The health benefits division of SEB operates as a licensed TPA and broker. The opportunity for SEB is to increase the capture of revenue by providing fully integrated services and solutions, currently being outsourced by most TPAs and Insurers to third parties, and turn cost centres to profit centres.
SEB's growth strategy is acquisitions driven. On the employee group benefit side, acquisitions target TPAs (Third Party Administrators), as well as broker and consultant organizations that provide solutions and services to employers. The objective is to secure the client relationships and transition many of the front and back-office business processes to the SEB technology environment over time; in effect, turning cost centres into profit centres. On the government side, SEB is targeting technology companies (primarily IT) that have established vendor relationships, security clearances and project references that are required to bid on government contracts. All government contracts are competitive RFP (Request for Proposal) processes, which require the requisite credentials to be eligible to bid. SEB's acquisition strategy with government is to establish the essential credentials required to bid competitively.
The initial growth plan for 2013 is acquisition-based, with the objective of reaching consolidated profitability quickly and establishing a solid base of business and clients from which to launch organic growth initiatives. In the past 75 days, SEB has closed two acquisitions and announced a third. Historically, the consolidated annual revenues for these companies exceeded $12.0 million. These transactions bring both a solid profitable base of business and clients, and they expand technology operations and infrastructure in both Toronto and Ottawa. Both are major centres of growth targeted by SEB."
Following the Company's year end of November 30, 2012, the following have occurred:
-- December 27, 2012---SEB closed a private placement consisting of $554,000 in principal amount of convertible notes-- February 7, 2013---SEB announced that it had closed the acquisition of Logitek Technology Ltd.-- February 7, 2013---Latiq Qureshi, President and CEO of Logitek, joined the Board of Directors.-- February 27, 2013---SEB closed an equity placement of $1,106,000 at $0.35 per unit.-- March 5, 2013---SEB announced that it had closed the acquisition of the SOMOS Group of Companies.-- March 19, 2013---SEB announced that SEB's Board of Directors approved a Memorandum of Agreement to acquire a 50% interest in the Inforica Group.-- April 1, 2013---Christine Hrudka joined the Board of Directors.
Approval of Options
On April 23, 2013, the Board of Directors of SEB approved the issuance of 1,219,000 options allocated over 57 key employees within SEB and subsidiaries SOMOS Group and Logitek Technology Ltd. and SEB's new Director, Christine Hrudka. SEB's objective is for every key employee of the company to benefit from the growth in the value of the equities of the Company.
Financial Results for Quarter Ending February 28, 2013
For the 3 month period ending February 28, 2013, SEB recorded a loss of $879,709, which included non-cash costs of $99,988, made up of a Stock-based compensation cost of $36,650, accretion of non-cash interest of $15,634 related to the Convertible Financing, and amortization of $47,704. Of the other costs the largest was Salaries and other compensation costs of $672,128 (the largest portion of which was related to software development and maintenance); the next was Professional Fees of $146,120, much of which was related to the costs of closing of the financings and acquisitions. Revenue for the quarter was $343,141 compared to $54,342 in the comparable quarter last year.
The quarterly comparative in the financial statements is the period January 1, 2012 to March 31, 2012. Following completion of the RTO in July, 2012, the Company elected to use November 30 as its year-end for financial reporting purposes. The comparative is that of Smart Employee Solutions Inc., the target company in the RTO, which was using September 30 as its year end.
The consolidated financial statements and related MD&A for the period ended February 28, 2013, can be found on SEDAR at www.sedar.com under the profile of Smart Employee Benefits Inc.
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Smart Employee Benefits Inc.
Chief Executive Officer
Smart Employee Benefits Inc.