BPG Annual Shareholder Meeting 2023
Blackpearl Group - Notice Of Annual Meeting
Notice of 2023
Annual Shareholders Meeting
1
Notice Of Annual Meeting
21 August 2023
Dear Shareholder,
Please find enclosed notice (Notice) of Black Pearl Group Limited’s (BPG or the Company) annual shareholders’ meeting
(Meeting) which will be held in person on Monday 4 September 2023 at Duncan Cotterill, Level 5, 50 Customhouse Quay,
Wellington Central, Wellington 6011, starting at 10am NZDT.
The Board warmly welcomes shareholders to BPG’s first Meeting as a listed company and we look forward to updating
shareholders on the Company’s growth and performance thus far, as well as providing updates on the development of
Pearl Diver and BPG’s other products and services.
BPG shareholders will be asked to vote on the following resolutions:
• fixing the auditor’s remuneration;
• the election of Hugo Fisher as an independent Director;
• the approval of agreements in association with Pearl Diver, entered into with Prospect Desk, who is an Associated Person
of BPG Chair, Tim Crown;
• the approval to ratify Shares issued under BPG’s most recent capital raise;
• the issue of Shares to Crown BP Holdings, LLC, an Associated Person of Tim Crown, to capitalise the NZ$2.4 million debt plus
interest, issued under the Promissory Note; and
• the issue of up to 2,056,518 restricted share units in BPG to select BPG employees and contractors under the Restricted
Share Unit Plan and individual Letters of Invitation.
Under the NZX Listing Rules (Rules), Resolutions 3 and 5 must be accompanied by an independent appraisal report.
Accordingly, the Company has instructed Simmons Corporate Finance Limited to complete the appraisal report, which has
been circulated with this Notice.
In its appraisal report, Simmons Corporate Finance Limited has concluded that in its opinion, after having regard to all
relevant factors:
• the terms and conditions of the Fee Cap Amendment (as defined in the appraisal report) are fair to the non-associated
shareholders; and
• the terms and conditions of the Equity Conversion Agreement are fair to the non-associated shareholders.
The Board encourages you to read this Notice and appraisal report in its entirety and exercise your right to vote.
Board Recommendation
The Board considers that resolutions 1 and 2 are in the best interests of BPG and its shareholders and recommends that
shareholders vote in favour of the resolutions.
The non-interested Directors of the Board for resolutions 3, 4 and 5 (being Nick Lissette, Cherryl Pressley, Hugo Fisher and Mark
Osborne), consider that resolutions 3, 4 and 5 are in the best interests of BPG and its shareholders and recommends that
shareholders vote in favour of the resolutions.
The non-interested Directors of the Board for resolution 6 (being Hugo Fisher, Tim Crown and Mark Osborne), consider that
resolution 6 is in the best interests of BPG and its shareholders and recommends that shareholders vote in favour of the
resolution.
Blackpearl Group - Notice of 2023 Annual Shareholders Meeting
Proxy Form
The enclosed proxy form has detailed instructions on how shareholders may lodge their vote or appoint a proxy to vote on their
behalf if they are unable to attend the meeting in person.
Shareholders attending the meeting in person will be given the opportunity to raise questions. Shareholders may also submit
written questions on the bottom of the Proxy Form. The main themes will be aggregated and responded to at the Meeting.
Alternatively, written questions can be sent online at https://investorcentre.linkgroup.nz/voting/BPG or by email to meetings@
linkmarketservices.com.
BPG reserves the right not to address questions that, in the Chair’s opinion, are not reasonable in the context of an annual
shareholders’ meeting, or any written questions that are not received by 3pm NZDT on Friday, 1 September.
I look forward to seeing you at the Meeting.
Tim Crown
ChairmanProxy Form
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Notice Of Annual Meeting
Notice is hereby given that the annual shareholders’ meeting (Meeting) of
Black Pearl Group Limited (BPG or the Company) will be held in person on
Monday 4 September 2023 at Duncan Cotterill, Level 5, 50 Customhouse Quay,
Wellington Central, Wellington 6011, starting at 10am NZDT.
Agenda
A. Chairman’s introduction.
B. Presentation to shareholders.
C. Questions.
D. Resolutions.
Resolutions
To consider and, if thought fit, to pass the following ordinary resolutions:
1. Auditor’s Remuneration: that the Board be authorised to fix the fees and expenses of the Company’s auditors.
2. Election of Hugo Fisher: that Hugo Fisher, who retires as a Director in accordance with Rule 2.7.1, and being eligible, be
elected as a Director of BPG.
3. Approval of Master Services Agreement and Statement of Work with Related Party: that the agreements for the supply of
data and associated services entered into with Prospect Desk, LLC, on the basis described in the Explanatory Notes, are
approved for the purposes of Rule 5.2.1
4. Ratification of Placement Shares: that, in accordance with Rule 4.5.1(c), the ratification of 5,250,407 Shares issued under the
Placement on 26 June 2023 is approved.
5. Issue of Shares under the Equity Conversion Agreement: that the issue of 3,840,106 Shares to Crown BP Holdings, LLC under
the Equity Conversion Agreement, be approved in accordance with Rules 4.2.1 and 5.2.1.
6. Issue of Restricted Share Units to Key Personnel: that, under Rule 4.2.1(a), the Board is authorised to offer to Key Personnel,
up to 2,056,518 restricted share units (representing up to 5% of BPG’s Shares on issue as at the date of this Notice if 100% of
the restricted share units were to vest and convert to Shares on a one-for-one basis) on the terms of the Key Personnel
Restricted Share Unit Plan described in the Explanatory Notes.
Blackpearl Group - Notice of 2023 Annual Shareholders Meeting
Procedural notes
Proxies
Any shareholder of BPG who is entitled to attend and vote at the Meeting may appoint a proxy to attend and vote on their
behalf. A corporation which is a shareholder may appoint a representative to attend the Meeting on its behalf in the same
manner as it could appoint a proxy. A proxy does not need to be a shareholder of BPG. A Proxy Form can be returned by
delivery, mail, email, or online (as set out below).
The Chairman of the Meeting (Tim Crown) and any of the Directors are prepared to act as proxy. Where any Director is
appointed as a discretionary proxy and is not prohibited from voting, each of the Directors intends to vote in favour of all of
the Resolutions. Tim Crown is prohibited from voting on resolutions 3, 4 and 5.
Voting restrictions apply to the persons (and their respected Associated Persons, as defined in the Rules) as detailed below
and shareholders are encouraged to give express voting directions to any of the listed persons that they appoint as their
proxy.
To appoint a proxy, you should complete and sign the enclosed Proxy Form and either return it by delivery, mail or email to the
share registrar of BPG:
By email: meetings@linkmarketservices.co.nz
(please put the words “BPG Proxy Form” in the subject line for easy identification)
By delivery:
Black Pearl Group Limited
C/- Link Market Services Limited
Level 30, PwC Tower
15 Customs Street West
Auckland 1010
By mail:
Black Pearl Group Limited
C/- Link Market Services Limited
PO Box 91976
Auckland 1142
You may also lodge your proxy online at https://investorcentre.linkgroup.nz/voting/BPG. You will require your CSN/Holder
Number and FIN to complete your proxy appointment. A shareholder will be taken to have signed the Proxy Form by lodging it
in accordance with the instructions on the website.
The completed Proxy Form must be received by Link Market Services no later than Friday, 1 September at 3pm NZDT. Online
proxy appointments must also be completed by this time. Registered shareholders at that time will be the only persons
entitled to vote at the Meeting and only the shares registered in those shareholders’ names at that time may be voted at the
Meeting.
Shareholder Questions
Shareholders attending the meeting in person will be given the opportunity to raise questions.
Shareholders may also submit written questions on the bottom of the Proxy Form. The main themes will be aggregated and
responded to at the Meeting. Alternatively, written questions can be sent online at
https://investorcentre.linkmarketservices.co.nz/voting/BPG or by email to meetings@linkmarketservices.com.
BPG reserves the right not to address questions that, in the Chair’s opinion, are not reasonable in the context of an annual
shareholders’ meeting, or any written questions that are not received by 3pm NZDT on Friday, 1 September.
Ordinary Resolutions
All resolutions are ordinary resolutions. An ordinary resolution is a resolution passed by more than 50% of votes of those
shareholders entitled to vote and voting on the resolutions in person or by proxy.
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Notice Of Annual Meeting
Voting Restrictions
Pursuant to Rule 6.3.1, the following voting restrictions apply:
• In relation to Resolution 3, BPG Chair, Tim Crown, and his Associated Persons are prohibited from voting any Shares that
they hold.
• In relation to Resolution 4, any shareholder, and their respective Associated Persons, who acquired Placement Shares,
are prohibited from voting any Shares that they hold. This includes Crown BP Holdings, LLC and its Associated Persons,
including Tim Crown.
• In relation to Resolution 5, Crown BP Holdings, LLC and its Associated Persons, including Tim Crown, are prohibited from
voting any Shares that they hold.
• In relation to Resolution 6, BPG executive Directors, Nick Lissette and Cherryl Pressley and their Associated Persons, are
prohibited from voting as Shares that they hold.
The Company will disregard any votes cast on Resolutions 3, 4, 5 and 6 (as applicable) by any person to whom the above
restrictions apply. Any discretionary proxies given to persons disqualified from voting under the requirements set out above
will not be valid.
The definition of Associated Person has the same meaning as under the Rules, and includes persons or legal entities who are
able to directly or indirectly exert a substantial degree of influence over the activities of another person or legal entity (or vice
versa).
Capitalised terms not defined in this Notice have the same meaning as in the Rules.
NZ RegCo No Objection
This Notice has been reviewed by NZX Regulation Limited (NZ RegCo). NZ RegCo has confirmed it has no objection to this
Notice but takes no responsibility for the contents of this Notice.
Blackpearl Group - Notice of 2023 Annual Shareholders Meeting
Explanatory Notes
Resolution 1: Auditor’s Remuneration
Pursuant to section 207T of the Companies Act 1993, William Buck New Zealand is automatically reappointed as auditor of BPG at
the Meeting. This resolution authorises the Board to fix the fees and expenses of William Buck New Zealand as BPG’s auditor in
accordance with section 207S of the Companies Act 1993.
Resolution 2: Election of Hugo Fisher
Hugo Fisher was appointed by the Board with effect from 18 July 2023. Rule 2.7.1 provides that a Director appointed by the Board
will hold office until the next annual meeting, at which time they must retire but shall be eligible for election.
Hugo Fisher has over 25 years of experience in both local and international financial markets. Hugo has built a network of trusted
financial and investment industry participants around the world (including kiwi saver providers, institutional investors, US mutual
funds, multi strategy hedge funds, private equity and venture capital investors). Hugo holds a Bachelor of Commerce (Finance)
and Bachelor of Arts from the University of Otago, as well as a Post Graduate Diploma of Applied Finance and Investment from
the Securities Institute of Australia (SIA).
The Board considers Hugo to be an Independent Director. Being eligible, Hugo has offered himself for election by shareholders.
The Board unanimously supports the election of Hugo.
Resolution 3: Approval of the Master Services Agreement and Statement of Work
Background
On 23 March 2023, BPG announced the launch of Pearl Diver, BPG’s new SaaS product that provides businesses unique visibility
into their website visitors. The provision of Pearl Diver’s services is facilitated by data partnerships and data co-operatives that
supply data and associated services that feed into the Pearl Engine. Pearl Diver cannot operate without the supply of data. To
this effect, in March 2023, BPG negotiated terminable agreements with Arizona based limited liability company, Prospect Desk,
LLC (Prospect Desk). Prospect Desk is a “Related Party” of BPG through BPG’s Chair, Tim Crown, on the basis outlined further
below. BPG has relied on this agreement until August 2023, when BPG entered into a master services agreement (Master Services
Agreement) and a statement of work (Statement of Work) with Prospect Desk on 1 August 2023 and 4 August 2023 respectively. The
Master Services Agreement and Statement of Work are of materially the same terms as the negotiated agreements from March
2023, with the exception that the terms of the written agreements are for a minimum of three years.
BPG seeks shareholder approval of the Master Services Agreement, Statement of Work and other related transactions stemming
from the Master Services Agreement. The key terms of the Master Services Agreement and Statement of Work are outlined below.
Master Services Agreement
The Master Services Agreement sets out the relationship between BPG and Prospect Desk for the provision of data partnership
services for BPG. The Master Services Agreement has a minimum term of three years, with the ability to mutually agree to renew
the term for a further three years, or such other period(s) as agreed to by the parties. The terms of the Master Services Agreement
are consistent with what would typically be expected in a commercial services agreement, with the exception of the following
clauses:
1. Data Licence Grants: Prospect Desk has agreed to grant BPG a non-exclusive licence to use the data held in its data
co-operative. In consideration, BPG has agreed to grant Prospect Desk a limited, non-exclusive, revocable licence to use,
including the right to store, process and modify certain data held by BPG (BPG Contribution Data), subject to the use of the
BPG Contribution Data being permitted under BPG’s Privacy Policy.
2. Fee Cap: Until such time as BPG obtains shareholder approval for the Master Services Agreement and all related series
of transactions, the aggregate amount BPG is required to pay to Prospect Desk under the Master Services Agreement,
statements of work or other related transactions, is capped at NZ$250,000 (Fee Cap). Should the aggregate amount
reach NZ$250,000, Prospect Desk may suspend or terminate the Master Services Agreement or any statements of work or
related transactions (including any part of them) by giving written notice to BPG. There are no break fees associated with
termination. Upon obtaining shareholder approval, the Fee Cap ceases to apply. The Fee Cap was included to ensure that
BPG complied with the Rules.
3. Effect of Termination: On termination of the Master Services Agreement, all data licenced through the Master Services
Agreement by Prospect Desk and BPG will cease. All fees payable under the Master Services Agreement and any statements
of work will cease.
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Statements of Work
Under the Master Services Agreement, BPG has the ability to engage with and enter into statements of work or data
participation agreements for the provision of services and data contributions to improve and develop the Pearl Engine.
BPG has entered into a Statement of Work with Prospect Desk for the provision of business consulting services and data
access and processing services for Pearl Diver. The data provided by Prospect Desk under the Statement of Work is supplied to
Pearl Diver customers and end users as part of Pearl Diver’s services.
The key terms of the Statement of Work with Prospect Desk are as follows:
1. Services: Prospect Desk will provide the following services:
a. business consulting services in relation to the business strategy and marketing for BPG’s products and services
(Business Consulting Services); and
b. access and processing of data (Data Services).
2. Term: a term of:
a. in relation to the Business Consulting Services, month to month; and
b. in relation to the Data Services, three years or until termination or any extension in accordance with the Master
Services Agreement.
3. Consideration: the consideration for the provision of the services above are in the form of fixed fees and revenue-based
fees (Fees) being:
4. Fee Cap: The Fee Cap terms in the Master Services Agreement applies.
One-off program set up fee + data access fee US$25,000
Three Month business consulting fee of US$5,000 per
month
US$15,000
Data processing fee (monthly)
20% of net revenue collected by BPG from the BPG’s
customers and/or end users to the extent the net
revenue relates to services that use the data supplied
processing component provided by Prospect Desk.
Minimum fee of US$15,000
Notice Of Annual Meeting
Blackpearl Group - Notice of 2023 Annual Shareholders Meeting
Implications of the Transaction
BPG currently relies on the Master Services Agreement and Statement of Work for the provision and processing of required
data that enables Pearl Diver to provide services to its end users. It is uncertain as to the total amount of fees BPG is expected
to pay to Prospect Desk, as this would depend on the success of the sales and marketing of Pearl Diver. BPG however, is
confident that the Fee Cap would be reached by the end of this year. Should the Fee Cap be reached, Prospect Desk has the
ability to suspend or terminate the Master Services Agreement and any Statements of Work under it. Pearl Diver is unable to
provide the full extent of its services without the data from Prospect Desk provided by the agreements.
The Master Services Agreement and Statement of Work also facilitates the following opportunities for BPG:
1. Increase in Monthly Recurring Revenue and Growth in US Markets
The approval of the Master Services Agreement, the Statement of Work and any related statements of work that may be
entered into in the future, will enable BPG to continue to increase its MRR and ARR through the continuation of services
provided through Pearl Diver. Not only does the steady increase in MRR and ARR promote growth and profitability, Pearl
Diver is also the key for BPG to infiltrate the SMB market based in the USA and provide future growth potential and draw in
overseas investors. Since the launch of Pearl Diver in March 2023, new sales from Pearl Diver has secured $1.1M in new ARR.
BPG can only achieve this growth and continued sales once the Fee Cap restriction is removed.
2. Opportunities for Development of the Pearl Engine
The Pearl Engine serves as a catalyst for data enhancement within BPG. BPG leverages an extensive set of proprietary
data and data partnerships to create data-powered features and products. The data and services procured through
the Master Services Agreement and statements of work, will create opportunities for the development of analytical and
artificial intelligence features that are extended to BPG’s products via the Pearl Engine and uncover new insights for the
growth of the Company.
MRR
ARR
Pearl Diver revenue per customer
Monthly Recurring Revenue (MRR) per customer is calculated using the monthly revenue generated
per customer. Annual Recurring Revenue (ARR) per customer is calculated based on 12x the MRR of
each price tier.
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Notice Of Annual Meeting
Key Risks
The Master Services Agreement and any statements of work under it are governed by the laws of the State of Arizona and any
disputes will be subject to dispute resolution procedures in Arizona. If BPG needed to enforce the terms of the Master Services
Agreement and any statements of work under it, it would be required to do so in the jurisdiction of Arizona. The total liability of
Prospect Desk or BPG under the Master Services Agreement or any statements of work under it is limited to the total amount
paid by BPG under the Master Services Agreement or any statements of work under it. There is a risk that Prospect Desk’s
liability to BPG exceeds that liability limit and BPG is unable to fully recuperate any loss.
NZX Listing Rule Requirements
Shareholder approval for Resolution 3 is required under Rule 5.2.1.
Rule 5.2.1 states that an Issuer must not enter into a “Material Transaction” if a “Related Party” is, or is likely to become, a direct
party to the Material Transaction, unless that Material Transaction is approved by an ordinary resolution or conditional on
such approval.
The Master Services Agreement and Statement of Work are a related series amounting to a Material Transaction with a
Related Party due to the following factors:
1. Material Transaction
A “Material Transaction” for the purposes of the Rules includes a transaction, or a related series of transactions, whereby
an Issuer provides or obtains services where the gross cost to the Issuer in any financial year is likely to exceed an
amount equal to 1% of the Average Market Capitalisation of the Issuer, with exception to when the gross cost is less than
NZ$250,000 in any financial year.
The Statement of Work is currently not a “Material Transaction” for the purposes of the Rule 5.2.1 as it has a Fee Cap of
NZ$250,000. BPG proposes to remove the Fee Cap as BPG expects the Fee Cap to be reached by the end of this year.
Should the Fee Cap be removed as it currently stands, the Statement of Work would be a “Material Transaction” for the
purposes of the Rules as the fees payable to Prospect Desk would exceed 1% of BPG’s Average Market Capitalisation,
being approximately NZ$138,700 (measured over the 20 trading days before BPG’s announcement on the launch of Pearl
Diver on 23 March 2023).
2. Related Party
The Master Services Agreement and Statement of Work are Material Transactions with Related Parties. A “Related Party”
for the purposes of the Rules includes an Associated Person of a Director of the Issuer. An Associated Person includes
someone who is able to, directly or indirectly, exert a degree of influence over another person or entity, or vice versa.
BPG Chair, Tim Crown has a 35% shareholding through his Associated Persons, and therefore, is able to exert a degree of
influence over Prospect Desk, making Prospect Desk a Related Party of BPG.
Accordingly, BPG proposes to seek shareholder approval of the Master Services Agreement, Statement of Work and any other
related transaction that may stem from the Master Services Agreement as a “Material Transaction” with a “Related Party” for
the purposes of Rule 5.2.1 and in accordance with the terms of the Master Services Agreement and Statement of Work.
Statements of Work with Potential Related Parties
As noted above, the Master Services Agreement provides BPG the ability to engage with and enter into statements of work or
data participation agreements for the provision of services and data contributions to improve and develop the Pearl Engine.
Due to the potential related party relationships that may arise between BPG and potential companies that provide the
services and data contributions (due to Tim Crown’s extensive investment portfolio in a large number of US tech enterprises
such as Prospect Desk), BPG has adopted a process to ensure that the statements of work and data participation agreements
are entered into on an arms’ length basis by ensuring that each party is represented by their own legal counsel as required
and ensuring that Tim Crown abstains from voting on any Board approval for the entry into future statements of work.
BPG also acknowledges that the entry into the above agreements and the opportunities with the Pearl Engine and Pearl Diver
that it has provided as a result, would not have been possible but for BPG Chair, Tim Crown and his Associated Persons.
BPG is aware of its continuous disclosure obligations and will update the market on any other material agreements entered
into under the Master Services Agreement.
Blackpearl Group - Notice of 2023 Annual Shareholders Meeting
Appraisal Report
Rule 7.8.8(b) requires that the relevant notice of meeting provided to shareholders for approval of a Related Party transaction
be accompanied by an appraisal report. The appraisal report has been prepared by Simmons Corporate Finance Limited
for the benefit of BPG shareholders in accordance with Rules 7.10 and 7.8.8(b) and accompanies this Notice in relation to this
resolution.
Implications of Resolution 3 not proceeding
Access to Prospect Desk data is currently critical to servicing existing Pearl Diver customers and obtaining new Pearl Diver
customers. Under the Statement of Work and the Master Services Agreement, the Fees payable to Prospect Desk, including the
20% of the net collected revenue from BPG’s products and/or services that use the data processing component provided by
Prospect Desk (payable monthly), is limited to the NZ$250,000 Fee Cap.
Should the revenue from Pearl Diver continue to increase and the Fee Cap be reached, Prospect Desk has the ability to
suspend or terminate the Master Services Agreement. If the Statement of Work is terminated, it is highly likely that Pearl Diver
will no longer be able to provide its services and all revenue associated with Pearl Diver would cease and detrimentally impact
BPG’s growth and development plans. BPG would need to source the data from other providers and develop processing
programmes to integrate with the Pearl Engine, which would take time and resources that could be spent on other growth and
development projects.
Resolution 4: Ratification of Placement Shares
On 26 June 2023, BPG issued 5,250,407 shares in BPG (Shares) under a private Placement (Placement Shares) raising
approximately NZ$2.2 million at an issue price of NZ$0.42 per Share. The Placement commenced on 26 May 2023 and was
limited to wholesale investors in New Zealand and accredited investors based in the United States of America. The Placement
Shares are of the same class and rank equally with all other existing ordinary shares in BPG and represents just under 15% of
BPG’s equity securities on issue immediately prior to the commencement of the Placement.
Tim Crown, Director and Chairman of the Company, indirectly participated in the Placement on the same terms and criteria as
all the other Placement participants, through his Associated Persons, Crown BP Holdings, LLC and Ohana Farms, LLC. No other
Director or Senior Manager participated in the Placement.
The ratification of the Placement Share issue will provide the Company with further avenues for raising capital and place the
Company in the best position to seize new growth opportunities. Should shareholders approve this resolution, BPG proposes
to raise further capital before the end of the year to accelerate the growth of Pearl Diver and supporting BPG’s drive to
profitability.
NZX Listing Rule Requirements
Shareholder approval for Resolution 4 is required under Rule 4.5.1(c).
The Placement Shares were issued in accordance with Rule 4.5.1, which permits an issue of shares up to 15% of the issued share
capital of BPG in any 12 month period without prior shareholder approval.
Rule 4.5.1(c) effectively provides BPG Shareholders the opportunity to replenish the 15% placement capacity under Rule 4.5.1 by
way of an ordinary resolution, allowing BPG to issue up to another 15% of its issued capital in the same 12 month period.
Implications of Resolution 4 not proceeding
Should Resolution 4 not be passed, BPG will only be able to issue a very limited number of Shares under Rule 4.5.1 and will
have to wait 12 months from the Placement Share issue date, being 26 June 2024, to raise further capital. This would be highly
detrimental to BPG’s pathways to growth and profitability, as without further capital, BPG would have to halt sales and
marketing immediately, greatly limiting the development and promotion of Pearl Diver.
Failure to pass Resolution 4 will not affect the validity of the Placement Shares already issued.
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Notice Of Annual Meeting
Resolution 5: Issue of Shares under the Equity Conversion Agreement
Background
On 26 November 2022 and prior to BPG listing on the NZX Main Board, Crown BP Holdings, LLC (a Related Party of BPG through
BPG’s Chair, Tim Crown, on the basis described further below) advanced to BPG NZ$2,400,000 with a fixed interest rate of 1%
per annum (Debt) under a promissory note (Promissory Note). Under the Promissory Note, BPG agreed to repay half of the Debt
by 23 December 2023 and the balance by 23 January 2025. Under the Promissory Note, Crown BP Holdings, LLC was issued 2.5
million warrants in BPG (Warrants). Each Warrant converts into one ordinary share in BPG, and can be exercised by Crown BP
Holdings, LLC at any time until 24 May 2028. No Warrants have been exercised as at the date of this Notice. Further information
on the Warrants can be found in BPG’s FY23 Annual Report.
The Promissory Note was amended by Crown BP Holdings, LLC on 13 April 2023, extending the Debt repayment dates by 12
months each (Promissory Note Amendment).
Equity Conversion Agreement
As announced to the market on 26 June 2023, BPG entered into a conditional equity conversion agreement with Crown BP
Holdings, LLC (Equity Conversion Agreement) to fully capitalise the Debt owed under the Promissory Note. Under the Equity
Conversion Agreement, Crown BP Holdings, LLC is required to convert 100% of the Debt under the Promissory Note to Shares
in BPG at a conversion price of NZ$0.63 per Share (Conversion), being a 50% premium over the issue price of $0.42 under the
capital raising completed in June 2023. Under the terms of the Equity Conversion Agreement, the Conversion is conditional
upon BPG obtaining shareholder approval under Rule 4.2.1.
Implications of the Issue of Shares under the Equity Conversion Agreement
Upon approval of Resolution 5, Crown BP Holdings, LLC will be issued 3,840,106 new Shares in BPG under the Equity Conversion
Agreement within seven (7) days from the date of this Meeting.
The capitalisation of the Debt will enable the Company to preserve cash to invest in the growth and development of the
Company, whilst encouraging the alignment of Crown BP Holdings, LLC’s interest as an investor and as an Associated Person
of BPG Director and Chairman, Tim Crown, with those of the Shareholders of BPG for the long term.
Dilutive effects
Upon Conversion of the Debt in full, the Promissory Note and Promissory Note Amendment are deemed to be terminated with
no further effect and Crown BP Holdings, LLC will be issued 3,840,106 new Shares.
Crown BP Holdings, LLC’s shareholding will be increased accordingly:
*Crown BP Holdings, LLC is an Associated Person of Tim Crown. Tim Crown has a relevant interest (as defined in the Financial
Markets Conduct Act 1993) in 3,485,153 Shares in aggregate through his relevant interests in Crown BP Holdings, LLC and Ohana
Farms, LLC. Crown BP Holdings, LLC holds 2,500,000 Warrants and Tim Crown also directly holds 288,000 Restricted Shares in
BPG. For a discription of the Restricted Share terms, please refer to page 42 of BPG's FY23 Annual Report.
Pre-ConversionPost-Conversion
Number of Shares held by Crown BP Holdings, LLC*3,098,1296,938,235
Total in class41,130,377 44,970,483
Total percentage of class held by Crown BP Holdings, LLC7.532%15.428%
Example Shareholding percentage5% (2,056,518 shares)4.573%
Blackpearl Group - Notice of 2023 Annual Shareholders Meeting
NZX Listing Rule Requirements
Shareholder approval for Resolution 5 is required under Rule 4.2.1 and 5.2.1.
Under Rule 4.2.1, BPG must, with exception to certain circumstances listed under Rule 4.1.2, only issue equity securities with
approval by ordinary resolution, and complete the share issuance within 12 months of obtaining shareholder approval.
Rule 5.2.1 states that an Issuer must not enter into a “Material Transaction” if a “Related Party” is, or is likely to become, a direct
party to the Material Transaction, unless that Material Transaction is approved by an ordinary resolution or conditional on
such approval.
The capitalisation of the Debt under the Equity Conversion Agreement is a Material Transaction with a Related Party due to the
following factors:
1. Material Transaction
A “Material Transaction” for the purposes of the Rules includes a transaction where an Issuer issues its own Financial
Products having a market value above 10% of the Issuer’s Average Market Capitalisation.
The market value of the new Shares to be issued under the Equity Conversion Agreement is NZ$2.4 million, being over 10%
of BPG’s Average Market Capitalisation of approximately NZ$18 million as at the date of entry into the Equity Conversion
Agreement.
2. Related Party
A “Related Party” for the purposes of the Rules includes an Associated Person of a Director of the Issuer.
Crown BP Holdings, LLC is an Arizona Limited Liability Company, and is an Associated Person of BPG Chair, Tim Crown, as
Tim is a major shareholder, manager (through his membership of Anchor Management, LLC) and a member of Crown BP
Holdings, LLC.
Appraisal Report
Rule 7.8.5 requires an appraisal report to accompany a notice of meeting if more than 50% of the Shares to be issued by
way of an ordinary resolution is intended to be acquired by directors or Associated Persons of directors of BPG, and Rule
7.8.8(b) requires that the relevant notice of meeting provided to shareholders for approval of a Related Party transaction be
accompanied by an appraisal report.
Crown BP Holdings, LLC is an Associated Person and a Related Party of BPG Chair, Tim Crown, as explained above. Accordingly,
an appraisal report has been prepared by Simmons Corporate Finance Limited and accompanies this Notice in relation to this
resolution.
Implications of Resolution 5 not proceeding
Should Resolution 5 not be passed, the new Shares will not be issued to Crown BP Holdings, LLC, and the Debt will only be
payable by way of cash in accordance with the Promissory Note and the Promissory Note Amendment. BPG will need to divert
cash to pay off the Debt by 23 January 2026 rather than invest in Company growth. If the Company is unable to pay off the
Debt repayments, the Company will need to return to Shareholders for alternative capital options.
13
Notice Of Annual Meeting
Resolution 6: Issue of Restricted Share Units to Key Personnel
BPG is proposing to issue up to 2,056,518 unquoted, non-transferrable restricted share units in BPG (RSUs) to select employees
and Contractors of BPG (Key Personnel). This represents 5% of BPG’s Shares on issue at the date of this Notice (if 100% of the
RSUs were to vest and convert to Shares on a one-for-one basis). BPG proposes to issue the RSUs under a new Restricted Share
Unit plan (RSU Plan) to a wholly owned subsidiary to hold the RSUs on bare trust for the benefit of the Key Personnel within 36
months in accordance with Rule 4.2.2(a).
The RSUs are convertible equity securities that entitle the holder to one ordinary share in BPG per RSU. The RSUs will be issued
to the Key Personnel at nil cost, in consideration for the Key Personnel’s contributions to the Company. Shares will be vested
with the Key Personnel over a defined period to provide an incentive and retention arrangement that is appropriate in the
circumstances and will be offered to each Key Personnel through a letter of invitation to participate in the RSU Plan (Letter of
Invitation). Shares issued on the conversion of the RSUs are issued on the same terms and rank equally with the BPG Shares
quoted on the NZX Main Board.
The exercise price (if any) of the RSUs will vary depending on the Key Personnel’s Letter of Invitation. The Letters of Invitation
are subject to the Restricted Share Unit Plan Rules. In any case, the RSUs will lapse (vested or unvested) upon the Key Personnel
ceasing to be employed or contracted by BPG or any of its subsidiaries.
The Board considers that a new RSU Plan will incentivise and align BPG’s key personnel with the interests of the Company
and its shareholders and is consistent with BPG’s growth strategy. The retention of experienced and skilled employees is
strategically and operationally important to the Company, as it is tied with the retention of operational knowledge, technology
capabilities, key partner and customer relationships and industry expertise, as well as providing the company with the
resources for the development of the Pearl Engine and new software features or applications of BPG’s products.
Dilutive Effects
Should Resolution 6 be approved by Shareholders and assuming 100% of the RSUs are vested and converted to Shares on a
one-for-one basis, BPG will issue up to 2,056,518 new Shares in BPG to the Key Personnel over a period of time. Accordingly, BPG’s
total Shares on issue will be (assuming that no further Shares will be issued prior to the RSUs exercising and without reference
to any other Shares that may be issued pursuant to the Equity Conversion Agreement contemplated by Resolution 5):
Pre-RSU Plan IssuePost-RSU Plan Issue and Conversion
Number of Shares to be issued on conversion
of 100% of RSUs issued under the RSU Plan
02,056,518 Shares
Total Shares on Issue41,130,377 Shares43,186,895 Shares
Example shareholding percentage5% (2,056,518 shares)4.762%
Blackpearl Group - Notice of 2023 Annual Shareholders Meeting
NZX Listing Rule Requirements
Shareholder approval for Resolution 6 is required under Rule 4.2.1.
Under Rule 4.2.1, BPG must, with exception to certain circumstances listed under Rule 4.1.2, only issue equity securities with
approval by ordinary resolution, and complete the share issuance within 36 months of obtaining shareholder approval.
As BPG proposes to issue up to 5% of its financial products on issue (as at the date of this Notice), BPG must seek shareholder
approval.
Implications of Resolution 6 not proceeding
Rule 4.6.1 allows for Issuers to issue equity securities of up to 3% of its financial products on issue to its employees or a trustee to
hold for the benefit of employees, without shareholder approval.
Should Resolution 6 not be passed, BPG will be limited to issuing up to the 3% capacity under Rule 4.6.1, being up to 1,233,911
RSUs.
Dilutive Effects for Resolutions 5 and 6
Should Resolutions 5 and 6 be approved by shareholders, BPG will issue a total of 5,896,624 new Shares (being 3,840,106 new
Shares to Crown BP Holdings, LLC and up to 2,056,518 new Shares assuming 100% of RSUs issued under the RSU Plan covert).
BPG’s total Shares on issue will be increased accordingly:
Pre-ConversionPost-Conversion
Total Shares on Issue should Resolutions 5 and 6 be approved41,130,377 47,0 27,0 01
Example shareholding percentage5% (2,056,518 shares)4.373%
15
Blackpearl Group - Notice Of Annual Meeting
Blackpearl Group - Notice of 2023 Annual Shareholders Meeting
---
General Enquiries
+64 9 375 5998 | enquiries@linkmarketservices.com
PROXY FORM/ADMISSION CARD FOR BLACK PEARL GROUP LIMITED 2023 ANNUAL MEETING
Notice is hereby given that the Annual Meeting of Shareholders of Black Pearl Group Limited (the Company) will be held in person on Monday 4
September 2023 at Duncan Cotterill, Level 5, 50 Customhouse Quay, Wellington Central, Wellington 6011, starting at 10am NZDT. If you will attend the
Meeting, please bring this form to assist with your registration. If you will not attend the Meeting but wish to be represented by proxy, please complete
and return this form (in accordance with the lodgment instructions above) to Black Pearl Group Limited’s share registry, Link Market Services, by no later
than 3pm, Friday, 1 September 2023.
Appointment of proxy
All shareholders are entitled to attend and vote at the meeting or to appoint a proxy and vote in their place, unless specifically excluded, or in the case of
a corporate shareholder, a representative to attend and vote instead of him/her and that proxy or representative need not also be a shareholder. The
Chairperson of the Meeting (Tim Crown) and any of the Directors are prepared to act as proxy. Where any Director is appointed as a discretionary
proxy and is not prohibited from voting, each of the Directors intends to vote in favour of all of the Resolutions. Tim Crown is prohibited from voting on
resolutions 3, 4 and 5.
Voting of your holding
Direct your proxy how to vote by making the appropriate election, either online or on this Proxy Form, in respect of each resolution. If you return this form
without directing the proxy how to vote on any particular matter, the proxy may vote as he/she thinks fit or abstain from voting. If you make more than one
election in respect of a resolution your vote will be invalid on that resolution. If this Proxy Form is returned duly signed by a Shareholder with voting
instructions included, but without specifying a person that is appointed as proxy, the Chairperson is deemed to be the proxy for the purpose of that form,
but only to vote to the extent of the voting instructions provided.
Voting Restrictions
Pursuant to Rule 6.3.1, the following voting restrictions apply:
• In relation to Resolution 3, BPG Chair, Tim Crown, and his Associated Persons are prohibited from voting any Shares that they hold.
• In relation to Resolution 4, any shareholder, and their respective Associated Persons, who acquired Placement Shares, are prohibited from
voting any Shares that they hold. This includes Crown BP Holdings LLC and its Associated Persons, including Tim Crown.
• In relation to Resolution 5, Crown BP Holdings, LLC and its Associated Persons, including Tim Crown, are prohibited from voting any Shares
that they hold.
• In relation to Resolution 6, BPG executive Directors, Nick Lissette and Cherryl Pressley and their Associated Persons, are prohibited from
voting as Shares that they hold.
The Company will disregard any votes cast on Resolutions 3, 4, 5 and 6 (as applicable) by any person to whom the above restrictions apply. Any
discretionary proxies given to persons disqualified from voting under the requirements set out above will not be valid.
Attending the meeting
If you wish to vote in person, you should attend the Meeting. Please bring this Proxy Form/Admission Card with you to the Meeting to assist with
your registration.
A corporation which is a Shareholder may appoint a representative to attend the Meeting on its behalf in the same manner as it could appoint a proxy. A
proxy does not need to be a shareholder of the Company.
Signing instructions for proxy forms
Individual
This Proxy Form must be signed by the shareholder or his/her/its attorney duly authorised in writing.
Joint Holding
In the case of a joint shareholding, this Proxy Form may be signed by either, or on behalf of, the joint shareholder (or their duly authorised attorney).
Power of Attorney
This Proxy Form and the power of attorney or other authority, if any, under which it is signed, or a copy of that power or authority certified by a Solicitor,
Justice of the Peace or Notary Public must be received at the office of Link Market Services Limited, in any manner as per the instructions below.
Corporate Shareholder
In the case of a corporate shareholder, this Proxy Form must be signed by a director or a duly authorised officer acting under the express or implied
authority of the shareholder, or an attorney duly authorised by the shareholder.
LODGE YOUR PROXY
Online:
https://investorcentre.linkgroup.nz/voting/BPG
Scan & email:
meetings@linkmarketservices.co.nz Mail:
Use the reply paid
Deliver: envelope or address to:
Link Market Services Link Market Services
Level 30, PwC Tower, PO Box 91976
15 Customs Street West, Auckland 1010 Auckland 1142
Scan this QR code with your smartphone and vote online
Go online to https://investorcentre.linkgroup.nz/voting/BPG to appoint your proxy
PROXY/CORPORATE REPRESENTATIVE FORM
STEP 1: APPOINT A PROXY TO VOTE ON YOUR BEHALF
I/We being a shareholder(s) of Black Pearl Group Limited hereby appoint:
of _
(full name of proxy) (full address)
Or
of
(full name of proxy) (full address)
as my/our proxy to vote for me/us on my/our behalf at the Annual Meeting of the Company to be held on Monday, 4 September 2023 and at
any adjournment of that meeting and to vote on any resolutions to amend any of the resolutions, on any resolution so amended, and on any
other resolution proposed at the meeting (or any adjournment thereof). Unless otherwise instructed as above, the proxy will vote on each resolution as
he/she sees fit, or may abstain from voting. The proxy is appointed only in respect of the above meeting or any adjournment thereof.
STEP 2: ITEMS OF BUSINESS – PROXY VOTING INSTRUCTIONS
Complete this part if you have appointed a proxy above and you want to direct the proxy as to how the proxy should vote.
Please note: For each resolution you must tick one box. If you mark the abstain box for an item, you are directing your proxy not to vote on your behalf
during a poll and your votes will not be counted computing the required majority, for that item.
BUSINESS
To consider and, if thought fit, pass the following resolutions:
Tick (✓) in box to vote
ORDINARY RESOLUTIONS For Against Abstain Discretion
1.
Auditor’s Remuneration: That that the Board be authorised to fix the fees and expenses
of the Company’s auditors.
2. Election of Hugo Fisher: That Hugo Fisher, who retires as a Director in accordance with
Rule 2.7.1, and being eligible, be elected as a Director of BPG.
3.
Approval of Master Services Agreement and Statement of Work with Related Party:
That the agreements for the supply of data and associated services entered into with
Prospect Desk, LLC, on the basis described in the Explanatory Notes, are approved for the
purposes of Rule 5.2.1.
4. Ratification of Placement Share: That in accordance with Rule 4.5.1(c), the ratification of
5,250,407 Shares issued under the Placement on 26 June 2023 is approved.
5. Issue of Shares under the Equity Conversion Agreement: That the issue of 3,840,106
Shares to Crown BP Holdings, LLC under the Equity Conversion Agreement, be approved in
accordance with Rules 4.2.1 and 5.2.1.
6. Issue of Restricted Share Units to Key Personnel: That, under Rule 4.2.1(a), the Board is
authorised to offer to Key Personnel, up to 2,056,518 restricted share units (representing up
to 5% of BPG’s Shares on issue as at the date of this Notice if 100% of the restricted share
units were to vest and convert to Shares on a one-for-one basis) on the terms of the Key
Personnel Restricted Share Unit Plan described in the Explanatory Notes.
STEP 3: SHAREHOLDER QUESTIONS
Shareholders present at the Annual Shareholders’ Meeting will have the opportunity to ask questions during the Meeting. If you cannot attend the
Annual Shareholders’ Meeting but would like to ask a question, you can submit a question online by going to
https://investorcentre.linkgroup.nz/voting/BPG and completing the online validation process or complete the question section below and return to Link
Market Services. Questions will need to be submitted by 3pm on Friday 1 September 2023. The Board will address and answer questions at the
Annual Meeting.
Question:
STEP 4: SIGNATURE OF SHAREHOLDER(S) This section must be completed
Shareholder 1 Shareholder 2 Shareholder 3
or duly authorised officer or attorney or duly authorised officer or attorney or duly authorised officer or attorney
Contact Name _ Contact Daytime Telephone Date
Electronic Investor Communications: If you received the Notice of Meeting and Proxy Form by mail and wish to receive your future investor
communications by email please provide your email address below.
---
www.simmonscf.co.nz
Black Pearl Group Limited
Appraisal Report
In Respect of:
an Amendment to the Master
Services Agreement with
Prospect Desk, LLC
the Equity Conversion
Agreement with Crown BP
Holdings, LLC
August 2023
Black Pearl Group Limited Appraisal Report
Index
Section Page
1. Introduction ........................................................................................................................ 1
2. Evaluation of the Fairness of the Fee Cap Amendment .................................................... 6
3. Evaluation of the Fairness of the Equity Conversion Agreement .................................... 11
4. Profile of Black Pearl Group Limited ................................................................................ 18
5. Sources of Information, Reliance on Information, Disclaimer and Indemnity .................. 24
6. Qualifications and Expertise, Independence, Declarations and Consents ...................... 26
Black Pearl Group Limited Page 1 Appraisal Report
1. Introduction
1.1 Background
Black Pearl Group Limited (Black Pearl or the Company) is a data technology
company, focused on unlocking the potential of data for small and medium-sized
businesses (SMBs).
Black Pearl’s shares are listed on the main equities securities market (the NZX Main
Board) operated by NZX Limited (NZX) with a market capitalisation of approximately
$21.8 million as at 10 August 2023. Its audited total equity as at 31 March 2023 was
approximately $2.1 million.
A profile of Black Pearl is set out in section 4.
1.2 Agreement with Prospect Desk, LLC
Black Pearl entered into a master services agreement (the Master Services
Agreement) and a statement of work (the Statement of Work) with Prospect Desk,
LLC (Prospect Desk), under which Prospect Desk provides business consulting
services and data processing functions for Black Pearl’s latest Software as a Service
(SaaS) product Pearl Diver.
In consideration for the services provided under the Master Services Agreement and
Statement of Work, Black Pearl pays a mix of fixed fees and revenue-based fees to
Prospect Desk (the Fees).
Black Pearl was not required to seek shareholder approval to enter into the Master
Services Agreement and Statement of Work as the Fees were capped at $250,000
(the Fee Cap) and any increase in or removal of the Fee Cap is conditional upon
shareholder approval.
Black Pearl now proposes to remove the Fee Cap under the Master Services
Agreement and Statement of Work (the Fee Cap Amendment). This is necessary
as Black Pearl is having success selling the Pearl Diver product and therefore the
$250,000 Fee Cap is expected to be reached later this year.
Prospect Desk does not hold any shares in Black Pearl. It is however a Related Party
of Black Pearl (as defined in the NZX Listing Rules (the Listing Rules)) as Tim
Crown, Black Pearl’s non-executive chair, has an ownership in Prospect Desk
through his private investment company, AZ Crown Investments (AZ Crown).
Mr Crown is the co-founder and chair of the NASDAQ-listed Fortune 500 company
Insight Enterprises, Inc.
1.3 Equity Conversion Agreement with Crown BP Holdings, LLC
Crown BP Holdings, LLC
Crown BP Holdings, LLC (Crown BP) is Black Pearl’s third largest shareholder,
holding 7.53% of the Company’s shares.
Crown BP is an Associated Person (as defined in the Listing Rules) of Mr Crown as
he is a manager of Crown BP (through his membership of Anchor Management, LLC)
and is also a member of Crown BP.
Black Pearl Group Limited Page 2 Appraisal Report
Promissory Note
On 26 November 2022, Crown BP advanced $2.4 million to Black Pearl with a fixed
interest rate of 1% per annum, payable quarterly in arrears (the Debt) under a
promissory note agreement dated 24 November 2022 (the Promissory Note).
Under the Promissory Note, Black Pearl:
granted Crown BP 2,500,000 warrants (the Warrants)
agreed to repay 50% of the Debt on or before 23 December 2023 and the
remaining 50% on or before 23 January 2025.
The Promissory Note was amended on 13 April 2023, extending the 2 Debt
repayment dates by 12 months (the Promissory Note Amendment).
Equity Conversion Agreement
Black Pearl and Crown BP entered into a conditional equity conversion agreement
on 26 June 2023 (the Equity Conversion Agreement) to fully capitalise the Debt
owed under the Promissory Note into ordinary shares in Black Pearl at a conversion
price of $0.63 per share (the Conversion Price).
This will result in the issue of 3,840,106 new fully paid ordinary shares to Crown BP
to fully satisfy the Debt (the Crown Allotment) (assuming accrued interest on the
Debt at the date of conversion [being 7 days after the date of the Company’s annual
meeting of shareholders] amounts to $19,267).
The Equity Conversion Agreement is conditional on Black Pearl receiving
shareholder approval for the Crown Allotment.
Should the resolution not be passed, the Debt will be repayable in cash in accordance
with the terms of the Promissory Note and the Promissory Note Amendment.
Shareholding Levels Post the Crown Allotment
The Company’s shareholders not associated with Mr Crown, Crown BP or Ohana
Farms, LLC (Ohana) (a related entity of Mr Crown) (the Non-associated
Shareholders) currently collectively hold 37,645,224 ordinary shares, representing
91.53% of the Company’s ordinary shares on issue.
If the Equity Conversion Agreement is approved by the Non-associated
Shareholders:
3,840,106 new ordinary shares will be issued to Crown BP under the Crown
Allotment
Crown BP’s shareholding level in Black Pearl will increase by 7.90% from
7.53% to 15.43%
the combined shareholding of Crown BP and Ohana (together the Crown
Associates) will increase by 7.82% from 8.47% to 16.29%
the Non-associated Shareholders’ collective shareholding level will decrease
by 7.82% from 91.53% to 83.71%.
Black Pearl Group Limited Page 3 Appraisal Report
Shareholding Levels Post the Crown Allotment
Current
Crown
Allotment
Post the Crown
Allotment
No. of Shares % No. of Shares No. of Shares %
Crown BP 3,098,129 7.53% 3,840,106 6,938,235 15.43%
Ohana 387,024 0.94% - 387,024 0.86%
Crown Associates 3,485,153 8.47% 3,840,106 7,325,259 16.29%
Non-associated Shareholders 37,645,224 91.53% - 37,645,224 83.71%
Total
41,130,377 100.00% 3,840,106 44,970,483 100.00%
1.4 Annual Meeting
Black Pearl is holding its annual meeting of shareholders on 4 September 2023,
where the Company will seek shareholder approval of ordinary resolutions in respect
of:
the Fee Cap Amendment (resolution 3 – the Fee Cap Amendment
Resolution)
the Equity Conversion Agreement (resolution 5 – the Equity Conversion
Agreement Resolution).
An ordinary resolution is a resolution passed by a simple majority of votes of those
shareholders entitled to vote and voting on the resolution in person or by proxy.
Crown BP and its Associated Persons (as defined in the Listing Rules) are not
permitted to vote on the Equity Conversion Agreement Resolution.
Mr Crown and Ohana are Associated Persons of Prospect Desk and Crown BP and
therefore are not permitted to vote on either the Fee Cap Amendment Resolution or
the Equity Conversion Agreement Resolution.
The Company’s shareholders will also vote at the annual meeting on resolutions in
respect of:
the Company’s auditor’s remuneration (resolution 1)
the election of Hugo Fisher as a director (resolution 2)
the ratification of the issue of 5,250,407 shares on 26 June 2023 (resolution 4)
the issue of up to 2,056,518 restricted share units to key personnel (resolution
6).
1.5 Summary of Opinions
Fee Cap Amendment
Our evaluation of the fairness of the Fee Cap Amendment as required under the
Listing Rules is set out in section 2.
In our opinion, after having regard to all relevant factors, the terms and conditions of
the Fee Cap Amendment are fair to the Non-associated Shareholders.
Black Pearl Group Limited Page 4 Appraisal Report
Equity Conversion Agreement
Our evaluation of the fairness of the Equity Conversion Agreement as required under
the Listing Rules is set out in section 3.
In our opinion, after having regard to all relevant factors, the terms and conditions of
the Equity Conversion Agreement are fair to the Non-associated Shareholders.
1.6 Regulatory Requirements
Fee Cap Amendment
Listing Rule 5.2.1 stipulates that an Issuer must not enter into a Material Transaction
if a Related Party is a party to the Material Transaction or to one of a related series
of transactions of which the Material Transaction forms part unless the Material
Transaction is approved by way of an ordinary resolution from shareholders not
associated with the Related Party.
The Fee Cap Amendment is a Material Transaction as the Fees payable to Prospect
Desk in any future financial year will likely exceed 1% of the Company’s Average
Market Capitalisation and Prospect Desk is a Related Party of the Company due to
Mr Crown’s ownership interest in the company.
Listing Rule 7.8.8 (b) requires an Appraisal Report to be prepared where a meeting
will consider a resolution required by Listing Rule 5.2.1.
Equity Conversion Agreement
Listing Rule 4.1.1 stipulates that an Issuer must only issue Equity Securities with
approval by ordinary resolution in accordance with Listing Rule 4.2.1.
Listing Rule 7.8.5 (b) requires an Appraisal Report to be prepared where a meeting
will consider a resolution in respect of the issue of Financial Products (ie the Crown
Allotment) as required by Listing Rule 7.8.4 and more than 50% of the Financial
Products to be issued are intended or likely to be acquired by Directors or Associated
Persons of Directors (ie Tim Crown).
The Equity Conversion Agreement is a Material Transaction as the market value of
the Crown Allotment exceeds 10% of the Company’s Average Market Capitalisation
and Crown BP is a Related Party of the Company as Crown BP is an Associated
Person of Mr Crown.
Listing Rule 7.8.8 (b) requires an Appraisal Report to be prepared where a meeting
will consider a resolution required by Listing Rule 5.2.1.
1.7 Purpose of the Report
The Company’s directors not associated with Mr Crown, being Hugo Fisher, Nick
Lisette, Mark Osborne and Cherryl Pressley (the Non-associated Directors) have
engaged Simmons Corporate Finance to prepare an Appraisal Report on the fairness
of the Fee Cap Amendment and the Equity Conversion Agreement in accordance
with the Listing Rules.
Simmons Corporate Finance was approved by NZX Regulation Limited (NZ RegCo)
on 27 July 2023 to prepare the Appraisal Report.
Simmons Corporate Finance issues this Appraisal Report to the Non-associated
Directors for the benefit of the Non-associated Shareholders to assist them in forming
their own opinion on whether to vote for or against the Fee Cap Amendment
Resolution and the Equity Conversion Agreement Resolution.
Black Pearl Group Limited Page 5 Appraisal Report
We note that each shareholder’s circumstances and objectives are unique.
Accordingly, it is not possible to report on the fairness of the Fee Cap Amendment or
the Equity Conversion Agreement in relation to each shareholder. This report on the
fairness of the Fee Cap Amendment and the Equity Conversion Agreement is
therefore necessarily general in nature.
The Appraisal Report is not to be used for any other purpose without our prior written
consent.
1.8 Currency References
Currency references in this report are to:
$ – New Zealand dollars
US$ – USA dollars.
Black Pearl Group Limited Page 6 Appraisal Report
2. Evaluation of the Fairness of the Fee Cap Amendment
2.1 Basis of Evaluation
Listing Rule 7.10.2 requires an Appraisal Report to consider whether the terms and
conditions of the Fee Cap Amendment are fair to the Company’s shareholders not
associated with Prospect Desk.
There is no legal definition of the term fair in either the Listing Rules or in any statute
dealing with securities or commercial law in New Zealand.
In our opinion, the Fee Cap Amendment will be fair to the Non-associated
Shareholders if:
they are likely to be at least no worse off if the Fee Cap Amendment proceeds
than if it does not. In other words, we consider that the Fee Cap Amendment
will be fair if there is no value transfer from the Non-associated Shareholders
to Prospect Desk, and
the terms and conditions of the Fee Cap Amendment are in line with market
terms and conditions.
We have evaluated the fairness of the Fee Cap Amendment by reference to:
the fairness of the terms of the Master Service Agreement and Statement of
Work
the rationale for the Fee Cap Amendment
the benefits and disadvantages to the Non-associated Shareholders of the Fee
Cap Amendment
the benefits and disadvantages to Prospect Desk of the Fee Cap Amendment
the implications if the Fee Cap Amendment Resolution is not approved.
Our opinion should be considered as a whole. Selecting portions of the evaluation
without considering all the factors and analyses together could create a misleading
view of the process underlying the opinion.
2.2 Evaluation of the Fairness of the Fee Cap Amendment
In our opinion, after having regard to all relevant factors, the terms and
conditions of the Fee Cap Amendment are fair to the Non-associated
Shareholders.
The basis for our opinion is set out in detail in sections 2.3 to 2.9.
In summary, the key factors leading to our opinion are:
the terms of the Master Service Agreement and Statement of Work are fair to
the Non-associated Shareholders
the rationale for the Fee Cap Amendment is sound. It will enable Prospect
Desk to continue to provide business consulting services and data processing
functions for Pearl Diver, maintaining the Company’s revenue growth and
helping to infiltrate the USA SMB market
Black Pearl Group Limited Page 7 Appraisal Report
the implication of the Fee Cap Amendment Resolution not being approved by
the Non-associated Shareholders is that it is highly likely that Pearl Diver will
no longer be able to provide its services and all revenue associated with Pearl
Diver will cease, which will adversely impact Black Pearl’s growth and
development plans. Black Pearl will need to source the data from other
providers and develop processing programs to integrate with the Pearl Engine
technology platform, which will take time and resources that could be spent on
other growth and development projects.
2.3 Terms of the Master Services Agreement and Statement of Work
Background
On 23 March 2023, Black Pearl announced the launch of Pearl Diver, the Company’s
new SaaS product that provides businesses unique visibility into their website
visitors.
The provision of Pearl Diver’s services is facilitated by data partnerships and data
co-operatives that supply data and associated services that feed into the Company’s
Pearl Engine technology platform. Pearl Diver cannot operate without the supply of
data.
To this effect, Black Pearl entered into the Master Services Agreement and a
Statement of Work with Prospect Desk.
Master Services Agreement
The Master Services Agreement sets out the relationship between Black Pearl and
Prospect Desk for the provision of data partnership services for the Company.
The key terms of the Master Services Agreement are:
a minimum term of 3 years, with the ability to mutually agree to renew the term
for a further 3 years, or such other period(s) as agreed to by parties
Prospect Desk grants Black Pearl a non-exclusive licence to use the data held
in its data co-operative
Black Pearl grants Prospect Desk a limited, non-exclusive, revocable licence
to use (including the right to store, process and modify) certain data held by
Black Pearl
until such time as Black Pearl obtains shareholder approval for the Master
Services Agreement and all related series of transactions, the aggregate
amount Black Pearl is required to pay to Prospect Desk under the Master
Services Agreement, statements of work or other related transactions is the
Fee Cap (ie $250,000)
should the Fees reach the Fee Cap, Prospect Desk may suspend or terminate
the Master Services Agreement or any statements of work or related
transactions (including any part of them) by giving written notice to Black Pearl
on termination of the Master Services Agreement, all data licenced through the
Master Services Agreement by Prospect Desk and Black Pearl will cease and
all Fees payable under the Master Services Agreement and any statements of
work will cease
there are no break fees associated with termination
upon obtaining shareholder approval, the Fee Cap will cease to apply.
Black Pearl Group Limited Page 8 Appraisal Report
Statement of Work
Under the Master Services Agreement, Black Pearl has the ability to engage with and
enter into statements of work or data participation agreements for the provision of
services and data contributions to improve and develop the Pearl Engine.
Black Pearl has entered into a Statement of Work with Prospect Desk for the
provision of business consulting services and data access and processing services
for Pearl Diver.
The data provided by Prospect Desk under the Statement of Work is supplied to Pearl
Diver customers and end users as part of Pearl Diver’s services.
The key terms of the Statement of Work are:
Prospect Desk will provide the following services:
business consulting services in relation to the business strategy and
marketing for Black Pearl’s products and services
access and processing of data
a term of:
in relation to the business consulting services: month to month
in relation to the data services: 3 years plus any extension in accordance
with the Master Services Agreement
the following Fees are payable:
one-off program set up fee and data access fee: US$25,000
3 months business consulting fee: US$5,000 per month
monthly data processing fee: 20% of the net revenue collected by Black
Pearl from the Company’s customers products and / or end users to the
extent the net revenue relates to services that use the data supplied
processing component provided by Prospect Desk (subject to a minimum
fee of US$15,000)
the Fee Cap terms in the Master Services Agreement applies.
Fairness of Terms
The negotiations of the terms of the Master Services Agreement on Black Pearl’s
part were led by Nick Lissette (executive director and chief executive officer), Karen
Cargill (chief financial officer), Sam Daish (chief technology officer) and the
Company’s legal advisers. Prospect Desk’s negotiations were led by its chief
executive officer and chief information officer.
We are advised by the Non-associated Directors that the terms of the Master Service
Agreement and Statement of Work are consistent with what would typically be
expected in a commercial services agreement.
It is difficult to benchmark the Fees against comparable data as such data is not
publicly available.
Black Pearl Group Limited Page 9 Appraisal Report
Based on our understanding of the background to the negotiations, the
representation made by the Non-associated Directors that the terms were negotiated
on an arms-length basis and in the absence of publicly available comparable data,
we are of the view that the terms of the Master Service Agreement and Statement of
Work are fair to the Non-associated Shareholders.
2.4 Rationale for the Fee Cap Amendment
Black Pearl announced on 3 August 2023 that the launch of Pearl Diver in March
2023 has generated over $1 million in new annual recurring revenue (ARR) in the 90
days ended 31 July 2023.
The Non-associated Directors have advised us that the Company can only achieve
this growth and continued sales if the Fee Cap is removed by way of the Fee Cap
Amendment.
The approval of the Fee Cap Amendment will enable Black Pearl to continue to
increase its monthly recurring revenue (MRR) and ARR through the continuation of
services provided through Pearl Diver.
The steady increase in MRR and ARR will enhance the Company’s growth and
profitability and Pearl Diver will be the key for Black Pearl being able to infiltrate the
SMB market in the USA, providing future growth potential and enhancing the
Company’s ability to attract overseas investors.
In our view, the rationale for the Fee Cap Amendment is sound. It will enable the
Company to continue its MRR and ARR growth through the continuation of services
provided through Pearl Diver and help to infiltrate the USA SMB market.
2.5 Main Advantage to the Non-associated Shareholders of the Fee Cap
Amendment
The Fee Cap Amendment solidifies Black Pearl’s commercial relationship with
Prospect Desk, enabling the Company to continue to grow its revenue and help
infiltrate the USA SMB market.
2.6 No Disadvantages to the Non-associated Shareholders of the Fee Cap
Amendment
In our view, there are no disadvantages to the Non-associated Shareholders
associated with the Fee Cap Amendment.
2.7 Other Issues for the Non-associated Shareholders to Consider
No Impact on Share Price and Liquidity
On the basis that the terms and conditions of the Master Services Agreement and
Statement Of Work are fair, we are of the view that the Fee Cap Amendment will
have no impact on Black Pearl’s share price and the liquidity of the Company’s
shares.
No Change in Business Risk
The Fee Cap Amendment will have negligible impact on the business risks faced by
the Company other than the Master Services Agreement and any statements of work
under it are governed by the laws of the State of Arizona and any disputes will be
subject to dispute resolution procedures in Arizona. Therefore if the Company had
to enforce the terms of the Master Services Agreement and any statements of work
under it, it would be required to do so in the jurisdiction of Arizona.
Black Pearl Group Limited Page 10 Appraisal Report
The total liability of Prospect Desk or Black Pearl under the Master Services
Agreement or any statements of work under it is limited to the total amount paid by
Black Pearl under the Master Services Agreement or any statements of work under
it. There is a risk that Prospect Desk’s liability to the Company may exceed that
liability limit and Black Pearl would be unable to fully recuperate any loss.
2.8 Likelihood of the Fee Cap Amendment Resolution Being Approved
The Fee Cap Amendment Resolution is an ordinary resolution, passed by a simple
majority of votes of those shareholders entitled to vote and voting on the resolution
in person or by proxy.
Prospect Desk does not hold any shares in the Company. The Crown Associates
are not permitted to vote on the Fee Cap Amendment Resolution. Therefore
shareholders holding 91.53% of the shares will determine the outcome of the Fee
Cap Amendment Resolution (assuming they all vote).
The Non-associated Directors have unanimously recommended that the
Non-associated Shareholders vote in favour of the Fee Cap Amendment Resolution.
The Company’s top 10 shareholders excluding Crown BP collectively hold 50.43% of
the Company’s shares (representing 55.10% of the maximum number of shares that
can vote on the Fee Cap Amendment Resolution) and will therefore significantly
influence the outcome of the voting on the resolution if they vote.
We are not aware of how these major shareholders will vote in respect of the
resolution.
2.9 Implications if the Fee Cap Amendment Resolution is not Approved
The Fees payable under the Master Services Agreement and Statement of Work are
currently limited to the $250,000 Fee Cap.
If the Fee Cap Amendment Resolution is not approved, then should the revenue from
Pearl Diver continue to increase and the Fee Cap is reached, Prospect Desk has the
ability to suspend or terminate the Master Services Agreement.
If the Statement of Work is terminated, the Non-associated Directors are of the view
that it is highly likely that Pearl Diver will no longer be able to provide its services and
all revenue associated with Pearl Diver will cease, which will adversely impact Black
Pearl’s growth and development plans.
Black Pearl will need to source the data from other providers and develop processing
programs to integrate with the Pearl Engine technology platform, which will take time
and resources that could be spent on other growth and development projects.
2.10 Voting For or Against the Fee Cap Amendment Resolution
Voting for or against the Fee Cap Amendment Resolution is a matter for individual
shareholders based on their own views as to value and future market conditions, risk
profile and other factors. Non-associated Shareholders will need to consider these
consequences and consult their own professional adviser if appropriate.
Black Pearl Group Limited Page 11 Appraisal Report
3. Evaluation of the Fairness of the Equity Conversion Agreement
3.1 Basis of Evaluation
Listing Rule 7.10.2 requires an Appraisal Report to consider whether the terms and
conditions of the Equity Conversion Agreement are fair to the Company’s
shareholders not associated with Crown BP.
In our opinion, the Equity Conversion Agreement will be fair to the Non-associated
Shareholders if:
they are likely to be at least no worse off if the Equity Conversion Agreement
proceeds than if it does not. In other words, we consider that the Equity
Conversion Agreement will be fair if there is no value transfer from the
Non-associated Shareholders to Crown BP, and
the terms and conditions of the Equity Conversion Agreement are in line with
market terms and conditions.
We have evaluated the fairness of the Equity Conversion Agreement by reference to:
the rationale for the Equity Conversion Agreement
the fairness of the terms of the Equity Conversion Agreement
the impact of the Equity Conversion Agreement on Black Pearl’s financial
position
the impact of the Equity Conversion Agreement on the control of Black Pearl
the dilutionary impact of the Equity Conversion Agreement
the impact of the Equity Conversion Agreement on Black Pearl's share price
the benefits and disadvantages to the Non-associated Shareholders of the
Equity Conversion Agreement
the benefits and disadvantages to Crown BP of the Equity Conversion
Agreement
the implications if the Equity Conversion Agreement Resolution is not
approved.
Our opinion should be considered as a whole. Selecting portions of the evaluation
without considering all the factors and analyses together could create a misleading
view of the process underlying the opinion.
Black Pearl Group Limited Page 12 Appraisal Report
3.2 Evaluation of the Fairness of the Equity Conversion Agreement
In our opinion, after having regard to all relevant factors, the terms and
conditions of the Equity Conversion Agreement are fair to the Non-associated
Shareholders.
The basis for our opinion is set out in detail in sections 3.3 to 3.13.
In summary, the key factors leading to our opinion are:
the rationale for the Equity Conversion Agreement is sound. It converts the
$2.4 million Debt (plus accrued interest) into equity, thus preserving the
Company’s cash reserves
the terms of the Equity Conversion Agreement are fair. The Conversion Price
is at a premium of between 13% and 29% to the recent market prices for the
Company’s shares and therefore will not be value dilutionary to the
Non-associated Shareholders
the Crown Allotment will have a positive impact on Black Pearl’s financial
position, preserving over $2.4 million of the Company’s cash resources by
issuing equity rather than paying cash to Crown BP to repay the Debt (plus
accrued interest)
the Equity Conversion Agreement will not increase Crown BP’s level of control
over the Company to any significant degree
the dilutionary impact of the Equity Conversion Agreement on the
Non-associated Shareholders will be approximately 8.5%
the Equity Conversion Agreement is unlikely to have any negative impact on
Black Pearl’s share price as the Conversion Price is at a premium to the
Company’s recent share price
the Equity Conversion Agreement is unlikely to have any impact on the liquidity
of Black Pearl’s shares as the number of shares held by the Non-associated
Shareholders will not change
the Equity Conversion Agreement will not change the business risk profile of
Black Pearl to any significant degree
the attraction of Black Pearl as a takeover target is unlikely to change
the implication of the Equity Conversion Agreement Resolution not being
approved by the Non-associated Shareholders is that Black Pearl will need to
repay the $2.4 million Debt in cash on or before 23 January 2026. This would
likely require the Company to undertake one or more capital raises in the near
term to maintain its solvency.
3.3 Rationale for the Equity Conversion Agreement
In our opinion, the rationale for the Equity Conversion Agreement is sound.
It enables Black Pearl to preserve $2.4 million of its cash reserves by converting the
Debt into equity.
Black Pearl Group Limited Page 13 Appraisal Report
3.4 Terms of the Equity Conversion Agreement
Crown BP advanced the Debt of $2.4 million to Black Pearl with a fixed interest rate
of 1% per annum on 26 November 2022 under the Promissory Note.
Under the Promissory Note Amendment, Black Pearl agreed to repay 50% of the
Debt on or before 23 December 2024 and the remaining 50% on or before 23 January
2026.
Under the Equity Conversion Agreement, Black Pearl will issue 3,840,106 new fully
paid ordinary shares to Crown BP at the Conversion Price of $0.63 per share to fully
repay the Debt (including an estimated $19,267 of accrued interest).
The new ordinary shares will be issued on terms identical to, and ranking pari passu
with, all of the Company’s ordinary shares on the date of the Crown Allotment.
The key term of the Equity Conversion Agreement from the perspective of the
Non-associated Shareholders is the Conversion Price.
We understand that the Conversion Price of $0.63 was agreed between Black Pearl
and Crown BP based on a 50% premium to the $0.42 issue price for the share
placements made by the Company in June 2023 which raised $2.2 million of fresh
equity.
A summary of Black Pearl’s daily closing share price and monthly volumes of shares
traded since it listed on the NZX Main Board on 2 December 2022 is set out in section
4.8.
The Company’s shares have traded between $0.30 and $1.08 over the period at a
volume weighted average share price (VWAP) of $0.49:
the shares traded at $0.53 on 10 August 2023
the one month VWAP to 10 August 2023 was $0.56
the 3 months VWAP to 10 August 2023 was $0.51
the 6 months VWAP 10 August 2023 was $0.50
the VWAP between 2 December 2022 and 10 August 2023 was $0.49.
The Conversion Price of $0.63 per share represents a premium of between 13% and
29% to the recent market prices for the Company’s shares.
Black Pearl Group Limited Page 14 Appraisal Report
We are of the view that the Conversion Price is fair to the Non-associated
Shareholders as it is at a premium to the recent market prices for the Company’s
shares and accordingly there is unlikely to be any material value transfer from the
Non-associated Shareholders to Crown BP through the Crown Allotment.
Based on the above, we are of the opinion that the terms and conditions of the Equity
Conversion Agreement are fair to the Non-associated Shareholders.
3.5 Impact on Financial Position
A summary of Black Pearl’s recent financial position is set out in section 4.6.
The Company had total equity of approximately $2.1 million and cash and cash
equivalents of approximately $1.8 million as at 31 March 2023.
If Black Pearl does not issue the shares under the Crown Allotment, then it will be
required to repay 50% of the Debt in cash on or by 23 December 2024 and the
remaining 50% in cash on or before 23 January 2026.
The issue of shares under the Crown Allotment will have a positive impact on Black
Pearl’s financial position as the Company’s cash resources will be preserved by
issuing equity rather than making 2 cash payments totalling $2.4 million (plus accrued
interest) to Crown BP to repay the Debt.
3.6 Impact on Control
Share Capital and Shareholders
Black Pearl currently has 41,130,377 fully paid ordinary shares on issue held by 208
shareholders. The names, number of shares and percentage holding of the
Company’s 10 largest shareholders as at 4 August 2023 are set out in section 4.4.
Shareholding Voting
As set out in section 1.3, if the Equity Conversion Agreement is approved, Crown
BP’s shareholding in Black Pearl will increase by 7.90% from 7.53% to 15.43%
following the Crown Allotment.
We are of the view that the Crown Allotment will not increase Crown BP’s ability to
influence the outcome of shareholding voting to any significant degree.
Even with a 15.43% shareholding, Crown BP will not be able to determine the
outcome of any special resolutions (which require the approval of 75% of the votes
cast by shareholders) or the outcome of any ordinary resolutions (which require the
approval of more than 50% of the votes cast by shareholders), subject always to
applicable voting restrictions under the Listing Rules and the Companies Act 1993.
Similarly, the 7.82% increase in the Crown Associates’ control of voting rights from
8.47% to 16.29% following the Crown Allotment will not increase the Crown
Associates’ ability to influence the outcome of shareholding voting to any significant
degree.
We note that any transactions between Black Pearl and any shareholder holding 10%
or more of the Company’s shares will need to satisfy the requirements of the Listing
Rules with respect to transactions with related parties.
Black Pearl Group Limited Page 15 Appraisal Report
Board of Directors
As set out in section 4.3, the Company currently has 5 directors, of whom only
Mr Crown is deemed to be an associate of Crown BP.
We are advised by the Non-associated Directors that the Equity Conversion
Agreement will not change the composition of the Board in the near term.
Operations
We are advised by the Non-associated Directors that Crown BP’s influence over
Black Pearl’s operations is predominantly through its Board representation and that
the approval of the Equity Conversion Agreement will not change Crown BP’s level
of influence over the Company’s operations.
3.7 Dilutionary Impact
The issue of shares under the Crown Allotment will result in the Non-associated
Shareholders' shareholdings in the Company being diluted by 8.5%.
By way of example, a shareholder currently holding 1.00% of the Company’s shares
will hold 0.91% of the Company’s shares immediately after the Crown Allotment.
While the dilutionary impact may be considered by some Non-associated
Shareholders to be relatively significant, we are of the view that the Non-associated
Shareholders’ main focus should be on whether there is any dilutionary impact on
the value of their respective shareholdings rather than on their level of voting rights.
As stated in section 3.4, we are of the view that the terms of the Equity Conversion
Agreement are fair to the Non-associated Shareholders from a financial point of view
and therefore do not dilute the value of their respective shareholdings.
3.8 Impact on Share Price and Liquidity
Share Price
A summary of Black Pearl’s daily closing share price and daily volume of shares
traded from 2 December 2022 to 10 August 2023 is set out in section 4.8.
In our view, the Equity Conversion Agreement is unlikely to have any negative impact
on the Company’s share price as the Conversion Price represents a premium of
between 13% and 29% to the recent market prices for the Company’s shares.
Liquidity
The analysis in section 4.8 shows that Black Pearl’s shares are relatively thinly traded
on the NZX Main Board. 11.4% of Black Pearl’s shares have traded since the
Company’s shares commenced trading on the NZX Main Board on 2 December
2022.
In our view, the Equity Conversion Agreement is unlikely to have any impact on the
liquidity of the Company’s shares as the number of shares held by the
Non-associated Shareholders will not change.
3.9 Main Advantage to the Non-associated Shareholders of the Equity Conversion
Agreement
The Equity Conversion Agreement enables Black Pearl to preserve $2.4 million of its
cash resources by converting the Debt into equity at the Conversion Price, which is
at a significant premium to Black Pearl’s current share price.
Black Pearl Group Limited Page 16 Appraisal Report
3.10 Main Disadvantage to the Non-associated Shareholders of the Equity
Conversion Agreement
The main disadvantage to the Non-associated Shareholders of the Equity
Conversion Agreement is that the Crown Allotment will dilute their interests in the
Company by 8.5%.
In our view, the positive aspect of preserving the Company’s cash reserves
significantly outweighs the dilutionary impact of the Crown Allotment.
3.11 Other Issues for the Non-associated Shareholders to Consider
Benefits to Black Pearl of Crown BP as a Cornerstone Shareholder
The Equity Conversion Agreement will strengthen Crown BP’s position as an
important strategic investor in the Company, further signalling its confidence in the
future prospects of Black Pearl.
No Change in Business Risk
The Equity Conversion Agreement will have negligible impact on the business risks
faced by the Company.
Likelihood of a Takeover Offer Unlikely to Change
In our view, irrespective of whether Crown BP holds 7.53% or 15.43% of the
Company’s shares, it is unlikely to change the attraction of Black Pearl as a takeover
target to Crown BP or to other parties:
as stated in section 3.6, the Crown Allotment will not change Crown BP’s level
of control over the Company to any significant degree and therefore Crown
BP’s inclination to make a takeover offer (or not) is unlikely to change
the decision of any bidder looking to fully or partially take over the Company is
unlikely to be influenced by whether Crown BP held 7.53% or 15.43% of the
Company’s shares.
3.12 Likelihood of the Equity Conversion Agreement Resolution Being Approved
The Equity Conversion Agreement Resolution is an ordinary resolution, passed by a
simple majority of votes of those shareholders entitled to vote and voting on the
resolution in person or by proxy.
The Crown Associates are not permitted to vote on the Equity Conversion Agreement
Resolution. Therefore shareholders holding 91.53% of the shares will determine the
outcome of the Equity Conversion Agreement Resolution (assuming they all vote).
The Non-associated Directors have unanimously recommended that the
Non-associated Shareholders vote in favour of the Equity Conversion Agreement
Resolution.
The Company’s top 10 shareholders excluding Crown BP collectively hold 50.43% of
the Company’s shares (representing 55.10% of the maximum number of shares that
can vote on the Equity Conversion Agreement Resolution) and will therefore
significantly influence the outcome of the voting on the resolution if they vote.
We are not aware of how these major shareholders will vote in respect of the
resolution.
Black Pearl Group Limited Page 17 Appraisal Report
3.13 Implications if the Equity Conversion Agreement Resolution is not Approved
If the Equity Conversion Agreement Resolution is not approved, then Black Pearl will
have to repay 50% of the Debt ($1.2 million) plus accrued interest in cash on or before
23 December 2024 and the remaining 50% plus accrued interest in cash on or before
23 January 2026.
The Company had approximately $1.8 million of cash and cash equivalents as at
31 March 2023. In order to fund its ongoing operations and meet the Debt repayment
obligations, Black Pearl would need to undertake one or more capital raises prior to
December 2024 to maintain its solvency.
3.14 Voting For or Against the Equity Conversion Agreement Resolution
Voting for or against the Equity Conversion Agreement Resolution is a matter for
individual shareholders based on their own views as to value and future market
conditions, risk profile and other factors. Non-associated Shareholders will need to
consider these consequences and consult their own professional adviser if
appropriate.
Black Pearl Group Limited Page 18 Appraisal Report
4. Profile of Black Pearl Group Limited
4.1 Background
The Company was incorporated on 25 October 2012 as Black Pearl Mail Limited. It
changed its name to Black Pearl Group Limited on 26 October 2022.
Black Pearl’s shares were listed on the NZX Main Board on 2 December 2022 by
way of a direct listing (ie no fresh equity was raised). As part of the direct listing,
Black Pearl issued an NZX Listing Profile dated 29 November 2022 (the Black Pearl
Listing Profile).
The Company’s key events are summarised below.
4.2 Nature of Operations
Black Pearl is a data technology company focused on unlocking the potential of data
for SMBs.
The Company builds, acquires and markets cutting-edge, cloud-based services that
empower businesses to make data-driven decisions, drive productivity and generate
demand.
Black Pearl provides data transparency for businesses of all sizes, helping facilitate
better decision-making and directly unlocking new revenue opportunities.
The core of Black Pearl’s technology is the private and proprietary platform Pearl
Engine, which supports the Company’s cloud based SaaS applications.
Black Pearl owns and operates 3 SaaS solutions:
Black Pearl Mail – enables businesses to centrally manage their email branding
and transform their daily business email into a marketing tool
NewOldStamp – enables businesses to centrally manage their email signatures
Pearl Diver – enables businesses to enhance customer engagement and
conversion rates by transforming anonymous website visits into leads and
identifies key sales opportunities using multiple data measurements to assess
levels of engagement.
Black Pearl Group Limited Page 19 Appraisal Report
4.3 Directors and Senior Management
The directors of Black Pearl are:
Tim Crown, non-executive chair, associated with Crown BP
Hugo Fisher, independent non-executive director
Nick Lissette, executive director
Mark Osborne, independent non-executive director
Cherryl Pressley, executive director.
The Black Pearl senior management team consists of:
Nick Lissette, founder / chief executive officer
Karen Cargill, chief financial officer
Cherryl Pressley, chief revenue officer
Sam Daish, chief technology officer
Johnson Saju – vice president of operations.
4.4 Capital Structure and Shareholders
Ordinary Shares
Black Pearl currently has 41,130,377 fully paid ordinary shares on issue held by 208
shareholders.
The names, number of shares and percentage holding of the Company’s 10 largest
shareholders as at 4 August 2023 are set out below.
10 Largest Shareholders
Shareholder No. of Shares %
VTPE Investment, LLC (VTPE) 4,130,028 10.04%
New Zealand Central Securities Depository Limited 3,707,597 9.01%
Crown BP 3,098,129 7.53%
Nick Lissette and Karen Cargill 2,496,955 6.07%
Sir Owen Glenn 2,403,720 5.84%
Shane Bruhns, Georgina Bruhns, Margot Thompson and Scott Burns 1,991,819 4.84%
Allan Smith and Neil Welch 1,798,145 4.37%
New Zealand Depository Nominee 1,317,224 3.20%
Peter Clare 1,081,991 2.63%
Lance Lissette 907,586 2.21%
Subtotal
22,933,368 55.76%
Others (198 shareholders) 18,197,009 44.24%
Total
41,130,377 100.00%
Source: NZX Company Research
Black Pearl Group Limited Page 20 Appraisal Report
Restricted Shares
Black Pearl currently has 526,857 restricted shares on issue, held by the Company’s
non-executive directors. The restricted shares have an issue price of either $0.42 or
$1.25 per share but have been issued as fully paid for nil consideration.
The key terms of the restricted shares are:
they are not transferable
they may be redeemed by the Company if the director ceases to hold office
before a specified date
they automatically convert into ordinary shares on specified dates.
Warrants
Black Pearl granted 2,500,000 Warrants to Crown BP on 24 November 2022 as
consideration for the Promissory Note.
The key terms of the Warrants are:
each Warrant can be exercised for one ordinary share at an exercise price of
$0.01 per warrant
an expiry date of 24 May 2028.
The Warrants have not been exercised as at the date of this report.
4.5 Financial Performance
A summary of Black Pearl’s recent financial performance is set out below.
Summary of Black Pearl Financial Performance
Year to
31 Mar 22
(Audited)
$000
Year to
31 Mar 23
(Audited)
$000
Subscription revenue 727 1,431
Cost of sales
(535) (730)
Gross profit 192 701
Other revenue 173 180
Operating expenses
(4,928) (8,052)
Loss before income tax (4,563) (7,171)
Net income tax credit 216 270
Loss for the year
(4,347) (6,901)
Source: Black Pearl 2023 annual report
The Company generates revenue from monthly, quarterly or annual subscriptions
charged for its SaaS applications.
Black Pearl had over 3,800 customers as at 31 March 2023, an increase of 496%
over 31 March 2022.
Cost of sales consist mainly of hosting and server costs and personnel expenses.
Other revenue consists mainly of Government grants.
Black Pearl Group Limited Page 21 Appraisal Report
Operating expenses consist mainly of personnel expenses, advertising and
marketing expenses and consulting costs.
4.6 Financial Position
A summary of Black Pearl’s recent financial position is set out below.
Summary of Black Pearl Financial Position
As at
31 Mar 22
(Audited)
$000
As at
31 Mar 23
(Audited)
$000
Current assets 1,379 2,135
Non current assets 358 4,554
Total assets 1,737 6,689
Current liabilities (429) (3,056)
Non current liabilities (340) (1,576)
Total liabilities (769) (4,632)
Total equity
968 2,056
Source: Black Pearl 2023 annual report
Black Pearl’s main current assets as at 31 March 2023 were cash and cash
equivalents of $1.8 million and trade and other receivables of $0.3 million.
Non current assets as at 31 March 2023 consisted mainly of goodwill (arising from
the acquisition of NewOldStamp) of $2.9 million and intangible assets (mainly
capitalised development costs) of $1.7 million.
Current liabilities as at 31 March 2023 consisted mainly of the current portion of the
Debt of $1.2 million, trade and other payables of $0.5 million and contract liabilities
of $0.5 million.
Non current liabilities as at 31 March 2023 consisted mainly of the non current portion
of the Debt of $0.8 million and contingent consideration of $0.5 million (in respect of
the acquisition of NewOldStamp).
The Debt had a carrying value of $2.0 million as at 31 March 2023, reflecting a
$0.4 million fair value write-down to reflect the below market interest rate of 1% per
annum.
Total equity of $2.1 million as at 31 March 2023 consisted of:
share capital – $28.5 million
reserves – $3.4 million
accumulated losses – negative $29.8 million.
Black Pearl Group Limited Page 22 Appraisal Report
4.7 Cash Flows
A summary of Black Pearl’s recent cash flows is set out below.
Summary of Black Pearl Cash Flows
Year to
31 Mar 22
(Audited)
$000
Year to
31 Mar 23
(Audited)
$000
Net cash (outflow) from operating activities (3,795) (5,208)
Net cash (outflow) from investing activities (11) (978)
Net cash received from financing activities
1,405 7,095
Net increase / (decrease) in cash held (2,401) 909
Foreign currency translation adjustment (2) (51)
Opening cash balance 3,304 901
Closing cash balance
901 1,759
Source: Black Pearl 2023 annual report
Financing activities cash flows in the 2022 financial year included $1.4 million raised
from the issue of shares.
Financing activities cash flows in the 2023 financial year included $5.0 million raised
from the issue of shares and the exercise of employee share options and the
$2.4 million Debt.
Subsequent to 31 March 2023, Black Pearl raised $2.2 million from the issue of
5,250,407 shares at a price of $0.42 per share on 26 June 2023.
4.8 Share Price History
Black Pearl’s shares listed on the NZX Main Board on 2 December 2022 at a price
of $1.25.
Set out below is a summary of the Company’s daily closing share price and monthly
volumes traded from 2 December 2022 to 10 August 2023.
Source: NZX Company Research
During the period, Black Pearl’s shares have traded between $0.30 and $1.08 at a
VWAP of $0.49.
-
500,000
1,000,000
1,500,000
2,000,000
0.00
0.20
0.40
0.60
0.80
1.00
2/12/20222/01/20232/02/20232/03/20232/04/20232/05/20232/06/20232/07/20232/08/2023
Volumes Traded
Share Price ($)
Black Pearl Share Price
Monthly volume (rhs)Closing price (lhs)
Black Pearl Group Limited Page 23 Appraisal Report
Trading in the Company’s shares is relatively thin. An analysis of VWAP, traded
volumes and liquidity (measured as traded volumes as a percentage of shares
outstanding) up to 10 August 2023 is set out below.
Share Trading up to 10 August 2023
Period Low
($)
High
($)
VWAP
($)
Volume
Traded
(000)
Liquidity
1 month 0.43 0.60 0.56 1,404 3.4%
3 months 0.39 0.60 0.51 2,226 5.4%
6 months 0.30 0.60 0.50 2,372 5.8%
Since listing 0.30 1.08 0.49 4,704 11.4%
Source: NZX Company Research
Black Pearl Group Limited Page 24 Appraisal Report
5. Sources of Information, Reliance on Information, Disclaimer
and Indemnity
5.1 Sources of Information
The statements and opinions expressed in this report are based on the following main
sources of information:
the draft notice of annual meeting
the Black Pearl Listing Profile
the Master Services Agreement
the Statement of Work
the Equity Conversion Agreement
the Promissory Note and the Promissory Note Amendment
the Black Pearl annual report for the year ended 31 March 2023
data in respect of Black Pearl from NZX Company Research and S&P Capital
IQ.
During the course of preparing this report, we have had discussions with and / or
received information from the Non-associated Directors and Black Pearl’s legal
advisers.
The Non-associated Directors has confirmed that we have been provided for the
purpose of this Appraisal Report with all information relevant to the Fee Cap
Amendment and the Equity Conversion Agreement that is known to them and that all
the information is true and accurate in all material aspects and is not misleading by
reason of omission or otherwise.
Including this confirmation, we have obtained all the information that we believe is
needed for the purpose of preparing this Appraisal Report.
In our opinion, the information to be provided by Black Pearl to the Non-associated
Shareholders is sufficient to enable the Non-associated Directors and the
Non-associated Shareholders to understand all the relevant factors and to make an
informed decision in respect of the Fee Cap Amendment and the Equity Conversion
Agreement.
5.2 Reliance on Information
In preparing this report we have relied upon and assumed, without independent
verification, the accuracy and completeness of all information that was available from
public sources and all information that was furnished to us by Black Pearl and its
advisers.
We have evaluated that information through analysis, enquiry and examination for
the purposes of preparing this report but we have not verified the accuracy or
completeness of any such information or conducted an appraisal of any assets. We
have not carried out any form of due diligence or audit on the accounting or other
records of Black Pearl. We do not warrant that our enquiries would reveal any matter
which an audit, due diligence review or extensive examination might disclose.
Black Pearl Group Limited Page 25 Appraisal Report
5.3 Disclaimer
We have prepared this report with care and diligence and the statements in the report
are given in good faith and in the belief, on reasonable grounds, that such statements
are not false or misleading. However, in no way do we guarantee or otherwise
warrant that any forecasts of future profits, cash flows or financial position of Black
Pearl will be achieved. Forecasts are inherently uncertain. They are predictions of
future events that cannot be assured. They are based upon assumptions, many of
which are beyond the control of Black Pearl and its directors and management.
Actual results will vary from the forecasts and these variations may be significantly
more or less favourable.
We assume no responsibility arising in any way whatsoever for errors or omissions
(including responsibility to any person for negligence) for the preparation of the report
to the extent that such errors or omissions result from our reasonable reliance on
information provided by others or assumptions disclosed in the report or assumptions
reasonably taken as implicit, provided that this shall not absolve Simmons Corporate
Finance from liability arising from an opinion expressed recklessly or in bad faith.
Our evaluation has been arrived at based on economic, exchange rate, market and
other conditions prevailing at the date of this report. Such conditions may change
significantly over relatively short periods of time. We have no obligation or
undertaking to advise any person of any change in circumstances which comes to
our attention after the date of this report or to review, revise or update this report.
We have had no involvement in the preparation of the notice of annual meeting
issued by Black Pearl and have not verified or approved the contents of the notice of
annual meeting. We do not accept any responsibility for the contents of the notice of
annual meeting except for this report.
5.4 Indemnity
Black Pearl has agreed that, to the extent permitted by law, it will indemnify Simmons
Corporate Finance and its directors and employees in respect of any liability suffered
or incurred as a result of or in connection with the preparation of the report. This
indemnity does not apply in respect of any negligence, wilful misconduct or breach
of law. Black Pearl has also agreed to indemnify Simmons Corporate Finance and
its directors and employees for time incurred and any costs in relation to any inquiry
or proceeding initiated by any person. Where Simmons Corporate Finance or its
directors and employees are found liable for or guilty of negligence, wilful misconduct
or breach of law or term of reference, Simmons Corporate Finance shall reimburse
such costs.
Black Pearl Group Limited Page 26 Appraisal Report
6. Qualifications and Expertise, Independence, Declarations and
Consents
6.1 Qualifications and Expertise
Simmons Corporate Finance is a New Zealand owned specialist corporate finance
advisory practice. It advises on mergers and acquisitions, prepares independent
expert's reports and provides valuation advice.
The person in the company responsible for issuing this report is Peter Simmons,
B.Com, DipBus (Finance), INFINZ (Cert).
Simmons Corporate Finance and Mr Simmons have significant experience in the
independent investigation of transactions and issuing opinions on the merits and
fairness of the terms and financial conditions of the transactions.
6.2 Independence
Simmons Corporate Finance does not have at the date of this report, and has not
had, any shareholding in or other relationship with Black Pearl, Mr Crown, Prospect
Desk or Crown BP or any conflicts of interest that could affect our ability to provide
an unbiased opinion in relation to the Fee Cap Amendment or the Equity Conversion
Agreement.
Simmons Corporate Finance has not had any part in the formulation of the Fee Cap
Amendment or the Equity Conversion Agreement or any aspects thereof. Our sole
involvement has been the preparation of this report.
Simmons Corporate Finance will receive a fixed fee for the preparation of this report.
This fee is not contingent on the conclusions of this report or the outcome of the
voting in respect of the Fee Cap Amendment Resolution or the Equity Conversion
Agreement Resolution. We will receive no other benefit from the preparation of this
report.
6.3 Declarations
An advance draft of this report was provided to the Non-associated Directors for their
comments as to the factual accuracy of the contents of the report. Changes made to
the report as a result of the circulation of the draft have not changed the methodology
or our conclusions.
Our terms of reference for this engagement did not contain any term which materially
restricted the scope of the report.
6.4 Consents
We consent to the issuing of this report in the form and context in which it is to be
included in the notice of annual meeting to be sent to the Non-associated
Shareholders. Neither the whole nor any part of this report, nor any reference thereto
may be included in any other document without our prior written consent as to the
form and context in which it appears.
Peter Simmons
Director
Simmons Corporate Finance Limited
11 August 2023
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.