Proposed Transaction Expected to Result in Debt Free Balance Sheet with approximately $37.5 Million Cash at Closing

Evolving Systems, Inc. entered into definitive agreements to sell all of the assets of its Customer Acquisition and Network Services division (‘Activation’) as well as its CVML and Loyalty Business (‘Marketing’) to PartnerOne Capital for a base purchase price of $40 million. The proposed transaction, which has been approved by the Board of Directors of both companies, is subject to various terms and conditions, including approval by Evolving Systems’ stockholders. Evolving Systems expects to file a preliminary proxy statement regarding the proposed transaction with the U.S. Securities & Exchange Commission within 30 days.

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At the closing, Evolving Systems expects to receive $37.5 million of the base purchase price in cash (subject to adjustment for net cash), with the remaining $2.5 million placed in escrow as security for Evolving Systems’ indemnification obligations. The escrowed funds will be released to Evolving Systems on the first business day following the one-year anniversary of the closing, less any portion used to make indemnification payments to PartnerOne.

“PartnerOne is very excited to take Evolving Systems to the next level, by continuing to serve its customers with the industry’s leading software and best-in-class customer service. We look forward to building a strong team and a positive work environment with the incredible people that make Evolving Systems the global leader in its category today,” said Riz Khaliq from PartnerOne.

“At closing, we anticipate that Evolving Systems will have a debt free balance sheet with approximately $37.5 million in cash and cash equivalents,” said Matthew Stecker, President & CEO of Evolving Systems. “The Board of Directors has established an investment committee to evaluate options to maximize the value of the Company’s assets, including, but not limited to, identifying potential opportunities to invest in or acquire one or more operating businesses that provide opportunities for appreciation in value and/or returning cash to shareholders.”

Evolving Systems’ largest stockholder and holder of approximately 20.8% of Evolving Systems’ issued and outstanding common stock has entered into a voting agreement to vote in favor of the proposed transaction, subject to certain terms and conditions contained therein.

The proposed transaction includes a “go-shop” period expiring on November 15, 2021. During this period, Evolving Systems, assisted by its legal and financial advisors, will actively initiate, solicit and consider alternative acquisition proposals from third parties. The Evolving Systems board will have the right to terminate the proposed transaction with PartnerOne, and enter into a superior transaction, subject to the terms and conditions contained in the purchase agreements executed by Evolving Systems and PartnerOne. There can be no assurance that this “go-shop” process will result in a superior proposal, and Evolving Systems does not intend to disclose developments with respect to the “go-shop” process unless and until it determines that such disclosure is appropriate or otherwise required.

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