SEB Closes a $2,000,000 Share Offering MISSISSAU

MISSISSAUGA, Ontario, Oct. 11, 2017 (GLOBE NEWSWIRE) -- Smart Employee Benefits Inc. (“SEB” or the “Company”) (TSXV:SEB) announces that it has closed a $2,000,000 common share equity offering (the “Offering”).

Aggregate proceeds of $2,000,000 were raised through the issuance of 12,500,000 common shares of the Company (each a “Common Share”) at a price of $0.16 per Common Share.

Finders that introduced subscribers to the Offering were issued Common Shares equal to 7% of the number of Common Shares issued to such subscribers, as well as finder warrants equal to 7% of the number of Common Shares issued to such subscribers. Finders were issued 411,250 Common Shares and finder warrants. Each finder warrant is exercisable into one Common Share of the Company at $0.20 per Common Share for a period of 18 months from closing.

All securities issued in connection with the Offering will be subject to a four-month hold period.  The hold periods will expire as follows: for the first tranche, expiry on February 4, 2018; for the second tranche, expiry on February 7, 2018; and for the third tranche, expiry on February 11, 2018. 

Further to the Company’s press release on October 2, 2017, NeST Group, through a controlled Investment Company, has completed an equity investment of $960,000 for 6,000,000 Common Shares as part of the Offering.

States John McKimm, President/CEO/CIO of SEB, “SEB has made substantial progress in the past 12 months and is well positioned for growth going forward:

• Sales­ – Are anticipated to exceed $110M for fiscal 2017, up approximately 15% from fiscal 2016.
• Equity Financing – Approximately $9.2M has been raised in the past year, over 80% subscribed for by existing shareholders, insiders and strategic partners.
• Debt Financing – Short term debt was consolidated and termed out in April 2017 with a $22.5M financing from a major Canadian bank, resulting in interest savings of over $1.5M per annum.
• Backlog, Evergreen and Option Year Contracts – Are in excess of $500.0M with approximately $440M in Technology-Non Benefits (“TNB”) and over $60.0M in Technology-Benefits Processing (“TBP”).
• Annuity Revenue – Over 90% of SEB revenues are from annuity client relationships.
• Benefits Business Unit – Over 300,000 plan members are managed on one or more of SEB’s five core health benefit processing solutions. The Aon transaction, which closed in April 2017, added over 250,000 plan members to SEB’s benefits processing, added technology and an infrastructure of approximately 160 people in Montreal, Toronto and India. Since closing, SEB has added five new national clients and multiple “Channel Partner” relationships with consulting and sales organizations and insurers across Canada, including Aon.
• Cost Savings – Cash expenses and cost structure have been reduced by over $5.5M (including interest charges) with the majority of these savings being fully realized in fiscal 2018.
• Positive EBITDA – Fiscal 2016 was the first year of positive EBITDA, after adjustments for one-time costs. Significant growth of EBITDA is forecasted for fiscal 2017 and beyond, resulting from cost savings and organic growth initiatives. Both TNB and TBP business units are now expected to be cash flow positive. TNB is a stable business with a healthy growth profile and TBP is expected to be cash flow positive for the first time in the 4^th Quarter, Fiscal 2017. Previous years’ EBITDA have been negative due to SEB’s heavy investment in its benefits processing solutions and infrastructure. TBP is the focus of future growth with profit margins typical of a SaaS business model. Gross margins in TBP are expected to be in excess of 70%. Profitability scales quickly once the fixed cost structure is covered.
• NeST Joint Venture – SEB has signed a Joint Venture (“JV”) with NeST to develop the USA marketplace as a back-office service provider to TPAs (Third Party Administrators) and PEOs (Professional Employer Organizations). Pursuant to this JV, SEB will receive a license fee of US$2.25M, paid over time from the JV and NeST will provide the working capital for growth. SEB will service the JV, largely from Canada and India. The JV will be focused on sales and marketing. SEB has invested tens of millions of dollars in software and infrastructure for Benefits Processing and this JV will expedite the returns on this investment.

"Going forward, SEB has a strong base from which to execute a growth strategy in both Canada and the U.S. The equity and debt financing has improved the strength of the balance sheet. The TBP “Channel Partner” strategy is driving strong organic growth. The TNB has a stable history of profitability and growth. The JV with NeST funds the growth in the USA. SEB is forecasting no major capital expenditure programs and its infrastructure is very scalable. Additionally, SEB anticipates being largely free of term debt by 2019 with a healthy growing cash flow profile.”    About SEB Smart Employee Benefits Inc.’s global infrastructure is comprised of two operating business units: Technology Non-Benefits (“TNB”) and Benefits Processing (“BP”). The TNB currently serves corporate and government clients across Canada and internationally. The BP focuses on offering SaaS and BPO solutions in the Benefits Processing Sector to corporate and government clients, globally. The BP business operates as a client of the TNB. The TNB is a critical competitive advantage in supporting the implementation and management of SEB’s benefits processing solutions into client environments. BP is a high-growth specialty practice area where SEB solutions can be game changing for the client.

The core expertise of both business units is data processing. Emphasis is on automating business processes utilizing SEB proprietary software solutions combined with solutions of third parties through joint ventures and partnerships. SEB’s business model in the BP is “Channel Partnerships” where SEB processing solutions enable business process efficiencies which both improve cost structures and enable new revenue models for Channel Partners and clients. All SEB solutions are cloud enabled and can be delivered in a SaaS environment.

Neither TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange Inc.) accepts responsibility for the adequacy or accuracy of this release.

This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities described herein in the United States.  The securities described in this news release have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available. Forward Looking Information The statements made in this release that are not historical facts contain forward-looking information that involves risks and uncertainties. All statements, including statements regarding the Company’s areas of focus, other than statements of historical facts, which address the Company’s expectations, should be considered as forward-looking statements and therefore subject to various risks and uncertainties. The words “may”, “will”, “could”, “should”, “would”, “suspect”, “outlook”, “believe”, “plan”, “anticipate”, “estimate”, “expect”, “intend”, “forecast”, “objective”, “hope” and “continue” (or the negative thereof), and words and expressions of similar import, are intended to identify forward-looking statements.

Such forward-looking statements are based on knowledge of the environment in which the Company currently operates, but because of the factors listed herein, as well as other factors beyond the Company's control, actual results may differ materially from the expectations expressed in the forward-looking statements. Investors are cautioned not to put undue reliance on forward-looking statements. The Company undertakes no obligation, and does not intend, to update, revise or otherwise publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of any unanticipated events, other than as required by applicable law.

MEDIA AND INVESTOR CONTACT: John McKimm President/CEO/CIO Office (888) 939-8885 x 354 Cell (416) 460-2817 john.mckimm@seb-inc.com