Toronto, Ontario - TheNewswire – December 9, 2019 - Quisitive Technology Solutions, Inc. (“Quisitive” or the “Company”) (TSXV:QUIS), a premier Microsoft solutions provider, today announced it has agreed to a transaction to acquire all of the issued and outstanding shares (the “Purchased Shares”) of Menlo Technologies, Inc. and its subsidiaries (collectively, “MENLO”), a leading provider of Microsoft technology, corporate consulting, and business software and systems based in Menlo Park, California  (the “Transaction”). The details of the Transaction are set forth in a definitive share purchase agreement between the Company, a wholly-owned subsidiary of the Company, and the shareholders (the “Vendors”) of MENLO, that was negotiated at arm's length. Completion of the Transaction is subject to a number of standard conditions, including receipt of all regulatory approvals and the acceptance of the TSX Venture Exchange (“TSXV”). The Transaction is expected to close on or about January 1, 2020.

 

Like Quisitive, Menlo Technologies is a global Microsoft technology services company specializing in cloud development, data analytics, mobile technology and enterprise business application services.  Menlo offers managed on shore and offshore development services from its Silicon Valley headquarters and offshore development center in Hyderabad, India. Over the trailing twelve months ended September 30, 2019 Menlo generated unaudited revenues of approximately US$17.5 million and unaudited adjusted EBITDA of approximately US$2.4 million.  

 

“We are thrilled to join forces with the Quisitive family,” said Gary Prioste, Menlo CEO. “The Quisitive brand has significant strength, that when paired with our competencies will allow us to scale beyond our geographies and accelerate our ability to reach and engage with larger enterprise customers.”

 

Thru application modernization and business application consulting, Menlo supports hundreds of clients globally.  Their cloud application expertise supports their Microsoft Dynamics ERP practice and with an office in Washington, DC, have deep knowledge of government compliance.  Their offices on the West Coast are recognized as an industry leader in cloud development and Azure migrations.  

 

“The integration of the Menlo competencies into the Quisitive portfolio will activate substantial enterprise growth in our North American market,” said Quisitive CEO Mike Reinhart. “Menlo has a strong reputation as a Microsoft gold partner in the cloud development space and brings forth a new capability in their on shore and offshore development model that will provide access to a net new customer set and expand our service portfolio for our customers.  The Menlo acquisition is a strong complement to our June 2019 CRG acquisition, accelerating our collective vision to build the premier Microsoft solutions provider in North America for Microsoft Dynamics business solutions and cloud innovations. The combination of CRG and Menlo’s Microsoft Dynamics businesses position Quisitive as a leader in the Microsoft Dynamics partner community. ”

  

The consideration for the Purchased Shares will consist of the following: (i) US$ $3,774,190 in cash, payable to the Vendors (the “Cash Payment”); (ii) the issuance to the Vendors of 19,784,981 common shares in the capital of Quisitive (the “Quisitive Shares”); (iii) the issuance to the Vendors of convertible debentures with an aggregate face value of US$5,000,000 (the “Notes”) accruing at a rate of interest of 10.0% per annum compounded on an annual basis and payable annually, having a term of up to 36 months from the closing date of the Transaction (the “Maturity Date”). The holders of the Notes may, at their option, elect to convert the principal outstanding and all accrued and unpaid interest owing thereunder into Quisitive Shares at a deemed price of C$0.20 per Quisitive Share at any time on or prior to the Maturity Date, and the Company, at its sole discretion, will have the option to automatically convert the Notes if the volume weighted average trading price of the Quisitive Shares on the TSXV is greater than or equal to C$0.40 for 20 consecutive trading days.

The Vendors may also be entitled to additional contingent consideration in the form of a performance earn-out if MENLO achieves certain financial thresholds during the three (3) year period following the closing of the Transaction. The amount of the earn-out is a base maximum of US$3,500,000, plus an additional incentive amount of US$1,000,000 based on exceeding growth targets during the first two years. The earn-out is payable 50% in cash and 50% in Quisitive Shares.

The funds representing the Cash Payment, acquisition fees, and working capital for the Company will be obtained pursuant to a 12-month US$7,500,000 demand loan (the “Loan”) from an investment company with interest accruing based on a Bank of Montreal Prime plus 8.05% per annum, calculated and payable monthly, with the principal amount to be repaid on demand or within 12 months from the date of initial advance of funds.  The Loan will be a direct obligation of Menlo Technologies Acquisition, Inc. (the “Borrower”) guaranteed by certain subsidiaries of the Borrower, and will be secured by: (i) a first ranking general security interest granted by the Borrower and  each of the guarantors over all of their respective present and future personal property; and (ii) a pledge of the Purchased Shares.

The Borrower will incur fees payable in cash upon closing of the Transaction equal to 3.75% of the Loan amount and 1.6% of the sum of the Cash Payment and the Notes.

 

About Quisitive

 

Quisitive is a premier Microsoft solutions provider that helps enterprise organizations move, operate and innovate in the Microsoft cloud: Microsoft Azure, Microsoft Dynamics and Microsoft O365 as well as provide proprietary Software as a Service (“SaaS”) solutions such as CRG emPerform™, LedgerPay and business solutions from other technology partners that complement the Microsoft platform. With a legacy of deep technical and business expertise, Quisitive is empowering the enterprise to navigate the ever-changing technology climate their business relies upon. Quisitive helps customers harness the power of the Microsoft cloud and innovative technologies such as, artificial intelligence, machine learning, the Internet of Things (IoT) and blockchain through customized solutions.

 

Quisitive is the 2019 Microsoft United States Partner of the Year. Quisitive earned this top honor among a global field of top Microsoft partners for demonstrating excellence in innovation and implementation of customer solutions based on Microsoft technology.

 

Quisitive is uniquely comprised of experienced Microsoft partner leaders and technologists who share a deep understanding of market needs and the appropriate application of Microsoft cloud technology. The company's expertise and focus are on helping industries such as financial services, manufacturing, oil and gas, and retail, drive innovation using Microsoft cloud-based technologies.

Quisitive serves clients globally with offices in Dallas, TX; Denver, CO; Minneapolis, MN; Ottawa, ON; and Toronto, ON. For more information, visit http://www.Quisitive.com and follow @BeQuisitive. TSXV: QUIS.

 

About MENLO

 

Based in Los Altos, California, Menlo Technologies delivers software development solutions on multiple platforms designed to help clients compete in an increasingly demanding global market. Menlo is a premier provider of outsourced web, mobile, and cloud development solutions and business applications. Lead by seasoned technology executives, their experience as both buyers and providers of technology solutions provides an edge in anticipating client needs. Their Hybrid Delivery approach utilizes a combination of onshore and offshore resources to maximize cost and efficiency.  Their clients include: Toshiba, Dell, Renesas and NEC.

 

Menlo services clients globally with offices in Los Altos, CA; Washington, DC; Austin, TX; and Hyderabad, India. For more information, visit www.menlo-technologies.com.

  

For additional information

Mike Reinhart

Chief Executive Officer

mike.reinhart@Quisitive.com

972-573-0995

 

Financial Measures

 

There are measures included in this news release that do not have a standardized meaning under generally accepted accounting principles (GAAP) and therefore may not be comparable to similarly titled measures and metrics presented by other publicly traded companies. The company includes these measures because it believes certain investors use these measures and metrics as a means of assessing financial performance. EBITDA (earnings before interest, taxes, depreciation and amortization is calculated as net earnings before finance costs (net of finance income), income tax expense, and depreciation and amortization of intangibles) is a non-GAAP financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.

 

Cautionary Note Regarding Forward-Looking Information and Statements

 

This news release contains certain “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Generally, any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking information or statements. The forward-looking information or statements in this news release may relate, among other things, to: the completion of the Transaction; the anticipated benefits of the Transaction to Quisitive and its shareholders; the future growth potential of the Company on a post-Transaction basis; the intention to scale operations and make technology investments; the accretive nature of the Transaction, including expected synergies thereof; future financial performance; and receipt of all regulatory approvals.

These forward-looking statements are based on reasonable assumptions and estimates of management of the Company at the time such statements were made. Actual future results may differ materially as forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to materially differ from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors, among other things, include: the expected results from the completion of the Transaction; business integration risks; fluctuations in general macroeconomic conditions; fluctuations in securities markets; the Company’s limited operating history; future capital needs and uncertainty of additional financing; the competitive nature of the technology industry; unproven markets for the Company’s product offerings; lack of regulation and customer protection; the need for the Company to manage its planned growth and expansion; the effects of product development and need for continued technology change; protection of proprietary rights; network security risks; the ability of the Company to maintain properly working systems; foreign currency trading risks; use and storage of personal information and compliance with privacy laws; use of the Company’s services for improper or illegal purposes; global economic and financial market conditions; uninsurable risks; changes in project parameters as plans continue to be evaluated; and those factors described under the heading "Risks Factors" in the Company's most recent management discussion & analysis dated September 30, 2019 available on SEDAR. Although the forward-looking statements contained in this news release are based upon what management of the Company believes, or believed at the time, to be reasonable assumptions, the Company cannot assure shareholders that actual results will be consistent with such forward-looking statements, as there may be other factors that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking statements and information. There can be no assurance that forward-looking information, or the material factors or assumptions used to develop such forward-looking information, will prove to be accurate. The Company does not undertake any obligations to release publicly any revisions for updating any voluntary forward-looking statements, except as required by applicable securities law.

 

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 news release.

 

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