A Vancouver software company focused on web-based solutions for municipalities has agreed to be acquired by a wholly-owned subsidiary of a Vancouver-based venture capital fund.
BasicGov Systems Inc. (TSX-V:BSG), which develops web-based software for local and state governments in the U.S., has agreed to sell all its assets to a subsidiary of Pender Growth Fund (VCC) Inc., which focuses on investments in undervalued public companies.
Pender Growth agreed to buy the assets for approximately $900,000, subject to adjustments for changes in specific working capital balances.
The sale value exceeds BasicGov’s estimated business value of between $810,000 and $850,000 as assessed by a business evaluator.
The company had gone through several changes over the past few years.
It changed its name last year from CloudBench Applications Inc. to BasicGov to signal its focus on marketing its BasicGov software using a software-as-a-service model.
Since the company name is one of the assets Pender Growth is acquiring, shareholders approved a name change for the company’s public shell to Pedro Resources Ltd.
The sale is expected to close by the end of September.
BasicGov revenue rose to $236,985 last year from $104,905 in 2008. However, flat revenues and continued operating losses created cash flow issues for the company, which started relying on working capital loans from Pender Growth, its largest shareholder.
In the second quarter of 2010, it reported a net loss of $263,163 on $68,668 in revenue, slightly better than a net loss of $324,924 in the first quarter of 2010 on $59,025 in revenue.