Xigem Technologies (CSE:XIGM, OTCQB:XIGMF) Corporation told investors it has entered into a letter of intent (LOI) on February 25, 2022, to purchase software platform All Source B2B from All Source Security Container Manufacturing Corp. (SCMC) for C$1.6 million in cash.
The Toronto-based technology company noted that All Source B2B was initially developed by SCMC as its proprietary logistics platform to optimize the distribution of its products to its small and medium-sized customers across North America. It also enables other third-party producers to list, sell and distribute their products in wholesale quantities.
"This transaction is highly complementary to our existing business,” Xigem co-founder and CEO Brian Kalish said in a statement. “The ongoing transformation of the economy has seen manufacturers and distributors increasingly selling through e-commerce platforms and shipping directly to their customers. All Source B2B has demonstrated that it is poised to be a leader in this part of the SaaS (software as a service) space.”
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Additionally, Xigem said All Source B2B provides integrated logistics capabilities, allowing customers to ship inventory directly from their warehouse while taking advantage of Less-than-Truckload (LTL) quantities. SCMC is one of North America's largest distributors of document destruction containers, including shred consoles, collection carts, bins and related accessories. All Source B2B has evolved into a wholesale SaaS-based storefront with robust logistics management capabilities, the company noted.
All Source B2B is fully integrated into a single cloud-based Zoho enterprise resource planning (ERP) system that connects the front end of any company's website to their inventory, operations and customer relationship management (CRM) functions, effectively automating the entire sales and marketing funnel, allowing it to function as a SaaS system for other markets.
Xigem revealed that the company generated annualized revenue of US$2.65 million in fiscal 2021, with an underlying earrings (EBITDA) margin of 12%. In fiscal 2020 revenue was US$2.62 million with a 22% margin.
"Having just completed a significant acquisition of Cylix Data, we are pleased to add another innovative, synergistic and revenue-generating asset to our expected multi-tiered revenue-producing ecosystem,” Kalish said.
Under the proposed transaction, SCMC will enter into an exclusive 10-year agreement with All Source B2B where it will continue to provide its technology services. The sale of the software business to Xigem is designed to facilitate All Source B2B's growth and further expansion into new sectors, while enabling Xigem to integrate its technology into its iAgent SaaS platform, giving it access to new markets and further enhancing iAgent's scope of appeal.
Xigem said the global market for logistics software is expected to grow by more than 8% annually, reaching US$17.75 billion by 2030. Citing market analysis company, Market Research Future, Xigem noted that growth drivers include the ability of logistics software to reduce costs and improve service while providing real-time visibility into delivery status and scheduling. Recent disruptions in global supply chains resulting from the aftermath of the pandemic have prompted some organizations to adopt logistics software.
The company said the transaction is expected to close within the next 60 days but may be extended to 120 days.
Xigem powers technology for the near trillion-dollar remote economy that businesses around the globe are embracing in a post-coronavirus pandemic economy. Its SaaS technology platform, iAgent, provides organizations, businesses and consumers with the tools necessary to support remote working and learning.
Xigem's software improves the capacity, productivity, and overall remote operations for businesses, consumers and other organizations.
Contact the author at stephen.gunnion@proactiveinvestors.com