Pluribus Technologies Corp. Acquires Social5

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Feb 01, 2022, 07:00 ET

Completes Second Acquisition in the eCommerce Vertical

TORONTO, Feb. 1, 2022 /PRNewswire/ - Pluribus Technologies Corp. (TSXV: PLRB) ("Pluribus" or the "Company"), a growing acquiror of small, profitable software companies, today announced that, pursuant to a share purchase agreement dated January 31, 2022 (the "Share Purchase Agreement"), it has acquired (the "Acquisition") all of the issued and outstanding shares in the capital stock of Veemo, Inc., which is the sole member of, and holder of the entire ownership interest in both Social5, LLC and Social5 Development Group, LLC (collectively, "Social5").

Founded in 2012, Social5 is profitable technology company that utilizes leading-edge software and content to enable small-to-medium-sized businesses ("SMB's") to effectively manage their social media footprint. With a unique combination of proprietary technology and journalism-trained talent, Social5 has grown to serve businesses in hundreds of industry verticals including healthcare, finance, education and real estate. Among its innovations and contributions to the Pluribus portfolio, Social5 has developed a scalable content-distribution platform that leverages artificial intelligence for publication. With an experienced leadership team and sophisticated tools for evaluating and executing online marketing campaigns, Social5 has become a partner of choice for SMB's looking to strengthen and expand their digital marketing efforts and increase their revenue.

"As we look to replicate our success rolling up companies in the eLearning vertical, Social5 is our second acquisition in the eCommerce vertical and the beginning of a consolidation strategy in that space," said Richard Adair, Chief Executive Officer of Pluribus Technologies. "The use of social media as a marketing channel has seen explosive growth in recent years and we were attracted by Social5's proprietary platform, diverse SMB customer base and high volume of recurring revenue. We anticipate there could be a number of cross-selling opportunities within our existing portfolio through the offer of an expanded range of products and services to multiple, complementary customer bases. Following our recent financing and go-public transaction, we remain focused on a small selection of key verticals, acquiring companies that both meet our return criteria and have an opportunity to deliver stable organic growth once we leverage the available synergies across our portfolio."

The team behind Social5 is a blend of accomplished executives in the eCommerce sector led by Rob Wellman who will remain involved in Social5 post-acquisition to ensure a smooth integration of Social5 into the Pluribus portfolio.

"Over the last decade, we have built something exciting, something disruptive," said Rob Wellman, Chief Executive Officer of Social5. "With our unique technologies, we have made it possible for small businesses to compete with larger brands at a price point that makes good financial sense. Our team is focused on helping entrepreneurs navigate the increasingly complex world of marketing through the social media channel with a 'one-stop shop' solution. Through this acquisition, we can accelerate growth by leveraging the entrepreneurial prowess of the Pluribus leadership team and the cross-selling opportunities that exist within the Pluribus portfolio."

Acquisition Rationale

Social5 has a strong history as a profitable business with an established operational track record;
As Pluribus continues to do in the eLearning vertical, this acquisition marks the beginning of a roll up of software companies in the fragmented eCommerce vertical;
There are more than 30 million SMB's in the U.S. alone¹;
North American digital ad spend is expected to grow by 37.5% in 2021²; and
Potential cross-selling opportunities with Pluribus' other eCommerce businesses to multiple customer bases – Social5 is targeting the same SMB customers as POWR Inc. and that provides both companies with a new channel for distribution.

¹ Source: https://cdn.advocacy.sba.gov/wp-content/uploads/2020/11/05122043/Small-Business-FAQ-2020.pdf.

² Source: https://www.emarketer.com/content/worldwide-digital-ad-spending-year-end-update

Terms of the Acquisition

Pursuant to the terms of the Share Purchase Agreement, the Company has agreed to pay the current shareholders of Social5 an aggregate of US$3,525,000 in cash less a holdback of US$345,000. In addition, the current Social5 shareholders will be entitled to an earn-out based on the achievement of future performance targets. The price paid for the Acquisition falls within Pluribus' historical target range for Adjusted EBITDA³ and the Acquisition is expected to be immediately accretive.

³ Adjusted EBITDA is a non-IFRS measure as described in the Non-IFRS Measures section of this news release.

About Social5

Social5 is a social media marketing company that uses proprietary technologies to provide affordable marketing solutions to an underserved SMB market. With an increasing number of consumers turning to social media channels such as Facebook, LinkedIn, Twitter and Instagram to research and purchase products, Social5 provides a suite of marketing solutions designed to help SMB's. These include graphical design, content creation, social media advertising and reputation management. Through its scalable content-delivery system and the recruitment of award-winning writers from Top-100 newspapers nationwide, Social5 has distinguished itself as a leading platform for helping SMB's retain existing customers and reach out to new ones. For more information, please visit: https://www.social5.com/.

About Pluribus Technologies Corp.

Pluribus is a technology company that acquires small, profitable business-to-business software companies at reasonable prices in a range of verticals and industries. Pluribus provides experienced sales and marketing resources, strategic partnerships and enabling technologies including automation, self-service and artificial intelligence/machine learning to create new revenue streams and enable companies to grow into significant organizations in their respective markets. For more information, please visit: https://www.pluribustechnologies.com/.

Non-IFRS Measures

The Company uses non-IFRS measures to assess its operating performance. Securities regulations require that companies caution readers that earnings and other measures adjusted to a basis other than IFRS do not have standardized meanings and are unlikely to be comparable to similar measures used by other companies. Accordingly, they should not be considered in isolation. The Company uses Adjusted EBITDA as a measure of operating performance. Therefore, Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Adjusted EBITDA is calculated based on results from operating activities adjusted for depreciation of property and equipment and right-of-use assets, and acquisition related restructuring costs. Management uses Adjusted EBITDA to evaluate operating performance as it excludes amortization of software and intangibles (which is an accounting allocation of the cost of software and intangible assets arising on acquisition), any impact of finance and tax related activities, asset depreciation, foreign exchange gains and losses, other income and restructuring costs primarily related to acquisitions

Forward-Looking Information

Certain information in this press release constitutes forward-looking statements under applicable securities laws. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking information in this press release includes, but is not limited to, statements with respect to the business plans of the Company, including the successful completion and pace of future acquisitions, the Company management's expectation on the growth, profitability and performance of its current and future acquisitions, Social5's continued growth and profitability and, Rob Wellman's engagement by Social5 following the closing of the Acquisition, the anticipated synergies between Social5 and the Company, the Company's ability to continue acquiring business-to-business software companies at reasonable prices and the Company's ability to grow its portfolio companies into significant organizations. Forward-looking statements are often identified by terms such as "may", "should", "anticipate", "expect", "potential", "believe", "intend" or negatives of these terms and similar expressions.

Forward-looking statements are based on certain assumptions, including the Company's ability to complete acquisitions on favorable terms; the Company's ability to manage a complex portfolio of companies effectively; the Company's ability to scale its management team to support a rapid pace of growth; the Company's ability to raise sufficient financing to continue the pace of its acquisition strategy; the Company's ability to maintain its rapid pace of growth. Other assumptions include industry trends, the availability of growth opportunities, and general business, economic, competitive, political, regulatory and social uncertainties will not prevent the Company from conducting its business. While the Company considers these assumptions to be reasonable based on information currently available, they are inherently subject to significant business, economic and competitive uncertainties and contingencies and they may prove to be incorrect. Forward-looking information speaks only to such assumptions as of the date of this release.

Forward-looking statements also necessarily involve known and unknown risks, including without limitation, risks associated with general economic conditions, including the COVID-19 pandemic, adverse industry events, marketing costs, loss of markets, future legislative and regulatory developments, the inability to access sufficient capital on favourable terms, the Company's limited operating history; ability to complete favorable acquisitions; the software industry in Canada and internationally, income tax and regulatory matters, the ability of the Company to execute its business strategies, including the ability manage a complex portfolio of companies effectively, competition, currency and interest rate fluctuations, and other risks.

Readers are cautioned that the foregoing is not exhaustive. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ from those anticipated. Forward-looking statements are not guarantees of future performance. The purpose of forward-looking information is to provide the reader with a description of management's expectations, and such forward-looking information may not be appropriate for any other purpose. Except as required by law, the Company disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, events or otherwise. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

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 press release.

SOURCE Pluribus Technologies Corp.