EMERGE Signs Definitive Agreement to Acquire Viral Loops, a Profitable B2B Referral Marketing Platform, Announces $1.8M Private Placement

Executive Summary

• EMERGE Commerce Ltd. signed a definitive agreement to acquire substantially all assets and certain liabilities of Viral Loops for an aggregate cash consideration of C$2.3 million (C$2.1 M upfront, C$200 K deferred).
• The acquisition is projected to be immediately earnings‑accretive, increasing EMERGE’s pro‑forma 2025 Adjusted EBITDA by ~52% to C$2.2 M and boosting gross margins from an average of 36% to 86% for the combined entity.
• Concurrently, EMERGE announced a non‑brokered private placement of 18 million units at C$0.10 per unit, raising C$1.8 million to fund the purchase price; each unit includes one common share and half a warrant exercisable at C$0.15 for 24 months.

Key Details

• Target Business: Viral Loops – B2B referral‑marketing platform; 2025 unaudited revenue C$1.3 M, gross margin ~86%, Adjusted EBITDA (Adj. EBITDA) C$800 K (~62% margin).
• Purchase Price: Total C$2.3 M (≈2.9× 2025 Adj. EBITDA); cash payment of C$2.1 M at closing plus C$200 K deferred cash consideration payable on the one‑year anniversary.
• Assumed Liabilities: Deferred revenue liability estimated at US$100 K; total assets of Viral Loops as of 31 Dec 2025 approx. $1.2 M.
• Closing Timeline: Expected prior to 30 Mar 2026, subject to TSX‑Venture Exchange approval and customary conditions precedent.
• Strategic Rationale: Deploy Viral Loops’ referral technology across EMERGE’s D2C grocery & golf verticals; improve overall gross margin (86% vs. 36% YTD), increase EBITDA stability, reduce seasonality, and target ROIC >25 % in Year 1.
• Pro‑Forma Impact: Inclusive of Viral Loops, EMERGE’s Adjusted EBITDA for 2025 would rise to C$2.2 M (≈52 % increase).
• Private Placement Terms: 18 000 000 units @ C$0.10/unit = C$1.8 M gross proceeds; each unit = 1 common share + ½ warrant; warrants exercisable at C$0.15/share for 24 months.
• Use of Proceeds: Net proceeds earmarked to fund the Viral Loops acquisition; remaining consideration to be satisfied with cash on hand (no securities issued).
• Finder Compensation: Up to 6 % of gross proceeds may be paid in cash commissions and/or finders’ warrants (each warrant exercisable at C$0.10 for 24 months).
• Regulatory Notes: Units subject to a four‑month statutory hold period; related‑party participation expected to be exempt from MI 61‑101 valuation/shareholder approval thresholds (<25 % market cap).
• Loan Amendment Clarification: Existing credit facility balance $5.85 M; amendment extends maturity to Oct 2027 with a $58,500 cash fee; does not preclude refinancing at better rates.

Notable Quotes

“Viral Loops is precisely the type of high‑margin, recurring revenue business we aim to acquire — profitable, cash‑flow generative, and strategically complementary to our portfolio. At ~2.9× Adj. EBITDA, we believe this transaction reflects disciplined capital allocation with compelling immediate returns.” – Ghassan Halazon, Founder & CEO, EMERGE

“The acquisition of Viral Loops is expected to substantially enhance EMERGE's profitability and cash flow profile, strengthen the Company's balance sheet, and potentially improve our cost of capital over time.” – Ghassan Halazon, Founder & CEO, EMERGE