Leading Canadian SD-WAN vendor acquires 100%
of Martello subsidiary in a cash and equity transaction totaling
approximately $800,000.
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OTTAWA, ON, July 22, 2020 /CNW/ - Martello Technologies Group
Inc., ("Martello" or the "Company") (TSXV: MTLO), a developer of
enterprise digital experience monitoring ("DEM") solutions,
announced today the sale of substantially all the assets and
certain liabilities of Elfiq Inc. ("ELFIQ" or the "Seller") to
Adaptiv Networks Inc. ("Adaptiv Networks" or the "Purchaser"),
an arm's length Canadian SD-WAN company. The
announcement is pursuant to an asset purchase agreement (the
"Agreement") between ELFIQ, a wholly-owned subsidiary of Martello,
and Adaptiv Networks. ELFIQ is an SD-WAN and link balancing
business which was acquired by Martello in December 2017. The transaction is subject to TSXV
approval.
By acquiring ELFIQ, Adaptiv Networks will broaden its portfolio
of SD-WAN solutions for mid-size enterprises and accelerate its
international expansion, leveraging and commercializing the
technology and assets of the ELFIQ SD-WAN and link balancing
business. Martello will receive an equity stake in Adaptiv
Networks. Adaptiv Networks will continue to sell and support the
ELFIQ solution through the network of ELFIQ partners and resellers
globally.
Under the terms of the Agreement, Adaptiv Networks will acquire
substantially all of the assets of ELFIQ for a price of
$800,000, subject to adjustment, for
cash consideration of $500,000 and
common shares of Adaptiv Networks. The cash consideration is
payable in the amounts of $400,000 on
closing and the issuance of a non-negotiable $100,000 promissory note due one year after
closing. Sixteen ELFIQ employees will be transferred to Adaptiv
Networks, and the Purchaser will assume certain liabilities
relating to the purchased assets, transferred employees and the
lease for the Montreal
office.
Martello announced on April 28,
2020 its intention to exit the SD-WAN business via a
divestment of the ELFIQ division. The Company is divesting of this
line of business to focus resources on its DEM strategy. This
strategy is focused on generating monthly recurring revenue from
sales of solutions that improve the digital user experience for
cloud services such as unified communications and video
conferencing. It is expected that the divestment of ELFIQ will
result in the elimination of losses relating to this division in
the near-term. Operating losses for the ELFIQ division were
$1.4M in the 2020 fiscal year.
"Adaptiv Networks is a Canadian SD-WAN leader that offers
natural synergies for the ELFIQ business, and I'm pleased that the
ELFIQ team can move forward together under new ownership to
accelerate growth of the ELFIQ technology", said John Proctor, President and CEO of Martello. "At
the same time, Martello can now adopt a strengthened focus on our
core growth opportunity in the DEM market and accelerate the path
to positive adjusted EBITDA."
About Martello Technologies Group
Martello Technologies Group Inc. (TSXV: MTLO) is a technology
company that provides digital experience monitoring (DEM)
solutions. The company develops products and solutions that provide
monitoring and analytics on the performance of real-time
applications on networks, while giving IT teams and service
providers control and visibility of their entire IT infrastructure.
Martello's products include unified communications performance
analytics software, and IT analytics software. Martello
Technologies Group is a public company headquartered in
Ottawa, Canada with offices
in Amsterdam, Geneva, Nice, Paris, Dallas
and New York. Learn more
at http://www.martellotech.com
This press release does not constitute an offer of the
securities of the Company for sale in the
United States. The securities of the Company have not been
registered under the United States Securities Act of 1933, (the
"1933 Act") as amended, and may not be offered or sold within
the United States absent
registration or an exemption from registration under the 1933
Act.
This press release shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of
the securities in any state in which such offer, solicitation or
sale would be unlawful.
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.
Cautionary Note Regarding Forward-Looking
Statements
This news release contains "forward-looking statements".
Forward-looking statements can be identified by words such as:
"anticipate," "intend," "plan," "goal," "seek," "believe,"
"project," "estimate," "expect," "strategy," "future," "likely,"
"may," "should," "will" and similar references to future periods.
Examples of forward-looking statements include, among others,
statements we make regarding accretive monthly recurring revenues
and effect of closing on the Company's gross margins.
Forward-looking statements are neither historical facts nor
assurances of future performance. Instead, they are based only on
our current beliefs, expectations and assumptions regarding the
future of our business, future plans and strategies, projections,
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conditions. Because forward-looking statements relate to the
future, they are subject to inherent uncertainties, risks and
changes in circumstances that are difficult to predict and many of
which are outside of our control. Our actual results and financial
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of these forward-looking statements. Important factors that could
cause our actual results and financial condition to differ
materially from those indicated in the forward-looking statements
include, among others, the following:
- Continued volatility in the capital or credit
markets.
- Our ability to maintain our current credit rating and the
impact on our funding costs and competitive position if we do not
do so.
- Changes in customer demand.
- Disruptions to our technology network including computer
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disruptions of our operating systems, structures or
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- Delayed purchase timelines and disruptions to customer
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continuity as a result of COVID-19.
Any forward-looking statement made by us in this news release
is based only on information currently available to us and speaks
only as of the date on which it is made. Except as required by
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update any forward-looking statement, whether written or oral, that
may be made from time to time, whether as a result of new
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SOURCE Martello Technologies Group