News Releases - NowVertical Group

NowVertical Group Reports Fourth Quarter and Full Year 2023 Financial Results

May 7, 2024

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← NowVertical Revamps Smartlytics Agreement to Complete Product Group Integration

TORONTO, Ontario – May 7, 2024 /Globe Newswire/ – NowVertical Group Inc. (TSX-V: NOW) (OTCQB: NOWVF) (“NOW” or the “Company”), a leading data analytics and AI solutions company, today announced audited financial results for its fourth fiscal quarter ended December 31, 2023. All figures are in U.S. dollars unless otherwise stated.

“Our operating model is evolving to better align with our strategic vision, driven by the integration of our business units. By consolidating formerly distinct businesses into a cohesive global framework, we are enhancing our solutions and services, streamlining resources and costs, and leveraging modern data and AI technologies. This strategic consolidation empowers us to deliver enhanced value propositions to our key accounts, collaborating closely with them to achieve tangible business outcomes and expand sales,” stated Sandeep Mendiratta, Chief Executive Officer.

Select results for the three months ended December 31, 2023:

Revenue was $10.1 million in the three months ended December 31, 2023, an increase of 20% over $8.4 million in the three months ended December 31, 2022. See year end adjustments below.
Gross Profit was $6.3 million or 59% in the three months ended December 31, 2023, an increase of 75% over $3.6 million or 43% in the three months ended December 31, 2022.
Loss from operations was $0.5 million in the three months ended December 31, 2023, an increase of 77% over $2.2 million in the three months ended December 31, 2022.
Net loss was $3.6 million in the three months ended December 31, 2023, consistent with a loss of $3.6 million in the three months ended December 31, 2022.
Adjusted EBITDA¹was $0.8 million in the three months ended December 31, 2023, and increase of 358% over a $0.3 million loss in the three months ended December 31, 2022.

Select results for the year ended December 31, 2023:

Revenue was $51.7 million in the year ended December 31, 2023, an increase of 91% over $27.7 million in the year ended December 31, 2022. See year end adjustments below.
Gross Profit was $26.7 million in the year ended December 31, 2023, an increase of 130% over $11.6 million in the year ended December 31, 2022.
Loss from operations was $0.07 million in the year ended December 31, 2023, an increase of 99% over $7.9 million in the year ended December 31, 2022.
Net loss was $5.9 million in the year ended December 31, 2023, an increase of 38% over $9.5 million in the year ended December 31, 2022.
Adjusted EBITDA¹ was $5.4 million in the year ended December 31, 2023, an increase of 378% over a $1.9 million loss in the year ended December 31, 2022.

Q4 2023 year end adjustments:

In Q4 2023 management reviewed its license reseller arrangements and determined that the Company is an agent under the current contract arrangements resulting in an accounting change from gross to net revenue and coupled with a reversal of deferred revenue and deferred costs. This resulted in a reallocation of $5.9 million in revenue. Prior to the cost of revenue reallocation, revenue for the year ended December 31, 2023, would have been $57.7 million.
There was a significant devaluation of the Argentine peso in Q4 2023, resulting in an extraordinary non-cash accounting impact on the Company’s Argentine subsidiary’s 2023 fourth quarter financial results. If the December 31, 2023, exchange rate is applied to each quarter proforma, the Company’s revenue during the three months ended December 31, 2023, would have been $14.6 million and $62.1 million for the year ended December 31, 2023.

Q4 2023 Business Highlights:

Tier one banking relationships resulted in securing non-dilutive funding, which was transformational for the business, giving us a solid footprint in the UK and LATAM (Brazil) and allowing NOW to deliver projects with an attractive cost base.
On November 21, 2023, NOW announced new contract wins in its Consumer Goods vertical, expanding its client roster in the pharmaceutical industry. This includes collaborations with Takeda Pharmaceutical and Novo Nordisk in BI, Data Engineering, and data integration to enhance analytics capabilities and drive innovation. NOW emphasized its commitment to providing tailored solutions for clients, combining technology and industry expertise to transform data into a strategic asset for future AI implementations.
On December 5, 2023, the Company announced significant contract expansions and operations in the United Arab Emirates (UAE), establishing a regional strategic footprint. The expansion showcased successful collaborations in Consumer Goods, Professional Services, Financial Services, Industrials, and Government Verticals.
On December 12, 2023, NOW announced strategic expansions in Peru and Mexico, along with a new contract with McDonald’s LATAM, capitalizing on the Latin America big data analytics market’s projected growth, reaching over US$12 billion by 2028 and the artificial intelligence market’s anticipated annual growth rate of 18.44%, resulting in a market size of over US$19 billion by 2030. The Company’s expansion included collaborating with Google in Peru for predictive analytics projects with RIMAC Seguros y Reaseguros, strategic consulting in data governance with DMX in Mexico, and a contract with Arcos Dorados (McDonald’s LATAM) across Latin America.

2024 Business Highlights:

On January 8, 2024, the Company announced the strategic appointment of directors David Charron and Chris Ford to the board of directors of the Company, bringing expertise in capital markets, financial governance, and technology transformation.
On January 15, 2024, the Company announced a strategic reorganization, appointing Sandeep Mendiratta as CEO to fast-track global asset integration and drive the Company’s next growth phase.
On January 23, 2024, NOW announced successful contract acquisitions totalling approximately $1.5 million US with key government departments in Brazil through its A10 subsidiary, showcasing its commitment to delivering cutting-edge data and analytics solutions to enhance government functions.
Effective February 1, 2024, Christine Nelson assumed the role of Interim Chief Financial Officer, succeeding Alim Virani. The changes aligned with NOW’s commitment to a more mature and integrated operating model, enhancing leadership to pursue growth strategies and reinforce M&A execution.
On March 5, 2024, the Company announced a $1.5 million 3-year technology renewal sale with a long-standing major financial services customer in South Africa.
On April 23, 2024, the Company announced a strategic restructure of the Acrotrend Solutions Limited obligations which aligned the earn-out compensation payable tied to the overall success of the NOW business.

Business Outlook

The Company works with private and public sector clients of all sizes, including some of the world’s largest corporations. While 70%[1] of CEOs recognize AI deployment within their organization as a critical competitive advantage for the future, 68% also report being stymied by uncertainty around this space, which makes it challenging to act quickly, necessitating strong partnerships between large enterprises and global solution providers like NOW.

The Company’s core markets are growing, offering an estimated $8.6 billion potential in LATAM and $146.4 billion in NA, UK, and ME for data analytics alone. The projected compound annual growth rate is estimated at 35.5% globally between 2024 and 2030. Throughout the first quarter of 2024, the Company has undergone a significant operational realignment. We have consolidated our operations into two primary markets: Latin America (‘LATAM’), North America, UK, Europe, the Middle East and Asia (“NA & EMEA”). This strategic shift is about consolidation and establishing a dedicated platform for strategic account growth. This move is designed to optimize our product units for organic growth and profitability, demonstrating our commitment to reaching near-term profitability and expanding our offerings to key enterprise clientele.

NOW’s strategic direction for 2024 and beyond involves deepening its connections with key accounts in the NA & EMEA, and LATAM regions. Through the integration of its top-tier solutions and services from various business units, the Company aims to develop highly compelling offerings tailored to the needs of its strategic partners. With more than 90 strategic accounts spanning these regions, NOW is actively refining its approach to delivering value-added solutions and services to each. This entails a restructuring of its teams to foster a culture of account-centricity, prioritizing a deep understanding of clients’ challenges and objectives. By doing so, NOW can offer contextualized solutions and services that directly align with their business objectives.

Investor Webinar

NOW management will hold a quarterly broadcast to discuss Q4 2023 results at 9:30 am ET, Wednesday, May 8, 2024. Participants will include Sandeep Mendiratta, Chief Executive Officer; Christine Nelson, Interim Chief Financial Officer; and Andre Garber, Chief Development Officer. A question-and-answer session will follow.

Investor Conference Call Registration

Following the call, a recording of the webinar and supporting materials will be available on the investor’s section of the Company’s website at https://nowvertical.com/news-and-media.

About NowVertical Group Inc.

The Company is a data analytics and AI solutions company offering comprehensive solutions, software and services. As a global provider, we deliver cutting-edge data, technology, and artificial intelligence (AI) applications to private and public enterprises. Our solutions form the bedrock of modern enterprises, converting data investments into business solutions. NOW is growing organically and through strategic acquisitions. For further details about NOW, please visit www.nowvertical.com.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

For further information, please contact:

Andre Garber, Chief Development Officer:
IR@nowvertical.com

Glen Nelson, Investor Relations and Communications:
glen.nelson@nowvertical.com
t: (403) 763-9797

NON-IFRS MEASURES

The non-IFRS financial measures referred to in this news release are defined below. The management’s discussion and analysis for the three months and year ended December 31, 2023, which will be available on the Company’s SEDAR+ profile, also contains supporting calculations.

“EBITDA” adjusts net income (loss) before depreciation and amortization expenses, net interest costs, and provision for income taxes.

“Adjusted EBITDA” adjusts EBITDA for acquisition accounting revenue adjustments in “Adjusted Revenue” and items such as acquisition accounting adjustments, transaction expenses related to acquisitions, transactional gains or losses on assets, asset impairment charges, non-recurring expense items, non-cash stock compensation costs, foreign exchange gains and losses and the full-year impact of cost synergies related to the reduction of employees.

Cautionary Note Regarding Non-IFRS Measures

This news release refers to certain non-IFRS measures. These measures are not recognized under IFRS, do not have a standardized meaning prescribed by IFRS, and are, therefore, unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. The Company’s definitions of non-IFRS measures used in this news release may not be the same as the definitions for such measures used by other companies in their reporting. Non-IFRS measures have limitations as analytical tools and should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS. The Company uses non-IFRS financial measures, including “EBITDA” and “Adjusted EBITDA”. These non-IFRS measures provide investors with supplemental measures of our operating performance and eliminate items that have less bearing on our operational performance or operating conditions and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. The Company believes that securities analysts, investors and other interested parties frequently use non-IFRS financial measures in the evaluation of issuers. The Company’s management also uses non-IFRS financial measures to facilitate operating performance comparisons from period to period and to prepare annual budgets and forecasts.

Forward‐Looking Statements

This news release contains forward-looking information and forward-looking statements within the meaning of applicable Canadian securities laws (together “forward-looking statements”), including, without limitation regarding the benefits to be derived from the Company’s efforts, the results of the restructuring, the alignment of management and the business unit leaders, and timing of certain payments by the Company. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties, and contingencies. Investors are cautioned that forward-looking statements are not based on historical facts but instead reflect the Company’s expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Forward-looking statements generally can be identified by the use of forward-looking words such as “may”, “should”, “will”, “could”, “intend”, “estimate”, “plan”, “anticipate”, “expect”, “believe” or “continue”, or the negative thereof or similar variations. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause future results, performance, or achievements to be materially different from the estimated future results, performance or achievements expressed or implied by the forward-looking statements and the forward-looking statements are not guarantees of future performance. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed thereon, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the Company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements are the following: timing and receipt of regulatory approvals, adverse market conditions; risks inherent in the data analytics and artificial intelligence sectors in general; regulatory and legislative changes; that future results may vary from historical results; inability to obtain any requisite future financing on suitable terms; any inability to realize the expected benefits and synergies of acquisitions; that market competition may affect the business, results and financial condition of the Company and other risk factors identified in documents filed by the Company under its profile at www.sedarplus.com, including the Company’s managements’ discussion and analysis for the year ended December 31, 2022 dated May 6, 2024 and the prospectus supplement (including all documents incorporated by reference therein) dated February 22, 2023. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended and such changes could be material. All of the forward-looking statement contained in this press release are qualified by the foregoing cautionary statements, and there can be no guarantee that the results or developments that we anticipate will be realized or, even if substantially realized, that they will have the expected consequences or effects on our business, financial condition or results of operation. Unless otherwise noted or the context otherwise indicates, the forward-looking statements contained herein are provided as of the date hereof, and the Company does not intend, and does not assume any obligation, to update the forward-looking statements except as otherwise required by applicable law. Investors are cautioned that, trading in the securities of the Company should be considered highly speculative.

[1] Source: Ernst and Young Global, https://www.ey.com/en_gl/newsroom/2023/10/ceos-bet-big-on-generative-ai-to-gain-competitive-edge-despite-hurdles-to-adoption-and-m-and-a-challenges

NowVertical Revamps Smartlytics Agreement to Complete Product Group Integration

May 1, 2024

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← NowVertical Group Announces Delay in Annual Filings NowVertical Group Reports Fourth Quarter and Full Year 2023 Financial Results →

TORONTO, ONTARIO, May 1, 2024, NowVertical Group Inc. (TSXV: NOW) (OTCQB: NOWVF) (“NOW” or the “Company”), is pleased to announce that NOW and Mostafa Hashem, NOW’s EVP Product & Technology have agreed to amend the outstanding earnout obligations governing NOW’s acquisition of Smartlytics Consultancy Limited (“Smartlytics”). In connection with the amendment, the incentives that Mr. Hashem would have received as a former owner of Smartlytics have been adjusted with the objective of rewarding Mr. Hashem for building an integrated product group that encompasses all of NOW’s existing software assets whereas, the former earn-out provisions were based on performance of the Smartlytics business unit only. Mr. Hashem was promoted to the EVP Product & Technology role in early 2024.

“With the amendment of the purchase agreement, we’re shifting focus to commercializing NOW’s software suite and capitalizing on cross-selling opportunities across our NA, EMEA, and LATAM markets. Mr. Hashem’s commercial acumen and success in generating revenue streams by combining NOW’s software with services for tangible business outcomes are commendable. This marks a major step towards deeper integration within our business, with NVG software playing a crucial role in expanding our footprint within strategic accounts,” remarked Sandeep Mendiratta, NOW’s CEO.

Transaction Details

In executing its integration strategy, the Company has amended the share purchase agreement dated December 10, 2022, that governed the acquisition of Smartlytics, restructuring its ongoing obligations with Mr. Hashem as follows:

the future earn-out payments for years 2024 and 2025 will be settled through payment by the Company tied to the EBITDA of NOW’s product group payable to the Seller equally in cash or through the issuance of Class A subordinate voting shares in the capital of NOW, subject to TSX Venture Exchange approval prior to the time of each issuance; and
the deferral of the payment of the previously due holdback amount of $100,000.

Multilateral Instrument 61-101 – Protection of Minority Security Holders in Related Party Transactions

Mostafa Hashem is the EVP of Product & Technology of the Company (the “Related Party”). As a result, the entering into of the Deed and certain of the transactions contemplated thereby are considered to be “related party transaction,” subject to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). Notwithstanding the foregoing, the Company is exempt from the formal valuation requirement per sections 5.5(a) and 5.5(b) of MI 61-101, as neither the fair market value of the subject matter of the transactions, nor the fair market value of the consideration for the transactions, insofar as it involves interested parties, exceeds 25% percent of the Company’s market capitalization and Company is not listed on any of the exchanges specified in Section 5.5(b) of MI 61-101, and the Company confirms that it has not obtained any valuations relevant to the transactions in the 24 months preceding entering into the Deed. In addition, the Company is exempt from the requirement to obtain minority shareholder approval per section 5.7(1)(a) of MI 61-101, as neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the transaction, insofar as it involves interested parties, exceeds 25% percent of the Company’s market capitalization.

The terms of the Deed were settled through arm’s length negotiations between independent representatives of the Company and the Related Party, with each party separately represented by legal counsel. The entering into of the Deed and the transactions contemplated thereby was considered and unanimously approved by the Company’s board of directors, having regard to, among other things, the impact of the transactions on the Company’s balance sheet, liquidity and overall stability.

The Company did not file a material change report 21 days in advance of implementing the transactions as the negotiations were only recently concluded.

About NowVertical Group Inc.

NowVertical Group is a Vertical Intelligence (VI) software and services provider that delivers vertically-specific data, technology, and artificial intelligence (AI) applications to industry and governments through its global platform. NOW’s proprietary solutions sit at the foundation of the modern enterprise by transforming AI investments into VI, enabling its customers to minimize their risk, accelerate the time to value, and reduce costs. NOW is rapidly growing organically and through targeted acquisitions. For more information about NOW, visit www.nowvertical.com.

Neither the 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.

For further information, please contact:

Andre Garber, Chief Development Officer
IR@nowvertical.com

Glen Nelson, Investor Relations and Communications

e: glen.nelson@nowvertical.com

t: (403) 763-9797

Non-IFRS Measures

This news release refers to certain non-international financial reporting standards (“IFRS”) measures, including “EBITDA”. For the purposes of this news release, EBITDA is defined as the consolidated earnings before interest, taxes, depreciation and amortization. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. The Company’s definitions of non-IFRS measures used in this news release may not be the same as the definitions for such measures used by other companies in their reporting. Non-IFRS measures have limitations as analytical tools and should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS. These non-IFRS measures are used to provide investors with supplemental measures of our operating performance and to eliminate items that have less bearing on our operational performance or operating conditions and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. The Company believes that securities analysts, investors and other interested parties frequently use non-IFRS financial measures in the evaluation of issuers. The Company’s management also uses non-IFRS financial measures to facilitate operating performance comparisons from period to period and prepare annual budgets and forecasts.

Forward Looking Statements

This news release contains forward-looking information and forward-looking statements within the meaning of applicable Canadian securities laws (together “forward-looking statements”), including, without limitation regarding the settlement of obligations owing to the Seller, the form and amount of future payments to be made by the Company, the number of Class A subordinate voting shares issuable and the price at which such shares will be issuable, the payment of the Future Earn-Outs, the alignment of management and the business unit leaders, the approval of the TSXV and the ability and timing of certain payments by the Company. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties, and contingencies. Investors are cautioned that forward-looking statements are not based on historical facts but instead reflect the Company’s expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Forward-looking statements generally can be identified by the use of forward-looking words such as “may”, “should”, “will”, “could”, “intend”, “estimate”, “plan”, “anticipate”, “expect”, “believe” or “continue”, or the negative thereof or similar variations. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause future results, performance, or achievements to be materially different from the estimated future results, performance or achievements expressed or implied by the forward-looking statements and the forward-looking statements are not guarantees of future performance. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed thereon, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the Company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements are the following: direct and indirect material adverse effects from the COVID-19 pandemic; timing and receipt of regulatory approvals, adverse market conditions; risks inherent in the data analytics and artificial intelligence sectors in general; regulatory and legislative changes; that future results may vary from historical results; inability to obtain any requisite future financing on suitable terms; any inability to realize the expected benefits and synergies of acquisitions; that market competition may affect the business, results and financial condition of the Company and other risk factors identified in documents filed by the Company under its profile at www.sedarplus.ca, including the Company’s managements’ discussion and analysis for the year ended December 31, 2022 dated April 28, 2023 and the prospectus supplement (including all documents incorporated by reference therein) dated February 22, 2023. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended and such changes could be material. All of the forward-looking statement contained in this press release are qualified by the foregoing cautionary statements, and there can be no guarantee that the results or developments that we anticipate will be realized or, even if substantially realized, that they will have the expected consequences or effects on our business, financial condition or results of operation. Unless otherwise noted or the context otherwise indicates, the forward-looking statements contained herein are provided as of the date hereof, and the Company does not intend, and does not assume any obligation, to update the forward-looking statements except as otherwise required by applicable law. Investors are cautioned that trading in the securities of the Company should be considered highly speculative.

NowVertical Group Announces Delay in Annual Filings

Apr 29, 2024

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← NowVertical Group Announces Amendment to Acrotrend Obligations NowVertical Revamps Smartlytics Agreement to Complete Product Group Integration →

TORONTO, ONTARIO, April 29, 2024, NowVertical Group Inc. (TSXV: NOW) (OTCQB: NOWVF), (“NOW” or the “Company”), announces a delay in the filing of its audited annual financial statements, management’s discussion and analysis and related chief executive officer (CEO) and chief financial officer (CFO) certifications (collectively, the “Annual Filings“) for the financial year ended December 31, 2023, which were due today under Canadian securities law requirements.

The reason for the delay is due to the Company’s auditors, Ernst & Young LLP (“EY”), requiring additional time to complete their remaining audit and quality procedures. The Company notes that there have been no disagreements between the Company and the auditor regarding any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures. The Company’s management, together with its audit committee, has been working with and will continue to work with its auditors to provide all necessary information and complete the Annual Filings. EY has committed to concluding its procedures by no later than May 7, 2024.

As a result of the delay, the Company expects to be noted in default by applicable securities regulatory authorities in Canada and that the Ontario Securities Commission, as principal regulator, will issue a ‘failure-to-file’ cease trade order (“CTO“) in accordance with the principles and guidance set out in National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions of the Canadian Securities Administrators. The CTO is expected to prohibit any trading in securities of the Company for so long as it remains in effect, in all Canadian jurisdictions in which the Company is a reporting issuer as well as certain other Canadian jurisdictions based on the provisions of local securities legislation and is anticipated to remain in effect until after the Annual Filings have been filed. The CTO is also expected to result in a suspension of the Company’s shares from trading on the TSX Venture Exchange (“TSXV“), which will continue until the CTO is revoked and all TSXV requirements are satisfied.

The Company intends to provide updates if and when necessary in accordance with applicable securities laws.

Forward Looking Statements

This news release contains forward-looking information and forward-looking statements within the meaning of applicable Canadian securities laws (together “forward-looking statements”), including, without limitation regarding the expectations of management with respect to the anticipated CTO, the filing of the Annual Filings and the resumption of trading of the Company’s shares on the TSXV. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties, and contingencies. Investors are cautioned that forward-looking statements are not based on historical facts but instead reflect the Company’s expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Forward-looking statements generally can be identified by the use of forward-looking words such as “may”, “should”, “will”, “could”, “intend”, “estimate”, “plan”, “anticipate”, “expect”, “believe” or “continue”, or the negative thereof or similar variations. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause future results, performance, or achievements to be materially different from the estimated future results, performance or achievements expressed or implied by the forward-looking statements and the forward-looking statements are not guarantees of future performance. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed thereon, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the Company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements are the following: the Company’s ability to remedy its filing default and have any CTO and TSXV trading suspension revoked in a timely manner, or at all; timing and receipt of regulatory approvals, adverse market conditions; risks inherent in the data analytics and artificial intelligence sectors in general; regulatory and legislative changes; that future results may vary from historical results and other risk factors identified in documents filed by the Company under its profile at www.sedarplus.ca, including the Company’s managements’ discussion and analysis for the year ended December 31, 2022 dated April 28, 2023 and the prospectus supplement (including all documents incorporated by reference therein) dated February 22, 2023. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended and such changes could be material. All of the forward-looking statement contained in this press release are qualified by the foregoing cautionary statements, and there can be no guarantee that the results or developments that we anticipate will be realized or, even if substantially realized, that they will have the expected consequences or effects on our business, financial condition or results of operation. Unless otherwise noted or the context otherwise indicates, the forward-looking statements contained herein are provided as of the date hereof, and the Company does not intend, and does not assume any obligation, to update the forward-looking statements except as otherwise required by applicable law. Investors are cautioned that, trading in the securities of the Company should be considered highly speculative.

NowVertical Group Announces Amendment to Acrotrend Obligations

Apr 23, 2024

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← NowVertical Group Announces Resolution of Shareholder Dispute and Board Changes NowVertical Group Announces Delay in Annual Filings →

Agreement with Acrotrend Sellers Reduces and Defers Cash Payment Obligations by NowVertical Over the
Next Two Years

TORONTO, ONTARIO, April 23, 2024, NowVertical Group Inc. (TSXV: NOW) (OTCQB: NOWVF), (“NOW” or the “Company”), is pleased to announce that Acrotrend Solutions Limited (“Acrotrend”) has achieved Adjusted EBITDA of US$2.1 million for the year ended December 31, 2023. In addition, in an effort to further align the interests of management with shareholders, the Company has entered into an agreement to settle its ongoing obligations in connection with NOW’s prior acquisition of Acrotrend pursuant to a share purchase agreement dated December 9, 2022, as amended (the “SPA”).

“As we articulated to shareholders earlier this year, the Board has been engaged in a renegotiation of commitments with key business unit stakeholders. Today, we are pleased to announce an agreement has been reached with the sellers of Acrotrend that enables NowVertical to improve its balance sheet through the reduction of its overall cash payment obligations, repaying a substantial portion of the 2023 earn out consideration due to the Acrotrend sellers in shares, and deferring and capping certain future payments,” said Board Chair Elaine Kunda.

“One of the Board’s key objectives in 2024 is to create an environment where all of the Company’s stakeholders are working towards the same metrics that are relevant to the Company as a whole and not just the individual business units. Through this amendment, the Acrotrend sellers, including NowVertical’s CEO, Sandeep Mendiratta, will increase their direct ownership of NowVertical, in a clear demonstration of their alignment with NowVertical and our shareholders. Since his appointment in January, Sandeep has been laser focused on driving the integration of our business units, the identification of customer and market opportunities, and aggressive execution on growth opportunities,” continued Ms. Kunda.

“Our leadership team is dedicated to fostering a culture of ‘operator-first mindset’, in line with the vision set by the Board, prioritizing alignment across our entire business. By empowering our business unit leaders and strategically organizing our teams, we’re primed for dynamic growth. This approach is already yielding tangible benefits, and my choice to receive a substantial portion of earn-out proceeds in NowVertical shares reflects the growth potential I see in the integrated business and my confidence in our leadership team’s ability to architect our collective future,” said Sandeep Mendiratta, the Company’s CEO.

Pursuant to the terms of the SPA, the former shareholders of Acrotrend (together, the “Sellers”) are currently entitled to receive more than US$2,160,000, including an earn out in the amount of US$1,255,000 to which the Sellers are entitled for Acrotrend’s positive performance during the year ended December 31, 2023 (the “2023 Earn-Out Amount”) and excluding the potential earn outs to which the Sellers may be entitled for the years ended December 31, 2024 and December 31, 2025.

Specifically, pursuant to the terms of the SPA, the Sellers are entitled to receive:

a holdback in the amount of US$410,000 (the “Holdback Amount”), plus interest accrued thereon since January 12, 2024;
a top-up amount equal the difference between the price of the 750,000 Class A subordinate voting shares in the capital of the Company (the “Subordinate Voting Shares”) received by the Sellers in connection with the transaction and the market price of such shares on the date when the Sellers elect to exercise their top-up entitlement, with an estimated value of US$558,116.24 (the “Top-Up Consideration”);
the 2023 Earn-Out Amount of $1,255,000 for the year ended December 31, 2023; and
future earn-out payments for the financial years ending December 31, 2024 and 2025 (the “Future Earn-Outs”).

Following negotiations between the independent directors of the Company and the Sellers, the Company and the Sellers have agreed to certain adjustments to the obligations of the Company under the SPA to better align the interests the Seller with all stakeholders. In addition, the adjustments significantly reduce and defer cash payments required to be paid to the Sellers by the Company over the next two years, enhancing the Company’s liquidity.

To crystalize the adjustments, the Company and the Sellers have entered into a deed of amendment (the “Deed”) whereby, subject to certain conditions precedent, including the approval of the TSX Venture Exchange (the “TSXV”), the Company and the Sellers have agreed that:

the payment of the Holdback Amount by the Company will be deferred and paid in installments by December 1, 2024, with the Sellers waiving all accrued and unpaid interest thereon if the Company adheres to certain of its other obligations under the Deed;
the Company will issue up to 2,835,277 Subordinate Voting Shares in settlement of the Sellers’ potential entitlement to Top-Up Consideration at a price per share equal to the greater of: (i) CAD$0.27; and (ii) the Discounted Market Price (as such term is defined under the policies of the TSXV) on the date that is two (2) trading days following the filing of the Company’s unaudited interim financial statements for the interim period ended March 31, 2024 on SEDAR+ at www.sedarplus.com (such price being, the “Share Issue Price”);
the Company will pay US$100,000 of the 2023 Earn-Out Amount in cash to the Sellers and will issue up to 5,000,000 Subordinate Voting Shares in settlement of US$1,155,000 of the 2023 Earn-Out Amount at a price per share equal to the Share Issue Price, with any remaining portion of the 2023 Earn-Out Amount to be settled through the issuance of Subordinate Voting Shares at the Discounted Market Price on the date that is two (2) trading days following the filing of the unaudited interim financial statements for the interim period ended March 31, 2024 on SEDAR+ at sedarplus.com; and
the Future Earn-Outs will be settled through a cash payment by the Company equal to US$990,000, payable to the Sellers on or before January 1, 2026.

Until such amounts are paid through the issuance of Subordinate Voting Shares or through cash payments, as applicable, the Holdback Amount, the Top-Up Consideration, the 2023 Earn-Out Amount and the Future Earn-Outs shall bear interest at a rate of up to 8% above the base rate of the Bank of England, provided that, upon the issuance of the Subordinate Voting Shares in settlement of the Top-Up Consideration and the portion of the 2023 Earn-Out Amount to be settled in shares, interest on certain of such amounts shall be waived. In addition, certain of the Company’s subsidiaries have agreed to guarantee the Company’s obligations to the Sellers and in certain circumstances, including where the Company and certain of its subsidiaries fail to abide by the terms of the Deed, the Sellers may accelerate the payment of certain amounts and elect to receive two-thirds (2/3) of the Top-Up Consideration and the 2023 Earn-Out Amount in cash with the remainder to be settled through the issuance of Subordinate Voting Shares.

Multilateral Instrument 61-101 – Protection of Minority Security Holders in Related Party Transactions

The Sellers include Sandeep Mendiratta, the Chief Executive Officer and a Director of the Company (the “Related Party”), and the remaining vendors consist of arm’s length parties. As a result, the entering into of the Deed and certain of the transactions contemplated thereby are considered to be a “related party transaction”, subject to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Related Party Transaction (“MI 61-101”). Notwithstanding the foregoing, the Company is exempt from the formal valuation requirement per sections 5.5(a) and 5.5(b) of MI 61-101, as neither the fair market value of the subject matter of the transactions, nor the fair market value of the consideration for those transactions, insofar as it involves interested parties, exceeds 25% percent of the Company’s market capitalization and Company is not listed on any of the exchanges specified in 5.5(b) of MI 61-101, and the Company confirms that it has not obtained any valuations relevant to the transactions in the 24 months preceding entering into the Deed. In addition, the Company is exempt from the requirement to obtain minority shareholder approval per section 5.7(1)(a) of MI 61-101, as neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the transaction, insofar as it involves interested parties, exceeds 25% percent of the Company’s market capitalization.

The terms of the Deed were settled through arm’s length negotiations between the independent directors of the Company and the Related Party, with each separately represented by legal counsel. The entering into of the Deed and the transactions contemplated thereby was considered and unanimously recommended to the Company’s board of directors by the independent members of the Company’s board of directors, having regard to, among other things, the impact of the transactions on the Company’s balance sheet, liquidity and overall stability, and, upon such recommendation, the board of directors unanimously approved the transaction with Sandeep Mendiratta declaring his interest and recusing himself from any deliberations or voting on the transactions.

The Company did not file a material change report 21 days in advance of implementing the transactions as the negotiations were only recently concluded.

About NowVertical Group Inc.

Neither the 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.

For further information, please contact:

Andre Garber, Chief Development Officer
IR@nowvertical.com

Glen Nelson, Investor Relations and Communications
e: glen.nelson@nowvertical.com
t: (403) 763-9797

Non-IFRS Measures

This news release refers to certain non-international financial reporting standards (“IFRS”) measures, including “Adjusted EBITDA”. For the purposes of this news release, Adjusted EBITDA is defined as the consolidated earnings before interest, taxes, depreciation and amortization. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. The Company’s definitions of non-IFRS measures used in this news release may not be the same as the definitions for such measures used by other companies in their reporting. Non-IFRS measures have limitations as analytical tools and should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS. These non-IFRS measures are used to provide investors with supplemental measures of our operating performance and to eliminate items that have less bearing on our operational performance or operating conditions and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. The Company believes that securities analysts, investors and other interested parties frequently use non-IFRS financial measures in the evaluation of issuers. The Company’s management also uses non-IFRS financial measures to facilitate operating performance comparisons from period to period and prepare annual budgets and forecasts.

Reconciliation of 2023 Acrotrend Adjusted EBITDA

Revenue		$ 5,921,425
Income from operations		1,497,993

GAAP Adjustments
Expenses incurred in connection with acquisitions		201,195
Foreign exchange realized loss		10,828
Depreciation and amortization		18,154

Non-GAAP Adjustments
Compensation and benefits related to other CGUs		428,127
Income from operations annualized		13,060

Adjusted EBITDA		$ 2,156,296

Forward Looking Statements

This news release contains forward-looking information and forward-looking statements within the meaning of applicable Canadian securities laws (together “forward-looking statements”), including, without limitation regarding the settlement of obligations owing to the Sellers, the form and amount of future payments to be made by the Company, the number of Subordinate Voting Shares issuable and the price at which such shares will be issuable, the payment of the Future Earn-Outs, the alignment of management and the business unit leaders, the approval of the TSXV, the ability and timing of certain payments by the Company. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties, and contingencies. Investors are cautioned that forward-looking statements are not based on historical facts but instead reflect the Company’s expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Forward-looking statements generally can be identified by the use of forward-looking words such as “may”, “should”, “will”, “could”, “intend”, “estimate”, “plan”, “anticipate”, “expect”, “believe” or “continue”, or the negative thereof or similar variations. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause future results, performance, or achievements to be materially different from the estimated future results, performance or achievements expressed or implied by the forward-looking statements and the forward-looking statements are not guarantees of future performance. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed thereon, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the Company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements are the following: direct and indirect material adverse effects from the COVID-19 pandemic; timing and receipt of regulatory approvals, adverse market conditions; risks inherent in the data analytics and artificial intelligence sectors in general; regulatory and legislative changes; that future results may vary from historical results; inability to obtain any requisite future financing on suitable terms; any inability to realize the expected benefits and synergies of acquisitions; that market competition may affect the business, results and financial condition of the Company and other risk factors identified in documents filed by the Company under its profile at www.sedarplus.ca, including the Company’s managements’ discussion and analysis for the year ended December 31, 2022 dated April 28, 2023 and the prospectus supplement (including all documents incorporated by reference therein) dated February 22, 2023. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended and such changes could be material. All of the forward-looking statement contained in this press release are qualified by the foregoing cautionary statements, and there can be no guarantee that the results or developments that we anticipate will be realized or, even if substantially realized, that they will have the expected consequences or effects on our business, financial condition or results of operation. Unless otherwise noted or the context otherwise indicates, the forward-looking statements contained herein are provided as of the date hereof, and the Company does not intend, and does not assume any obligation, to update the forward-looking statements except as otherwise required by applicable law. Investors are cautioned that, trading in the securities of the Company should be considered highly speculative.

NowVertical Group Announces Resolution of Shareholder Dispute and Board Changes

Mar 21, 2024

Other News

← NowVertical Signs Multi-Year Contract with Leading South African Bank in a $1.5 Million 3-Year Deal NowVertical Group Announces Amendment to Acrotrend Obligations →

TORONTO, ONTARIO, March 21, 2024, NowVertical Group Inc. (TSXV: NOW) (OTCQB: NOWVF), (“NOW” or the “Company”), is pleased to announce that it has resolved all outstanding disputes with Daren Trousdell, a shareholder of the Company, has appointed the Company’s Chief Executive Officer, Sandeep Mendiratta, to the Company’s board of directors (the “Board”), and has commenced a process to appoint an additional independent director who is mutually acceptable to the Company and Mr. Trousdell. In order to accommodate the addition of Mr. Mendiratta, Darrell MacMullin has agreed to resign from the Board.

Mr. Mendiratta joined NowVertical in January 2023 as the Chief Executive Officer of Acrotrend Solutions in connection with NOW’s acquisition of Acrotrend. Mr. Mendiratta was appointed as the Chief Executive Officer of the Company in January 2024 and has a proven track record of scaling businesses, is a seasoned expert in the data analytics industry, and is a well-respected leader within the Company.

“We are excited to enhance and strengthen our existing Board with Mr. Mendiratta bringing the further perspectives of management and a strong understanding of the business in which NOW operates. We believe he will be a valuable addition as we continue to grow the business of the Company”, said Elaine Kunda, Chairman of NOW.

Daren Trousdell, former CEO of the Company and significant shareholder of the Company commented, “I have admired Mr. Mendiratta’s abilities and vision since meeting him in the context of NOW’s acquisition of Acrotrend. I believe that he will add an important perspective to the Board and will make a positive impact on the Board and as the CEO.”

As part of the resolution of all disputes between them, the Company and Mr. Trousdell have agreed to settle and dismiss without costs all ongoing legal proceedings and provide mutual releases in favour of one of one another. The parties have also agreed to certain voting and standstill provisions to preserve alignment between them moving forward, providing the Company with runway as it works to create value for shareholders.

Ms. Kunda stated, “We are happy for the Company to be able to move forward. This agreement allows for the Board to continue to align with one of our largest stakeholders and focus on generating value for all stakeholders.”

Mr. Trousdell states that “I am pleased that the Company and I have resolved our differences and are aligned on a path forward that is focused on creating value for shareholders. I look forward to collaborating productively with Mr. Mendiratta, Ms. Kunda, and the Board in the months ahead”.

The Board would like to thank Mr. MacMullin for his contributions and dedication to the Company.

About NowVertical Group Inc.

Neither the 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.

For further information, please contact:

Andre Garber, Chief Development Officer
IR@nowvertical.com

Glen Nelson, Investor Relations and Communications
e: glen.nelson@nowvertical.com
t: (403) 763-9797

Cautionary Statement

This news release contains forward-looking information and forward-looking information within the meaning of applicable Canadian securities laws (together “forward-looking statements”), including, without limitation the appointment of the New Director. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties, and contingencies. Forward-looking statements generally can be identified by the use of forward-looking words such as “may”, “should”, “will”, “could”, “intend”, “estimate”, “plan”, “anticipate”, “expect”, “believe” or “continue”, or the negative thereof or similar variations. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause future results, performance, or achievements to be materially different from the estimated future results, performance or achievements expressed or implied by the forward-looking statements and the forward-looking statements are not guarantees of future performance. Forward-looking statements are qualified in their entirety by inherent risks and uncertainties, including: adverse market conditions; risks inherent in the data analytics and artificial intelligence sectors in general; regulatory and legislative changes; that future results may vary from historical results; inability to obtain any requisite future financing on suitable terms; any inability to realize the expected benefits and synergies of acquisitions; that market competition may affect the business, results and financial condition of the Company and other risk factors identified in documents filed by the Company under its profile at www.sedarplus.ca, including the Company’s managements’ discussion and analysis for the year ended December 31, 2022 dated April 28, 2023 and the prospectus supplement (including all documents incorporated by reference therein) dated February 22, 2023. Further, these forward-looking statements are made as of the date of this news release and, except as expressly required by applicable law, the Company assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

NowVertical Signs Multi-Year Contract with Leading South African Bank in a $1.5 Million 3-Year Deal

Mar 5, 2024

Other News

← NowVertical Group Obtains Court Decision NowVertical Group Announces Resolution of Shareholder Dispute and Board Changes →

TORONTO, Ontario – March 5, 2024 /Globe Newswire/ – NowVertical Group Inc. (“NowVertical” or the “Company”) (TSX-V: NOW) (OTCQB: NOWVF), a leading data analytics and AI solutions company, is pleased to announce it has renewed its contract with one of the oldest of South Africa’s “big four” banks (the “Customer”) for its NOW Privacy software. With this third consecutive renewal, the Customer has agreed to a 3-year $1.5 million commitment paid in the first half of 2024. This demonstrates a transition from previous one-year contracts to a substantial long-term partnership.

Under this multi-year renewal, NOW will continue delivering its solutions, services and cutting-edge technology through its NOW Privacy software solution. Among other use cases, NOW Privacy ensures ongoing compliance with the Protection of Personal Information Act (“POPIA”) of South Africa, effectively manages and reduces surface attack exposure, and streamlines processes for data subject access requests. The NOW Privacy technology is responsible for overseeing the management of over 1 billion unstructured data records for this Customer.

This contract solidifies NOW’s standing as a trusted partner among leading financial institutions globally. In addition to its longstanding relationship with the renewed South African bank, NOW serves a rapidly expanding portfolio of financial services clients, including industry giants like Lloyds Bank, Santander, Western Union, Industrial and Commercial Bank of China, Grupo Petersen, Banco Macro, and Banco Sol.

Sandeep Mendiratta, CEO of NOW, conveyed his satisfaction, remarking, “We are immensely pleased that another large, global financial institution has once again placed its trust in NOW to provide essential data governance solutions. It’s invigorating to collaborate with our clients, empowering them to harness the potential of our data and AI solutions to drive tangible business outcomes by unlocking the inherent value within their data. Our suite of solutions and services remains instrumental in empowering our global financial clients not only to meet but exceed regulatory compliance standards, proactively track data access, mitigate risk, and foster meaningful customer engagements.”

About NowVertical Group Inc.:

NowVertical Group is a data analytics and AI solutions company offering comprehensive solutions, software and services. As a global provider, we deliver cutting-edge data, technology, and artificial intelligence (AI) applications to private and public enterprises. Our solutions form the bedrock of modern enterprises, converting data investments into business solutions. NOW is growing organically and through strategic acquisitions. For further details about NOW, please visit www.nowvertical.com.

For further information, please contact:

Andre Garber, Chief Development Officer
IR@nowvertical.com

Glen Nelson, Investor Relations and Communications
glen.nelson@nowvertical.com
t: (403) 763-9797