Universal mCloud to acquire Tandem, Hawthorn backed NGRAIN for $2.95M

Universal mCloud Corp. (TSX-V: MCLD) has agreed to acquire 100% of NGRAIN (Canada) Corporation for up to $2.95 million in a cash-and-stock deal. The acquisition is expected to close in Q1, 2018.

Universal mCloud will issue 5,250,000 shares with a deemed price of $0.40 per share for $2.1 million, including 500,000 shares for nGrain employees. An additional $100,000 worth of shares to be provided as employee performance awards. Universal mCloud will pay $300,000 in cash and $307,500 in the form of a Vendor Note to be paid within 90 days of closing. The deal also includes the assumption of $142,500 in long-term, unsecured debt.

Founded in 2000, NGRAIN has raised over $40 million from Tandem Expansion Fund, Hawthorn Equity Partners, Canadian and US private investors.

NGRAIN reported 2017 revenue at $1.2 million with gross margin of 78% and EBITDA of $330,000.

“This transaction solidifies our position in IoT analytics by adding another critical component of our overall strategic vision,” said Russel McMeekin, mCloud CEO. “We will leverage nGrain’s AI and 3D Augmented Reality technology to greatly enhance our AssetCare™ platform starting immediately with our AssetCare™ Wind solution.”

The precision standards that nGrain technology utilizes meets rigorous requirements, including deployment in such applications as F-22 and F-35 fighter jet inspections. This standard of precision will greatly enhance mCloud’s AssetCare™ offering, initially as a wind turbine solution for blade inspection, and will drastically reduce the cost of inspection while providing a highly accurate virtual representation to be used for future comparisons and correlating to continuous IoT sensor data.

According to Russel McMeekin, “The nGrain technology opens up a very compelling customer value proposition to offset costly inspection methods with the ability to correlate field observations with a 24/7 connected IoT data stream. Furthermore, the nGrain technology exceeds mainstream industrial requirements providing us a “best in breed” offering for the critical assets that we service. We are particularly happy to have the nGrain team join us, whom we see as helping drive our innovation agenda forward.”

nGrain enhances mCloud’s innovation culture and it is expected that the application of its AI/3D technology will expand beyond wind turbine inspection, to supplement additional asset classes, including building energy management and distributed electrical transformers. AssetCare™ Mobile, which supports field service technicians, will also gain with enhanced and secure Augmented Reality capabilities.

Barry Po, Senior Director, Product and Business Development says, “The entire nGrain team is excited to be joining mCloud. We see a natural cultural fit, but more importantly we see a path to bringing the nGrain technology to a broader audience through mCloud’s distribution and growth plans.”

Marc Weiner of Tandem Expansion Fund, a major shareholder in nGrain says, “As investors in nGrain, we have come to know both the technology and the people. We see the combination of this capability with mCloud’s team and vision as game changing, yielding market winning solutions and a strong return on our investment going forward.”

photo credit: nGrain