“As we articulated to shareholders earlier this year, the Board has been engaged in a renegotiation of commitments with key business unit stakeholders. Today, we are pleased to announce an agreement has been reached with the sellers of Acrotrend that enables
“One of the Board’s key objectives in 2024 is to create an environment where all of the Company’s stakeholders are working towards the same metrics that are relevant to the Company as a whole and not just the individual business units. Through this amendment, the Acrotrend sellers, including NowVertical’s CEO,
“Our leadership team is dedicated to fostering a culture of 'operator-first mindset', in line with the vision set by the Board, prioritizing alignment across our entire business. By empowering our business unit leaders and strategically organizing our teams, we're primed for dynamic growth. This approach is already yielding tangible benefits, and my choice to receive a substantial portion of earn-out proceeds in
Pursuant to the terms of the SPA, the former shareholders of Acrotrend (together, the “Sellers”) are currently entitled to receive more than
Specifically, pursuant to the terms of the SPA, the Sellers are entitled to receive:
- a holdback in the amount of
US$410,000 (the “Holdback Amount”), plus interest accrued thereon sinceJanuary 12, 2024 ; - a top-up amount equal the difference between the price of the 750,000 Class A subordinate voting shares in the capital of the Company (the “Subordinate Voting Shares”) received by the Sellers in connection with the transaction and the market price of such shares on the date when the Sellers elect to exercise their top-up entitlement, with an estimated value of
US$558,116.24 (the “Top-Up Consideration”); - the 2023 Earn-Out Amount of
$1,255,000 for the year endedDecember 31, 2023 ; and - future earn-out payments for the financial years ending
December 31, 2024 and 2025 (the “Future Earn-Outs”).
Following negotiations between the independent directors of the Company and the Sellers, the Company and the Sellers have agreed to certain adjustments to the obligations of the Company under the SPA to better align the interests the Seller with all stakeholders. In addition, the adjustments significantly reduce and defer cash payments required to be paid to the Sellers by the Company over the next two years, enhancing the Company’s liquidity.
To crystallize the adjustments, the Company and the Sellers have entered into a deed of amendment (the “Deed”) whereby, subject to certain conditions precedent, including the approval of the
- the payment of the Holdback Amount by the Company will be deferred and paid in installments by
December 1, 2024 , with the Sellers waiving all accrued and unpaid interest thereon if the Company adheres to certain of its other obligations under the Deed; - the Company will issue up to 2,835,277 Subordinate Voting Shares in settlement of the Sellers’ potential entitlement to Top-Up Consideration at a price per share equal to the greater of: (i)
CAD$0.27 ; and (ii) the Discounted Market Price (as such term is defined under the policies of the TSXV) on the date that is two (2) trading days following the filing of the Company’s unaudited interim financial statements for the interim period endedMarch 31, 2024 on SEDAR+ at www.sedarplus.com (such price being, the “Share Issue Price”); - the Company will pay
US$100,000 of the 2023 Earn-Out Amount in cash to the Sellers and will issue up to 5,000,000 Subordinate Voting Shares in settlement ofUS$1,155,000 of the 2023 Earn-Out Amount at a price per share equal to the Share Issue Price, with any remaining portion of the 2023 Earn-Out Amount to be settled through the issuance of Subordinate Voting Shares at the Discounted Market Price on the date that is two (2) trading days following the filing of the unaudited interim financial statements for the interim period endedMarch 31, 2024 on SEDAR+ at www.sedarplus.com; and - the Future Earn-Outs will be settled through a cash payment by the Company equal to
US$990,000 , payable to the Sellers on or beforeJanuary 1, 2026 .
Until such amounts are paid through the issuance of Subordinate Voting Shares or through cash payments, as applicable, the Holdback Amount, the Top-Up Consideration, the 2023 Earn-Out Amount and the Future Earn-Outs shall bear interest at a rate of up to 8% above the base rate of the
Multilateral Instrument 61-101 – Protection of Minority Security Holders in Related Party Transactions
The Sellers include
The terms of the Deed were settled through arm’s length negotiations between the independent directors of the Company and the
The Company did not file a material change report 21 days in advance of implementing the transactions as the negotiations were only recently concluded.
About
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
For further information, please contact:
IR@nowvertical.com
e: glen.nelson@nowvertical.com
t: (403) 763-9797
Non-IFRS Measures
This news release refers to certain non-international financial reporting standards (“IFRS”) measures, including “Adjusted EBITDA”. For the purposes of this news release, Adjusted EBITDA is defined as the consolidated earnings before interest, taxes, depreciation and amortization. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. The Company’s definitions of non-IFRS measures used in this news release may not be the same as the definitions for such measures used by other companies in their reporting. Non-IFRS measures have limitations as analytical tools and should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS. These non-IFRS measures are used to provide investors with supplemental measures of our operating performance and to eliminate items that have less bearing on our operational performance or operating conditions and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. The Company believes that securities analysts, investors and other interested parties frequently use non-IFRS financial measures in the evaluation of issuers. The Company’s management also uses non-IFRS financial measures to facilitate operating performance comparisons from period to period and prepare annual budgets and forecasts.
Reconciliation of 2023 Acrotrend Adjusted EBITDA | |||
Revenue | $ | 5,921,425 | |
Income from operations | 1,497,993 | ||
GAAP Adjustments | |||
Expenses incurred in connection with acquisitions | 201,195 | ||
Foreign exchange realized loss | 10,828 | ||
Depreciation and amortization | 18,154 | ||
Non-GAAP Adjustments | |||
Compensation and benefits related to other CGUs | 428,127 | ||
Income from operations annualized | 13,060 | ||
Adjusted EBITDA | $ | 2,156,296 |
Forward Looking Statements
This news release contains forward-looking information and forward-looking statements within the meaning of applicable Canadian securities laws (together “forward-looking statements”), including, without limitation regarding the settlement of obligations owing to the Sellers, the form and amount of future payments to be made by the Company, the number of Subordinate Voting Shares issuable and the price at which such shares will be issuable, the payment of the Future Earn-Outs, the alignment of management and the business unit leaders, the approval of the TSXV, the ability and timing of certain payments by the Company. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties, and contingencies. Investors are cautioned that forward-looking statements are not based on historical facts but instead reflect the Company’s expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Forward-looking statements generally can be identified by the use of forward-looking words such as “may”, “should”, “will”, “could”, “intend”, “estimate”, “plan”, “anticipate”, “expect”, “believe” or “continue”, or the negative thereof or similar variations. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause future results, performance, or achievements to be materially different from the estimated future results, performance or achievements expressed or implied by the forward-looking statements and the forward-looking statements are not guarantees of future performance. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed thereon, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the Company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements are the following: direct and indirect material adverse effects from the COVID-19 pandemic; timing and receipt of regulatory approvals, adverse market conditions; risks inherent in the data analytics and artificial intelligence sectors in general; regulatory and legislative changes; that future results may vary from historical results; inability to obtain any requisite future financing on suitable terms; any inability to realize the expected benefits and synergies of acquisitions; that market competition may affect the business, results and financial condition of the Company and other risk factors identified in documents filed by the Company under its profile at www.sedarplus.ca, including the Company’s managements’ discussion and analysis for the year ended
Source:
2024 GlobeNewswire, Inc., source