For those who's interestingPress Release - Carma Financial Services Corporation(TSX-V : CFS)
Carma Financial Services Corporation (TSX-V: CFS)
February 21, 2005 9:42:00 AM
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Contents
1. Introduction
2. An Overview of the Post Acquisition Corporation
3. Emerging Focus
4. A Summary of Synergex' Business
a) Component Model of Synergex' Existing Business Process Building
Blocks
b) The Technology Workgroup
c) 2005 Emerging Revenue Streams within Synergex
5. Existing Operations of Carma
6. A Consolidated Strategic View of the Post-Acquisition "Synergex
Corporation"
7. Acquisitions and Alliances
8. Related Party Transaction
9. Going-Forward Management of the Corporation
10. Sponsor
11. Further Information
TORONTO, Feb 01, 2005 --
1. Introduction
Carma Financial Services Corporation ("Carma"), a TSX Venture Exchange listed company trading under the symbol CFS, has mailed its Notice of Annual and Special Meeting of Shareholders (the "Meeting") and Management Information Circular (the "Circular") to shareholders. Carma's stock will resume trading shortly.
Carma's Meeting will be held at 5:00 PM on February 24, 2005 in order to consider routine annual matters, and to approve the acquisition of Synergex Group Inc. ("Synergex"), and related matters such as changing Carma's name to "Synergex Corporation".
The details of the matters to be dealt with at the Meeting are given in the Circular, which is also available at www.sedar.com.
2. An Overview of the Post Acquisition Corporation
Subject to the approval of disinterested shareholders of Carma, after the completion of the acquisition of Synergex the company will be made up of three integrated work groups. These workgroups will collectively provide a new approach to customer service. From initial customer request to solution execution we will offer comprehensive solutions to customers. These diverse yet functional workgroups include:
Commercial Gateway Workgroup (the logistics and distribution operation currently within Synergex)
Technology Workgroup (currently within Synergex, and which will include new RFID Complete(TM) and DataCoat(TM) Services)
Business Information Workgroup (Carma's existing lines of business)
The issued and outstanding shares of Carma as at January 17, 2005 total 58,220.452. The number of common shares issued and outstanding of Carma after the acquisition would be 111,553,785 common shares.
Common shares of Carma owned indirectly by David Aiello currently total 30,149,999. After the acquisition the common shares of Carma held directly and indirectly by David Aiello would total 82,913,332. David Aiello is President of both Carma and Synergex Group, and owns all of the issued and outstanding shares of Synergex Group.
3. Emerging Focus
Synergex uniquely offers customers a comprehensive and in-depth option for fundamental business process outsourcing.
The following are three examples of current Synergex products and services.
RFID Complete is a full suite of Radio Frequency Identification ("RFID") solutions from complete RFID Enablement to per click RFID facilitation, called DataCoat(TM).
With its extensive experience in designing and managing supply chains, Synergex' teams of experts yield the right technology based supply chain solution for business.
Synergex' teams of experts offers broader Risk Management solutions. From credit reporting, accounts receivable management, employee background checking, ethical hacking to intrusion detection and firewall optimization and configuration, Synergex pulls together risk management solutions from various workgroups.
4. A Summary of Synergex' Business
Synergex website may be viewed at www.synergexgroup.com.
Adding to Synergex' historical base in Commercial Gateway operations, the following provides a brief review of Synergex' recently developed Technology business.
In the Synergex value adding process, Synergex designs customized supply chain solutions for its customers based on its Business Process Building Blocks.
a) Component Model of Synergex' Existing Business Process Building Blocks
Commercial Gateway Workgroup:
Financial and Administrative Services
Logistics Services
Distribution Services
VMI and EDI Integration
Creative Art and Printing Services
Regulatory Compliance Consulting
Inventory Planning and Procurement
Inventory Analysis and Sales Forecasting
Credit Evaluation
Synergex' Commercial Gateway gross margins have increased consistently, as shown in the following table. Additional key financial parameters of Synergex from 2002 through 2004, are also provided below:
2004 (est) (unaudited(x))
Sales
$110,000,000
Gross margin
$11,000,000
Assets
$40,000,000
Working capital
$7,000,000
Cash from operations
$3,500,000
(x) based on company-prepared estimates
2003 (audited)
Sales
$97,166,000
Gross margin
$9,916,000
Assets
$37,200,000
Working capital
$5,100,000
Cash from operations
$3,100,000
2002 (audited)
Sales
$126,547,000
Gross margin
$8,066,000
Assets
$45,100,000
Working capital
$2,000,000
Cash from operations
$2,800,000 (xx)
(xx) 2002 normalized cash flow from operations before non-recurring expenditures
b) The Technology Workgroup was established in May 2004 in order to market Synergex' organization's IT expertise to customers, and to create new business opportunities by reaching forward from Synergex' traditional Commercial Gateway business. The Synergex Technology Suite currently includes:
Enterprise Consulting, including security, data management, server consolidation
IT Product Distribution, including hardware and software fulfillment
Staff Augmentation, being Rent-A-Tech and staff recruitment
Customized Software Solutions, including network audit, and work order request management
Warranty Services, including IBM, HP/Compaq, and Dell certified services
Client Site Services, including cabling, traditional break/fix, and on-site system deployment
Management is deepening the services offered in each Workgroup, and at the same time building new revenue models through developing unique synergies between the Synergex Technology Workgroup and the Business Process expertise in its supply chain management business.
c) 2005 Emerging Revenue Streams within Synergex
The Synergex RFID Solution
Synergex is offering to the marketplace a product offering called RFID Complete. RFID Complete is the turnkey solution to Radio Frequency Identification. RFID Complete consists of RFID Enablement and DataCoat(TM) RFID Compliance Facilitation.
Synergex and RFID
As RFID advances toward mainstream adoption, Synergex is positioned to be a leader in the Canadian marketplace by providing RFID consulting, feasibility analysis, integration of equipment and software, and support services. Synergex leverages existing capabilities from our Commercial Gateway and Technology Workgroups, showing clients how RFID solutions can significantly reduce costs, improve information management, and yield related efficiencies.
Whether clients are looking to meet compliance requirements with specific retailers or are looking for the long-term benefits of RFID solutions within their global supply chains, our Technology practice will provide skills, solutions, and on-going support to determine the true range of options our clients have in deploying RFID technology and achieving targeted compliance standards.
RFID Enablement - A brief synopsis
Phase One: Consulting
In the RFID consulting phase, Synergex will work with companies to understand their current business operations and recommend an approach for RFID deployment.
Phase Two: RFID Planning
Synergex will plan the necessary business requirements for the client organization in order to design and deploy a successful RFID strategy.
Synergex will focus efforts on designing key high-level RFID architecture, while integrating the solution within the existing supply chain network. As part of the planning phase, Synergex will prepare and recommend a business case, including keys to address compliance standards, and provide a specific project plan with scope, schedule and cost estimates.
Phase Three: RFID Feasibility
As part of the feasibility phase, Synergex will consider and evaluate all necessary technical issues that can arise from the integration of RFID in a supply chain. Synergex will identify and source the most cost effective RFID solution.
Phase Four: RFID Implementation
Synergex implements RFID across the entire scope of the client's operations, essentially RFID-enabling the business unit for EPCglobal compliance.
Phase Five: Post Implementation Support
Post implementation support is critical to the long-term success of the RFID system. Synergex provides a 24x7 help desk support, problem resolution management, maintenance and tuning of the RFID system and components.
DataCoat(TM) RFID Compliance Facilitation
Recently, retailers have outlined shipping configuration and physical and electronic compliance requirements related to the next phase of management of their supply chains. Many organizations may not be able to meet the standards set by retailers within mandated time frames, or they may be unwilling to invest in the equipment and data management infrastructure required to achieve compliance. Our DataCoat(TM) RFID Compliance Facilitation solution is under development within Synergex to serve this emerging market.
Supply Chain Management - New Industry Sectors
Synergex is actively designing services for the automotive and aerospace industries to further employ its expertise in kitting, outsourced assembly, and comprehensive supply chain management of high-value, time-sensitive components.
Business Risk Management
Synergex addresses an integrated view to corporate security, encompassing background checking of corporate employees, intrusion detection, maximizing the effectiveness of electronic firewalls, and ethical hacking.
Out-Tasking
Out-Tasking is a modified form of outsourcing in which Synergex accepts responsibility for performance of a particular function, technology or service delivery. It is appropriate in cases in which enterprises cannot comprehensively outsource.
Staff Augmentation
Synergex' staff augmentation business supplies a variety of human and technical resources on a short or long-term basis.
5. Existing Operations of Carma Carma's active operations include two Commercial Credit Bureaus: Mercantile Credit Bureau (focused on a broad number of industries), and, Lumbermen's Credit Bureau Limited (focused on the construction industry) and Accounts Receivable Management and Collections Agencies. The brands operated by the company are:
Canada Bonded Attorney and Legal Directory, Limited, and,
American Bonded Attorney Inc.
Carma's Business Information Workgroup products and services include credit investigation services, real time commercial credit reporting, online credit access to payment data through Credit Window, project reports, corporate searches, U.S. business reports, principal reports, insolvency searches, weekly and online lien information, registrations under the Personal Property Security Act (Ontario) (the "PPSA"), PPSA searches, corporate searches, and a credit managers' handbook.
The Business Information Workgroup facilitates clients' credit review process by providing the latest real time quality information, thereby significantly reducing credit application fraud often suffered by clients relying on credit information that is otherwise dated. Credit Window and E-Groups are the newest online service offerings. Credit Window provides access to real time payment data about a client's customers. E-Groups will automate credit groups and provide a new generation of instant credit reporting resources to clients.
Management and outsourcing services are led by Carma's leading debt recovery Workgroup, providing clients with a range of accounts receivable management services. Carma offers services for the recovery of current accounts receivable, early stage cure programs, and third party debt recovery for both commercial and consumer accounts.
6. A Consolidated Strategic View of the Post-Acquisition "Synergex Corporation"
A. Commercial Gateway
Commercial Gateway
Logistics Management
Creative Services
Supply Chain Management
Data-Coat -- RFID Compliance
B. Technology
Enterprise Consulting
Staff Augmentation
Product Delivery
Client-Site Services
Out-Tasking
Outsourcing
RFID Enablement
Web Hosting
C. Business Information
Commercial Credit Reporting
Accounts Receivable Management
Business Risk Management
Translation Services
7. Acquisitions and Alliances
Acquisition and alliance strategies will be important to the new Synergex Corporation and its shareholders as detailed planning and negotiations related to its acquisition and alliance strategies will be of significant management focus through 2005 and 2006.
The objective is two-fold: to build long term value for shareholders principally through the acquisition of human resources and other dynamic capabilities, and aligning all aspects of the organization's workgroups with the future strategy.
Management will continue to exercise discipline in analyzing the strategic value of prospective transactions and completing thorough due diligence investigation.
8. Related Party Transaction
The acquisition of Synergex by Carma constitutes a related party transaction within the meaning of the applicable laws consequently an Independent Committee of the Board of Carma retained a valuator (Kraft Yabrov Valuations Inc.) to prepare a Fairness Opinion and Valuation relating to the terms of the acquisition of Synergex. The Board of Carma has unanimously approved the acquisition of Synergex as being in the best interests of disinterested shareholders.
9. Going-Forward Management of the Corporation
Upon completion of the transaction, management of "Synergex Corporation" will be comprised as follows:
David Aiello President, Chief Executive Officer, and Chief Operating Officer Nick Blasutto Chief Financial Officer John Smith Senior Vice President Matthew Reiter Senior Vice President Jean-Paul Rehr Vice President 10. Sponsor
Wellington West Capital Inc. ("Wellington") has been retained to act as Carma's Sponsor to the TSX Venture Exchange in connection with Carma's application for Exchange approval for the acquisition and the graduation of Carma from Tier 2 to Tier 1 issuer status. The terms of the sponsorship required Wellington to conduct extensive due diligence which has been completed. An agreement to sponsor should not be construed as any assurance with respect to the merits of the acquisition of the likelihood of completion.
11. For further information please contact one of the following: John L. Smith or David Aiello 905-740-3158 905-565-1212
Completion of the acquisition is subject to a number of conditions, including but not limited to Exchange acceptance and disinterested shareholder approval. The acquisition cannot close until the required shareholder approval is obtained. There can be no assurance that the acquisitions will be completed as proposed or at all.
Investors are cautioned that except as disclosed in the Management Information Circular dated January 17, 2005, any information released or received with respect to the matters to be dealt with at the Annual and Special Meeting of Shareholders and Management Information Circular may not be accurate or complete and should not be relied upon.
The TSX Venture Exchange has in no way passed on upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
For further information:
John L. Smith, (905) 740-3158
or
David Aiello, (905) 565-1212
Visit Carma Financial Services Corporation Website: www.carmafinancial.com