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Tiny Ltd. — M&A Activity 2025
May 22, 2025
47831_rns_2025-05-22_7fae0bca-9c4e-42cd-b8ae-b850bd89ff41.pdf
M&A Activity
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FORM 51-102F3
MATERIAL CHANGE REPORT
Item 1 Name and Address of Company
Tiny Ltd. ("Tiny" or the "Company")
Suite 1800 – 510 West Georgia Street
Vancouver, British Columbia V6B 0M3
Item 2 Date of Material Changes
May 12, 2025
Item 3 News Releases
On May 12, 2025, and May 13, 2025, the Company issued two news releases through Cision Newswire and filed the news releases on SEDAR+.
Item 4 Summary of the Material Changes
On May 12, 2025, the Company completed the acquisition ("Acquisition") of a majority interest in Serato Audio Research Limited ("Serato").
Pursuant to the terms of the share purchase agreement dated April 1, 2025, as amended (the "Acquisition Agreement"), the Company acquired 66% of the issued and outstanding shares of Serato from the shareholders of Serato (the "Sellers") for a base purchase price of US$66,000,000, subject to customary adjustments (the "Purchase Price") which was paid to the Sellers through: (i) the issuance of 29,360,451 Class A common shares in the capital of the Company (the "Common Shares") having an aggregate value of US$23,600,000 (the "Completion Shares"), and (ii) the payment of US$42,400,000 in cash.
Immediately prior to the closing the Acquisition, 17,400,000 subscription receipts (the "Subscription Receipts") issued by the Company pursuant to its bought deal offering that closed on April 9, 2025 (the "Bought Deal Offering") automatically converted into 17,400,000 Common Shares and 8,700,000 Common Share purchase warrants (the "Warrants").
In connection with the Acquisition, on May 12, 2025, the Company also completed a private placement offering (the "Private Placement") of $36,100,000 aggregate principal amount of 11% secured convertible debentures due in 2030 (the "Convertible Debentures").
The Convertible Debentures were issued with an original issue discount of 7.5% for aggregate gross proceeds to the Company of $33,392,500. Each Convertible Debenture has a face value of $1,000 and was offered and sold at a price of $925 per Convertible Debenture. The Convertible Debentures bear interest at a rate of 11.00% per annum from May 12, 2025 (the "Closing Date") and will mature on May 12, 2030 (the "Maturity Date"). On the Maturity Date, any outstanding principal amount of the Convertible Debentures plus any accrued and unpaid interest will be repaid by the Company in cash.
Item 5 Full Description of Material Changes:
Item 5.1 Full Description of Material Changes
The Acquisition
On May 12, 2025, the Company completed the Acquisition. Pursuant to the terms of the
Acquisition Agreement, the Company acquired 66% of the issued and outstanding shares of Serato from the Sellers for the Purchase Price which was paid through: (i) the issuance of 29,360,451 Completion Shares, and (ii) the payment of US$42,400,000.
The Completion Shares were issued at a price of US$0.8038 ($1.15) per share and are subject to a statutory four month hold period in accordance with applicable Canadian securities laws. In addition, the Sellers agreed to contractual restrictions on the sale of their Completion Shares whereby the transfer of such shares are restricted for a period of 24 months following closing, with 50% of such Completion Shares becoming freely trading upon the first anniversary of the closing date and 12.5% being released quarterly thereafter.
In addition to the Purchase Price, the Acquisition Agreement provides that the Sellers are eligible to receive additional contingent consideration upon satisfaction of certain total revenue growth and adjusted EBITDA performance targets within the two years following the closing of the Acquisition (the "Contingent Consideration"). If applicable, the Company is obligated to satisfy the first US$15,000,000 of Contingent Consideration in cash with any additional Contingent Consideration above US$15,000,000 payable through a combination of cash and up to 5,000,000 Common Shares, at the Company's discretion, at a price per share that is equal to the greater of the: (i) maximum allowable discount under the policies of the applicable stock exchange, and (ii) volume weighted average trading price of the Common Shares during the 30 trading days immediately preceding the issuance of such shares. If the Contingent Consideration targets are met, the Contingent Consideration will be paid after 90 days following the second anniversary of the closing date of the Acquisition or on such other date as agreed by the parties.
Concurrently with the closing of the Acquisition, the Company entered into a shareholders' agreement with Serato and those Sellers who will continue to retain an interest in Serato setting out the terms upon which the parties will conduct the business and operations of Serato. The shareholders' agreement includes put rights in favour of the Sellers and call rights in favour of the Company, exercisable upon the satisfaction of certain conditions, and providing for the acquisition by Tiny and certain other shareholders of Serato, of up to 9% of the remaining shares in the capital of Serato. Where applicable, the mechanisms in the shareholders' agreement, including the exercise of the put rights and call rights, will be subject to certain conditions, including minimum financial performance obligations and, where applicable, approval of the TSX Venture Exchange (the "TSXV"). If the put rights or the call rights are exercised, the purchase price payable for the additional shares of Serato will be payable in cash and, subject to the approval of the TSXV, the issuance of Common Shares, at a price per share that is equal to the greater of the: (i) maximum allowable discount under the policies of the TSXV; and (ii) volume weighted average trading price of the Common Shares during the 30 trading days immediately preceding the exercise date of such rights.
Subscription Receipt Conversion
In connection with the closing of the Acquisition, the escrow release conditions related to the Subscription Receipts were satisfied. On May 12, 2025, the proceeds from the Bought Deal Offering were released to the Company and each Subscription Receipt automatically converted into one Common Share and one-half of one Warrant. Each whole Warrant entitles the holder thereof to purchase one additional Common Share at an exercise price of $1.45 per Common Share until 1:30 p.m. (Vancouver time) on April 9, 2027.
Pursuant to the terms of the Amended and Restated Warrant Indenture between the Company and Computershare Trust Company of Canada, as warrant agent (the "Warrant Agent") dated May 9, 2025, the Company may accelerate the expiry of the Warrants if, at any time after the date that is four months after the closing of the Bought Deal Offering, the volume weighted average trading price of the Common Shares is equal to or greater than
$2.90 for any 20 consecutive trading days on the TSXV or such other stock exchange on which the Common Shares are then listed (the “Acceleration Right”) provided that the Company issues a notice of acceleration to the holders of the Warrants and the Warrant Agent, within 10 business days following the occurrence of an event triggering the Acceleration Right.
Private Placement
In connection with the Acquisition, on May 12, 2025, the Company completed the Private Placement, issuing $36,100,000 aggregate principal amount of Convertible Debentures. The Convertible Debentures were issued with an original issue discount of 7.5% for aggregate gross proceeds to the Company of $33,392,500. Each Convertible Debenture has a face value of $1,000 and was offered and sold at a price of $925 per Convertible Debenture. The Convertible Debentures bear interest at a rate of 11.00% per annum from the Closing Date and will mature on the Maturity Date. On the Maturity Date, any outstanding principal amount of the Convertible Debentures plus any accrued and unpaid interest will be repaid by the Company in cash.
The Convertible Debentures were sold pursuant to an agency agreement entered into among the Company and Canaccord Genuity Corp. and Roth Canada, Inc. dated May 12, 2025 and issued pursuant to a debenture indenture (the “Debenture Indenture”) entered into between the Company, FAX Capital Corp. and Computershare Trust Company of Canada, as debenture trustee (the “Debenture Trustee”) dated as of the Closing Date.
The Convertible Debentures are convertible into Common Shares at the option of the holder at any time prior to the close of business on the earlier of: (i) the last business day immediately preceding the Maturity Date; and (ii) the last business day immediately preceding the date specified by the Company for redemption of the Convertible Debentures, in each case, at a conversion price of $1.50 per Common Share, subject to adjustment in certain circumstances (the “Conversion Price”).
The Company has the right to require the conversion of all of the principal amount of the then outstanding Convertible Debentures into Common Shares at the Conversion Price upon not more than 60 days’ and not less than 30 days’ notice in the event that the daily volume weighted average trading price of the Common Shares on the TSXV is greater than $3.00, subject to adjustment in accordance with the terms of the Debenture Indenture for any 20 consecutive trading days.
On or after the second anniversary of the Closing Date, the Company will have the right to redeem the Convertible Debentures, in whole or in part (the “Redemption Right”). In the event that the Company exercises the Redemption Right, holders of Convertible Debentures will be entitled to receive the principal amount of the Convertible Debentures, plus accrued and unpaid interest to the date of redemption, plus an additional make-whole payment that is equal to the amount of interest that would be payable from the date of redemption to the Maturity Date multiplied by a make-whole factor of (i) 75% on or following the second anniversary of the Closing Date and before the third anniversary of the Closing Date, (ii) 50% on or following the third anniversary of the Closing Date and before the fourth anniversary of the Closing Date, and (iii) 25% on or following the fourth anniversary of the Closing Date and before the Maturity Date.
Subject to regulatory approval, if prior to the second anniversary of the Closing Date, 10% or less of the aggregate principal amount of the Convertible Debentures remain outstanding, the Company shall have the right, but not the obligation, to redeem all of the outstanding Convertible Debentures at an aggregate redemption price equal to the principal amount of such Convertible Debentures plus accrued and unpaid interest thereon to, but excluding, the date of redemption plus an amount equal to the aggregate amount of all interest that would
become payable prior to the Maturity Date.
If, prior to the 18-month anniversary of the Closing Date, the Company acquires limited partnership interests of Tiny Fund 1 (Canada) LP having a value of at least $75,000,000, subject to a leverage test, the terms of the Convertible Debentures may be adjusted to provide that: (i) the rate of interest payable on the Convertible Debentures shall be reduced from 11.00% per annum to 10.00% per annum; and (ii) the initial Conversion Price shall be increased to $1.61. In addition, should the Company issue Common Shares in connection with the acquisition of limited partnership interests in Tiny Fund 1 (Canada) LP at an effective price that is less than $1.15 per Common Share, the Conversion Price shall be reduced to reflect the weighted average dilution of the Common Shares provided that in no event can the Conversion Price be less than $1.15 per Common Share.
The obligations of the Company under its senior credit facilities and the Convertible Debentures are guaranteed by certain of the Company's subsidiaries, being Spin Acquisition Limited, Dribbble Holdings Ltd., Dribbble Holdings (US) Ltd., Meteor Software Holdings Ltd., Meteor Software Limited Partnership, Meteor Software (US) Ltd., MediaNet Solutions, Inc., Tiny Boards Limited Partnership, and Tiny Capital General Partner Ltd. (collectively, the "Guarantors") and security granted by the Company and the Guarantors, including: (i) a pledge of all of the issued and outstanding shares of each of the Guarantors held by the Company or other Guarantors; (ii) a pledge of the shares of Serato owned by Spin Acquisition Limited; and (iii) a security interest in substantially all of the assets of the Company and the Guarantors, but excluding the Company's interest in approximately 75% of the Company's shares in Beam Digital Ltd. and all its interest in WeCommerce Holdings Limited Partnership (collectively, the "Security").
The Debenture Trustee, on behalf of the holders of Convertible Debentures, has entered into an intercreditor and subordination agreement with the Bank of Nova Scotia. The Security granted in favour of the Debenture Trustee, on behalf of the holders of the Convertible Debentures, will rank subordinate to the Security securing the Company's senior credit facilities. Each Convertible Debenture shall rank pari passu in right of payment of principal and interest with all other Convertible Debentures issued under the Private Placement.
Item 5.2 Disclosure for Restructuring Transactions
Not applicable.
Item 6 Reliance on Section 7.1(2) of National Instrument 51-102
Not applicable.
Item 7 Omitted Information
Not applicable.
Item 8 Executive Officer
Mike McKenna
Chief Financial Officer
Tiny Ltd.
Phone: 416-938-0574
Email: [email protected]
Item 9 Date of Report
May 22, 2025