VisualVault Corporation

VisualVault Corporation

June 13, 2013 09:25 ET

VisualVault Corporation (CNSX:VVT) Announces $9,600,000 Private Placement of 32,000,000 Units at $0.30 per Unit and Provides Corporate Update

SCOTTSDALE, ARIZONA--(Marketwired - June 13, 2013) - The Board of Directors of VisualVault Corporation (the "Company") (CNSX:VVT) wishes to update shareholders on the Company's business development and financing strategies and with that is pleased to announce a non-brokered private placement of units (the "Units") at $0.30 per Unit for gross proceeds totalling $9,600,000. Each Unit consists of one common share and one share purchase warrant, with each warrant exercisable at $0.35 per share for a period of two years from the closing date. Upon closing of the private placement, the Company will consolidate its share capital on a 2:1 basis. The total number of post-consolidated Units offered will therefore be 16,000,000 Units, priced at $0.60 per Unit. Each share purchase warrant will be exercisable at a post-consolidated exercise price of $0.70 per share for a term of two years.

The Company was formed to build a large software as a service (SaaS) business process management (BPM) software enterprise through both organic and acquisitive growth.

The Company's organic market opportunities are large and for that reason an initial focus on the most attractive opportunities is key. Management and the Board have agreed that certain defined segments of the United States healthcare market, specifically hospital claims denials, represent recurring revenue opportunities with the potential to drive projected annual revenues in excess of $60mm within three years. Revenues accruing from within the industry verticals presently served by the VisualVault platform remain an integral part of the organic revenue model.

The Company's acquisition strategy has also been clearly defined. Acquisitions will come in three forms; 1) domain expertise software companies with good customers, 2) stranded BPM software companies, and 3) BPM companies with unique solutions. All of these acquisition targets have valuable recurring revenues that will incrementally grow as the VisualVault platform is offered to their established customer base. Selected acquisitions have been identified that complement the Company's focus on healthcare. The Company intends to acquire up to 15 companies, each of which are presently generating revenue in the range of $5,000,000 or more. Purchase prices will be less than 75% of one year's current revenue. Over a three-year planning period, and consistent with the Company's organic growth, management expects these acquisitions to drive projected gross revenues to over $75,000,000.

The business model is SaaS with a per-user-per-month pricing and as BPM solutions are integrated into the business processes of the users, customer churn is typically very low. After the initial 18 month period, internally generated cash should be sufficient to fund over half of new acquisitions.

As previously announced, John Shackleton joined as a Director and Chairman of the Board on April 17, 2013. John is former CEO of OpenText (led growth from $50MM revenue to $1.2B). OpenText is a leader in the same space as VisualVault. John holds a vision of strong growth through organic business development and segment roll-up based on the VisualVault platform. The guidance and direction of this industry recognized leader is invaluable to the Company as we begin to execute on the strategies to accomplish projected revenue targets.

The Company intends to complete the above-noted financing in two tranches and to prepare for a larger financing in the fall of 2013, primarily to support the acquisition strategy. Initial contact has been made with investment banks in both Canada and the United States.

The net proceeds of the current offering will be utilized for business development purposes, in particular a focus on selected sub-segments of the healthcare vertical, the purchase of the assets of Auersoft LLC and general working capital.

Van Potter, CEO of the Company, remarked that "Our Company's management and directors have worked diligently to achieve several key milestones including our focused organic and acquisitive growth model and a simpler financing strategy. We can now move forward as we close the financing to execute aggressively on our strategic plans."


Van Potter, President, CEO, Director

About VisualVault Corporation

VisualVault Corporation (Scottsdale, Arizona, Toronto Ontario) provides business process and secure document management cloud services used to automate critical business processes where security and integrity of unstructured data is needed and compliance requirements are high. The service is unique in its ability to meet the most compelling and underserved needs of a wide range of vertical markets including health care, securities regulation, manufacturing and government.

This press release contains "forward-looking information", which is disclosure regarding possible events, conditions or financial performance that is based on assumptions about future economic conditions and courses of action. In particular, the forward-looking information in this press release includes information regarding the following:

  • the terms of the financing and share consolidation;
  • the recurring revenue opportunities in the United States healthcare market;
  • the implementation of the Company's acquisition strategy and expected revenues realized therefrom; and
  • the business model cash flow.

Actual results may vary from the forward-looking information in this press release. Material risk factors that could cause actual results to differ materially from the forward-looking information include the following:

  • that the parties cannot complete the proposed private placement;
  • that the parties do not obtain shareholder approval of the share consolidation;
  • that the Company cannot realize the revenue opportunities in the United States healthcare market; and
  • that the Company cannot successfully implement its acquisition strategy on the terms proposed herein or realize revenue or cash flow from its business model on the terms proposed herein.

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