021, 09:31 ET


TerrAscend Logo (CNW Group/TerrAscend)
TerrAscend Logo (CNW Group/TerrAscend)
Gage Cannabis Co. Logo (CNW Group/TerrAscend)
Gage Cannabis Co. Logo (CNW Group/TerrAscend)

Establishes Leading Presence in Michigan, the Third Largest U.S. Cannabis Market

Combines Industry Leading Retail, Cultivation and Operations Teams Across 7 Cultivation Facilities and 23 Operational Retail Locations in 5 States

The Gage Brand, One of the Most Influential and Innovative in Michigan, to Be Featured Across TerrAscend's Current and Future Markets

NEW YORK, DETROIT and TORONTO, Sept. 1, 2021 /CNW/ – TerrAscend Corp. (“TerrAscend” or the “Company”) (CSE: TER) (OTCQX: TRSSF), a leading North American cannabis multi-state operator, and Gage Growth Corp. (“Gage”) (CSE: GAGE), a leading high-quality premium cannabis brand and operator, today announced that they have entered into a definitive arrangement agreement (the “Arrangement Agreement”) pursuant to which TerrAscend will acquire all of the issued and outstanding subordinate voting shares (the “Gage Shares”) of Gage by way of a court-approved plan of arrangement under the Canada Business Corporations Act (the “Transaction”). All references to dollar values refer to US dollars unless otherwise noted.

Under the terms of the Arrangement Agreement, shareholders of Gage (the “Gage Shareholders”) will receive 0.3001 of a common share of TerrAscend for each Gage Share (or equivalent) held (the “Exchange Ratio”), representing a total consideration of approximately $545 million1 based on the closing price of TerrAscend on August 31, 2021. The Exchange Ratio implies a consideration of $2.11 (or C$2.66) per Gage Share, representing a 18% premium based on the closing prices of both companies' shares on the Canadian Securities Exchange (the “CSE”) on August 31, 2021.

Upon completion of the Transaction, the combined business will have operations in 5 states and Canada, including 7 cultivation and processing facilities and 23 operating dispensaries serving both medical and adult-use cannabis markets in the U.S. and Canada.

Management Commentary

“The acquisition of Gage expands our footprint to the third largest cannabis market in the U.S.,” said Jason Wild, Executive Chairman of TerrAscend. “Combining our market-leading share in our existing states with Gage's proven cultivation, retail, and marketing capabilities, creates one of the largest and most dynamic companies in the industry. We look forward to leveraging Gage's profound connection with Michigan's consumers, in addition to its established partnerships with award-winning brands like COOKIES, to provide our patients and customers with best-in-class product offerings and retail experiences.”

“Our shared strategic and corporate values make this combination a strong fit,” said Fabian Monaco, CEO of Gage. “We also recognize the incredible success that TerrAscend has enjoyed in recent years. We could think of no better company to partner with as we execute on our shared strategy of deep vertical integration and scale in our core markets, with a vision of creating the most consumer-centric cannabis company in the world.”

Key Transaction Highlights and Benefits

If consummated, the Transaction is anticipated to result in the following benefits:

  • Leadership in a Top 3 Market: Gage has established itself as a leader in the Michigan market, which is the third largest cannabis market in the U.S.2 with reported cannabis sales of $171 million in the month of July 2021, representing an annualized market size of approximately $2.1 billion2.
  • Premium Brands: The Transaction will provide access to Gage's sought-after brand and proprietary library of genetics as well as Gage's exclusive licensing partnerships in Michigan with COOKIES, SLANG Worldwide, Blue River, Pure Beauty, and Khalifa Kush.
  • Efficient Operating Model: The combined company will operate 7 cultivation facilities, including 3 cultivation facilities in Michigan, in addition to Gage's 9 contract grow agreements.
  • Expanding Retail Footprint: The combined company will operate a retail network expected to reach 34 stores over the coming months. This includes 23 currently open dispensaries across 5 states with Gage operating 10 dispensaries in Michigan in addition to TerrAscend's 13 store footprint in key markets including California, New Jersey and Pennsylvania. TerrAscend is expected to open its 14th dispensary in the fourth quarter in Lodi, New Jersey and Gage is expected to open 10 additional dispensaries across Michigan in the coming months.
  • A Leader in Experiential Retail: Gage's award-winning retail stores generate industry leading retail metrics, including strong average basket size ($152 in the second quarter of 2021 compared to Michigan average of $853) and premium pricing for its flower products (40%+ relative to the Michigan market average price2). TerrAscend expects to leverage Gage's portfolio of over 40+ proprietary flower strains in addition to brand and marketing capabilities, at retail locations in other states.
  • Expert Operating Teams: The Transaction combines management teams with similar core philosophies, strong track records of execution and operational expertise in building leading businesses in the most competitive cannabis markets in the country.

    Balance Sheet Strength: Gage's $32.8 million cash position with minimal debt as of June 30, 2021, combined with TerrAscend's strong balance sheet, positions the combined company to execute on its growth plans.
NOTES:
1Calculated equity value on a fully diluted basis
2Marijuana Regulatory Agency – State of Michigan
3Detroit Metro Times

The Transaction Details

The Transaction will be effected by way of a court-approved plan of arrangement pursuant to the Canada Business Corporations Act. Under the terms of the Arrangement Agreement, TerrAscend will acquire all of the issued and outstanding Gage Shares, with each Gage Shareholder receiving 0.3001 of a common share in the capital of TerrAscend for each Gage Share, implying a price per Gage Share of $2.11 (or C$2.66) which represents an 18% premium based on the closing prices of both companies shares on August 31, 2021. After giving effect to the Transaction, Gage Shareholders will hold approximately 19.8% of the issued and outstanding pro forma TerrAscend Shares (on a fully-diluted as-converted basis). In connection with the Transaction, all outstanding options and warrants of Gage will be exchanged for replacement options and warrants of TerrAscend, exercisable to acquire that number of common shares of TerrAscend as is equal to the Exchange Ratio multiplied by the number of Gage Shares that the holders of the options or the warrants would have acquired if such holders had exercised such options or warrants immediately prior to the effective time of the Transaction.

In connection with and as an integral part of the Transaction, TerrAscend, through a wholly-owned and controlled subsidiary (the “TerrAscend Subsidiary”), has entered into a membership interest purchase agreement with the owners of the licenses that Gage supports in the State of Michigan (the “Licensed Operators”) to acquire, subject to regulatory approvals, all of the issued and outstanding membership interests of each of the Licensed Operators and/or all of the licenses owned by such Licensed Operators (the “License Assets”).

As part of the Transaction, exchangeable shares (each of which is exchangeable into Gage Shares)  indirectly owned by Rami Reda, an insider of Gage, will be transferred (along with all super voting shares of Gage attached to such exchangeable shares) to TerrAscend in exchange for TerrAscend Shares on the basis of the Exchange Ratio.

Certain exchangeable units (each of which is exchangeable into Gage Shares) held by Mike Hermiz, a director and officer of Gage, will remain in place following the closing of the Transaction. In this regard, Mr. Hermiz, Gage, TerrAscend and certain subsidiaries of Gage will, concurrently with the closing of the Transaction, enter into a support agreement that will, among other things, govern the terms and conditions under which Mr., Hermiz will be entitled to exchange his exchangeable units into TerrAscend Shares on the basis of the Exchange Ratio. In addition, all super voting shares of Gage held by Mr. Hermiz will be transferred to TerrAscend in connection with the closing Transaction for no consideration.

Additional details of the Transaction will be described in the management information circulars that will be mailed to Gage Shareholders (the “Gage Circular”) and TerrAscend shareholders (the “TerrAscend Circular”), respectively, in connection with a special meeting of Gage Shareholders (the “Gage Meeting”) and a special meeting of TerrAscend Shareholders (the “TerrAscend Meeting”) expected to be held in the fourth quarter to approve the Transaction. Additional information regarding the terms of the Arrangement Agreement, the background to the Transaction, the rationale for the recommendations made by the Special Committees (as defined below) and how shareholders can participate in and vote at the Gage Meeting or TerrAscend Meeting will be provided in the Gage Circular or TerrAscend Circular, as applicable.

The Transaction is subject to the approval of (i) at least two-thirds of the votes cast by Gage Shareholders at the Gage Meeting; (ii) a majority of the votes cast by Gage Shareholders at the Gage Meeting (excluding the votes cast by persons whose votes may not be included in determining minority approval of a “business combination” pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”)); and (iii) a majority of the votes cast by disinterested shareholders of TerrAscend (“TerrAscend Shareholders”) at the TerrAscend Meeting (excluding the votes cast by persons whose votes may not be included in determining minority approval of a “related party transaction” pursuant to MI 61-101).

All of Gage's directors and officers, and shareholders holding more than 58.50% of the total voting power of the issued and outstanding Gage Shares have entered into voting support and lock-up agreements with TerrAscend to vote in favor of the Transaction. This represents approximately 29.1% of the voting power of the issued and outstanding Gage Shares entitled to vote for purposes of the disinterested shareholder vote required pursuant to MI 61-101 (after excluding the votes attached to Gage Shares held by certain “interested parties”, all in accordance with MI 61-101). In addition, all directors and officers of TerrAscend have entered into voting support agreements to vote in favour of the Transaction at the TerrAscend Meeting, to the extent such individuals are permitted to do so under applicable securities laws.

In addition to the aforementioned approvals, completion of the Transaction is subject to receipt of all applicable regulatory approvals for the TerrAscend Subsidiary to obtain ownership of the License Assets representing at least 70% of Gage's consolidated revenues and other customary conditions, including the receipt of all necessary court, regulatory and stock exchange approvals. Subject to the receipt of all required approvals, closing of the Transaction is expected to occur in the first half of 2022.

The Arrangement Agreement contains customary terms and conditions, including non-solicitation provisions which are subject to Gage's right to consider and accept a superior proposal subject to a matching right in favour of TerrAscend. The Arrangement Agreement also provides for the payment of a termination fee of $30 million by TerrAscend or Gage, as applicable, if the Transaction is not completed under certain limited circumstances.

A copy of the Arrangement Agreement will be available through Gage's and TerrAscend's filings with the securities regulatory authorities in Canada in SEDAR at www.sedar.com.

None of the securities to be issued pursuant to the Arrangement Agreement have been or will be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws, and any securities issued in the Transaction are anticipated to be issued in reliance upon available exemptions from such registration requirements pursuant to Section 3(a)(10) of the U.S. Securities Act and applicable exemptions under state securities laws. This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities.

If the Transaction is completed, the Gage Shares will be delisted from the CSE.

Multilateral Instrument 61-101

The Transaction constitutes a “business combination” under MI 61-101 for Gage and a “related party transaction” under MI 61-101 for TerrAscend as Jason Wild, is a “control person” of both Gage and TerrAscend. TerrAscend and Gage are each relying on the formal valuation exemption under MI 61-101, on the basis that no securities of Gage or TerrAscend are listed on the Toronto Stock Exchange or other specified markets. As required by MI 61-101, each of Gage and TerrAscend will seek the requisite majority of the minority approvals of the Transaction from the Gage Shareholders and the TerrAscend Shareholders at the Gage Meeting and the TerrAscend Meeting, excluding the votes of shareholders whose votes are required to be excluded for the purposes of “minority approval” under MI 61-101 in the context of a “business combination” and a “related party transaction”, respectively.

Upon closing of the Transaction, JW Asset Management, LLC, an entity controlled by Jason Wild, currently the holder of approximately 39% of TerrAscend Shares will hold approximately 32% of TerrAscend Shares on a partially diluted basis.

In addition, JW Asset Management, LLC and its joint actors hold or exercise direction or control over approximately 16.34% of the Gage Shares (on an as exchanged basis) and warrants to acquire an additional 23,757,145 Gage Shares. As a result of the foregoing, Jason Wild and his joint actors will be excluded from the disinterested shareholder vote conducted at both the TerrAscend Meeting and the Gage Meeting in accordance with MI 61-101.

In addition, the preservation of the ability of Mr. Hermiz to continue to hold his exchangeable units following the closing the Transaction constitutes a “collateral benefit” to him for purposes of M 61-101. Accordingly, Mr. Hermiz will be classified as an interested party for purposes of the Gage disinterested shareholder vote pursuant to MI 61-101. Mr. Hermiz holds 8,500,000 subordinate voting shares and 900,000 super voting shares (each super voting share entitles the holder to 50 votes) of Gage (representing approximately 25% of the voting power of the issued and outstanding Gage Shares).

Recommendation of the TerrAscend Special Committee and TerrAscend's Board

The special committee of the TerrAscend board of directors (the “TerrAscend Special Committee”), comprised of Craig Collard, after receiving the oral fairness opinions from the TerrAscend Special Committee's financial advisors described below, and independent legal and financial advice, has recommended the Transaction having determined that the Transaction is in the best interests of TerrAscend and that the Transaction is fair to the minority shareholders of TerrAscend.

The TerrAscend Special Committee has obtained oral fairness opinions from each of ATB Capital Markets Inc. and Haywood Securities Inc. to the effect that, as of the date of the Arrangement Agreement, and subject to the assumptions, limitations and qualifications on which such opinions are based, the Transaction is fair, from a financial point of view, to TerrAscend and its shareholders.

After receiving the recommendations of the TerrAscend Special Committee, the disinterested members of TerrAscend's board of directors have unanimously determined that (i) the Transaction is in the best interests of TerrAscend and that the Transaction is fair to TerrAscend's minority shareholders; (ii) it approve and authorize the Transaction and the entering into of the Arrangement Agreement and all ancillary agreements; and (iii) in accordance with and subject to the terms of the Arrangement Agreement, it recommend to TerrAscend's minority shareholders that they vote in favour of the resolution to approve the Transaction at the TerrAscend Meeting.

Additional details concerning the rationale for the recommendations made by the TerrAscend Special Committee and TerrAscend's board of directors, including copies of the fairness opinions prepared by the TerrAscend Special Committee's independent financial advisors, will be set out in the TerrAscend Circular to be filed and mailed to TerrAscend shareholders in the coming weeks, which, together with the Arrangement Agreement, will be available under TerrAscend's profile at www.sedar.com.

Each of: (i) Mr. Jason Wild, a director and the executive chairman of TerrAscend and President and Chief Investment Officer of JW Asset Management, LLC (a control person of both TerrAscend and Gage), and (ii) Mr. Richard Mavrinac, a director of both TerrAscend and Gage, declared their respective interests to the TerrAscend board of directors and did not attend any part of the meeting of the TerrAscend board of directors during which the Transaction was discussed and approved and neither Mr. Wild nor Mr. Mavrinac voted on the approval of the Transaction.

Recommendation of Gage's Board

The special committee (the “Gage Special Committee”) of the board of directors of Gage (the “Gage Board”), comprised of  Bruce Linton and Dr. Rana Harb, after receiving legal and financial advice, including the fairness opinion from its independent financial advisor discussed below, has unanimously recommended the Transaction having determined that the consideration to be received by the Gage Shareholders pursuant to the Transaction is fair, from a financial point of view, to the Gage Shareholders.

The Gage Special Committee has obtained an oral fairness opinion from Eight Capital to the effect that, as of the date of the Arrangement Agreement, and subject to the assumptions, limitations and qualifications on which such opinions are based, the consideration to be received by the Gage Shareholders pursuant to the Transaction is fair, from a financial point of view, to the Gage Shareholders.

After receiving the recommendations of the Gage Special Committee, and the fairness opinion from its independent financial advisor discussed below, the disinterested members of the Gage Board have unanimously determined that (i) the consideration to be received by the Gage Shareholders pursuant to the Transaction is fair, from a financial point of view, to the Gage Shareholders; (ii) the Transaction is in the best interests of Gage; and (iii) it approve and authorize the Transaction and the entering into of the Arrangement Agreement and all ancillary agreements; and (iv) in accordance with and subject to the terms of the Arrangement Agreement, it recommend to the Gage Shareholders that they vote in favour of the resolution to approve the Transaction at the Gage Meeting.

The Gage Board has obtained an oral fairness opinion from Clarus Securities to the effect that, as of the date of the Arrangement Agreement, and subject to the assumptions, limitations and qualifications on which such opinions are based, the consideration to be received by the Gage Shareholders pursuant to the Transaction is fair, from a financial point of view, to the Gage Shareholders.

Additional details concerning the rationale for the recommendations made by the Gage Special Committee and the Gage Board, including copies of the fairness opinions prepared by the independent financial advisor to the Gage Special Committee and the Gage Board, will be set out in the Gage Circular to be filed and mailed to the Gage Shareholders in the coming weeks, which, together with the Arrangement Agreement, will be available under Gage's profile at www.sedar.com.

Mr. Richard Mavrinac, a director of both TerrAscend and Gage, declared his interests to the Gage Board and did not attend any part of the meeting of the Gage Board during which the Transaction was discussed and approved and Mr. Mavrinac did not vote on the approval of the Transaction.

Advisors

Norton Rose Fulbright acted as Canadian and U.S. legal counsel to TerrAscend. ATB Capital Markets Inc. and Haywood Securities Inc. acted as independent financial advisors to the TerrAscend Special Committee and Stikeman Elliott LLP acted as independent legal counsel to the TerrAscend Special Committee.

Dentons Canada LLP acted as legal counsel to Gage in Canada and Dickinson Wright PLLC acted as legal counsel to Gage in the United States. Eight Capital acted as independent financial advisor to the Gage Special Committee and Clarus Securities acted as independent financial advisor to the Gage Board.

The CSE has neither approved nor disapproved the contents of this news release. Neither the CSE nor its Market Regulator (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.

About TerrAscend

TerrAscend is a leading North American cannabis operator with vertically integrated operations in Pennsylvania, New Jersey, and California, licensed cultivation and processing operations in Maryland and licensed production in Canada. TerrAscend operates an award-winning chain of The Apothecarium dispensary retail locations as well as scaled cultivation, processing, and manufacturing facilities on both the East and West coasts. TerrAscend's best-in-class cultivation and manufacturing practices yield consistent, high-quality cannabis, providing industry-leading product selection to both the medical and legal adult-use market. The Company owns several synergistic businesses and brands, including The Apothecarium, Ilera Healthcare, Kind Tree, Prism, State Flower, Valhalla Confections, and Arise Bioscience Inc.

For more information about TerrAscend, visit www.terrascend.com.

About Gage

Gage Growth Corp. is innovating and curating the highest quality cannabis experiences possible for cannabis consumers in the state of Michigan and bringing internationally renowned brands to market. Through years of progressive industry experience, the firm's founding partners have successfully built and grown operations with federal and state licenses, including cultivation, processing and retail locations. Gage's portfolio includes city and state approvals for 19 “Class C” cultivation licenses, three processing licenses and 15 provisioning centers (dispensaries).

For more information about Gage Growth Corp., visit www.gagecannabis.com or www.gageinvestors.com.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This news release contains “forward-looking information” within the meaning of applicable securities laws. Forward-looking information contained in this press release may be identified by the use of words such as, “may”, “would”, “could”, “will”, “likely”, “expect”, “anticipate”, “believe, “intend”, “plan”, “forecast”, “project”, “estimate”, “outlook” and other similar expressions. Forward-looking information is not a guarantee of future performance and is based upon a number of estimates and assumptions of management in light of management's experience and perception of trends, current conditions and expected developments, as well as other factors relevant in the circumstances, including assumptions in respect of current and future market conditions, the current and future regulatory environment, and the availability of licenses, approvals and permits.

Forward-looking statements in this news release include, but are not limited to: statements with respect to the anticipated completion of the Transaction and the timing for its completion; the timing for the holding of the TerrAscend Meeting and the Gage Meeting; the satisfaction of closing conditions which include, without limitation (i) required Gage and TerrAscend shareholder approvals, (ii) certain termination rights available to the parties under the Arrangement Agreement, (iii) obtaining the necessary approvals from the CSE for the listing of TerrAscend's common shares in connection with the Transaction, and (iv) other approvals and  closing conditions contained in the Arrangement Agreement; statements with respect to the anticipated effects of the Transaction on TerrAscend and its strategy going forward and statements with respect to the anticipated benefits associated with the acquisition of Gage. Actual results and developments may differ materially from those contemplated by these statements.

Such forward-looking statements are based on certain assumptions regarding TerrAscend and Gage, including the successful completion of the Transaction, anticipated benefits from the Transaction, and expected growth, results of operations, performance, industry trends and growth opportunities. While TerrAscend and Gage consider these assumptions to be reasonable, based on information currently available, they may prove to be incorrect.

Among other things, there can be no assurance that the Transaction will be completed or that the anticipated benefits from the Transaction will be achieved. Readers are cautioned not to place undue reliance on forward-looking statements.

Forward-looking information is subject to a variety of risks and uncertainties that could cause actual events or results to differ materially from those projected in the forward-looking information. Such risks and uncertainties include, but are not limited to, current and future market conditions; risks related to federal, state, provincial, territorial, local and foreign government laws, rules and regulations, including federal and state laws in the United States relating to cannabis operations in the United States; with respect to TerrAscend and the risk factors set out in TerrAscend's most recently filed MD&A, filed with the Canadian securities regulators and available under TerrAscend's profile on SEDAR at www.sedar.com, and with respect to Gage, the risk factors set out in Gage's most recently filed MD&A, filed with the Canadian securities regulators and available under Gage's profile on SEDAR at www.sedar.com

The statements in this press release are made as of the date of this release. TerrAscend and Gage disclaims any intent or obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.

The CSE accepts no responsibility for the adequacy or accuracy of this release.

Cautionary Note Regarding Cannabis Operations in the United States

Investors should note that there are significant legal restrictions and regulations that govern the cannabis industry in the United States. Cannabis remains a Schedule I drug under the US Controlled Substances Act, making it illegal under federal law in the United States to, among other things, cultivate, distribute or possess cannabis in the United States. Financial transactions involving proceeds generated by, or intended to promote, cannabis-related business activities in the United States may form the basis for prosecution under applicable US federal money laundering legislation.

While the approach to enforcement of such laws by the federal government in the United States has trended toward non-enforcement against individuals and businesses that comply with medical or adult-use cannabis programs in states where such programs are legal, strict compliance with state laws with respect to cannabis will neither absolve TerrAscend or Gage of liability under U.S. federal law, nor will it provide a defense to any federal proceeding which may be brought against TerrAscend or Gage. The enforcement of federal laws in the United States is a significant risk to the respective business of TerrAscend and Gage and any proceedings brought against TerrAscend or Gage thereunder may adversely affect their respective operations and financial performance.

Third Party Information

This press release includes market and industry data that has been obtained from third party sources, including industry publications. Each of TerrAscend and Gage believes that the industry data is accurate and that its estimates and assumptions are reasonable, but there is no assurance as to the accuracy or completeness of this data. Third party sources generally state that the information contained therein has been obtained from sources believed to be reliable, but there is no assurance as to the accuracy or completeness of included information. Although the data is believed to be reliable, neither TerrAscend nor Gage has independently verified any of the data from third party sources referred to in this press release or ascertained the underlying economic assumptions relied upon by such sources.

Q&A Interview with Tom Fanelli Founder / CEO Convesio

Tom Fanelli CEO / Founder Convesio

3 SEPTEMBER 2019 / 3:00 PM / WWW.MONEYSENSEWITHKYLE.COM

Attendees

Robert Kyle Martin Financial Blogger www.moneysensewithkyle.com, Tom Fanelli CEO / Founder Convesio

Agenda

Q&A Interview with Tom Fanelli CEO / Founder Convesio

Action Items

  1. Welcome – Robert Kyle Martin Financial Blogger www.moneysensewithkyle.com
  2. Q&A Interview questions Tom Fanelli CEO / Founder Convesio

Q&A Interview questions Convesio.

Welcome everyone. I'm Kyle Martin Financial Blogger at www.moneysensewithkyle.com. Today we have Tom Fanelli CEO / Founder of Convesio for a Q&A Interview to learn more about this startup company, What they do?, Where are they going?, How they will get there?, Obstacles along the way, and Why to invest in Convesio. Welcome Tom!

Thank you for having me.

Tom..tell us about yourself

Originally from Florida, I have been in technology, product and marketing roles over 20 years. My first real business was an agency in Southwest Florida that I started in the late 90’s. We eventually got into web design services way before there was anything like WordPress. I relocated to the San Francisco Bay Area over 10 years ago to join a software startup. That startup was acquired almost a year later by a company, RealPage. Not long after the acquisition, we took that company public on the NASDAQ (RP). After 6 years, I moved on to a large corporation that owns several hosting companies and currently hosts over 4MM sites. Throughout my career I have always been close to scalable web platforms, high volume hosting, and have had a passion for agencies. This is what brought me to the place of creating Convesio.

What does your company do?

We provide a scalable, high performance platform for agencies to create and manage WordPress websites. Technology for hosting really falls into two major categories. The first being legacy shared hosting, and by that I mean everything in that world from Dedicated, VPS, and Cloud Servers. Essentially this technology has not undergone any major evolutionary leap forward. The other category is where Amazon, Google Cloud, etc are positioned. The problem with these is they are costly and require special expertise to deploy and manage. This leaves many agencies in a really hard spot. Convesio is there to fill the void with a simple to use and cutting edge solution.

Where will your company be in 5 years?

I like to refer to Flywheel who was recently acquired by WP Engine at only 6 years old. When WP Engine purchased Flywheel they disclosed they were doing $18MM in Annual Recurring Revenue. WP Engine also indicated they were approaching an IPO and valuation of approximately a billion dollars. Once WP Engine goes public my thought is the market is going to heat up substantially. I see a lot of parallels between where the WordPress market is and where RealPage’s market was when we had our IPO. If you look at the PropTech market 10 years ago, it was not nearly as developed as it is now. VC money is pouring into it and more companies are going public, this was all facilitated by RealPage breaking the glass ceiling. I think a similar thing is going to happen in the WordPress space, but even more extreme.  

How far along are you? What's your biggest obstacle?

We’ve made tremendous progress in the last year. When we started we were not even sure this idea would make it out of R&D and now we are at a stage where we have raving fans who would be really bummed if they couldn’t use Convesio anymore. That proves we are delivering on our value propositions. In many ways we have the product, experience, and traction to build on our early stage success. The challenges now are staffing and providing a great customer experience as we scale. 

Who are your competitors? Who is the biggest threat?

Clearly WP Engine is a threat, simply because they have financial means and once they go public are going to likely be motivated to solidify their position in the market. Other competitors are companies like Flywheel (recently acquired by WP Engine), Kinsta, and Pantheon.

How will you make money?

We are a subscription based SaaS platform, so our primary means is to offer monthly or annual packages for our platform. In addition, we have several other revenue streams we will bring online as we grow to diversify our revenue.

On Wefunder.com Convesio has raised $713,218 of a $200,000 – $1,000,000 goal with 376 investors. How do you plan to spend the money raised?

The bulk of our funds will be used to scale marketing, sales, and support. We do have some continued investment in product and will need to scale servers as we grow customers, but the primary focus is sales and customer experience.

How are you different from other managed WordPress providers?



Our platform is very different. This is hard to explain without getting super technical, but we have built our platform from the ground up, designed to squeeze every drop of performance out of WordPress. Most hosting providers use the same legacy technology. So in this way we are very different, more scalable, stable, and faster.

What’s Next?

Our fundraising ends in October 2019, after that my focus is going to shift to scaling revenue and customers as quickly as we can without sacrificing quality of service.

Why should we invest in Convesio and how?

Hosting is a $100B a year business globally. There are no signs the growth in WordPress will slow down anytime soon. Over 75MM sites use WordPress and it’s the dominant choice by designers and agencies building websites. This is a rare opportunity to invest in a platform akin to Amazon Web Services but for WordPress. We have a very different approach the competitors in this space and our team is made up of seasoned experts. I’m confident this market is going to see significant growth during the next 10 years. Investing is easy, just visit our profile on WeFunder and you can start investing for as little as $100. Here's the Link: https://www.wefunder.com/convesio

Thank you Tom for sharing with us this exciting technology to create and manage WordPress websites. Audience, you now have the inside scoop on Convesio straight from Tom Fanelli the CEO / Founder of Convesio. Hosting sites can be costly and require expertise to deploy and manage. Convesio is there to fill the void with a simple to use and cutting edge solution. If you are interested in investing in this startup company the current campaign is at this Link: https://wefunder.com/convesio

Any questions contact Tom at Tom@convesio.com or use the Leave a comment on my website www.moneysensewithkyle.com That’s all for today. Thank you and we’ll see you in retirement.

Step 10 – Republic’s Commission and additional Resources in 2019

It's easy to get started investing at republic.co in 2019

Click on the link to get started:

The startups that raise on Republic set the terms at which they sell their securities.

Investing on Republic is free for Investors.

Unless specified otherwise in the deal terms, Republic collects from the startup 6% of the total amount raised and 2% of securities offered in a successful financing.

The 6% of the total amount raised comes out of the proceeds of the offering. Companies raising on Republic may also use the proceeds of their successful financing to pay for the escrow agent and other transaction-related fees.

To learn more about investing, please see https://www.sba.gov/starting-business/finance-your-business/venture-capital/venture-capital

To learn more about crowdfunding, please see the recently adopted rules.

The SEC has issued an Investor Bulletin that is quite helpful to gaining an initial understanding.
SEC Investor Bulletin: Crowdfunding (February 16, 2016)

To view SEC filings made by Republic and companies offering securities through this site, please see the SEC EDGAR database.


Next: Discover Live Offerings

Step 9 – Selling Restrictions | Can I sell securities acquired on Republic? in 2019

It's easy to get started investing at republic.co in 2019

Click on the link to get started:

The startups that raise on Republic set the terms at which they sell their securities.

Because the startup company issuing the securities is private, you cannot sell your securities on the public market, making it potentially difficult to find a buyer.

In fact, you are restricted from reselling your securities in the first 12 months post closing of the offering, unless the shares are transferred:

  • to the company that issued the securities
  • to an accredited investor
  • to a nuclear family member: a child, stepchild, grandchild, parent, stepparent, grandparent, spouse or spousal equivalent, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships.
  • in connection with your death, divorce, or other similar circumstance
  • to a trust controlled by you or a trust created for the benefit of a family member (defined as a child, sibling or parent of you or your spouse) or
  • as part of a later offering registered with the SEC.

Any transfer during this period is still subject to state and foreign laws.

You should know that there may be no market for the securities after the initial 12 month restricted period. Once the 12 month restricted period ends, any sale or disposition of the securities you hold must comply with applicable federal, state and foreign laws.

It is important that you only invest capital with the expectation of holding your investment for an indefinite period of time, and with the real risk of a total loss of your investment in mind. Only invest an amount you can afford to lose without changing your lifestyle.

Read Next:

Republic’s commission

Additional resources

Step 8 – Disclosure Requirements in 2019

It's easy to get started investing at republic.co in 2019

Click on the link to get started:

The startups that raise on Republic set the terms at which they sell their securities.

Companies fundraising on Republic must disclose a limited amount of information to you, including:

a. general information about the company,
b. its officers and directors,
c. a description of the business,
d. the planned use for the money raised from the offering, often called the use of                    proceeds,
e. the funding goal,
f. the deadline for the offering, related-party transactions,
g. risks specific to the company or its business, and
h. financial information about the company.

You should use this information to determine whether a particular investment is appropriate for you.

The type of financial information disclosed as well as verification of finances varies based on whether the company has raised via crowdfunding in the past, as well as the amount being raised.

$107,000 or less – financial statements and certain specific line items from income tax returns are required, both of which are certified by the principal executive officer of the company.

$107,000.01 to $535,000 – financial statements are reviewed by an independent public accountant and the accountant’s review report is provided as well as certification by the principal executive officer of the company. A review is some level of scrutiny of the financials by a CPA.

$535,000.01 to $1.07 million – if first time crowdfunding, then financial statements reviewed by an independent public accountant and the accountant’s review report if available are disclosed: otherwise financial statements audited by an independent public accountant and the accountant’s audit report must be prepared and disclosed. An audit provides a higher level of scrutiny by the accountant than a review as well as some verification by the accountant.

Each offering has a discussion forum where you should ask any questions you have and review those asked by other investors. These channels can be useful both before and after making an investment.

Once an offering has closed, the company will provide updates on the results of its operations and financial statements through its website on an annual basis. These updates are likely to be less regular and robust than those provided by public companies to their shareholders. Republic likely will not retain any relationship with the company. Republic does not make the Company’s post-closing disclosure available to you through its website.

Read Next:
Selling restrictions
Republic’s commission
Invest in promising early-stage companies
Become an investor 

 

 

 

 

Q&A Interview | Sama Jashnani Co-founder/CEO DownToDash

19 AUGUST 2019 / 2:00 PM CST/ WWW.MONEYSENSEWITHKYLE.COM

Attendees 

Robert Kyle Martin Financial Blogger https://www.moneysensewithkyle.com, Sama Jashnani Co-founder/ CEO DownToDash

Action Items

  1. Welcome – Robert Kyle Martin Financial Blogger www.moneysensewithkyle.com
  2. Q&A Interview questions Sama Jashnani Co-founder/CEO DownToDash

Q&A Interview questions DownToDash

 Welcome everyone – I’m Kyle Martin Financial Blogger @ www.moneysensewithkyle.com. Today we have Sama Jashnani Co-founder / CEO DownToDash for a Q&A Interview to learn more about this startup company, What they do?, Where are they going?, How they will get there?, Obstacles along the way, and Why to invest in DownToDash. 

KyleWelcome Sama!

CEO / Founder Convesio

Sama – Thank you so much for having me, I really appreciate it. 

Kyle – Sama..tell us about yourself

Sama

I am an entrepreneur, connector, speaker and I also love dancing, trekking, adventure, food and just meeting new interesting people. I co-founded a social enterprise and e-commerce platform and worked at a global marketing agency. I also got a full scholarship to study Marketing and Strategy at Warwick Business School.  

Kyle – What does your company do? 

Sama

DownToDash is an app to make quality activity buddies. It connects people in the same location based on what they are down to do, whether it is workouts, sports, movies or other activities. Users can post specific plans, for example, play Tennis on Thursday at 5 pm at McCarren Park and other users can join. We will also add closed networks within the app for students and employees. For example an employee can verify his account through a delloitte.com email address and connect with employees only. Our focus will always be on the security of our users and finding a high-quality activity buddy. We will use Artificial intelligence and our algorithm to match people based on their skill level and ensure that they are a good match for the experience. 

Kyle – That’s some cool technology. Where will your company be in 5 years?

Sama

We project to be at 3.5 million users and $ 13.83 million in revenue in 5 years, using a conservative approach. We want to be the one-stop shop for meeting people all over the world. You can discover experiences, book the experience and your means of transportation through one app. We will also incentivize users to socialize by adding group discounts for experiences. We believe we have a strong exit potential and strategy (WeWork recently acquired MeetUp for $200 Million).

Kyle – Outstanding. How far along are you? What's your biggest obstacle?

Sama

We have 5286 users, 3913 monthly active users and 60,000+ successful plans created on the app. We created an internship program that was selected to be in the Top 100 Internship programs in the US by CNBC. Make it and want to scale this ambassador base. Also, we were recently featured on Entrepreneur Elevator Pitch Season 3. Our biggest obstacle is the inability to scale quickly without sufficient funding.

Kyle – Ok great. Who are your competitors? Who is the biggest threat?

Sama

The most similar existing platform is Meetup but Meetup operates only for groups and has no age filter. Bumble Bff and Vina are friend-focused but are only for female friendships. They are not focused on specific plans (example Tennis on Thursday at 5 pm). Moreover, Bumble is also a dating app. Our focus on activities and specific plans is our unique selling point. 

Kyle – We want to know,  How will you make money?

Sama

We offer $75, $100 and $200 per month advertising packages for the marketing of events and experiences. We are working on automating this process by incorporating ‘bookings' within the app, for example two people can book a Tennis court through the app and we will charge them a fee. We will also add paid accounts for users with premium features for $3 per month and gather patterns in our data to provide guidance and predictive analysis to companies that deal with specific cohorts.

Kyle – On Wefunder.com DownToDash has raised $19,550 of a $50,000 – $1,070,000 goal with 70 investors. How do you plan to spend the money raised?

Sama

51% towards technology and product development, 35% towards marketing and 14% towards our team and legal expenses. We will immediately invest in revamping the product and adding exciting features such as closed networks. We will also start Instagram ads and influencer campaigns.

Kyle – Fantastic! How are you different from other competitors?

Sama

Our focus is on security of our users and finding a high-quality activity buddy is what makes us different. Users love that our ‘plans’ feature is spontaneous and allows them to do what they love, according to their availability and preferences. Our millennial-friendly branding and positioning also gives us an advantage. 

Kyle – I know users love to know security is important and finding a high quality activity buddy set you apart. What’s Next?

 Sama     

 We got into Founder University by Jason Calacanis and are super excited to explore the tech ecosystem in San Francisco and also promote the app there.  

Kyle – Why should we invest in DownToDash and how?

 Sama

Technology and social media have been criticized to create loneliness, isolation and depression. We are using technology to foster real-life interactions and want to change the way people meet all over the world! This is your one chance to come onboard with this exciting opportunity of investing in an upcoming social media giant! Here is a link to our campaign: https://wefunder.com/downtodash/

You can also contact me at sama@downtodash.com for any questions. 

Kyle – Thank you Sama for sharing with us this exciting technology to bring people together. Audience, you now have the inside scoop on DownToDash straight from the Co-founder CEO of DownToDash. It’s a new exciting app that's going to be secure and bring high quality activity buddies together. If your interested in investing in this startup company the current campaign is at this link: https://wefunder.com/downtodash/. Any questions contact Sama at sama@downtodash.com or use the Leave a comment button on my website http://www.moneysensewithkyle.com. That’s all for today. Thank you and we’ll see you in retirement.

Step 7 – What are some of the Risks involved in Investing? in 2019

It's easy to get started investing at republic.co in 2019

Click on the link to get started:

The startups that raise on Republic set the terms at which they sell their securities.

Please be sure to carefully review the Risk Disclosures. The following section is excerpted from that lengthier document.

Some of the key risks to know before you invest in startups:

Crowdfunding investments are highly risky and speculative. You should do your own research and scrutinize all disclosed risk factors before making an investment decision. The following are some of the key risks applicable to Republic offerings:

Speculative. Investments in startups and early-stage ventures are speculative and these enterprises often fail. Unlike an investment in a mature business where there is a track record of revenue and income, the success of a startup or early-stage venture often relies on the development of a new product or service that may or may not find a market. You should be prepared to lose your entire investment.

Illiquidity. Your ability to resell your investment in the first year will be restricted with narrow exceptions. You may need to hold your investment for an indefinite period of time. Unlike investing in companies listed on a stock exchange where you can quickly and easily trade securities, you may have to locate an interested private buyer when you do seek to resell your crowdfunded investment.

No voting rights. A Crowd SAFE does not provide voting rights to its holder, unless and until the Crowd SAFE or the note is converted into an equity stake. If and when you receive voting shares in a company, your voting rights will likely be diluted when the company raises additional funds.

Cancellation restrictions. Once you make an investment in a crowdfunding offering, you can cancel the investment at any time and for any reason up to 48 hours before the offering deadline.

Valuation and capitalization. Unlike listed companies that are valued publicly through market-driven stock prices, the valuation of private companies, especially startups, is difficult. You risk overpaying for the equity stake you receive. The class of equity being sold via a crowdfunding offering may have fewer rights than other equity classes issued by a company.

Limited disclosure. The company must disclose information about itself, its business plan, the offering, and its anticipated use of proceeds, among other things. An early-stage company may be able to provide only limited information about its business plan and operations because it does not have fully developed operations or a long history to provide more disclosure. The company is also only obligated to file information regarding its business annually, including financial statements.
Under certain circumstances the company may cease to publish annual reports and holders of the Crowd SAFE will have no information rights.

Investment in personnel. An early-stage investment is also an investment in the founding entrepreneur(s) and/or management of the company. Being able to execute on the business plan is often an important factor determining whether the business will be viable and successful. You should also be aware that a portion of your investment may fund the compensation of the company’s employees, including its management. You should carefully review any disclosure regarding the company’s use of proceeds.

Possibility of fraud. As with other investments, there is no guarantee that crowdfunding investments will be immune from fraud.

Lack of professional guidance. Many successful companies partially attribute their early success to the guidance of professional early-stage investors (e.g. angel investors and venture capital firms). These investors often negotiate for seats on the company’s board of directors and play an important role through their resources, contacts and experience in assisting early-stage companies in executing on their business plans. An early-stage company primarily financed through crowdfunding may not have the benefit of such professional investors.

Again, please be sure to review more extensive Risk Factors here.

Read Next:
Disclosure requirements
Selling restrictions

 

Step 6 – What is equity Crowdfunding at Republic.co in 2019

It's easy to get started investing at republic.co in 2019

Click on the link to get started:

The startups that raise on Republic set the terms at which they sell their securities.

You’ve probably heard the term “crowdfunding” before: perhaps in the context of a Kickstarter campaign or a GoFundMe page. It’s basically a financing model that collects small sums of money from a large number of people — i.e. the crowd — over the internet.
Equity crowdfunding uses that same basic model, but it's appropriate for startups, rather than causes and creative projects, and in return the backer gets a percentage of ownership or a financial stake in the company.*

* – On Republic, they typically get the Crowd SAFE.

How is equity crowdfunding different from other types of crowdfunding?

There are essentially three kinds of crowdfunding: reward-based, donation-based and equity-based.

1 Reward-based crowdfunding 
Is when you contribute money and get a reward in return. This is mostly used for creative campaigns, and there are often varying levels of rewards, or perks, that correspond to pledge amounts. Think Kickstarter and Indiegogo.

2 Donation-based crowdfunding
Is when you contribute money without expecting anything of value in return. This exists largely to fund charitable causes, like building a well in Kenya, or personal campaigns, like helping someone pay their medical bills. Think GoFundMe, YouCaring and CrowdRise.

3 Equity-based crowdfunding
Is when you contribute money to help fund the growth of a company, and receive a slice of the financial pie in return (but you can get perks too). These campaigns tend to yield much larger funding amounts. Think AngelList, FundersClub and yours truly, Republic.

What is Title III and why is it a big deal?

Equity investing isn’t new, but in the past only “accredited investors,” or wealthy people who earn more than $200,000 a year or have a net worth of over $1 million, were allowed to take part. In theory, this was to protect the non-wealthy from bad decisions and financial ruin, but the flip side was that ordinary citizens were denied the opportunity to invest as they saw fit. For example, AngelList, the world's most popular online investing platform, only allows accredited investors to invest.
That all changed in May 2016, when the SEC launched the new rules under the name “Title III” (full name Title III of the Jumpstart Our Business Startups Act, also called Regulation Crowdfunding or Reg CF for short).
President Obama’s words after he signed the bipartisan act, designed to make it easier for small companies to fundraise:

“For the first time, ordinary Americans will be able to go online and invest in entrepreneurs that they believe in. — Barack Obama”

The rules stated that 1) entrepreneurs can now raise up to $1 million in a 12-month period from non-accredited investors, and 2) investors can invest a limited amount per 12-month period based on their income and net worth.
It might sound a bit dry, but this is big. We're talking democratization-of-finance big. It means potentially opening up to the masses opportunities once reserved for the rich. It means a level playing field, where citizens interested in investing are no longer treated differently based on the amount of money that they have.

Why we’re excited

Because more investors mean more startups, and more startups means more social innovation and progress. This is what it looks like to fund the future.
That’s why Republic is focused specifically on Title III equity crowdfunding. Read more about our mission here.

Why you should be excited

Well, we think you should be. To help you decide if startup investing is for you, see: how do I start investing in startups.
Even if you’re not ready to invest right now, join Republic — we’re a community of tens of thousands of people interested in startups and investing.


Read Next:
Risks
Disclosure requirements

Step 5 – How The CrowdSafe Works at Republic.co in 2019

It's easy to get started investing at republic.co in 2019

Click on the link to get started

The startups that raise on Republic set the terms at which they sell their securities.

What is the Crowd SAFE?

A Simple Agreement for Future Equity

A Crowd SAFE is an investment contract between investors and companies looking to raise capital. Individuals make investments in exchange for the chance to earn a return—in the form of equity in the company—if it’s acquired or has an IPO.

The Crowd SAFE was created by Republic and is an equity crowdfunding-specific version of a SAFE, a financial instrument widely used by angels and VCs investing in startups. It’s now used by several industry players in various forms.

How does it work?

Investors using the Crowd SAFE get a financial stake in the company, but are not immediately holders of stock. Investments are converted to equity if certain “trigger events” occur, such as the company’s acquisition or IPO.

Risk note: trigger events are not guaranteed. Investors should see them only as possibilities.

How much can I earn?

Your return depends on your investment amount, the company’s exit valuation (how much the company is worth if and when the trigger event happens), and the terms of the Crowd SAFE.

Helpful calculators demonstrate how different offering terms and company outcomes produce a range of returns on investments.

Crowd SAFE Calculator

Risk note: If there is never an exit valuation you may never get a return on your investment.

Risk note: Calculators can't be used to project performance of one particular investment, but can serve as an educational tool for those making investment decisions on our platform.

Terms of the Crowd SAFE

Each company can customize its Crowd SAFE, including or excluding certain provisions. Most include a valuation cap and a discount. If the Crowd SAFE includes both a valuation cap and a discount, the provision more favorable to the investor applies if there is ever a trigger event.

Valuation cap

The valuation cap specifies the maximum valuation at which the investment converts into equity shares or cash. This means that investors, when a trigger event occurs, receive equity shares or cash at the valuation cap price—no matter the valuation at which the company sells. Therefore, the higher the valuation of the company at the time of sale, the greater the investor’s return.

Discount

If a trigger event for the company occurs, the discount provision gives investors equity shares (or equal value in cash) at a reduced price relative to what others pay at IPO or for the company’s acquisition.

Crowd SAFE Calculator can help understand these terms better.

Risk note: If there is never an exit valuation you may never get a return on your investment. If no subsequent equity financing or trigger event occurs, the Crowd SAFE will not convert and produce no return for the investor, likely leading to a loss of invested principal.

Read Next:

What is equity crowdfunding Risks

Step 4 – Understanding Deal Terms at Republic.co in 2019

 

It's easy to get started investing at Republic.co in 2019

Click on the link to get started

The startups that raise on Republic set the terms at which they sell their securities.

Funding goal

Minimum funding goal

The minimum amount the startup needs to raise. If the startup doesn’t reach the minimum funding goal before the campaign end, their campaign is considered unsuccessful, and all investments are refunded to investors.

Maximum funding goal

Maximum amount of funds the startup is willing to raise in this campaign, at these terms. When the startup reaches their maximum funding goal, they stop accepting investments.

Campaign timeline

The campaign will run for a predetermined period of time, regardless of whether or not the startup reaches its minimum or maximum funding goal at any point.

 

Each crowdfunding campaign has:

  • 1 A start and an end date even if the startup reaches their minimum funding goal before the deadline, the campaign will run and remain open for investments until the deadline.
  • 2 Investment cancellation deadline a deadline for canceling investments is common to all campaigns and is at the 48 hours mark prior to the campaign's end date. Past that point, your investment will be final and you won't be able to cancel or get a refund.

Investment limits

The startup sets the minimum investment size they will accept. Republic allows startups to go as low as $10, but the typical minimum investment ranges between $25–$100. The startup can also choose to limit the maximum investment amount, if they wish to allow more investors to participate.

Terms of the Crowd SAFE™

When you invest on Republic, you typically receive a Crowd SAFE — a security issued by the startup. The Crowd SAFE is not equity, it is an agreement for future equity, meaning that it can convert to equity in the future. Each company Crowd SAFE's terms are different, but they typically include two main parameters – valuation cap and discount – that determine how the specific Crowd SAFE converts to equity.
Learn how the Crowd SAFE works.

Republic Crypto deals may use a different instrument called the Token DPA.

Changing the terms during the campaign

If a company makes a material change to the deal terms or other information disclosed on the campaign page while the campaign is running, they are required to notify you and get your confirmation that you still want to invest.

You will have 5 business days to reconfirm your investment after the confirmation request has been sent to you. If you do not reconfirm within 5 business days, your investment will be cancelled, and you would have to reinvest if you still wanted to participate.

Read Next:

How the Crowd SAFE works What is equity crowdfunding