Xigem Technologies (CSE:XIGM, OTCQB:XIGMF) said it has signed an asset purchase agreement dated February 24, 2023, with EAF Group of Companies to purchase substantially all of the assets of EAFdigital Inc (EchoDigital) for an aggregate consideration of $892,450.
The company explained that EchoDigital is an artificial intelligence-driven, Software-as-a-Service (SaaS)-fueled automobile shopping and delivery platform for the $1.5 trillion global used automobile market.
Employing its proprietary AI, EchoDigital establishes and uses psychological aptitude to qualify a lead and seamlessly match it with the most suitable customer service/sales representative (CSR) to complete the sale. Xigem said EchoDigital is easily scalable, customizable and applicable to almost any CSR-dependent sales system.
READ: Xigem Technologies inks deal to acquire automotive shopping and delivery platform EAFdigital
"EchoDigital is an innovative technology platform that has demonstrated an ability to harness disparate sources of consumer data to drive tangible business results for the pre-owned automobile dealership it was developed by," Xigem co-founder and CEO Brian Kalish said in a statement. "With this transaction, Xigem is acquiring what it expects to be a stream of accretively profitable revenue as well as the potential to drive further growth by integrating EchoDigital with Xigem's other proprietary technology; and marketing the platform to other players in the pre-owned automobile market, and other industry verticals.”
Xigem noted that EchoDigital currently supports the EAF Group, a vertically integrated automobile sales, leasing, servicing, finance and warranty provider.
Echo Auto Group, established in 2006, developed and began commercializing EchoDigital for its own use in 2018. Since then EchoDigital has acted as the sales engine for several of the EAF Group's divisions, proving itself to be a cost-reduction and sales-driving tool. EchoDigital has been responsible for approximately 60% of the EAF Group's overall sales.
Based on unaudited financial results for the calendar year ended December 31, 2022, as well as the terms of a management agreement according to the asset purchase agreement, Xigem said EchoDigital is projecting receiving gross royalties of approximately $8.2 million, resulting in net royalty revenues of approximately $300,000, on EAF Group sales for the calendar year ending December 31, 2023.
Under the terms of the agreement, Xigem said it will finance the deal using 8,924,495 of its common shares. Based on their closing price on February 24, 2023, the shares are valued at $892,450.
In addition to the shares issued to the vendor, Xigem said a finder's fee equal to equal to 892,450 shares, representing approximately 10% of the value of the transaction, will be payable to an arm's-length party.
Upon closing of the transaction, which is expected to occur on or about March 6, 2023, Xigem said EchoDigital will be operated as a wholly-owned subsidiary of the Company.
Established in Toronto, Canada, Xigem is positioned to become a leading technology provider for the emerging near trillion-dollar remote economy, with software capable of improving capacity, productivity, and overall remote operations for businesses, consumers, and other organizations.
Contact the author at stephen.gunnion@proactiveinvestors.com