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Highlights
- Uniserve acquires Cyclone Systems, enhancing its IT service offerings across Canada.
- Acquisition expected to add $2.5M in revenue and $800K in EBITDA annually.
- Deal includes a convertible note structure with potential for share issuance.
Uniserve Communications Corporation (TSXV:USS), a prominent provider of IT solutions and services across Canada, is pleased to announce the successful closure of its acquisition of Cyclone Systems Inc. ("Cyclone"). This acquisition marks a significant milestone in Uniserve’s growth strategy, expanding its market presence and strengthening its portfolio of IT services.
Cyclone Systems is a full-service Managed IT Services Provider with a strong and diverse client base spanning multiple provinces. The acquisition is strategically aligned with Uniserve’s current service offerings, and the integration of Cyclone’s operations is expected to provide substantial financial benefits. The company anticipates that this transaction will contribute approximately $2,500,000 in top-line revenues and $800,000 in earnings before amortization, interest, and taxes (EBITDA) annually.
The transaction was finalized under an Asset Purchase Agreement (APA) between Uniserve and Cyclone, which was signed on January 24, 2025. The total purchase price for the business and assets of Cyclone was $2,350,000, with $1,350,000 paid in cash at the time of closing. The remaining $1,000,000 of the purchase price is being settled through the issuance of a convertible note (the “Note”), which has a three-year term and carries an annual interest rate of 6%, payable monthly. The Note is secured against the assets acquired from Cyclone.
The terms of the convertible note allow Uniserve to make annual prepayments on the Note, with the option to convert up to 50% of the prepayment amount into common shares of Uniserve. Additionally, the Note has provisions for anniversary payments, where 10% of the principal balance will be payable in cash or converted into shares, depending on the preference of Cyclone. The shares issued under the Note will be convertible at different prices depending on the year:
- Year 1: Convertible at $0.35 per Share
- Year 2: Convertible at $0.45 per Share
- Year 3: Convertible at $0.55 per Share
Uniserve also has the option to accelerate the conversion of the Note should the 10-day volume-weighted average price of Uniserve’s shares on the TSX Venture Exchange (the "Exchange") reach or exceed 150% of the applicable conversion price. This feature provides flexibility for Uniserve in managing the financial terms of the transaction while providing an opportunity for Cyclone to convert part of the outstanding principal into Uniserve shares.
This acquisition is expected to significantly enhance Uniserve’s competitive position within the Canadian IT services sector, particularly in the managed services space. It will also expand Uniserve’s geographic footprint and client base, positioning the company for continued growth in the rapidly evolving technology landscape.
By acquiring Cyclone Systems, Uniserve is further establishing itself as a key player in the IT services industry, providing businesses and residential customers across Canada with a comprehensive range of solutions. The integration of Cyclone's expertise and client relationships complements Uniserve's long-term vision for growth and operational excellence.
