Fobi AI (TSX-V:FOBI, OTCQB:FOBIF) Inc is acquiring online coupon and advertising platform Qples Inc in a US$3.2 million deal.
The deal gives the Vancouver-based artificial intelligence company control over a connected retail commerce solution that has relationships to some major consumer packaged goods brands, according to Fobi.
Qples’ technology will be integrated into Fobi’s connected retail commerce solutions and Fobi Data Exchange.
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The business is cash flow positive and expected to generate around US$1 million in 2021 revenue, and on track to hit $2 million in 2022.
In a statement, Fobi told investors that the acquisition is an “important step” in the firm’s strategy to connect CPG brands and retailers and increase its leadership in key retail verticals like grocery and convenience.
“With some significant revenue deals already announced this quarter and, more importantly, a major expansion in our sales pipeline now taking place, we have good reason to believe in the potential for significant developments in North America and around the world,” Fobi CEO Rob Anson said in a release.
“As such, our Qples acquisition is perfect in terms of both timing and fit with Fobi’s technology to close on upcoming major developments. Moreover, I expect Qples itself to contribute significant revenue to Fobi in 2021 and well beyond.”
Qples president Eddie Watson added: “We believe that the merging of two very proven technology companies will greatly accelerate further development and synergistic growth. Furthermore, the bridging of the markets of both Fobi and Qples will open up new doors and business opportunities for Fobi in the CPG and Retail areas.”
Deal terms
Under the terms of the asset purchase agreement, Fobi will pay out US$2,120 in cash to Qples and issue the remainder of the purchase price in shares.
Qples also has the opportunity to earn up to a US$1 million earn-out that will be calculated based on the revenue derived from the assets purchased from Qples over the period from January 1, 2022, to December 31, 2022. Pursuant to the earn-out, Qples can earn US$500,000 in shares if the asset-derived revenue meets or exceeds US$1.6 million during the earn-out period or can earn US$1 million in shares if it meets or exceeds US$3.2 million during the period.
Fobi will also loan a maximum of US$325,000 to Qples in order for it to repay an outstanding loan with the United States Small Business Administration. The loan will be repaid to Fobi, in whole or in part, pursuant to the terms of the asset purchase agreement.
The closing of the acquisition is subject to the approval of the stock exchange.
Contact Angela at angela@proactiveinvestors.com
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