San Luis Obispo-based TechXpress is being split up and sold for $1.6 million in cash and stock.
Crosstown firm SpendSmart Networks, the publicly traded parent of SMS Masterminds, will buy the e-commerce division of TechXpress for $1.2 million in a stock-and-cash deal. The IT support division of TechXpress will be taken over by Tim Snyder, the chief technology officer at TechXpress, for $410,000 in a debt financing provided by SpendSmart.
SpendSmart is headed by Alex Minicucci, the founder of SMS Masterminds who sold his company to SpendSmart and took the reins in a reverse merger earlier this year. The company offers prepaid debit cards aimed at teens that alert parents via text message when teens spend. It also offers a text-message-based loyalty card system for small-business owners.
“With this acquisition comes an impressive, scalable back-end system for managing websites, and more importantly, a talented team of developers that have extensive experience with transaction-based sites designed to influence purchasing behavior,” Miniccuci said in a release.
TechXpress was founded in 1999 by Bryan Sarlitt, who is the sole shareholder of the company. SpendSmart is paying Sarlitt $458,000 in cash and $741,814 in stock for the part of TechXpress that builds e-commerce websites.
SpendSmart is also loaning $410,000 to Synder Computer Services. That entity will use the loan proceeds to acquire the IT services division of TechXpress from Sarlitt.
After the deal, Sarlitt will become a consultant with SpendSmart. For one year of consulting services, Sarlitt will receive an additional $425,000 in cash from SpendSmart.
“I wasn’t actively looking to sell, but the stars aligned and brought me a win-win opportunity,” Sarlitt said in a press release. “It allowed me to walk away with a clean slate having our debts paid off, allowed our staff to keep their jobs with more growth potential, and allowed our clients to receive more services and support than ever before.”
The IT services division of TechXpress serves about 50 small and mid-sized companies on the Central Coast. It has moved to an office on Fiero Lane in San Luis Obispo and will continue serving clients without interruption, Snyder said in a press release.
“We’ve never had a better team, all of whom are staying on board. I look forward to building upon the 15 years of quality service that TechXpress has been providing to the community,” Snyder said in a release.
The e-commerce side of TechXpress serves about 50 companies, mostly in the consumer goods space, with 2.5 million customers. In a release, Minicucci said SpendSmart will continue to serve those customers while offering access to its data analytic tools and loyalty programs.
“We believe there is considerable opportunity for growth in this area through marketing initiatives,” Minicucci said in a release.
At the end of June, SpendSmart had $6 million in cash and cash equivalents on its books. For the most recent quarter of this year, the company had about $1.3 million in revenue, about $1 million of which came from the SMS Masterminds unit. It marked a net loss of $2.5 million, the bulk of which came from $884,000 in stock-based compensation expenses.