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Press release from CNW Group

BSM Technologies Announces Binding Letter of Intent to Acquire Telematics Company

Tuesday, March 19, 2013

BSM Technologies Announces Binding Letter of Intent to Acquire Telematics Company13:53 EDT Tuesday, March 19, 2013TORONTO, March 19, 2013 /CNW/ - BSM Technologies Inc. ("BSM" or the "Company") (TSXV: GPS), a leading provider of remote monitoring, fleet management, fleet diagnostics and automated vehicle security systems, today announced that it has entered into a binding letter of intent dated March 18, 2013 (the "LOI")  with a private, arms-length company in the telematics industry ("AcquireeCo"), in connection with the acquisition by BSM of AcquireeCo (the "Transaction") from AcquireeCo's shareholders.AcquireeCo is a private company whose principal business consists of fleet management, GPS tracking, mobile data communications, and telematics. AcquireeCo's services address areas such as vehicle location, real-time alerts, dispatch, vehicle diagnostics and maintenance reporting.BSM and AcquireeCo have agreed to proceed diligently and in good faith to negotiate and settle the terms of the Transaction, to enter into a definitive agreement and to complete the Transaction as soon as possible but, in any event, not later than April 28th, 2013.The Transaction will be subject to a number of terms and conditions including but not limited to the following:  i.     Approval by the Board of Directors of BSM;  ii.      Receipt of all requisite stock exchange and securities regulatory approvals and consents;  iii.      Completion of due diligence satisfactory to BSM with respect to AcquireeCo;  iv.     AcquireeCo obtaining all consents including change of control consents and approvals required to be obtained in order to complete the Transaction;  v.      The entering into of definitive agreements in respect of the Transaction on terms and conditions acceptable to BSM and AcquireeCo; and  vi.      No material adverse change having occurred in the business, condition or prospects of AcquireeCo (financial or otherwise), or in respect of its relationships with customers or vendors.Under the terms of the LOI, the Transaction will be structured as a purchase of 100% of the outstanding securities of AcquireeCo. Pursuant to the LOI, BSM will pay to the AcquireeCo shareholders $16,000,000 (the "Purchase Price"), which will be comprised of:  i.     $10,000,000 in cash;  ii.     $2,000,000 in non-cash consideration which will consist of 1,428,572 common shares in the capital of BSM;  iii.     An additional $4,000,000 subject to an earn-out (the "Earn-Out"), comprised of: $2,000,000 in cash; and an additional 1,428,572 common shares in the capital of BSM (valued at $2,000,000) which will be deposited into an escrow account and will vest and be delivered to the AcquireeCo Shareholders.The Earn-Out will be payable to the AcquireeCo Shareholders based on the following Earn-Out schedule:  i.     50% of the Earn-Out will be released and payable if AcquireeCo meets or exceeds $5,000,000 in recurring telematics revenue during the twelve month period commencing on the first day of the first month following the closing date; and  ii.     50% of the Earn-Out will be released and payable if AcquireeCo meets or exceeds $5,500,000 in recurring telematics revenue during the twelve month period immediately following the Initial Period.The LOI provides for a break fee in the amount of $400,000 to be paid in the event that definitive agreements are settled and entered into and all conditions of closing have been satisfied, and either BSM or the AcquireeCo shareholders fail to complete the Transaction.The Transaction is expected to be completed by the end of April, 2013.Financial Information of AcquireeCoThe following sets out the financial information for AcquireeCo for their last fiscal year, the 12 months ended December 31, 2012:Financial Highlights All values in thousands except per share dataTwelve months endedDecember 3120122011 Recurring  revenue$5,301$3,627 Hardware and other revenue     $2,801     $2,448 Total revenue$8,102      $6,075 Gross profit$5,864     $4,218 Gross margin %    72%69% Operating expenses$3,589$2,694 EBITDA$2,284$1,533 Additional details with respect to the Transaction will be provided in future press releases, which will also be available under BSM's profile on www.SEDAR.com. All information contained in this press release relating to AcquireeCo and its business and operations is based solely upon information provided to BSM by AcquireeCo and is subject to due diligence to be completed by BSM.About BSM Technologies (bsmwireless.com)BSM Technologies, through its subsidiary BSM Wireless Inc., is a leading provider of remote monitoring, fleet tracking, fleet maintenance, and business intelligent engine providing real time, web‐based tracking of mobile and fixed assets. BSM provides solutions for commercial, government, and law enforcement organizations who manage and operate diverse assets and large fleets, and who seek to enhance customer service, improve the safety of their drivers and vehicles, and lower business costs.Neither 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. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.For more information, please visit http://www.bsmwireless.comSOURCE: BSM Technologies Inc.For further information: Aly Rahemtulla President & CEO BSM Technologies Inc. (416) 675-1201 arahemtulla@bsmwireless.com Craig Armitage TMX Equicom (416) 815-0700 ext. 278 carmitage@tmxequicom.com Fil Marinkovic TMX Equicom (416) 815-0700 ext. 289 fmarinkovic@tmxequicom.com