Kontrol Technologies Enters into a Non-Binding Letter of Intent to Acquire Building Service and Solutions Company in Alberta

Kontrol Technologies Corp., a leader in smart buildings and cities through IoT, Cloud and SaaS technology, has entered into a Letter of Intent (“LOI”) to acquire a building service and solutions company in Alberta, Canada .

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“In addition to an attractive customer base, in Western Canada, the repeat nature of the Target’s revenues provides a high-value platform that we will seek to leverage with our proprietary technology.”

The Target is a well-established service and solutions provider for a wide range of blue-chip customers including municipalities, property managers, developers, and real estate investment trusts. The Target provides high value services in mechanical materials, heating, and building retrofits. The Target provides commercial and multi-residential services to approximately 700 different locations annually with strong repeat business.

“We remain focused on national expansion as well as adding recurring revenues to our existing platform,” says Paul Ghezzi, CEO of Kontrol Technologies. “In addition to an attractive customer base, in Western Canada, the repeat nature of the Target’s revenues provides a high-value platform that we will seek to leverage with our proprietary technology.”

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Based on the fiscal year ended April 30, 2022, unaudited financial statements, the Target generated $5.4 Million in revenue with a 73% gross margin and a normalized EBITDA margin of 20%.

The consideration for the acquisition is $3.5 Million to be paid in cash on closing and $500,000 worth of common shares in the capital of the Company (which common shares are expected to be subject to certain escrow restrictions) and a total earn-out of up to $750,000 over a three-year period. The earn-out is subject to achieving certain earnings targets.

As noted in our press release dated August 31, 2022, Kontrol has entered into a $50 Million credit agreement with a Schedule 1 Bank (the “Bank”). The facility can be drawn to fund acquisitions subject to complying with the Bank’s approvals. The Company will assess its acquisition financing options including the potential use of this Bank credit agreement.

A closing date of December 15, 2022 has been targeted by the Company and the Target, and the acquisition is subject to a number of conditions precedent including the finalization of a definitive Share Purchase Agreement and all required approvals.

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