VIQ Solutions Accelerates M&A Strategy with Accretive Acquisition of a Leading U.S. Digital Media Content and Transcription Provider

Further Strengthens Global Market Leadership in Transforming the Evidentiary Data Capture and Transcription Industry

VIQ Solutions Inc. (“VIQ” or the “Company”) (TSX Venture Exchange: VQS and OTCQX Markets: VQSLF), a global provider of secure, AI-driven, digital voice and video capture technology and transcription services, today announced that it acquired one of the most respected and leading Digital Media Content and Transcription providers in the United States, ASC Services LLC of Washington, D.C. (“ASC”). The Company entered the definitive agreement for the acquisition of ASC on January 31, 2020.

Key transaction highlights include (all amounts are in USD):

• Transaction is expected to be immediately accretive to VIQ’s operating income and net earnings;
• Adds approximately $6 million in annualized recurring profitable revenue;
• Adds several Fortune 500 clients including world leading newswires and databases;
• Adds media content distribution partners and several U.S. Government clients;
• Extends VIQ’s footprint in the $6 billion market for voice and video to text transcription (as estimated by MarketsandMarkets.com);
• Adds approximatively 2.8 million minutes per year of highly secure single and multi-speaker video and audio content required for transformation into verbatim transcripts and documentation;
• The acquisition is non-dilutive.

“We are pleased to welcome ASC Services to VIQ Solutions,” said Sebastien Pare, VIQ’s President and CEO. “The evidentiary data capture and transcription industry is going through a rapid digitalization and this fourth highly accretive acquisition in the last 13 months is expected to deliver immediate value to VIQ shareholders by increasing 2020 operating income and net earnings.”

“While ASC is proud to trace our origins back to Reuters Newswire transcript service, we welcome today’s increasing demand for immediate content access. We believe VIQ’s world class AI technology solutions combined with ASC’s depth of knowledge and processes enables us to deliver accurate and timely solutions our global broadcast and political clients now demand. We are truly excited by the opportunities now open to us,” said Carr Davis and Anthony O’Brien, Managing Partners of ASC Services.

“The acquisition contributes to our long-term growth strategy and enables us to streamline the value of the entire digital capture, transcription and media distribution value chain, which is core to our mission,” said Susan Sumner VIQ’s COO. She continued, “ASC is an industry leader and we see numerous opportunities to drive growth and create next generation services for their Fortune 500 customers and partners. Together we will realize substantial efficiency gains and aggressively grow our business, while providing superior service to our clients.”

The purchase price paid for the ASC acquisition was $6.9 million, with $3.1 million paid in cash on closing and $3.8 million paid via an earn-out payable quarterly over 30 months. VIQ funded this acquisition through a drawdown of approximately $3.1 million in debt capital pursuant to an $11.5 million debt facility (the “Debt Facility“) entered into on November 28, 2018 with Crown Capital Partner Funding, LP (“Crown“).

Replacement of Warrants Issued to Crown Capital Partner Funding, LP

In connection with the acquisition of ASC, the Company and Crown entered into an amendment (the “Amendment“) to the Debt Facility, pursuant to which Crown agreed to forfeit to the Company for cancellation the 9,000,000 common share purchase warrants (the “Original Crown Warrants“) that Crown was issued on November 28, 2018.

In exchange for the Original Crown Warrants, the Amendment provides that the Company will issue 450,000 new common share purchase warrants (the “New Crown Warrants“). Each New Crown Warrant is exercisable to acquire one common share (a “Share“) in the capital of the Company at a price per Share equal to CAD$2.06 (the “Exercise Price“) until November 28, 2023.

The issuance of the New Crown Warrants is subject to the approval of the TSXV.

Amendment and Conversion of Outstanding Convertible Notes

The Company also announces that it has entered into agreements (the “Amending Agreements“) with the holders of unsecured convertible notes (each, a “Note“) in the aggregate principal amount of approximately USD$6,792,934, granting the holders of such Notes (each a “Noteholder“) the option to convert the principal and the aggregate interest payable on their Notes from the date of issuance to the maturity date (the “Total Interest Payable“), into Shares at a conversion price of CAD$2.18 per Share (the “Conversion Option“), as previously announced by the Company on December 18, 2019.

Concurrent with their entry into the Amending Agreements, Noteholders holding all of the outstanding Notes exercised the Conversion Option, except to the extent that the exercise of the Conversion Option would result in a Noteholder becoming a “control person” under the policies of the TSX Venture Exchange (the “TSXV“). The Corporation issued 6,395,648 Shares as the result of the exercise of the Conversion Option in respect of Notes having an aggregate principal amount of approximately USD$6,404,319 and an aggregate Total Interest Payable of approximately USD$4,089,607 (the “Conversion“).

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