CoinSmart Announces Acquisition by Coinsquare, Creating one of Canada’s Largest Crypto Asset Trading Platforms

CoinSmart Financial Inc. (“CoinSmart” or the “Company”) (NEO: SMRT) (FSE: IIR), announced today that it has entered into a definitive agreement dated September 22, 2022 (the “Purchase Agreement”) with Coinsquare Ltd. (“Coinsquare”), a leading Canadian crypto asset trading platform, pursuant to which CoinSmart has agreed to sell to Coinsquare all of the issued and outstanding shares of its wholly-owned operating subsidiary Simply Digital Technologies Inc. (“Simply Digital”) (the “Transaction”).

The acquisition and integration of these two businesses will establish Coinsquare as one of Canada’s largest crypto asset trading platforms with a diversified and compliant offering across various business lines, including both retail and institutional trading, crypto payment processing, and digital asset custody. CoinSmart will hold approximately 12% ownership in Coinsquare on a pro-forma basis. The combined company has transacted over $10 billion since January 2018, and will have over $350 million in assets under custody with a combined user base in excess of 1 million.

Coinsquare is in the final stages of its approval to become Canada’s first crypto asset trading platform regulated as an Investment Industry Regulatory Organization of Canada (“IIROC”) dealer and marketplace member.

“Today is an exciting day for all of us at CoinSmart,” said CoinSmart CEO Justin Hartzman. “We are thrilled to be working alongside the Coinsquare team to build one of the largest regulated crypto asset trading platforms in Canada and I could not be more proud of what we have accomplished so far. With a diversified product suite, exceptional crypto talent, and one of the largest user bases in Canada, the combined company will be well-positioned to pursue its aggressive expansion plans. While the crypto market is in the building phase of its life cycle, this transaction will provide the torque needed to be in a favourable position entering the next bull run.”

“This acquisition represents a monumental and exciting milestone for both companies and brings together two industry leading management teams,” said Coinsquare, CEO Martin Piszel. “We are excited to work together to shape how the crypto industry in Canada grows and evolves, and together we will be able to offer our clients the most innovative and secure products backed by the highest standards of regulation in the industry.”

Key Transaction Benefits

– One of Canada’s Largest Crypto Asset Trading Platforms: combined company will have transacted over $10 billion in crypto transactions since January 2018 and will have over $350 million in assets under custody, together with a diversified and regulated platform across trading, payments, asset management, and digital asset custody.
– Acquisition of Cash and Shares with Upside to Shareholders: consideration payable to CoinSmart at closing of $3 million in cash, and the issuance of 5,222,222 common shares of Coinsquare (“Coinsquare Shares”), with an aggregate deemed value of approximately $26,215,555, plus the ability to receive up to approximately $20 million in additional cash consideration on the achievement of SmartPay business earn-out targets and 1,100,000 Coinsquare Shares on the achievement of over-the-counter (“OTC”) business earn-out targets. It is further anticipated that CoinSmart will hold cash (or crypto assets) of approximately $10 million on completion of the Transaction.
– Investment in Canada’s only Qualified Custodian for Digital Assets: backed by Coinsquare, Coinbase Ventures and other well-known financial institutions, Tetra Trust is Canada’s only qualified custodian for digital assets, and represents significant potential upside for Coinsquare shareholders.
– Exposure to Diversified Investment Portfolio: Coinsquare, through its subsidiary Coinsquare Investments Ltd., holds a diversified investment portfolio in assets, such as FRNT Financial ( TSXV: FRNT) and two Blockchange Ventures funds.
– Management Team to Join Coinsquare: CoinSmart Co-Founders Justin Hartzman, Jeremy Koven, and Michael Koral, amongst others, will join Coinsquare. Justin Hartzman will join the Coinsquare Executive Team and CoinSmart will be entitled to a nominee to join the Coinsquare Board of Directors upon completion of the Transaction.
– Voting Support by Senior Officers and Directors of ~45%: each of the directors and certain senior officers of CoinSmart have entered into support and voting agreements with Coinsquare pursuant to which they have agreed to vote in favour of the Transaction.

Transaction Details

Pursuant to the terms of the Purchase Agreement, Coinsquare will acquire all of the issued and outstanding shares of Simply Digital on a cash-free, debt-free basis.

The purchase price, which is subject to standard post-closing adjustments as set out in the Purchase Agreement, will be satisfied on closing by (i) the payment to CoinSmart of $3 million in cash, and (ii) the issuance of 5,222,222 Coinsquare Shares to CoinSmart. Coinsquare’s largest shareholder, Mogo Inc. (NASDAQ: MOGO) (TSX: MOGO), disclosed in their most recent financials that they valued the Coinsquare Shares at approximately $5.02 per Coinsquare Share as of June 30, 2022. There can be no assurance that such value per Coinsquare Share has not changed since June 30, 2022.

Subject to the terms set forth in the Purchase Agreement, additional consideration will be payable to CoinSmart pursuant to the Transaction upon the achievement of certain revenue-based earn-out targets related to CoinSmart’s SmartPay business and OTC trading business. Up to an additional $20 million in cash may be payable pursuant to the SmartPay earn-out (over a period of three years following closing of the Transaction) and up to an additional 1,100,000 Coinsquare Shares may be issuable pursuant to the OTC earn-out (over a period of one year following closing of the Transaction).

On completion of the Transaction, CoinSmart will hold approximately 12% of the issued and outstanding Coinsquare Shares. Coinsquare is a privately held company incorporated under the laws of Canada. Other than its interest in Coinsquare Shares and cash, CoinSmart will hold no other material assets immediately following the completion of the Transaction. The Transaction has been unanimously approved by the board of directors of the Company (the “Board”).

Under the terms of the Purchase Agreement, the Board may respond to an unsolicited bona fide written proposal that, having regard to all relevant terms and conditions of such proposal, constitutes or could reasonably be expected to constitute or lead to a Superior Proposal (as defined in the Purchase Agreement).

The Transaction will constitute the sale of all or substantially all of the undertaking of CoinSmart pursuant to the Business Corporations Act (British Columbia) and, accordingly, will require approval by not less than two-thirds of the votes cast at a special meeting of the shareholders of CoinSmart (the “Meeting”). CoinSmart currently expects to mail the management information circular in connection with the Meeting to shareholders on or before October 29, 2022, and to hold the Meeting on or before November 29, 2022. Subject to the satisfaction (or waiver) of applicable closing conditions as set forth in the Purchase Agreement, the closing of the Transaction is anticipated to occur in the fourth quarter of 2022.

The management of CoinSmart will be employed by Coinsquare following the closing of the Transaction and will continue to play an active role in the ongoing and future business of Simply Digital (including the SmartPay business and the OTC business).

Board Recommendation

The Board has unanimously determined that the Transaction is in the best interests of CoinSmart. Accordingly, the Board approved the Purchase Agreement and recommends that Shareholders vote in favour of the resolution to approve the Transaction at the Meeting.

Each of the directors and certain senior officers of the Company, collectively holding approximately 45% of the issued and outstanding common shares of the Company, have entered into support and voting agreements with Coinsquare pursuant to which they have agreed to support and vote in favour of the Transaction. In making its determination, the Board considered, among other things, an opinion provided to the Board by Eight Capital to the effect that, based upon and subject to the limitations, assumptions and qualifications stated in such opinion, the consideration to be received by CoinSmart pursuant to the Transaction is fair, from a financial point of view, to CoinSmart.

Financial Advisors and Counsel

In connection with the Transaction, CoinSmart has engaged Eight Capital as its financial advisor and Wildeboer Dellelce LLP as its legal advisor. Coinsquare has engaged Origin Merchant Partners as its financial advisor and Goodmans LLP as its legal advisor.

Additional Information

Complete details of the terms and conditions of the Transaction are set out in the Purchase Agreement, which will be filed by CoinSmart under its profile on SEDAR at www.sedar.com.
In addition, further information regarding the Transaction will be contained in the management information circular in respect of the Meeting which will be filed on SEDAR at the time that it is mailed to shareholders. All shareholders are urged to read the information circular once it becomes available, as it will contain additional important information concerning the Transaction.

About CoinSmart

CoinSmart is a leading Canadian-headquartered crypto asset trading platform dedicated to providing customers with an intuitive way for buying and selling digital assets, like Bitcoin and Ethereum. CoinSmart is one of the few crypto asset trading platforms in Canada to be registered as a securities dealer and marketplace with the Ontario Securities Commission. CoinSmart is also one of the first Canadian headquartered trading platforms to have an international presence, accepting customers across 40+ countries at a time when the digital asset industry continues to rapidly expand. CoinSmart further builds on its mission to make cryptocurrency accessible by providing educational resources tailored to every level of cryptocurrency knowledge and unparalleled 24/7 omni-channel customer support. Offering instant verification, industry leading cold wallet storage, advanced charting with order book functionality and over-the-counter premium services, CoinSmart ensures every client’s needs are met with the highest level of quality and care. For more information, please visit www.coinsmart.com.

About Coinsquare

Founded in 2014, Coinsquare, a private company incorporated under the laws of Canada provides customers with a proprietary platform engineered to deliver a robust, secure, and intelligent interface for trading Bitcoin, Ethereum, Litecoin, and other digital assets. Coinsquare has grown to become Canada’s oldest operating digital asset firm, trading on behalf of over half a million Canadians. Coinsquare has raised over $100M in capital and has successfully executed trades in excess of $8 billion to date. For more information, please visit www.coinsquare.com.

For further information: Contact Details:

CoinSmart
Justin Hartzman, Chief Executive Officer
Email: ir@coinsmart.com
Tel: 1.647.923.7678

The Top Floor Public Relations
Michele McDermott-Fox
Email: michele@thetopflooragency.com,
Tel: 1.905.379.1893

CoinSmart Announces Increase in Key Performance Metrics

CoinSmart Financial Inc. (NEO: SMRT) (FSE: IIR) (“CoinSmart” or the “Company”) one of Canada’s leading crypto asset trading platforms, today announced that despite a sustained period of risk-off selling across the digital asset market over the past few months, the company has experienced large percentage increases in a number of key growth metrics in Q4 2021 compared to Q3 2021.

The platform saw an overall retail and OTC volume increase of 52.6% from Q3 2021 to Q4 2021 as well as an increase in registered users of 10.6% during the same timeframe. OTC revenues rose by 124.47% in Q4 2021 compared to Q3 2021, and CAD ETH trading volumes saw an increase of 55.56%. This is an indication that CoinSmart’s business model is well-suited to periods of market volatility in the overall crypto market.

“We started CoinSmart with the mission to open up digital asset investing to all Canadians, with a platform specifically designed to provide a transparent and secure investing environment,” said Justin Hartzman, co-founder and CEO of CoinSmart. “The numbers we are reporting today highlight CoinSmart’s robustness to the overall market even during periods of significant volatility. For a trading platform such as ours, providing our users with access to liquidity during periods of market volatility is the key to success, and CoinSmart is well positioned to continue to thrive during such volatility, whether from sell-side or buy-side price action.”

CoinSmart also recently announced a multi-year sponsorship agreement with the Canadian Hockey League (CHL) to be their official Crypto Trading Partner sponsor across the CHL’s three member leagues (OHL, WHL, QMJHL). Year 1 of the multi-year deal will see CoinSmart premium branding and signage displayed in and around rinks across multiple teams this season including in-ice logos across all CHL major events. The following seasons will see CoinSmart branding extended to 24 teams across all three leagues.

About CoinSmart Financial Inc.

CoinSmart is a leading Canadian-headquartered crypto asset trading platform dedicated to providing customers with an intuitive way for buying and selling digital assets, like Bitcoin and Ethereum. CoinSmart is one of the few crypto asset trading platforms in Canada to be registered as a securities dealer and marketplace with the Ontario Securities Commission. CoinSmart is also one of the first Canadian headquartered trading platforms to have an international presence, accepting customers across 40+ countries at a time when the digital asset industry continues to rapidly expand.

CoinSmart further builds on its mission to make cryptocurrency accessible by providing educational resources tailored to every level of cryptocurrency knowledge and unparalleled 24/7 omni-channel customer support. Offering instant verification, industry leading cold wallet storage, advanced charting with order book functionality and over-the-counter premium services, CoinSmart ensures every client’s needs are met with the highest level of quality and care. For more information, please visit https://www.coinsmart.com/.

For further information:
Justin Hartzman, Chief Executive Officer
E-mail: ir@coinsmart.com
Tel.: (647) 923-7678

CoinSmart Closes CAD$4.5 Million Seed Funding; Plans to Expand into Europe

Canada-based cryptocurrency exchange CoinSmart has announced the closing of a CAD$4.5 million (roughly US$3.5 million) seed funding round and extensive plans to expand into Europe.

CoinSmart, owned by Simply Digital Technologies, told CoinDesk in a statement Monday the investment was raised earlier this year through the issuance of interest-bearing convertible debentures, a type of debt instrument. Investors in the round were not disclosed.

The funding will be used to expand CoinSmart’s platform into European markets and support operational changes. It will also help Simply Digital Technologies prepare for a planned reverse takeover ahead of a hoped-for public listing on the TSX Venture Exchange, said the firm.

Enabling its European expansion, CoinSmart said it has obtained a Financial Intelligence Unit license issued in Estonia. “CoinSmart’s fundamental mission is to make cryptocurrency accessible for people of all experience levels,” said CoinSmart CEO Justin Hartzman. “We’re excited about the ways in which crypto can help streamline payments within Europe’s financial system and subsequently better serve and protect our customers.”

Coinsmart (bit.ly/38b7IkQ): Justin Hartzman CEO (https://www.coinsmart.com)