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mCloud to Acquire Kanepi

Source: www.gulfoilandgas.com 6/25/2020, Location: Not categorized

mCloud Technologies Corp., a leading provider of asset management solutions combining IoT, cloud computing, artificial intelligence ("AI") and analytics, today announced that it has signed a definitive agreement (the "Acquisition Agreement") to acquire kanepi Group Pty Ltd ("kanepi"), an information, visualization, and analytics software technology company headquartered in Perth, Australia, with a development center in Singapore. The acquisition of kanepi, which will be made through a newly incorporated subsidiary of mCloud, will supplement mCloud’s customer base and accelerate the expansion of AssetCare™ to new asset classes.

kanepi’s footprint in the southern hemisphere is expected to bolster mCloud’s presence in a variety of process industries including upstream and midstream oil and gas, offshore Floating Production Storage and Offloading (FPSOs), Liquefied Natural Gas (LNG), and mining facilities.

kanepi provides advanced visual analytics solutions designed to deliver an immediate and positive impact on the industrial operations of asset intensive industries. Founders and Managing Directors Tim Haywood and Shane Attwell have led kanepi since its inception in 2014. Both have extensive experience in successfully creating and deploying software technology with prior endeavors at ISS Group, Apache, and Honeywell.

The core technologies from kanepi are ready to be integrated into mCloud’s AssetCare™ cloud platform. Working prototypes have been well received by mCloud customers in North America. The kanepi technology is applicable to all AssetCare™ offerings, including the Company’s Connected Worker solution on RealWear headsets. The integration of kanepi's technology is expected to grow mCloud’s ability to potentially connect tens of thousands of workers in Australia, Africa, and Southeast Asia.

"The acquisition of kanepi will bring mCloud a strategic book of business including major customers in new geographies," said Russ McMeekin, mCloud President and CEO. "These customers will immediately contribute to our AssetCare™ customer base for Connected Solutions, and kanepi’s technology will accelerate our technology roadmap."

"Joining mCloud is a winning formula all around," said Tim Haywood, kanepi Founder & Managing Director. "This combination will accelerate our growth, expand the reach of our technology, and bring new value to our customers."

Based on kanepi’s recent financial performance and current contract velocity, the Company expects this acquisition to add C$2.4 million in annual recurring AssetCare™ revenues on a go-forward basis.

As consideration for the acquisition of kanepi, the Company will: (i) pay to the sellers of kanepi an aggregate cash consideration of AUD$5,000,000 (the "Closing Cash Consideration") plus a net cash distribution adjusted for working capital; and (ii) issue such number of common shares of the Company (the "Consideration Shares") as is equal to AUD$7,000,000 based on a price per share equal to the volume weighted average trading price of the Company’s common shares (the “Common Shares”) on the TSX Venture Exchange (the "TSXV") for the 15 trading days immediately prior to the closing date of the transaction, subject to compliance with the policies of the TSXV. All Consideration Shares will be subject to a 30-month lock-up, with 25% of the Consideration Shares released from the lock-up on the 12, 18, 24 and 30 month anniversaries of the closing date.

In addition, subject to kanepi earning AUD$10,000,000 of revenue during the 12 month period following closing or AUD$14,000,000 of revenue during the 24 month period following closing, or kanepi meeting certain customer acquisition targets during such periods, the Company will potentially pay two additional payments to the sellers of AUD$1,000,000 each (the "Earn-out Payments"). If earned, fifty percent of each Earn-out Payment will be made in cash, with the remainder satisfied by the issuance of Common Shares based on a price per share equal to the volume weighted average trading price of the Common Shares on the TSXV for the 15 trading days immediately prior to the date on which the applicable earn-out condition is satisfied.

The completion of the acquisition is subject to the satisfaction of a number of closing conditions, including receipt of Australian foreign investment regulatory approval and the approval of the TSXV.

Brokered Offering
mCloud is also pleased to announce that it has filed a preliminary prospectus supplement (the “Preliminary Supplement”) to its short form base shelf prospectus dated April 28, 2020 for Nunavut and its amended and restated ?short form base shelf prospectus dated April 28, 2020 (together, the “Base Shelf Prospectus”) relating to a proposed underwritten overnight public offering of C$10 million of units of the Company (the "Units"). Each Unit will consist of one Common Share (a “Unit Share”) and one-half of one Common Share purchase warrant of the Company (each whole Common Share purchase warrant, a "Warrant"), with each Warrant being exercisable to acquire one Common Share.

The Offering will be led by Raymond James Ltd. (the "Lead Underwriter") with a syndicate of underwriters that will include Eight Capital Corp. and Paradigm Capital Inc. (together with the Lead Underwriter, the "Underwriters"). The Offering will be priced in the context of the market, with the offering price of the Units and the term and exercise price of the Warrants to be ?determined at the time of entering into an underwriting agreement for the Offering?.

The Underwriters will be granted an option to purchase up to an additional 15% of the Units offered pursuant to the Offering on the same terms and conditions for a period of 30 days following the closing of the Offering. The over-allotment option may be exercised by the Underwriters to acquire Units, Common Shares and/or Warrants.

The Company ?will apply to list the Units Shares, the Warrants and the Common Shares to be issued upon ?exercise of the Warrants on the TSXV.? Listing will be subject to the Company fulfilling all of the requirements of the TSXV.

The net proceeds of the Offering will be used, in part, to satisfy payment of the Closing Cash Consideration under the Acquisition Agreement, with the remaining net proceeds to be used for working capital and general corporate purposes. ?Closing of the Offering will be subject to a number of customary conditions including, but not ?limited to, receipt of all necessary regulatory approvals and stock exchange approvals, including ?approval of the TSXV and the entering into of an underwriting agreement with the ?Underwriters.

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