NowVertical Revamps Smartlytics Agreement to Complete Product Group Integration

TORONTO, May 01, 2024 (GLOBE NEWSWIRE) -- NowVertical Group Inc. (TSXV: NOW) (OTCQB: NOWVF) (“NOW” or the “Company”), is pleased to announce that NOW and Mostafa Hashem, NOW’s EVP Product & Technology have agreed to amend the outstanding earnout obligations governing NOW’s acquisition of Smartlytics Consultancy Limited (“Smartlytics”). In connection with the amendment, the incentives that Mr. Hashem would have received as a former owner of Smartlytics have been adjusted with the objective of rewarding Mr. Hashem for building an integrated product group that encompasses all of NOW’s existing software assets; whereas the former earn-out provisions were based on performance of the Smartlytics business unit only. Mr. Hashem was promoted to the EVP Product & Technology role in early 2024.

“With the amendment of the purchase agreement, we're shifting focus to commercializing NOW's software suite and capitalizing on cross-selling opportunities across our NA, EMEA, and LATAM markets. Mr. Hashem's commercial acumen and success in generating revenue streams by combining NOW's software with services for tangible business outcomes are commendable. This marks a major step towards deeper integration within our business, with NVG software playing a crucial role in expanding our footprint within strategic accounts," remarked Sandeep Mendiratta, NOW's CEO.

Transaction Details

In executing its integration strategy, the Company has amended the share purchase agreement dated December 10, 2022, that governed the acquisition of Smartlytics, restructuring its ongoing obligations with Mr. Hashem as follows:

• the future earn-out payments for years 2024 and 2025 will be settled through a payment by the Company tied to the EBITDA of NOW’s product group payable to Mr. Hashem equally in cash and through the issuance of Class A subordinate voting shares in the capital of NOW, subject to TSX Venture Exchange approval prior to the time of each issuance; and
• the deferral of the payment of the previously due holdback amount of $100,000.

Multilateral Instrument 61-101 – Protection of Minority Security Holders in Related Party Transactions

Mostafa Hashem is the EVP Product & Technology of the Company (the “Related Party”). As a result, the entering into of the Deed and certain of the transactions contemplated thereby are considered to be “related party transaction”, subject to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). Notwithstanding the foregoing, the Company is exempt from the formal valuation requirement per sections 5.5(a) and 5.5(b) of MI 61-101, as neither the fair market value of the subject matter of the transactions, nor the fair market value of the consideration for the transactions, insofar as it involves interested parties, exceeds 25% percent of the Company’s market capitalization and Company is not listed on any of the exchanges specified in Section 5.5(b) of MI 61-101, and the Company confirms that it has not obtained any valuations relevant to the transactions in the 24 months preceding entering into the Deed. In addition, the Company is exempt from the requirement to obtain minority shareholder approval per section 5.7(1)(a) of MI 61-101, as neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the transaction, insofar as it involves interested parties, exceeds 25% percent of the Company’s market capitalization.