Newsroom | Press Release

Sangoma Completes the Acquisition of Two Businesses

Acquires all key assets of Schmooze, including FreePBX® and all shares of RockBochs

MARKHAM, ONTARIO—(Marketwire – January 2, 2015) – Sangoma Technologies Corporation (TSX VENTURE:STC), a leading provider of hardware and software components that enable or enhance IP Communications Systems for both voice and data, today announced two separate transactions, both of which closed January 1, 2015. Sangoma has acquired all the key assets of Schmooze Com Inc and all the outstanding shares of RockBochs Inc.

Schmooze, based in Wisconsin, is the primary developer of FreePBX® and the manager/sponsor of that open source project, one of the mostly widely used IP-PBXs on the planet with millions of installs around the globe. Schmooze offers chargeable, add-on commercial modules, support services, accompanying hardware to complement FreePBX and an integrated SIP trunking service (under the SIPStation brand name) to this huge base of FreePBX users.

RockBochs, based in Minnesota, offers Fax-over-IP monthly service, including developing its own FoIP customer premise equipment and offers semi-custom telecom appliances that allow customers to install their own communications software on a purpose-built server.

“Over recent years, Sangoma has been focused on introducing new products and services to the market and offering them to a wider cross section of customer segments,” said Bill Wignall, President and CEO of Sangoma. Wignall continued, “These acquisitions are a logical next step on that strategic path, will contribute natural product line extensions with a solid strategic fit, and complement our organic growth in sales of new products. Sangoma has evolved from telephony cards with the addition of gateways, SBCs, a suite of products for the Lync ecosystem, tapping, and several others. So perhaps it’s not surprising that some of our customers have been asking for Sangoma to offer a PBX. For those customers who have asked for a Sangoma-supported PBX, we can now meet that need with an Open Source or Commercial variant of FreePBX. For those who prefer to build or install their own PBX software, we of course remain committed to supporting such partners as we always have, and this includes providing industry-leading telephony cards for integration inside their PBX servers, appliances which allows partners to install their PBX software on our hardware platforms, as well as gateways and SBCs for connections to the PSTN and IP-based networks. Further, we can now offer both SIP trunking service to the community of millions of FreePBX users, and Fax-over-IP services, both of which will be expanded through the use of Sangoma’s network of partners around the world. We’ve been exploring ways to accelerate growth and make better use of our cash, and these transactions do that, and are expected to significantly expand our growing software and services business by adding critical new sources of recurring revenue. I’m very pleased to have the Schmooze and RockBochs teams, products, and customers joining the Sangoma family.”

The Schmooze and RockBochs product lines are expected to become an integral part of the Sangoma portfolio over the coming year. The acquisitions will enable acceleration in the development of FreePBX and SIPStation capabilities and in the Fax-over-IP services from RockBochs. It is also expected to lead to integration of Sangoma technologies inside those offerings, such as incorporating Sangoma’s SBC functionality inside FreePBX and the RockBochs appliances, for example.

Sangoma has been a pioneer in the open source telecom space for many, many years and was a key contributor to helping make Asterisk® a dependable business communications technology. The company understands and appreciates the space and remains fully committed to the open source community. The Schmooze transaction is expected to make it easier for users of FreePBX to obtain the software from Sangoma and its channel partners, and we anticipate them being able to count on the industry-leading reputation of Sangoma’s “because it must work” products to interoperate even more elegantly with FreePBX—perhaps the most widely used Asterisk-based PBX in the world.

“For companies that use FreePBX directly or as part of a solution they develop, Sangoma will seek to accelerate the innovation that they’ve come to value from us as the leaders of the project over the last many years,” said Tony Lewis, co-founder and CEO of Schmooze. He continued, “The FreePBX community should benefit from the project being backed by a larger, mature public company with much broader resources and over 30 years of experience in telecom and a long pedigree in open source. We are excited about the stability and credibility this adds to the project and I expect that FreePBX users will really appreciate it.”

On a combined basis, the acquired businesses will have generated between $4.5 and $5 million in revenue during calendar 2014 and both have been historically profitable. Integrated into Sangoma, we expect these acquisitions to be accretive to earnings immediately.

The Company paid initial aggregate consideration of US$4 million in cash, issued 3,650,000 common shares to Schmooze shareholders for a value of US$1 million and entered into earn-out arrangements for contingent consideration of up to US$1.5 million if certain revenue targets are achieved.

In conjunction with these transactions the Company has established a $2.5 million operating line of credit, secured by a general security interest on assets, to ensure that it continues to have the flexibility to grow.

Management will discuss these acquisitions more fully on its second quarter conference call, to be scheduled at the time results for the quarter ending December 31, 2014 are released to the market.

About Sangoma Technologies Corporation

Sangoma Technologies is a trusted leader in delivering value-based Communications as a Service (CaaS) solutions for businesses of all sizes, service providers and OEMs.  Sangoma’s offerings include Unified Communication (UCaaS) and Call Center as a Service (CCaaS) business phone systems, both on-premise and cloud, Communications Platform as a Service (CPaaS), SIP trunking services (TaaS), and telephony hardware which can also be deployed as a service. Sangoma’s products and services are used in leading PBX, IVR, contact center, carrier networks, and data communication applications worldwide. Sangoma is the primary developer and sponsor of the Asterisk project, the world’s most widely used open source communications software, and the FreePBX project, the world’s most widely used open source PBX software. Businesses can achieve enhanced levels of collaboration, productivity, and ROI with Sangoma.

https://www.sangoma.com

Cautionary Statement Regarding Forward Looking Statements
This press release contains forward-looking statements, including statements regarding the future success of our business, development strategies and future opportunities. Forward-looking statements include, but are not limited to, statements concerning estimates of future revenue, expected expenditures, expected future production and cash flows, and other statements which are not historical facts. When used in this document, the words such as “could”, “plan”, “estimate”, “expect”, “intend”, “may”, “potential”, “should” and similar expressions indicate forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements are based on the opinions and estimates of management on the date that the statements are made and involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other events contemplated by the forward-looking statements will not occur or will differ materially from those expected. Although Sangoma believes that the expectations represented by such forward-looking statements are reasonable based on the current business environment, there can be no assurance that such expectations will prove to be correct as these expectations are inherently subject to business, economic and competitive uncertainties and contingencies. Some of the risks and other factors which could cause results to differ materially from those expressed in the forward-looking statements contained in the management’s discussion and analysis include, but are not limited to changes in exchange rate between the Canadian Dollar and other currencies, the variability of sales between one reporting period and the next, changes in technology, changes in the business climate in one or more of the countries that Sangoma operates in, changes in the regulatory environment, the rate of adoption of the company’s products in new markets, the decline in the importance of the PSTN and new competitive pressures. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement and Sangoma undertakes no obligation to update forward-looking statements if circumstances or management’s estimates or opinions should change except as required by law. Readers are directed to Sangoma’s filings on SEDAR with respect to Management’s Discussion and Analysis of Financial Results for the basis of Sangoma’s reconciliation of EBITDA to net income as calculated under IFRS

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Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Sangoma Technologies Corporation

David Moore
Chief Financial Officer
(905) 474-1990 Ext. 4107
dsmoore@sangoma.com
www.sangoma.com

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