Input Capital Corp. Enters Purchase Agreement to Acquire SRG Security Resource Group Inc.

REGINA, SK, Dec. 14, 2020 /CNW/ - Input Capital Corp. (TSXV: INP) (US: INPCF) ("Input" or the "Company") is pleased to announce that it has today entered into a binding share purchase agreement (the "Purchase Agreement") with SRG Security Resource Group Inc. ("SRG") and all of the common shareholders of SRG ("SRG Shareholders"), whereby Input has agreed to acquire all of the issued and outstanding common shares ("SRG Shares") from the SRG Shareholders on the terms and subject to the conditions set out in the Purchase Agreement (the "Acquisition"). Upon completion of the Acquisition, which is expected to close in or around February 2021, SRG will become a wholly-owned subsidiary of the Company.

SRG is a privately-held, market-leading Canadian provider of world-class Cyber Security and physical Protective Security Services. Founded in 1996, most of SRG's employees are located in Western Canada, but solutions and services are provided to organizations across the country. SRG clients include federal and provincial governments, Crown corporations, and many high profile corporate and public sector clients such as hospitals, airports, utility companies and police forces. More information is available on SRG's website at https://securityresourcegroup.com.

As previously announced, Input will continue to operate its existing agriculture operations for the foreseeable future. The average remaining term of Input's streaming contracts with its many farm clients is 2-3 years. With canola prices nearing all-time highs, Input believes that it has an excellent opportunity to maximize the value of its assets as the Company repatriates capital from the agriculture sector over the remaining life of these contracts. This is expected to put Input in an excellent financial position to back SRG's anticipated growth strategy in the security sector.

Doug Emsley, Chairman & CEO of Input, restated his earlier comments: "The SRG security platform represents a unique opportunity for the Company to acquire a 24-year-old, profitable, high-performing business that is extremely well-positioned for its next stage of growth. By marrying Input's very strong balance sheet to SRG's growth opportunities, we see an opportunity to create a thriving player in the cyber and physical security services business. SRG's founders have been in the security business since 1987. The entire SRG management team is expected to remain with the company."

Acquisition Terms

Pursuant to the Purchase Agreement, Input will acquire all the SRG Shares for a total purchase price of approximately C$19,900,000 (the "Purchase Price"), as adjusted on a dollar-for-dollar basis for positive or negative net working capital of SRG. Half of the Purchase Price will be satisfied by the issuance of 8,883,930 common shares of Input ("InputShares") at a deemed value of C$1.12 per Input Share for an approximate total value of C$9,950,000. The remaining 50% of the Purchase Price will be paid in cash. Any closing net working capital adjustments to the Purchase Price will be made only in cash.

The Input Shares to be issued pursuant to the Acquisition represent approximately 16.74% of the issued and outstanding Input Shares as of November 30, 2020.

The new Input Shares to be issued to SRG Shareholders pursuant to the Acquisition will be subject to a statutory hold period expiring 4 months and 1 day from the date of issuance. In addition, the SRG Shareholders have agreed to lock-up terms in favour of the Company restricting their ability to transfer their Input Shares until the date that is 6 months following the closing of the Acquisition.

The Acquisition is subject to TSX Venture Exchange ("TSXV") approval and other typical conditions precedent including:

a)  SRG having no closing debt, except current liabilities calculated within the net working capital adjustment;

b)  100% of the SRG Shareholders will have signed the Purchase Agreement or joinder agreements agreeing to be bound by the Purchase Agreement;

c)  compliance by the parties to the Purchase Agreement with all covenants and agreements in such agreement;

d)  the representations and warranties of the parties to the Purchase Agreement being true and correct at closing;

e)  receipt of all regulatory approvals, including approval of the TSXV;

f)  there being no material adverse change with respect to SRG or Input; and

g)  other customary conditions precedent set forth in the Purchase Agreement.

The Purchase Agreement also contains customary representations, warranties and covenants by the parties thereto.

Assuming all of the conditions in the Purchase Agreement are satisfied or waived, including approval of the TSXV, the Acquisition is expected to close in or around February 2021.

The full text of the Purchase Agreement may be found under Input's issuer profile at www.sedar.com.

Independent Committee

Doug Emsley, Chairman of the Board, President and Chief Executive Officer of Input and a holder of 21.95% of the issued and outstanding Input Shares, is also the chairman of the board and chief executive officer of SRG and an SRG Shareholder holding approximately 19.3% of the outstanding SRG Shares (on a fully diluted basis, assuming the exercise of all outstanding SRG options). Mr. Emsley is a "related party" to Input under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101") and a "Non-Arm's Length Party" under applicable TSXV policies. As a result, the Acquisition is a "related party transaction" under MI 61-101 insofar as it relates to Mr. Emsley but is exempt from the formal valuation and minority approval requirements because the fair market value of the consideration payable to Mr. Emsley under the Purchase Agreement will not exceed 25% of Input's market capitalization, as determined under MI 61-101.

Because Mr. Emsley is a related party, the Company formed a special committee of independent directors (the "Independent Committee") consisting of David Brown, C.M., Q.C., David Laidley, FCPA, FCA, and Dr. Lorne Hepworth, to consider and oversee the Acquisition and make a recommendation to the board of directors of Input whether the proposed acquisition of the SRG Shares would be in the best interests of the Company and its shareholders. In the case of the proposed acquisition, the Independent Committee was charged with evaluating the proposed transaction and possible alternatives. In that connection, the Independent Committee retained Davies Ward Phillips & Vineberg LLP as its independent legal advisor and MNP LLP as its independent financial advisor.

Following its review of the proposed Acquisition, which included financial analysis and advice by MNP to the Independent Committee, the Independent Committee recommended to the board of directors of Input that the board approve the Acquisition and authorize the Company to enter into the Purchase Agreement to acquire the SRG Shares on the terms and subject to the conditions therein. The Input board has unanimously approved the Company proceeding with the Acquisition and the entering into of the Purchase Agreement. Mr. Emsley declared his interest and abstained from voting on the proposed Acquisition.

Additional information about the Acquisition may be found in a Material Change Report that has been filed under Input's issuer profile at www.sedar.com.

ABOUT INPUT

Input is primarily an agriculture commodity streaming company providing several flexible and competitive forms of financing which help western Canadian farmers solve working capital, mortgage finance and canola marketing challenges and improve the financial position of their farms. As of May 2019, Input postponed capital deployment into new streaming contracts while the Company explores new profitable business opportunities to invest determined through Input's strategic alternatives process.  For more information, please visit www.inputcapital.com.

Forward Looking Statements

This release includes forward-looking statements regarding Input and its business. Such statements are based on the current expectations and views of future events of Input's management. In some cases the forward-looking statements can be identified by words or phrases such as "may", "will", "expect", "plan", "anticipate", "intend", "potential", "estimate", "believe" or the negative of these terms, or other similar expressions intended to identify forward-looking statements. The forward-looking events and circumstances discussed in this release may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting Input, including risks regarding the agricultural industry, economic factors and the equity markets generally, the Company's inability to consummate the acquisition of SRG, the anticipated timing and completion of the Acquisition, non-satisfaction of the conditions to the Acquisition (including the approval of the TSX Venture Exchange), risks associated with the anticipated benefits of the Acquisition to Input and its shareholders, uncertainties concerning the Company's future plans and intentions with respect to its business, risks and uncertainties relating to Input's and SRG's businesses, and many other factors beyond the control of Input (including the ongoing COVID-19 pandemic). No forward-looking statement can be guaranteed. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Accordingly, readers should not place undue reliance on any forward-looking statements or information. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Input undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

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.

SOURCE Input Capital Corp.