RSY.H RSI International Systems Inc

RSI International Systems Inc. (NEX: RSY.H) (the “Company” or “RSI”) and ARCPoint Group Inc. (“ARCpoint”), the parent company of ARCpoint Franchise Group LLC, ARCpoint Corporate Labs LLC and AFG Services LLC, are pleased to announce that they have entered into a letter of intent (the “Letter of Intent”) dated December 2, 2021 pursuant to which the Company and ARCpoint intend to complete a transaction that will result in the reverse takeover of the Company by the shareholders of ARCpoint (the “Proposed RTO”) pursuant to the policies of the TSX Venture Exchange (the “Exchange”).

ARCpoint CEO John Constantine commented, “By undertaking this transaction, we expect to accelerate the growth and profitability of our three business lines, which currently comprise master franchisor to over 125 ARCpoint franchise locations, provider of services and goods to franchisees and operator of corporate lab locations. With additional capital, we look forward to expanding the number of franchise locations, entering new markets, helping make both franchisees’ and our own corporate entities more profitable and improving an already accelerated growth curve though the development of new technology, tools and services.”

Mr. David Keys, Chairman of RSI and a representative for the Ernest W. Moody Revocable Trust, which holds 44.4% of RSI’s outstanding shares added, “We are very excited about working with the talented ARCpoint management team and believe this is an excellent opportunity for RSI shareholders to get involved in a great opportunity.”

About ARCpoint

ARCpoint is a leading US-based franchise system providing drug testing, alcohol screening, DNA and clinical lab testing, corporate wellness programs, and employment and background screening, among other services. The company is based in Greenville, South Carolina, USA. ARCpoint Franchise Group LLC, formed under the laws of the state of South Carolina in February 2005, is the franchisor of ARCpoint Labs and supports over 125 independently owned locations. ARCpoint sells franchises to individuals throughout the United States and provides support in the form of marketing, technology and training to new franchisees. ARCpoint Corporate Labs LLC develops corporate-owned labs committed to providing accurate, cost-effective solutions for customers, businesses and physicians. AFG Services LLC serves as the innovation center of the ARCpoint group of companies as it builds a proprietary technology platform and a physician network to equip all ARCpoint labs with best-in-class tools and solutions to better serve their customers. The platform also digitalizes and streamlines administrative functions such as materials purchasing, compliance, billing and physician services for ARCpoint franchise labs and other clients.

Terms of the Proposed RTO

Pursuant to the terms of the Letter of Intent, it is currently anticipated that the Company will acquire all of the issued and outstanding shares of ARCpoint by way of a share exchange. In return, the shareholders of ARCpoint will receive common shares in the capital of the Company. However, it is agreed by both parties that the proposed structure may be revised to accommodate tax considerations, accounting treatments and applicable legal and regulatory requirements.

As of the date hereof, the number of common shares of the Company to be issued to shareholders of ARCpoint remains subject to the final valuation of ARCpoint, which will be based on a brokered private placement (the “Private Placement”) to be undertaken by ARCpoint concurrently with, and as a condition to completion of, the Proposed RTO as more fully described below.

Closing of the Proposed RTO is subject to the satisfaction of, among other things, the following conditions precedent: completion of the Private Placement; completion and satisfaction of mutual due diligence by the parties; negotiation and execution of all definitive transaction documents (including accuracy of representations and warranties, compliance of covenants and satisfaction of customary conditions); and receipt of all requisite approvals and consents for the Proposed RTO including (i) approval by the Exchange for the Proposed RTO and the proposed new insiders of the Company, (ii) approval by the board of directors of each of ARCpoint and the Company, and (iii) approval by the shareholders of ARCpoint.

Concurrent Financing

In connection with the Proposed RTO, ARCpoint intends to raise up to $5 million in connection with the Private Placement. The Private Placement shall be completed prior to the closing of the Proposed RTO and is a condition to completing the Proposed RTO. The structure and the terms and conditions of the Private Placement will be determined by ARCpoint and the agent(s) to be engaged in connection with the Private Placement. The proceeds of the Private Placement will be held in escrow subject to satisfaction of certain escrow release conditions prior to the closing of the Proposed RTO. The definitive terms of the Private Placement will be announced in a subsequent press release once binding terms and particulars of the Private Placement have been agreed upon.

Arm’s Length Transaction

The Proposed RTO is an “Arm’s Length Transaction” within the meaning of Policy 1.1 of the Exchange. None of Non-Arm’s Length Parties (such term as defined in the policies of the Exchange) of the Company (i) are insiders of ARCpoint, (ii) have any direct or indirect interest in ARCpoint or its shareholders, or (iii) have a relationship with any Non-Arm’s Length Parties of ARCpoint, its shareholders or any other Non-Arm’s Length Parties of ARCpoint.

Shareholder Approval

Subject to confirmation by the Exchange, the Company takes the view that the Proposed RTO does not require shareholders’ approval pursuant to the policies of the Exchange because the Company is a NEX listed issuer without active operations and the Proposed RTO is not a Related Party Transaction (as defined in the polices of the Exchange).

Notwithstanding the foregoing, the Exchange may impose conditions on its approval for the Proposed RTO which may require shareholder approval. Under the terms of the Letter of Intent, ARCpoint may also require the Company to seek shareholder approval to change its name prior to closing of the Proposed RTO. In addition, the proposed share exchange under the Letter of Intent may require the Company to consolidate its common shares which would also require shareholder approval. Therefore, the Company intends to hold a special shareholders’ meeting after obtaining conditional approval for the Proposed RTO from the Exchange to approve all such matters in connection with the Proposed RTO that would require shareholder approval.

Trading Halt

In connection with the announcement of the Letter of Intent, trading in the common shares of the Company has been halted pursuant to the policies of the Exchange. Trading will remain halted until, among other things, the Company completes certain regulatory filings in connection with the Proposed RTO with the Exchange and the Exchange has completed any preliminary background searches on the proposed new insiders of the Company it considers necessary or advisable.

Sponsorship

Sponsorship of a Proposed RTO is required by the Exchange unless exempt in accordance with the Exchange policies. The Company is currently reviewing the requirements for sponsorship and may apply for an exemption from the sponsorship requirements pursuant to the Exchange policies. However, there is no assurance that the Company will obtain this exemption.

The Company and ARCpoint will issue additional press releases related to the Proposed RTO and other material information as it becomes available.

For more information, please contact:

RSI International Systems Inc. Adam Ho, CEO & DirectorPhone: (604) 329-1009Email: adamho@shaw.ca

ARCpoint Group LLC John Constantine, CEO & Director Phone: 864-271-3210E-mail: info@arcpointlabs.com

Completion of the Proposed RTO is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable, disinterested shareholder approval. Where applicable, the Proposed RTO cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed RTO will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Proposed RTO, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of the Company should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the Proposed RTO and has neither approved nor disapproved the contents of this news release.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain “forward-looking statements” under applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to: the terms and conditions of the Proposed RTO; the terms and conditions of the proposed Private Placement; and the business and operations of the Resulting Issuer after completion of the Proposed RTO. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; delay or failure to receive board, shareholder or regulatory approvals; and the results of operations. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company and ARCpoint disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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