TORONTO, June 1, 2016 /CNW/ - Pivot Technology Solutions, Inc. ("Pivot" or the "Company") (TSX-V: PTG), today announced that its distribution, administrative services and license agreements (the "ARC Agreements") with Austin Ribbon & Computer Supplies, Inc. ("Austin Ribbon") will terminate on August 31, 2016.
In 2011, a subsidiary of Pivot, ARC Acquisition (US) Inc. ("AcquisitionCo"), had entered into an agreement with Austin Ribbon in connection with the acquisition of certain assets of Austin Ribbon. Further to the agreements entered into between both companies, AcquisitionCo has been selling products and services for resale by Austin Ribbon since that date, and has been providing certain administrative services to Austin Ribbon. Austin Ribbon is certified as a historically underutilized business ("HUB") in the United States.
Austin Ribbon advised AcquisitionCo that it proposes to terminate its relationship with AcquisitionCo effective August 31, 2016. Once terminated, Pivot expects that the Company's sales reported in respect of Austin Ribbon will decrease significantly over time.
In anticipation of this outcome, Pivot is refocusing its strategy in the markets Austin Ribbon is active in, including a shift to direct sales, engagement with other resellers with HUB status, and leveraging of its growing brand recognition in the market.
"While short-term the termination of the agreements by Austin Ribbon will impact our top line, we are very well positioned to leverage the geographic footprint, capabilities, and networks of the wider Pivot organization, and penetrate the markets Austin Ribbon is active in," stated Kevin Shank, CEO of Pivot.
As disclosed in Pivot's MD&A for the period ended March 31, 2016 and prior periods, Pivot is deemed to have the primary exposure to the significant risks and rewards associated with sales by Austin Ribbon to its third-party customers, and therefore the results of operations of Austin Ribbon are consolidated in Pivot's consolidated results.
Total gross sales reported by Pivot in respect of Austin Ribbon were approximately $24.1 million for the three month period ended March 31, 2016, and $120.2 million for the year ended December 31, 2015. Austin Ribbon's sales efforts were concentrated in the state of Texas, serving both public and private organizations.
In connection with the termination of its relationship with AcquisitionCo, Austin Ribbon has requested the reimbursement of certain amounts paid to AcquisitionCo in respect of administrative services provided by AcquisitionCo in 2015 and to date in 2016. The Company does not believe Austin Ribbon is entitled to any reimbursement, and is evaluating any claim it may have against Austin Ribbon.
About Pivot Technology Solutions, Inc.
Together with its portfolio companies and partners, Pivot delivers solutions that enable organizations to design, build, implement and maintain computing and communication infrastructure that addresses their unique business needs. Pivot's approach supports improvement of business performance, helps organizations reduce capital and operating expenses, and accelerates the delivery of new products and services to end-customers. With over 2,000 customers, many of whom are Fortune 1000 companies, Pivot extends its value added solutions to help organizations of all sizes improve operating efficiency, reduce complexity and enhance service delivery through virtualization and cloud computing. Pivot enables businesses to extend their enterprise through mobility solutions to better connect business partners and customers. Pivot has offices throughout North America and can be found online at www.pivotts.com.
Forward Looking Statements
This news release contains statements that, to the extent they are not recitations of historical fact, may constitute "forward-looking statements" within the meaning of applicable Canadian securities laws. Forward-looking statements include statements regarding the termination of the ARC Agreements, the Company's shift to direct sales, the Company's future engagement with other resellers with HUB status and claims by Austin Ribbon and the assumptions underlying any of the foregoing. Pivot uses words such as "may", "would", "could", "will", "likely", "expect", "believe", "intend" and similar expressions to identify forward-looking statements. Any such forward-looking statements are based on assumptions and analyses made by Pivot in light of its experience and its perception of historical trends, current conditions and expected future developments, including the assumption that claims by Austin Ribbon are without merit and that the Company has the ability to penetrate the markets Austin Ribbon is active in. However, whether actual results and developments will conform to Pivot's expectations and predictions is subject to any number of risks, assumptions and uncertainties. Many factors could cause Pivot's actual results to differ materially from those expressed or implied by the forward-looking statements contained in this news release. These factors include, without limitation: the risk that termination of the agreements with Austin Ribbon will negatively impact Pivot's results of operations, starting as early as Q2 of 2016, the risk that Pivot will not be successful in increasing its sales in the markets that Austin Ribbon is active in, and the risk that AcquisitionCo may be required to reimburse Austin Ribbon for payments previously received in respect of services provided. The "forward-looking statements" contained herein speak only as of the date of this press release and, unless required by applicable law, the Company undertakes no obligation to publicly update or revise such information, whether as a result of new information, future events or otherwise.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Pivot Technology Solutions, Inc.
For further information: Marc Lakmaaker, National Equicom, [email protected], Tel: 416 848 1397; Kevin Shank, Chief Executive Officer, [email protected]; Andrew Bentley, Pivot Technology Solutions, Inc., [email protected], Tel: 647 788 2034