Constellation Software Inc. — Management Reports 2020

Jul 16, 2020

Rozdil Capital Corporation Management Discussion and Analysis For the Three Months Ended May 31, 2020

July 14, 2020

The following management discussion and analysis (“MD&A”) of the results of the operations and financial position of Rozdil Capital Corporation (the “Corporation” or “Rozdil”) for the three months ended May 31, 2020 and 2019 should be read in conjunction with the Corporation’s unaudited condensed interim financial statements for the three months ended May 31, 2020 and 2019. All figures contained in this MD&A are presented in Canadian dollars.

Forward-Looking Statements

Certain statements contained in this MD&A may constitute forward-looking statements. These statements relate to future events or the Corporation’s future performance. All statements, other than statements of historical fact, may be forward-looking statements.

Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “propose”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Corporation believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this MD&A should not be unduly relied upon by investors as actual results may vary. These statements speak only as of the date of this MD&A and are expressly qualified, in their entirety, by this cautionary statement. The Corporation’s actual results could differ materially from those anticipated in these forward-looking statements as a result of various risk factors.

The Corporation

The Corporation was incorporated under the Ontario Business Corporations Act on May 3, 2018 and is classified as a Capital Pool Corporation, as defined in Policy 2.4 of the TSX Venture Exchange (the “Exchange”).

The principal business of the Corporation is the identification and evaluation of assets or businesses with a view to completing a Qualifying Transaction (“QT”). The Corporation has not commenced operations and has no assets other than cash. The Corporation’s continuing operations as intended are dependent upon its ability to identify, evaluate and negotiate an acquisition, or business, or an interest therein. Such an acquisition will be subject to the approval of the regulatory authorities concerned and, in the case of a non-arm’s length transaction, of the majority of the minority shareholders.

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The proceeds raised from the issuance of share capital may only be used to identify and evaluate assets or businesses for future investment, with the exception that up to the lesser of 30% of the gross proceeds realized by the Corporation in respect of the sale of its securities or $210,000, may be used for purposes other than evaluating businesses or assets. These restrictions apply until completion of a QT by the Corporation as defined under the policies of the TSX Venture. The Corporation is required to complete its QT on or before two years from the date the Corporation receives regulatory approval.

During the period ended February 28, 2019, the Corporation issued, as seed shares, 2,350,000 common shares at $0.05 per share for total proceeds of $117,500.

On July 16, 2019, the Corporation completed its Initial Public Offering (“IPO”) of 2,150,000 common shares at $0.10 per share for total proceeds of $215,000. The Corporation paid a commission of 10% of gross proceeds to Haywood Securities Inc. (the “Agent”) , and granted the Agent warrants to acquire 10% of the common shares issued in the offering exercisable for a period ending twenty-four months from the date the Corporation’s common shares are listed on the TSX Venture Exchange, exercisable at $0.10 per share. The Corporation also paid a corporate finance fee and reimbursed the Agent for legal fees and other reasonable expenses incurred pursuant to the Offering. Cash issuance costs of $48,889 were associated with these issuances and the value attributed warrants granted to the Agent is $11,351.

The Corporation’s common shares commenced trading on the TSX Venture Exchange under the trading symbol “ROZ.P” on July 16, 2019.

The Corporation granted stock options to officers and directors to collectively acquire 375,000 of the outstanding common shares of the Corporation at an exercise price of $0.10 per share and expiring five years from the date of grant. The Corporation granted stock options to the technical consultant to acquire 50,000 of the outstanding common shares of the Corporation at an exercise price of $0.10 per share and expiring three years from the date of grant.

The head office and the registered head office of the Corporation is located at 4 King Street West, Suite 401, Toronto, Ontario, M5H 1B6.

On July 14, 2020 the Board of Directors approved the unaudited condensed interim financial statements for the three months ended May 31, 2020 and 2019.

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Summary of Quarterly Results

	May 31,2020	February29, 2020	November30, 2019	August31, 2019	May 31,2019	February28, 2019	November30, 2018	August31, 2018
TotalAssets	$174,903	$182,199	$196,848	$201,251	$80,886	$107,514	$110,068	$117,500
TotalRevenues	nil	nil	nil	nil	nil	nil	nil	nil
TotalExpenses	$2,416	$16,729	$8,103	$60,342	$42,988	$3,194	$2,432	$2,500
Net Loss	($2,416)	($16,729)	($8,103)	($60,342)	($42,988)	($3,194)	($2,432)	($2,500)
Basic anddilutednet lossper share	($0.00)	($0.01)	($0.00)	($0.06)	$-	$-	$-	$-

Results of Operations

Three months ended May 31, 2020

The Corporation recorded a net loss of $2,416 during the three months ended May 31, 2020 (2019 - $42,988). The net loss for the three months ended May 31, 2020 is due mainly due to costs in relation to its listing on the Exchange, bank charges and professional fees.

Additional Disclosure for Venture Issuers without Significant Revenue

Since the Corporation has no revenue from operations, the following is a breakdown of the material costs incurred from the date of incorporation (May 3, 2018) to May 31, 2020:

Material Costs	Period from date of incorporation(May 3, 2018) toMay 31, 2020
Professional fees	$61,645
Filingfees	$45,722
Stock-based compensation	$31,096
Bank charges	$241

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Liquidity and Capital Resources

As at May 31, 2020, the Corporation had cash of $174,903. The Corporation had current liabilities of $1,400 and working capital of $173,503.

Negative cash flows of $7,296 (2019 – $26,628) were recorded from operating activities during the three months ended May 31, 2020. This is primarily due to outflows relating to filing fees, professional fees and bank charges.

Outstanding Share Data

As of the date of this MD&A, 4,500,000 common shares are issued and outstanding.

Off-Balance Sheet Arrangements

The Corporation has not had any off-balance sheet arrangements from the date of its incorporation to the date of this MD&A.

Related Party Transactions

During the three months ended May 31, 2020, the Corporation incurred fees of approximately $1,017 (2019 - $nil) for head office services provided by an entity whose owner is a director of the Corporation.

There was no remuneration paid to key management personnel during the three months ended May 31, 2020 (2019-$nil) and no other related party transactions have occurred during this period.

Capital Management

The Corporation's objective when managing capital is to maintain its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders.

The Corporation includes equity, comprised of share capital, contributed surplus and deficit, in the definition of capital.

The Corporation's primary objective with respect to its capital management is to ensure that it has sufficient cash resources to fund the identification and evaluation of potential acquisitions. To secure the additional capital necessary to pursue these plans, the Corporation may attempt to raise additional funds through the issuance of equity or by securing strategic partners.

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The proceeds raised from the issuance of common shares may only be used to identify and evaluate assets or businesses for future investment, with the exception that not more than the lesser of 30% of the gross proceeds from the issuance of shares or $210,000 may be used to cover prescribed costs of issuing the common shares or administrative and general expenses of the Corporation. These restrictions apply until completion of a Qualifying Transaction by the Corporation as defined under the Exchange Policy 2.4.

Risk Disclosures and Fair Values

The Corporation's financial instruments, consisting of cash and accrued liabilities approximate fair value due to the relatively short-term maturity of the instruments. It is management’s opinion that the Corporation is not exposed to significant interest, currency or credit risks arising from these financial instruments.

Critical Accounting Estimates

The Corporation’s significant accounting policies are summarized in Note 2 to the audited financial statements for the year ended February 29, 2020.

Additional Information

For further detail, see the Corporation’s unaudited condensed interim financial statements for the three months ended May 31, 2020 and 2019. Additional information about the Corporation can also be found on SEDAR.