Smart Employee Benefits Inc.
TSX VENTURE : SEB

Smart Employee Benefits Inc.

September 18, 2012 10:20 ET

SEB Reaches Agreement to Acquire QLogitek

TORONTO, ONTARIO--(Marketwire - Sept. 18, 2012) - Smart Employee Benefits Inc. ("SEB") (TSX VENTURE:SEB), is a technology company providing software, solutions and services specializing in "managing group benefit solutions and healthcare claims processing environments" for corporate, government and non-profit clients. SEB has reached an agreement to acquire Logitek Technology Ltd. ("QLogitek").

PURCHASE TERMS:

QLogitek shareholders, as part of the purchase price conditions, will receive 6,809,240 SEB shares ("Shares") and 1,000,000 Share Purchase Warrants ("Warrants"). The shares will be escrowed over a period of 30 months released in various amounts at 6 month intervals. The Warrants have a term of 42 months and an escalating exercise price every 12 months of $0.45, $0.55 and $0.65 during the first three years of the term. The Warrants are tied to performance parameters over 36 months equating to cumulative revenue and EBITDA targets of $15.0 million and $3.0 million, respectively. The purchase price also includes a five year Convertible Note with an annualized interest rate of 3% and an escalating conversion price of $0.45, $0.55, $0.65, $0.70 and $0.75 from years one through five. SEB will also assume net debt of $72,283 and transfer to the QLogitek shareholders approximately $724, 141 of non-core QLogitek assets. The net purchase price to SEB is approximately $2,766,913.

ABOUT QLOGITEK:

QLogitek is a leading B2B-EDI supply chain integration solutions provider. B2B complexities surrounding planning, buying, making, paying, moving, and selling are conveniently managed through the company's suite of 10 products and services. This suite connects enterprises with their trading partners to enable an array of supply chain processes such as EDI exchange for supplier order fulfillment, inbound management for distribution centre optimization, repair-order tracking, scan-based trading, product lifecycle management and claims management. The company offers an innovative cloud computing service delivery model as well as a traditional on-premise model.

20,000 trading partner organizations including manufacturers, shippers, and distributors are mobilized by QLogitek across 170 countries for leading North American retail and consumer packaged goods (CPG) enterprises. These enterprises include LCBO, Hudson's Bay, Best Buy, LG Electronics and Rogers Communications, to mention a few. QLogitek's 24x7 operations allow approximately 80,000 business users globally to conduct over 3.7 billion transactions annually.

Based in Toronto (Canada), the company has been a Microsoft Gold Certified Partner since its inception in 1999. It was the first Canadian partner to be designated a Microsoft Supply Chain Management (SCM) "Go-To" Partner and, in 2001, was the sole recipient of Microsoft's .NET award for being the first company to deliver Microsoft's vision of 'technology-as-a-service' to a business community. Since then it has gone on to receive national and international awards and accolades. In 2011, QLogitek was 1 of 3 global finalists in the Application Integration category in the Microsoft Worldwide Partner Awards. In this same year, it won Microsoft Canada's IMPACT Award for being Canada's top application integration solutions provider. Most recently, in 2012, QLogitek was recognized by the Retail Council of Canada (RCC) as having delivered Canada's top technology solution. QLogitek's customer LCBO deployed its cloud-based Inbound Management System (IMS) for scheduling to warehouses and its Supplier Order Management System (SOMS) for purchase order automation to win this prestigious award.

After the transaction, QLogitek will be operated as an SEB division while maintaining its current brand and software/service/solutions offerings. QLogitek's supply chain solutions and systems integration expertise will significantly enhance SEB's health claims processing solutions capability to its clients. For more information, please visit www.qlogitek.com.

ABOUT SEB:

SEB is a technology company providing software, solutions and services specializing in managing "group benefit solutions and healthcare claims processing environments" for corporate and government clients. This is a $56.0 billion industry, of which over $33.0 billion is employee group benefit plans and over $23.0 billion of other healthcare benefit claims (eg: workers compensation claims, travel benefits, various federal and provincial government programs, dental associations, drug associations, etc.) In the employee group benefits industry, SEB operates a licensed Third Party Administrator ("TPA") and Insurance Broker utilizing its software platform to provide "totally hosted PCI compliant supply chain solutions" for managing the complete group benefits business processes between Insurers, clients, brokers, consultants, technology service providers and healthcare service providers. In healthcare claims processing, SEB also operates as a systems integrator utilizing its technology platform together with other technologies to provide customized solutions for highly specialized environments (eg: travel claims, etc). The technology and expertise deployed in this area also allows SEB to provide other related supply chain, systems integration and human resource solutions and services to the same clients. For more information, please visit www.seb-inc.ca.

EXECUTIVE COMMENTS:

John McKimm, President/CEO/CIO of SEB comments, "QLogitek is an established company providing world-class supply chain software, solutions and services to a number of Canada's leading companies who sell products and services to consumer and corporate consumers globally. SEB views 'health claims processing' as a supply chain environment. The QLogitek supply chain software solutions and PCI level one compliant hosting environment, combined with SEB's leading rules based, fully integrated adjudication software platform will give SEB the capability to provide health claim processing clients with highly customized, fully integrated - Administration, Adjudication, Claims Paying, Reporting - technology environments which are very unique in the health claims processing industry. SEB will now be in a position to offer efficient and highly cost effective functionality, features, and comprehensive services to this industry that are not readily available in the Canadian marketplace today."

Latiq Qureshi commented, "Mr. McKimm and I have been business associates for many years. We are very excited about the SEB vision and see numerous applications for QLogitek technology solutions in healthcare. QLogitek is a well established solution provider offering supply chain expertise and software. The 'health claims processing' industry is a massive industry. QLogitek expertise and software solutions, combined with the leading SEB technology solutions (in adjudication and administration) and expertise is a powerful combination in an industry where critical and core functionality still operates on 25 year old mainframe environments. Additionally, SEB management will bring opportunities and business relationships to enlarge QLogitek's core supply chain software and systems integration business. The fit between QLogitek and SEB creates opportunities for both companies to further QLogitek supply chain solutions into new marketplaces, particularly in healthcare. QLogitek and SEB have been co-located for a number of months. We are collaboratively engaged in joint technology development and a number of joint client initiatives. There are many additional synergies that both companies will enjoy as we move forward together in providing software, solutions and services to our clients."

Forward-Looking Statements

This press release is intended for information purposes only. Statements made in this press release may contain "forward looking" information about the company's future business prospects. These statements - while expressed in good faith and believed to have a reasonable basis - are subject to risk and uncertainties that could cause actual results to differ materially from those set forth or implied by such forward looking statements. Investors should consult a professional advisor before making any investment decision.

SOURCE Smart Employee Benefits Inc.

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