Investor Strategy Call – July 14th


Speaker1: [00:00:08] It’s just getting set up with the call, I think today, yeah, today we should probably only have one or two people. Oh, I said, OK, I see your stuff is here. Yeah. So these calls, sometimes these calls are really small. So if you want to come up and discuss, feel free to just ping me, raise your hand and the thing, and then we’ll bring you up right away. Yeah, I think at this rate, it may just be us, so yeah, feel free to discuss, allow you to talk if you need.

Speaker2: [00:01:41] Hey, how’s it going? I just wanted to come to come on and say hello and also give you an update of where we are. Absolutely on our journey with this of acquisition that we have previously discussed with you.

Speaker1: [00:02:03] Yeah. Please.

Speaker2: [00:02:05] Yeah. So we are we are well in advance of closing out these two acquisitions. So we have what walk with Roger Camp and USCG? As for the foreign financing of it, we have a term sheet with them right now. We can’t go into the due diligence process with USCG. U.s. Capital Group, Capital Global, I should say. Yes. So for the acquisition of the IT company as well as the call center. So I’m sorry, go ahead.

Speaker1: [00:02:50] Oh no, I just said, God, it’s

Speaker2: [00:02:52] So far, everything is everything is going well. Just also putting together the purchase agreement as well. So clearly going into negotiations with the sellers and making sure that we can. We have agreed on on what needs to be agreed on, and we just the risk as much as possible and as well as work under the challenges that may show itself do in this process. So I think within the next six weeks, we should be able to close this thing out. So we’re looking forward to making sure we have. Looking forward to closing this out and definitely want to come back and give testimony of all of this support and the help that you have provided us so far toward this process.

Speaker1: [00:04:03] No worries. So then, yeah, because now it’s really the crucial parts because usually now emotions are really high. And the thing I hate to say it, but the thing hasn’t the money hasn’t been all the money is haven’t been wired yet, and the good deal is not done until the money is wired. And so now it’s really time to be as skeptical as we can be because sometimes the lawyers killed at the last minute, the seller can kill the deal last minutes. All sorts of things can happen even if the money is there. So, yeah, so now it’s the most dangerous time to be really vigilant here.

Speaker2: [00:04:37] Exactly. So that’s that’s exactly why we’re going to this. There’s a few emotions on the seller side that we have to manage as well and as well as we don’t want to be attached to the deal, although we want to get it done. We’re going to be emotionally attached to it where we cannot kill it because it becoming a if it doesn’t make sense.

Speaker1: [00:05:04] Got it. And so one question. The term sheet there, the seller has agreed to that term, those terms, right?

Speaker2: [00:05:15] Yes, the seller has agreed, so the term sheet is with USCG, basically four for one of the deal, they’re providing us 12 mil and I call it 12 mil and. Socrates, 20, 20 mil line of credit and a 12 mile term loan, so make the acquisition. So we have shared that with we already shared that with the with the seller, what she looks like, they’re on board with that with best in line with what we have discussed with them. So basically, is it is it 20 mil closing and seven meals seller’s note and the seller would like to retain 10 percent of the company to and continue to walk there. So I don’t expect I don’t expect to to for him to stay. So we do have contingency in place in case he said, OK, I have my money now I’m leaving. So we do have contingency for that. Actually, we actually preparing. We prepared for that. We would like him to stay, but we expect him to leave. So it’s a similar business to ours. So it’s not it’s not a big deal, but I do plan to buy him out as quickly as possible as well.

Speaker1: [00:06:56] Got it. Ok, got it. And so what do you have? And I, you know, I’m a big fan of keeping everything as stable as possible here. But I mean, you know, would you have a contingency, you know, for the financing and for the deal itself? We can, you know, we can have I mean, yeah, like I mean, I would I would personally benefit if this one goes through. But like, would would it make sense to have some some tertiary options as well, just like, let’s say, you know, let’s say, eight weeks pass and then, you know, it’s not something just chaotic happens that is not expected here, would you? Is that something you’d be open to?

Speaker2: [00:07:37] Absolutely.

Speaker1: [00:07:39] Got it.

Speaker2: [00:07:40] Absolutely. Although we expect them to give the fund, as you have stated before, the fund hasn’t been released, right? Know, and they’re going to do diligence. So we know we know anything can happen at this point, so we definitely would like to have a look inside the battle plan to make sure that we cover all our bases in case they pull out or whatever the case may be, we can move forward.

Speaker1: [00:08:13] No good. Yeah, no, I think I think this is. This sounds really promising and then, yeah, obviously if this one goes through like I probably just end up, I don’t know where you’re located, probably you end up doing an in-person interview if that’s OK with you. But because, yeah, I mean, this industry is just to build trust and to do those types of things. But one step at a time, let’s just see. Let’s just see what happens when one day at a time and then just go from there.

Speaker2: [00:08:37] Yeah, absolutely. And as we move forward, this is not going to be the only deal we are doing. So we do plan on doing it quite potentially. Another couple acquisitions this year as well. And we we are going to put our focus on AI research company and cybersecurity research company. We have identified a few one of them that we are excited to talk to as well. So, so this is not going to be the only the only one we do. So building a relationship with you and others that can help us response and get us to fund would be significant to us.

Speaker1: [00:09:22] I mean, perfect. Great. Yeah, I mean this this looks solid, you know? No emotions keeping stability contingency plans for these, for the seller and for the deal. I think this checks out. Personally, I think this this one, I think you’re entering into the right mindset.

Speaker2: [00:09:37] So, yeah, absolutely. But that’s the goal. That’s the goal is to continue to have a level head toward this process. We have a certain thing that has to be done since we operate in the federal space and they have a certain type of contract with the federal government that requires approval before we can buy some of the some of the contracts. Some of the assets and that’s that’s also a time issue because we have to work with the Small Business Administration, the US Small Business Administration, because of this certifications that they have. They have to get approval before they can sell out some of these contracts to us. So. So that could take between. So we want to basically, we’re looking at two closing right now. One is for the non non SBA Small Business Administration contracts, and the other is to cut the Small Business Administration contract because they need prior approval. So all we can also looking at doing just one and just wait for the Small Business Administration to approve the those type of contracts first and then we could do one closing. So these are the things that we’re discussing with them. The owner would like to do one closing, but that because of the approval that is required, as you know, the government doesn’t move quickly so that we put a delay into the process. So.

Speaker1: [00:11:16] Oh, God. Yeah, because because of the. So you’re saying because of the slowdown, because you know, you need to contract to change names. There needs to be like an approval process from the US government. So that’s why it’s slow that one down. Essentially, what exactly started?

Speaker2: [00:11:36] So this organization is they have a program called a program. Basically, it’s a sub one by the Small Business Administration, the U.S. government, Small Business Administration. And since they have contracts under that program, the SBA has to approve the next. The people that they can sell it to without that who basically can be barred from doing government contracts. So we have to make sure that we do everything right since this is a space that we mainly operate.

Speaker1: [00:12:14] Ok, got it. And so that deal, so forgive me the question, so then that that is for. So that’s because you mentioned that there’s one deal with the line of credit and then this one is this one for the same one? Or is this one for a different role?

Speaker2: [00:12:28] Yeah, this one is the one that we have the line of credit for 20 million line of credit and a closed term loan. So we definitely need to also give us a line of credit to that at our discretion. So we will definitely use it to potentially use it for the closing. And then they use a 12 million term loan and try to multiply that by four times.

Speaker1: [00:12:56] Okay, that’s where Rachel comes in. I think is the multiple.

Speaker2: [00:13:00] Exactly.

Speaker1: [00:13:02] Interesting.

Speaker2: [00:13:04] Exactly. Yeah. So we’ve been working very closely with Rachel. Can they introduce us to USCG? And they set up a meeting for us to meet with the managing partner. And as well as some of the other partners at USCG in New York. So we did take a trip up about a month ago to meet with them and discuss our visions and what we’re looking to do and so on. So of all the different deals that we’re looking to transact with them and do as a company. So we had a very good conversation. We met them for about what was a group of people that were for at least two hours, two and a half hours talking to them and getting to know them and then getting to know us. So. Very good meeting and got to know each other. I basically now we have almost like direct access to them or we can email them to our team, the managing partner and so on and so forth, and talk to them. So which is which is good. But we know the deals is based on the evaluation, so we look forward to to having a long term relationship with them and others like you and others, so so that we can make sure we make these things happen as good as possible.

Speaker1: [00:14:24] Perfect. Yeah. No, it’s good that you got direct access because, yeah, because sometimes it’s, you know, sometimes people kind of try to stand in between people and so on. And so, yeah, because, you know, reasons I call them were taken care of. So I mean, the direct access, you know, that’s the that’s the cleanest way so that you’re not playing games with all these intermediaries that just block people behind an email thread. So that’s when they met them in person. It always builds that level of rapport.

Speaker2: [00:14:52] Yeah, exactly. That’s something that we’ve throughout this process we find to be valuable because I was able to basically get them on a phone call and speak with them directly instead of going like you said to intermediaries and and have them walk in conversation and have work and communication. So I was able to get them on a couple of calls, actually, where I was able to set certain things straight and as well as basically access them to lower some of the terms. Some of the rates and stuff like that they were providing. So I think that direct communication was significantly helpful. To make sure that it was no longer all the parties that they were talking to, they were talking directly to me. They have to basically we’re having to a conversation. So it was basically easier to get what I was looking for from them than going to an intermediary where there was no emotional involvement. Not true. Assessment on definitions of what is what is needed, if that makes sense for lack of a better word.

Speaker1: [00:16:04] Yeah, yeah. Well, I mean, there’s that and then, you know, obviously there’s sometimes there’s some markup in some of these because some people sometimes that can happen. And no, it’s great that I went to the source. And so yeah, and I think I think even no matter how many, how much and of course, you really notice, but no matter how much rapport is built in this industry, they’re just watching out for any, any last minute surprises from anyone, any firm. And then, you know, if it fits, if people are doing what they say, they would do all the way to the end, then yeah, then then this is somebody, you know, these are people you would do repeat business with.

Speaker2: [00:16:41] Exactly, exactly. Yeah, we’re definitely looking to create other relationships as well, because, like you said, it’s it’s good to to to have these relationships. So we’re looking to build in and because not every deal could be the right one to go to them for. Yeah. So we want to have it basically be able to just have a diversified financier of partners that we can go to through the different type of deals.

Speaker1: [00:17:12] Yeah, exactly. Yeah. And then we don’t get much. Wilkinson is pretty good as well. And then there’s several others. So but others have their strengths and strengths and weaknesses. So but generally, you know, a lot of these people, they they don’t touch. We work with people that usually it’s all on the closing of escrow. And so there are no surprise fees unless or if there’s a fee will tell you. But yeah, we usually do the people that perform really well

Speaker2: [00:17:36] On the back end. Yes, Robert. Absolutely. That’s great.

Speaker1: [00:17:44] Awesome. Yeah, so, yeah, so just give me a breath and then hopefully, hopefully this thing goes through and then we can celebrate

Speaker2: [00:17:51] Like a plan to me.

Speaker1: [00:17:52] Yes, sir.

Speaker2: [00:17:54] Sir, thank you. I appreciate it. Just want to let you know where we are. I appreciate all the help.

Speaker1: [00:17:59] No worries. Thank you. And stay in touch.

Speaker2: [00:18:01] Thank thanks.


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