Route1 Inc. (OTCQB:ROIUF) (TSXV:ROI) (the “Company” or “Route1”), a
leader in secure data protection technologies and user
authentication for government and enterprise, today announced that
it has entered into an agreement to acquire Group Mobile Int’l, LLC
(“Group Mobile”) from XpresSpa Group, Inc. (“XpresSpa Group”).
Group Mobile, a wholly owned subsidiary of
XpresSpa Group, based in Chattanooga, TN and Chandler, AZ supplies
rugged mobile technology solutions to a number of the world’s
largest automotive manufacturing companies and suppliers, the
world’s largest manufacturing company, as well as local and state
governments in the southeastern and southwestern United
States.
Group Mobile Background:
- Deployed over 1.5 million rugged mobile devices.
- https://groupmobile.com/.
- Based on historical results, quarterly revenue of USD $3.4
million to USD $4.5 million, gross profit margin of 16% to 22% and
positive EBITDA.
- Margins driven by services offerings.
- Rapidly growing recurring revenue Technology as a Service
model.
- Hardware supplier relationships with the leaders in rugged and
warehouse focused technology equipment manufacturers – Getac and
Zebra.
- Strong distributor relationships including Ingram Micro,
ScanSource and Synnex.
Route1 is acquiring Group Mobile to expand the
use of Route1’s core technologies into the enterprise sector,
diversify the Route1 client base, and leverage Group Mobile’s
current and future placement of rugged mobile devices to sell
Route1’s core technologies.
Route1 believes that tangible synergy is
realizable post-closing as a result of the acquisition of Group
Mobile. Route1 plans to:
- Sell ActionPLAN, Powered by MobiNET to Group Mobile’s
long-standing customers and new US based automotive OEMs and Tier I
and II parts manufacturers;
- Further the introduction of MobiKEY to corporate America by
creating a seamless way to manage, patch, and harden rugged mobile
devices; and
- Embed MobiKEY and ActionPLAN, Powered by MobiNET application
software with new rugged devices sold to generate new recurring
revenue.
The acquisition will also provide Route1 with additional sales
resources for existing technologies and these new human resources
will provide sales bench strength, training and mentoring to the
existing Route1 sales team.
Route1 entered into an agreement to acquire
Group Mobile from XpresSpa Group on March 6, 2018. The
closing date of the acquisition is expected to occur in late-March
2018. The approximate two weeks between signing and closing
will be used to obtain the requisite regulatory and stakeholder
contract approvals, and business integration planning.
On closing, Route1 will issue to XpresSpa Group
25 million common shares and 30 million, three-year common share
purchase warrants with an exercise price of CAD 5 cents per common
share; post-closing, XpresSpa Group will own approximately 6.7% of
Route1’s undiluted common shares. The issued Route1 common
shares will not be tradable until a date no earlier than 12 months
after the closing date; 50% or 12.5 million common shares tradeable
after 12 months plus an additional 2,083,333 common shares
tradeable each month until 18 months after the date of closing,
subject to a change of control provision.
There may also be one or more payments made to
XpresSpa Group based on the actual gross profit of Group Mobile
meeting a minimum threshold in each 12-month period during the
first three years post-closing or for the three years in aggregate
post-closing. Specifically, if the gross profit of Group
Mobile is in excess of USD $3,750,000 per 12-month period, then
XpresSpa Group will receive 27.5% of the actual gross profit amount
greater than USD $3,750,000. If the gross profit target is
missed in the first or second year, no subsequent annual earn-out
payment(s) will be made. There is also a cumulative earn-out
that is equal to 27.5% of the Group Mobile gross profit for the
first 36 months post-closing that is in excess of $11,250,000 less
any annual earn-out amounts previously made. Payments
pursuant to the annual or cumulative earn-out will be made in cash,
90 days after the respective period end.
Additional transaction terms include:
- No assumption of indebtedness (other than trade payables or
accruals incurred in the ordinary course of business).
- A minimum working capital balance.
- An XpresSpa Group non-compete and non-solicitation for a period
equivalent to the proposed earn out term.
- A voting agreement whereby, if XpresSpa Group owns in excess of
3% of the outstanding shares of Route1, all common shares issued as
part of the acquisition are subject to a voting agreement with
Route1 for the term of the earn-out.
Upon closing, Route1 will hold a shareholder
webcast and conference call to discuss the transaction.
About Route1 Inc.Route1 Inc. is
a world-leader in secure data protection technologies and user
authentication for government and enterprise. Route1
solutions enable the workforce to be more productive and more
flexible without compromising system access, data-at-rest, or
data-in-use. The Company’s suite of patented enterprise
security solutions combines best-in-class authentication, data
security and secure communications with streamlined administration
tools, running on a proven, trusted infrastructure. From
mobile access to business continuity to best-in-class full system
encryption, Route1 offers the most effective, affordable methods to
secure the digital fortress, while meeting or exceeding the highest
standards for government and industry. Route1 has Full
Authority to Operate from the U.S. Department of Defense, the U.S.
Department of the Navy, the U.S. Department of the Interior, and
other government agencies. The Company is also trusted by
enterprise security teams in the banking, healthcare, legal and
education sectors, among others. With offices in Washington, D.C.,
Boca Raton, FL and Toronto, Canada, Route1 serves public and
private sector clients around the world. Route1 is listed on
the OTCQB in the United States under the symbol ROIUF and in Canada
on the TSX Venture Exchange under the symbol ROI. For more
information, visit: www.route1.com.
About XpresSpa Group,
Inc.XpresSpa Group, Inc. (Nasdaq: XSPA) is a health and
wellness holding company. XpresSpa Group’s core asset, XpresSpa, is
the world’s largest airport spa company, with 57 locations in 23
airports globally, including one off-airport spa at Westfield World
Trade Center in New York City. XpresSpa offers services that are
tailored specifically to the busy customer. XpresSpa is committed
to providing exceptional customer experiences with its innovative
premium spa services, as well as exclusive luxury travel products
and accessories. XpresSpa serves almost one million customers per
year at its locations in the United States, Holland, and the United
Arab Emirates. XpresSpa Group’s non-core assets include Group
Mobile, Infomedia, and intellectual property assets. To learn more
about XpresSpa Group, visit: www.XpresSpaGroup.com. To learn more
about XpresSpa, visit www.XpresSpa.com.
For More Information
Contact:
Route1 Inc.Peter ChodosEVP and
CFO, Route1 Inc.+1 416 814-2619peter.chodos@route1.com
XpresSpa Group, Inc. Jeff Sonnek
ICR +1 646-277-1263Jeff.Sonnek@icrinc.com
This news release, required by applicable
Canadian laws, does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities in the United
States. The securities have not been and will not be registered
under the United States Securities Act of 1933, as amended (the
"U.S. Securities Act") or any state securities laws and may not be
offered or sold within the United States or to U.S. Persons unless
registered under the U.S. Securities Act and applicable state
securities laws or an exemption from such registration is
available.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
© 2018 Route1 Inc. All rights reserved. No part
of this document may be reproduced, transmitted or otherwise used
in whole or in part or by any means without prior written consent
of Route1 Inc. See
https://www.route1.com/terms-of-use/ for notice of Route1’s
intellectual property.
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