mCloud Technologies to Acquire Information and Visualization Tech Leader Kanepi and Announces C$10 Million Overnight Brokered Offering

mCloud Technologies Corp., a leading provider of asset management solutions combining IoT, cloud computing, artificial intelligence and analytics, announced that it has signed a definitive  agreement  to acquire kanepi Group Pty Ltd, 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.

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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.

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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 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 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. 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.

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