Xigem Technologies (CSE:XIGM) told investors that EchoDigital, the SaaS-fueled AI automobile shopping and delivery platform it acquired in March, will soon resume its performance following a change in control at the original vendor of the business.
As part of the transaction, the company explained that EchoDigital was contracted to continue to support the EAF GROUP, a vertically integrated automobile sales, leasing, servicing, finance and warranty provider, under a royalty and service-based management agreement.
Based on unaudited interim financial information for the period March 8 to March 31, 2023, Xigem noted that the EchoDigital asset contributed gross sales of $439,684 and net sales of $13,191 for the company in its first fiscal quarter of 2023.
However, in May Xigem said it was made aware that one of the Vendor's subsidiaries licensed to sell automobiles in Ontario received a temporary suspension of its license by its regulator, the Ontario Motor Vehicle Industry Council (OMVIC).
As a result, it said the suspension was expected to impact the anticipated performance of the EchoDigital through its second fiscal quarter of 2023, and the balance of 2023.
Xigem said it was made aware by the Vendor on August 1 that all its shares have been sold to Carnance Inc, a dealer of new and pre-owned vehicles, currently registered with OMVIC.
Then, on August 17, it was made aware by Carnance that the OMVIC has approved the change in control of Carnanc.
As part of the Carnance transaction, Xigem said the royalty and service-based management agreement and loan agreement entered into with Vendor as part of the acquisition have been assumed, in their entirety, by Carnance. As a result, it said it expects the performance of its EchoDigital asset to resume towards the end of its fiscal or early in the fourth fiscal quarter of 2023.
Xigem said it still expects to place the EchoDigital asset into a new wholly-owned subsidiary of the company.
Contact the author at stephen.gunnion@proactiveinvestors.com