IoT and cloud solutions specialist Universal mCloud Corp (CVE:MCLD) has struck a royalty acquisition deal, which will double the group's revenues and allow it to provide enhanced services to customers, it said.
The firm has inked a binding agreement to purchase 100% of Flow Capital's (CVE: FW) royalty agreement with Agnity Global - the latter being a long standing technology partner.
The deal extends mCloud's potential to reach all parts of North America, Asia, and Europe, it said.
The deal means that mCloud's combined yearly revenues will total around C$12.5mln with break-even adjusted EBITDA (earnings before interest, tax, depreciation and amortization).
MCloud provides asset management solutions for smart buildings, wind, and power utility providers.
In its most recent fiscal year, Agnity had revenues of greater than US$6mln and royalty cash flows of around US$500,000.
mCloud will pay Flow Capital US$2mln in cash and 1.5mln mCloud shares at close, and another 3.5mln shares if share-based performance milestones are met.
"mCloud's AssetCare platform is now connected to over 15,000 assets around the world and Agnity's mobile capabilities are already being applied to our AI and Analytics offerings in the field, empowering field workers to achieve successful outcomes," Russel McMeekin, mCloud president and chief executive, told investors.
"This transaction will allow mCloud to offer enhanced IoT capabilities to our customers, such as blockchain-based mobile security, while simultaneously doubling our high-margin recurring revenue base and positioning mCloud for profitability in the near term."
Agnity has provided mobile apps that bolstered mCloud's AssetCare platform.
"This agreement further deepens this relationship, enabling mCloud to directly benefit from Agnity's highly talented R&D teams in Silicon Valley and India, thus accelerating the company's product development agenda," the group said.
"Over time, mCloud and Agnity will look to achieve further integration in technical, sales, and general operations."
Shares in Universal added 5.32% to C$0.50.