SEB CORPORATE UPDATES
MISSISSAUGA, January 20, 2016 – Smart Employee Benefits Inc. (TSXV: SEB) (“SEB” or the “Company”) announces the following corporate updates:
Bristol Capital to Provide Investor Relations Services
SEB is pleased to announce that it has retained Bristol Capital Ltd. (“Bristol”) to provide investor relations services, with the objective of creating greater investor awareness. Bristol and SEB are unrelated and unaffiliated.
Bristol will facilitate introductions to key financial institutions, fund managers, money managers and analysts, in addition to arranging investor meetings, roadshow presentations and conference calls.
Under the terms of the agreement (the “Agreement”), with an effective date of January 18, 2016, Bristol will receive compensation of $6,000 per month. Subject to approval from the TSX Venture Exchange (“TSXV”), Bristol will also receive 200,000 options in accordance with the Company’s stock option plan. The options will be exercisable at $.40 per share, and will vest at the rate of 50,000 shares per quarter. The stock options will expire and terminate upon the earlier of: (i) 36 months from the date of issuance; and (ii) 30 days after Bristol ceases to provide services as set forth in the Agreement. Bristol and its clients may have or may acquire a direct interest in the securities of the Company.
The Agreement is for an initial one year term and shall be automatically renewed for subsequent one year terms unless terminated earlier by 30 days prior written notice by the Company or Bristol within the first four months of the Agreement, or 60 days prior to renewal.
BBS Securities to Provide Market Making Services
SEB is also pleased to announce that it has retained BBS Securities Inc. (“BBS”) to provide market-making services. BBS will trade securities of the Company on the TSXV, in accordance with applicable TSXV policies, with the objective of contributing to market liquidity of the Company’s shares.
Under the terms of the agreement with BBS, with an effective date of July 22, 2015, BBS will receive compensation of $1,500 per month. BBS will not receive shares or options as compensation; however, BBS and its clients may have or may acquire a direct interest in the securities of the Company. SEB and BBS are unrelated and unaffiliated entities. BBS is a member of the Investment Industry Regulatory Organization of Canada, a participating organization of TSX and a member of TSXV. The capital and securities required for any trade undertaken by BBS as principal will be provided by BBS.
The agreement with BBS is for an initial term of 180 days and shall be automatically renewed for subsequent 180 day periods unless terminated earlier by 30 days prior written notice by the Company or BBS.
Osprey Capital to be Issued 500,000 Warrants for Corporate Advisory Services
In addition, SEB announces that in connection with the closing of its $8,775,000 credit facilities with a major Canadian Schedule I Bank, as previously disclosed in a press release dated March 10, 2015, the Company will be issuing 500,000 warrants (the “Warrants”) to Osprey Capital Partners Inc. (“Osprey”) upon final approval from TSXV for such Warrant issuance. The Warrants are partial payment to Osprey for acting as an advisor to SEB on a credit facilities transaction and each Warrant will have a two year term and will entitle Osprey to acquire common shares of SEB at $0.50 per share. Osprey is a registered dealer and an arm’s length party to SEB.
Board of Directors Change
Keith Harris, a Director of SEB since it was first listed on the TSXV in 2012, has resigned as a Director effective January 19, 2016. Mr. Harris was a Director of the Capital Pool Company with which SEB completed a reverse takeover to become a public company. We thank Mr. Harris for his contribution as a Director.
Investor Relations – Eduardo Baer, Executive Vice President, Capital Markets, is no longer working with SEB. The Company has elected to have this activity provided by external resources.
Technology Division – The Company has created a National Technology Leadership Team headed by Mark Hustak of our Regina office. The leadership team is comprised of senior management personnel, including Mr. Hustak, with participation from both Toronto and Ottawa offices. This team will be responsible for the strategic direction of the Technology Division, which, in 2016, is expected to generate over $100.0M in sales, with an EBITDA in the 8% to 9% range. This division has over $300.0M of backlog and expected renewals. Brian Deeks has been appointed as Chief Operating Officer of the combined operations of Somos Consulting Group and the recently acquired Maplesoft Consulting Group. The Technology Division has a strong base of profitable business, with over 85% of 2016 forecasts in backlog. The expertise and infrastructure in this division is critical to expediting growth strategies in the Benefits Division.
Benefits Division – John Jackson, Executive Vice President, Benefits Division, has relinquished his role as EVP and may move to a transitional consulting role of up to 6 months, on terms to be negotiated. The Company is finalizing the engagement of an executive recruiting firm to source a new executive to lead the growth opportunities in this division. The Company is also actively reviewing acquisitions and joint venture opportunities, together with strategic partnerships, as drivers of the Benefits Division’s growth strategy. The growth focus in 2016 is the Benefits Division. Prior to 2016, much of the focus had been on the Technology Division. SEB’s competitive advantage is technology, and it was imperative that the Company have a strong, profitable Technology Division to enable SEB to capitalize on growth opportunities in its Benefits Division.
Financial Progress since Fiscal 2014 – SEB has grown since November, 2014, from reported revenue of
$20.1M and an EBITDA loss of $6.1M, to trailing proforma (including Maplesoft) revenue of $102.9M and a proforma adjusted EBITDA of $5.4M for fiscal 2015. With the closing of the Maplesoft transaction, announced on December 4th, 2015, backlog and expected renewals have grown to over $360.0M. With over 500% growth in revenue since 2014, the management structure of SEB is being re-aligned to address the Company’s market opportunities.
Smart Employee Benefits Inc.’s global infrastructure is comprised of two Divisions: Technology and Benefits. The Technology Division currently serves corporate and government clients across Canada and internationally. The Benefits Division delivers SaaS and BPO processing solutions to both corporate and government funded health benefit environments. The Technology Division is a critical competitive advantage in supporting the implementation and operation of SEB’s benefits processing solutions in client environments. The core expertise of SEB’s Technology Division is building and operating fully integrated data processing and business process solutions. Health Benefit environments is a high growth specialty area.SEB’s core benefits technology solutions automate health benefits processing. They tie the administration and processing of all benefit types into “one environment” and integrate seamlessly with all legacy client systems to allow real-time, self-serve access of data. These “Modular Solutions” operate as an integrated environment or stand alone. SEB’s technology solutions and expertise fall into six categories as follows:
1. Health Benefits Administration and Claims Processing Platform – Modular, fully integrated, end-to- end Administration/Adjudication/Payments/Billing/Reporting software platform provided on a SaaS or BPO model. SEB issues its own benefit cards.
2. Health & Wellness Integrated Platform – Modules include content library, Personal Health Assessment, education modules, over 80 applications for managing health initiatives, personalized report card and action initiative, integrated reward platform, integrated organization health assessment, prevention/intervention programs, integrated real time reporting, personal health record, etc. The focus is on education and prevention.
3. Disability Management Platform – Modules include: Benefits & Disability Portal, Absence Management Module, Audit Workflow Module, Case Management Module, Predictive Analytics Module. The Modules are implemented within a Best Practices environment and automate the work flow in managing disability cases.
4. Predictive Analytics and Fraud – Algorithms that analyze historical data and provide big data analytics that allow creation of fraud identification rules which are incorporated, real-time, into adjudication environments. Analytics also assist in pricing.
5. Enterprise Service Bus – Business Process Data Management Module for tying legacy data systems to new technology solutions and automating access to legacy data systems.
6. Technology Infrastructure and Expertise – Extensive data management expertise including data centres, PCI certified security, systems integration, business intelligence, software development, CRM, BizTalk, PeopleSoft, BPO, ITIL, Big Data Analytics, Professional Services, Hosting, Project Management, etc. This infrastructure and expertise make everything work as an integrated solution.
For further information about SEB, please visit www.seb-inc.com.
Disclaimer in Regards to Forward-looking Statements
Certain statements included herein constitute “forward-looking statements” within the meaning of applicable securities laws, including but not limited to statements regarding SEB’s areas of focus and service offerings. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management at this time, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Investors are cautioned not to put undue reliance on forward-looking statements. Except as required by law, SEB does not intend, and undertakes no obligation, to update any forward-looking statements to reflect, in particular, new information or future events.
MEDIA AND INVESTOR CONTACT:
Smart Employee Benefits Inc. John McKimm, President/CEO/CIO (416) 460-2817
Bristol Capital Glen Akselrod
(905) 326 1888 ext 10
Neither TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.