Smart Employee Benefits Inc. (“SEB” or the “Company”) (TSXV:SEB, OTCQB:SEBFF), a leader in benefits processing solutions and services today announced that as contemplated in the $5,000,000 convertible debenture (the “Debenture”) previously issued in March of 2022 to Co-operators Financial Services Limited (“The Co-operators”), SEB intends to issue common shares (the “Shares”) in satisfaction of the accrued interest payable on August 31, 2022 under the Debenture. 

The Debenture has an interest rate of 12% per annum, paid quarterly in arrears on the last day of May, August, November and February of each year, with the principal repayment due on the maturity date of November 30, 2025.  Interest accrued from the issuance of the Debenture until February 28, 2023, is payable quarterly in Shares at the then market price, subject to approval of the TSX Venture Exchange (the “TSXV”) at the time of each interest payment in Shares.  To the extent TSXV approval is not obtained, such interest would be capitalized and added to the principal of the Debenture. 

Furthermore, an additional fee of 3% per annum of the outstanding principal amount of the Debenture (“PIK Fee”) is payable on the last day of May and November in each year.  For PIK Fees relating to a PIK Fee payment date on or prior to November 30, 2023, such PIK Fees are payable in Shares at the then market price, subject to TSXV approval at the time of each PIK Fee payment in Shares.  To the extent TSXV approval is not obtained, such PIK Fee would be capitalized and added to the principal of the Debenture.

The Company intends to issue 1,120,243 Shares to The Co-operators at a deemed issue price of $0.135 per Share, being the closing price of the Shares on the TSXV on August 31, 2022, in satisfaction of the $151,232.88 owing in accrued interest.

The issuance of the Shares as payment for accrued interest owing on the Debenture remains subject to approval from TSXV.  All Shares issued as payment for accrued interest owing on the Debenture will be subject to a hold period expiring four months and one day from the date of issuance of the Shares. 

There are currently 172,388,774 Shares of the Company that are issued and outstanding.  According to information reported on SEDI, The Co-operators currently owns 1,150,684 Shares of the Company, a convertible debenture (“Initial Debenture”) convertible into 80,000,000 Shares, as well as the Debenture convertible into 20,000,000 Shares.  Pursuant to the issuance of the Shares as payment for the aforementioned accrued interest, The Co-operators would be issued an additional 1,120,243 Shares.  As a result, if The Co-operators were to convert the principal amount of the Initial Debenture as well as the Debenture, then The Co-operators would beneficially own or control, directly or indirectly, an additional 100,000,000 Shares, for a total of 102,270,927 Shares, representing approximately 37.39% of the 273,509,017 then issued and outstanding Shares of the Company. 

The prior issuance of the Debenture to The Co-operators in March of 2022 was considered a related party transaction within the meaning of TSXV Policy 5.9 and Multilateral Instrument 61-101 (“MI 61-101”).  The Company relied on the exemptions from the valuation and minority shareholder approval requirements of MI 61-101 contained in Sections 5.5(b) (Company is listed on the TSXV) and 5.7(1)(a) (fair market value of the Debenture did not exceed 25% of the Company’s market capitalization) in respect of such transaction. A resolution of the board of directors of the Company was passed to approve the issuance of the Debenture, with the two director appointees of The Co-operators, abstaining from voting.  No materially contrary view or abstention was exercised or made by any other director.

About Smart Employee Benefits Inc. (“SEB”):

SEB is an Insurtech company focused on Benefits Administration Technology driving two interrelated revenue streams – Benefits Solutions and Technology Services. The Company is a proven provider of leading-edge IT and benefits processing software, solutions and services for the Life and Group benefits marketplace and government. We design, customize, build and manage mission critical, end-to-end technology, people and infrastructure solutions using SEB’s proprietary technologies and expertise and partner technologies. We manage mission critical business processes for over 150 blue chip and government accounts, nationally and globally. Over 90% of our revenue and contracts are multi-year recurring revenue streams contracts related to government, insurance, healthcare, benefits and e-commerce. Our solutions are supported nationally and globally by over 600 multi-certified technical professionals in a multi-lingual infrastructure, from multiple offices across Canada and globally.

Our solutions include both software and services driven ecosystems including multiple SaaS solutions, cloud solutions & services, managed services offering smart sourcing (near shore/offshore), managed security services, custom software development and support, professional services, deep systems integration expertise and multiple specialty practice areas including AI, CRM, BI, Portals, EDI, e-commerce, digital transformation, analytics, project management to mention a few. The Company has more than 20 strategic partnerships/relationships with leading global and regional technology and consulting organizations.

Forward-Looking Statements

Certain information in this release, may constitute forward-looking information. In some cases, but not necessarily in all cases, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “targets”, “expects” or “does not expect”, “is expected”, “an opportunity exists”, “is positioned”, “estimates”, “intends”, “assumes”, “anticipates” or “does not anticipate” or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might”, “will” or “will be taken”, “occur” or “be achieved”. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates and projections regarding future events.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS RELEASE REPRESENTS THE COMPANY’S CURRENT EXPECTATIONS AND, ACCORDINGLY, IS SUBJECT TO CHANGE. HOWEVER, THE COMPANY EXPRESSLY DISCLAIMS ANY INTENTION OR OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING INFORMATION, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE, EXCEPT AS REQUIRED BY APPLICABLE LAW.

Neither TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange Inc.) accepts responsibility for the adequacy or accuracy of this release.

All figures are in Canadian dollars unless otherwise stated.

Media and Investor Contact

John McKimm

President/CEO/CIO

Office (888) 939-8885 x 2354

Cell (416) 460-2817