Quisitive Announces Creation of a Premier, Global Microsoft Digital Transformation and Cloud-Based Solutions Leader with Acquisition of Catapult Systems

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Quisitive’s Cloud Solutions Capabilities Further Bolstered by Catapult’s Robust IT Services Business and Relationship with Microsoft

THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION IN CANADA ONLY AND IS NOT INTENDED FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES.

TORONTO, Nov. 08, 2021 (GLOBE NEWSWIRE) — Quisitive Technology Solutions, Inc. (“Quisitive” or the “Company”) (TSXV: QUIS), a premier Microsoft Solutions Provider and Payment Solutions Provider, has signed a definitive agreement dated November 8, 2021 to acquire all of the issued and outstanding membership units (the “Membership Units”) of Austin, Texas-based Catapult Systems, LLC (“Catapult”), a Microsoft-focused digital solutions and services provider, for US$51.5 million in cash (the “Transaction”).

The Transaction brings together two of the largest Microsoft exclusive technology partners and brings Quisitive’s combined run-rate revenue to over US$160 million. This combination also creates a formidable footprint in Texas.

For the trailing twelve months ended September 30, 2021, Catapult generated unaudited revenues of approximately US$52.2 million with nearly 35% from recurring revenue. The Transaction is expected to be accretive on an EBITDA and earnings basis in 2022.

The details of the Transaction are set forth in a definitive purchase agreement between Quisitive, Ltd., a wholly owned subsidiary of the Company, as purchaser, and a wholly owned subsidiary of Chinasoft International Limited (the “Vendor”), that was negotiated at arm’s length. Completion of the Transaction is subject to a number of standard conditions for a transaction of this nature, including regulatory approval, and completion of an equity financing as further described below. The Transaction is expected to close on or about November 17, 2021.

Acquisition Summary and Rationale
Management of the Company believes that the acquisition of Catapult is compelling based on the following key factors:

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  • Strengthens Quisitive’s senior leadership team with veteran industry leaders who have proven success with a similar philosophy of focusing exclusively on Microsoft platforms; these leaders understand how to deliver high value services to customers, allowing key members of Quisitive management more time to focus on the payments solutions business as it begins to scale and grow.

  • Establishes a premier global Microsoft partner within the cloud solutions space by combining two of the biggest U.S. Microsoft exclusive technology partners.

  • Diversifies Quisitive’s recurring revenue through the addition of Catapult’s IP platforms, Spyglass, a solution accelerator for managing security in a Microsoft environment, and Azure Management Services (AMS), a service for continuous optimization and management of Azure for infrastructure, data and applications, which includes a proprietary monitoring and altering tool with IP.

  • Creates significant sales and marketing synergies across the combined client base enabled by a consolidated sales and solutions team of over 50 dedicated cloud solution sellers and solutions specialists.

  • Provides geographic and personnel scale increasing total employee hubs to 15 across the globe and over 700 combined employees.

  • Bolsters Quisitive’s Cloud Solutions offering by augmenting its Digital Workplace practice and establishing a robust Security practice.

  • Further positions the Company as a leading Microsoft partner with 10 Microsoft Advanced Specializations and 17 Microsoft Competencies.

“The combination of Quisitive and Catapult will bring together top providers to create one of the most preeminent partners in the Microsoft ecosystem,” said Quisitive CEO Mike Reinhart. “In addition to significantly elevating our cloud solutions value proposition, Catapult adds a complementary client base, highly talented human capital, and an attractive recurring revenue profile. The acquisition is perfectly aligned with our inorganic strategy, which is laser focused on acquiring companies like Catapult that augment our breadth of Microsoft capabilities, geographic reach, and intellectual property. We look forward to working with the Catapult team to leverage the attractive synergies and opportunities to capture an even greater share of the digital transformation market.”

Terri Burmeister, Catapult CEO and President added: “We are excited to unite these two leading companies to create the top Microsoft-focused partner in the U.S. Quisitive’s breadth of services, IP and industry alignment are a perfect complement to Catapult’s solutions and services and will provide great value to our established customer base. Our brand promise is to be very customer-centric and combining this focus on delivery excellence with Quisitive creates a company that is truly a force to be reckoned with in the Microsoft ecosystem.”

Acquisition Terms
The consideration for the Membership Units will consist of a cash payment of US$51.5 million payable to the Vendor (the “Cash Payment”).

Quisitive Financial Update
Quisitive has provided guidance that Q3 2021 revenue is expected to range between US$26.25-$27.75 million showing significant growth over the US$12.7 million of revenue in Q3 2020. Adjusted EBITDA is also expected to show continued growth on a quarter over quarter basis. Quisitive expects that costs and expenses as an overall percentage of revenue for Q3 2021 will be consistent with past quarters. Quisitive will release Q3 earnings on November 22, 2021.

Quisitive CEO Mike Reinhart continued: “Our team has capitalized on our M&A strategy year to date, as we are executing on the integration of the BankCard and Mazik acquisitions made earlier this year and are realizing the operational synergies we expected. The addition of Catapult will further strengthen our cloud solutions business as they add expertise in security and digital workplace services to support clients with digital transformation and cloud-based solutions. In addition, LedgerPay continues to progress to launch with VISA and MasterCard currently installing their network equipment and hardware in our data centers. Collectively our Company is continuing to demonstrate execution of our strategy and delivering value to our customers and shareholders.”

All figures reported above with respect to the preliminary estimated revenues are preliminary and are unaudited and subject to change and adjustment as the Company prepares its consolidated financial statements for the interim period ended September 30, 2021. Accordingly, investors are cautioned not to place undue reliance on the foregoing information. The Company does not intend to provide preliminary estimated revenues or other preliminary financial results in the future. The Company’s auditor has not reviewed the preliminary revenue results and has not audited or expressed an opinion on them. The preliminary estimated revenue provided in this news release constitutes “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian and U.S. securities laws, are based on several assumptions and are subject to a number of risks and uncertainties. Actual results may differ materially. See “Cautionary Note Regarding Forward-looking Information and Statements”.

Financing Summary

Quisitive announces that is has entered into an agreement pursuant to which Scotiabank, Canaccord Genuity and Eight Capital, as joint bookrunners, together with a syndicate of underwriters (collectively, the “Underwriters”), will purchase on a “bought deal” basis 33,340,000 common shares of the Company (the “Offered Shares”) at a price of C$1.20 per Offered Share (the “Issue Price”) for aggregate gross proceeds to Quisitive of approximately C$40 million (the “Offering”). The Company has granted the Underwriters an option, exercisable, in whole or in part, at any time not later than the 30th day following the closing of the Offering, to purchase up to an additional 15% of the Offering at the Issue Price for market stabilization purposes and to cover over-allotments, if any (the “Over-Allotment Option”). If the Over-Allotment Option is exercised in full, the total gross proceeds of the Offering will be approximately C$46 million.

Pursuant to its participation right under an investor rights agreement between the Company and FAX Capital Corp. (“FAX”), FAX has indicated that it will further its investment in the Company by participating in the Offering in support of the Company’s continued growth. In addition, another strategic investor has committed to participating in the Offering, and with the combined interest from those two strategic investors, the Offering is approximately half covered by demand.

In connection with the Offering, the Underwriters will receive a cash commission equal to 6% of the gross proceeds from the sale of the Offered Shares (including any Offered Shares issued pursuant to the exercise of the Over-Allotment Option).

The Closing of the Offering is expected to occur on or about November 17, 2021 and is subject to the approval of the TSX Venture Exchange (“TSXV”) and other necessary regulatory approvals.

Quisitive also intends to draw down C$15 million from the credit facility that it entered into on August 27, 2021 with a syndicate led by Bank of Montreal and including Desjardins Capital Markets (the “Credit Facility”) to partially fund the acquisition of Catapult.

The net proceeds from the Offering will be used to partially fund the Cash Payment, with the balance of the purchase price to be funded pursuant to the draw down on the Credit Facility and cash on hand.

The Offered Shares will be offered by way of (i) a prospectus supplement (the “Prospectus Supplement”) to Quisitive’s amended and restated short form base shelf prospectus dated September 10, 2021, which Prospectus Supplement is expected to be filed with the securities commissions and other similar regulatory authorities in each of the provinces and territories of Canada on or prior to November 10, 2021 (ii) in the United States by way of private placement pursuant to the exemption from registration provided for under Rule 144A of the United States Securities Act of 1933, as amended; and (iii) in jurisdictions outside of Canada and the United States as are agreed to by the Company and the Underwriters on a private placement or equivalent basis.

The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from the registration requirements. 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.

About Quisitive:
Quisitive (TSXV: QUIS) is a premier, global Microsoft partner that harnesses the Microsoft platform and complementary technologies, including custom solutions and first-party offerings, to generate transformational impact for enterprise customers. Our Cloud Solutions business focuses on helping enterprises move, operate, and innovate in the three Microsoft clouds. Centering on our LedgerPay product suite, our Payments Solutions business leverages the Microsoft Azure cloud to transform the payment processing industry into an entirely new source of customer engagement and consumer value. Quisitive serves clients globally from eleven employee hubs across the world. For more information, visit www.Quisitive.com and follow @BeQuisitive.

About Catapult:
Catapult is a Microsoft-focused solutions and services firm that specializes in imagining, building, and sustaining digital transformation and cloud-based solutions that people love to use. Catapult has consistently been recognized as a leading Microsoft Partner with 10 Advanced Specializations and 17 Microsoft competencies. Catapult was recognized as the 2020 MSUS Partner Award Winner Azure – DevOps, Top Microsoft 365 Security Partner for FY20, and named a finalist of the Data Analytics 2020 Microsoft Partner of the Year Award. Catapult has offices nationwide.

Quisitive Investor Contact
Matt Glover and John Yi
Gateway Investor Relations
QUIS@gatewayir.com
949-574-3860

Quisitive Management Contact

Mike Reinhart
President and Chief Executive Officer
mike.reinhart@quisitive.com
949-574-3860

Tami Anders
Chief of Staff
tami.anders@quisitive.com

Financial Measures
There are measures included in this news release that do not have a standardized meaning under generally accepted accounting principles (GAAP) and therefore may not be comparable to similarly titled measures and metrics presented by other publicly traded companies. The company includes these measures because it believes certain investors use these measures and metrics as a means of assessing financial performance. EBITDA (earnings before interest, taxes, depreciation and amortization is calculated as net earnings before finance costs (net of finance income), income tax expense, and depreciation and amortization of intangibles) is a non-GAAP financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.

The Purchased Shares 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 in the United States absent registration or an applicable exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. 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 Purchased Shares in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Cautionary Note Regarding Forward-Looking Information and Statements
This news release contains certain “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Generally, any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking information or statements. The forward-looking information or statements in this news release may relate, among other things, to: the completion of the Transaction, including the Offering; the anticipated benefits of the Transaction to Quisitive and its shareholders; the future growth potential of the Company on a post-Transaction basis; statements with respect to the release the Company’s preliminary revenue and other financial results for the third quarter ended September 30, 2021 and the Company’s expected revenue and other financial results for the quarter ended September 30, 2021; the intention to scale operations and make technology investments; the accretive nature of the Transaction, including expected synergies thereof; future financial performance; and receipt of all regulatory approvals.

These forward-looking statements are based on reasonable assumptions and estimates of management of the Company at the time such statements were made. Actual future results may differ materially as forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to materially differ from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors, among other things, include: the expected results from the completion of the Transaction; receipt of all required regulatory approvals including the approval of the TSXV; business integration risks; risks that the estimated financial results will differ from those set forth herein as a result of the Company’s financial closing procedures, final adjustments and other developments that may arise between the date of this news release and the issuance of the financial statements; fluctuations in general macroeconomic conditions; fluctuations in securities markets; the Company’s limited operating history; future capital needs and uncertainty of additional financing; the competitive nature of the technology industry; unproven markets for the Company’s product offerings; lack of regulation and customer protection; the need for the Company to manage its planned growth and expansion; the effects of product development and need for continued technology change; protection of proprietary rights; network security risks; the ability of the Company to maintain properly working systems; foreign currency trading risks; use and storage of personal information and compliance with privacy laws; use of the Company’s services for improper or illegal purposes; global economic and financial market conditions; uninsurable risks; changes in project parameters as plans continue to be evaluated; and those factors described under the heading “Risks Factors” described in the Company’s annual information form dated August 20, 2021, and the Company’s most recent management discussion & analysis dated June 30, 2021, each available on SEDAR. Although the forward-looking statements contained in this news release are based upon what management of the Company believes, or believed at the time, to be reasonable assumptions, the Company cannot assure shareholders that actual results will be consistent with such forward-looking statements, as there may be other factors that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking statements and information. There can be no assurance that forward-looking information, or the material factors or assumptions used to develop such forward-looking information, will prove to be accurate. The Company does not undertake any obligations to release publicly any revisions for updating any voluntary forward-looking statements, except as required by applicable securities law.

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.

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