Uniserve Communications closes Megawire acquisition

Executive Summary

• Uniserve Communications Corp. has closed the acquisition of the business, assets, and undertaking of Megawire Inc., a full-service managed IT services provider, for a total consideration of $6.5 million.
• The transaction involves three distinct agreements: an asset purchase for Megawire (paid via shares), a share purchase for Brimax Financial Services Inc. (paid via cash), and a share purchase for Waterloo Wireless Inc. (paid via a convertible note).
• To fund the acquisition, Uniserve borrowed $2.5 million from an insider lender (369 Terminal Holdings Ltd.), secured by warrants, and issued common shares subject to hold periods.

Key Details

• Megawire Acquisition (Asset Purchase):

  • Total Consideration: $2 million paid via issuance of 3,431,961 Uniserve common shares at $0.5828 per share.
  • Hold Period: Shares subject to a four-month hold period expiring April 23, 2026.
  • Escrow & Adjustments: 857,990 shares held in escrow. A post-closing gross margin benchmark is calculated six months after closing; if the margin is less than the benchmark by more than 7%, the escrowed shares equal to the difference are cancelled.
  • Assets Acquired: Substantially all business assets, including IP, goodwill, ~$100,000 inventory, and real property lease in Waterloo, Ont. Excludes corporate entity, cash, working capital, indebtedness, and employee contracts.
  • Liabilities Assumed: Vehicle leases and cellular tower licenses.
  • Employee Terms: Uniserve agreed to offer employment to all Megawire employees on substantially similar terms, recognizing seniority for future severance.

• Brimax Financial Services Inc. Acquisition (Share Purchase):

  • Total Consideration: $2.4 million in cash.
  • Payment Structure: $2.15 million paid to shareholders (Brian and Gail Maxwell); $250,000 held in escrow for closing purchase price adjustments (net assets/liabilities).
  • Adjustments: If net assets are negative, purchase price reduces by that amount recovered from escrow. No material adjustments anticipated.

• Waterloo Wireless Inc. Acquisition (Share Purchase):

  • Total Consideration: $2.1 million paid via a non-transferable convertible note.
  • Note Terms:
    • Principal: $2.1 million.
    • Term: Three years, expiring Dec. 22, 2028.
    • Interest: 7% per annum, payable monthly.
    • Conversion: Noteholder may elect to convert up to 50% of outstanding value into Uniserve shares.
    • Prepayment: Uniserve may elect to pay up to one-third of the note value annually; noteholder may choose conversion instead of cash.
    • Anniversary Payments: 10% of outstanding principal due on first and second anniversaries (cash or shares at noteholder's election).
    • Conversion Prices: Year 1: $0.75/share; Year 2: $1.00/share; Year 3: $1.25/share.
    • Blocker: 10% ownership limit on conversion.
  • Security: Waterloo provided a guarantee and a first-priority security interest over all present and after-acquired property.
  • Adjustments: Purchase price adjusts for net asset/liability differences; no material adjustments anticipated.

• Financing & Related Party Transactions:

  • Loan: Uniserve borrowed $2.5 million from 369 Terminal Holdings Ltd. (insider holding >10% of shares).
  • Loan Terms: Repayable on demand, 8% interest per annum, monthly payments.
  • Warrants: Lender received 3.5 million non-transferable warrants exercisable at $0.57/share until Dec. 22, 2026.
  • Use of Proceeds: $2.4 million used for Brimax purchase price; $100,000 for working capital/transaction expenses.
  • MI 61-101 Exemption: Transaction exempt from valuation and minority approval as fair market value does not exceed 25% of market cap.

• Additional Agreements & Costs:

  • Consulting Agreement: Emerald Flow Consulting Inc. (Steven Maxwell) to provide management services for 12 months until Dec. 31, 2026, for $18,750/month ($225,000 total).
  • Non-Competes: Megawire and Steven Maxwell signed 24-month non-competition agreements across Canada.
  • Lease: Uniserve entered a 10-year lease with DKS Group Holdings Inc. (affiliate of Steven Maxwell) for ~9,450 sq ft in Waterloo, Ont., at ~$31,000/month (~$356,500/year).
  • Director Appointment: Steven Maxwell appointed as a director on Nov. 26, 2025.
  • Warrant Withdrawal: Uniserve withdrew its TSX-V application for 1 million warrants related to a Vancouver lease.

Notable Quotes

• "The acquisition of this MSP will further enhance the depth of services that Uniserve will deliver and strengthen our data centre portfolio by allowing us to provide service in Eastern Canada. This acquisition will further support the growth of Uniserve's recurring-revenue-based service offerings and consolidate our ability to provide these services in Ontario. As Canadian businesses continue their digital transformations, we are working to build on our ability to provide quality bandwidth and infrastructure to meet growing customer needs in these areas. We expect this acquisition to bring strong top-line sales and an expected EBITDA [earnings before interest, taxes, depreciation and amortization] to the organization, which will provide a solid platform for us to scale up operations in Ontario," said Kwin Grauer, Uniserve's acting interim chief executive officer.