Kontrol Technologies Provides Corporate Update

Source: www.gulfoilandgas.com 6/12/2024, Location: North America

Kontrol Technologies Corp. (Cboe CA:KNR) (OTCQB:KNRLF) (FSE:1K8) (“Kontrol” or the “Company”) provides a corporate update.

The Company has entered into a definitive Asset Purchase Agreement for the sale of all the operational assets and the assumption of certain liabilities of its wholly owned operating subsidiary CEM Specialties Inc. (CEMSI) (the “CEMSI Sale”). The financial closing date is anticipated to be June 21, 2024. The sale price is $16.25 million minus estimated post-closing adjustments and Kontrol will retain net working capital estimated at $1. 25 million. The total estimated proceeds to Kontrol including retained working capital is approximately $17.3 million.

Consideration at financial closing are cash proceeds of approximately $16 million minus customary adjustment and indemnity holdbacks totaling $1.2 million and closing costs. Kontrol anticipates collecting the retained net working capital over approximately 90 days. The purchaser is a large USA based industrial emissions company with operations in the USA and Canada.

The Company will use the proceeds from the CEMSI Sale to accelerate organic growth in its recurring revenue “sustainable buildings” platform (which includes HVAC services, energy optimization and Greenhouse Gas reduction) and to add accretive acquisitions and for general corporate purposes.

“The Company will have a substantial cash position to grow its sustainable buildings platform and we are well positioned in a rapidly growing market sector,” says Paul Ghezzi, CEO of Kontrol Technologies. “Based on the value of this transaction the Kontrol Board is pleased to complete this sale as the value received represents a significant premium to book value.”

The Company’s sustainable buildings platform operates with a gross margin of approximately 50% and customers include REITS, municipalities, property managers and industrial buildings. The Company is currently reviewing multiple potential acquisition opportunities but has not entered into any definitive acquisition agreements currently. The Company will target potential business acquisitions with recurring revenues and Gross Margins in the range of 40% to 60%.

The Company will retain its BioCloud technology patents and will seek opportunities to monetize those patents through an independent sale or potential joint venture.

As part of the CEMSI Sale, the Company will amalgamate CEMSI and Kontrol Energy Group, both wholly owned subsidiaries, into Kontrol Technologies Corp. The completion of the CEMSI Sale is conditional on customary approvals.

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