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MTM Technologies Acquires Assets and Business Operations of Network Catalyst

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MTM Technologies announced that it acquired the assets and business operations of Network Catalyst.

MTM Technologies also announced that on September 16, 2004, it completed a $5.5 million equity investment by Pequot Ventures, the private equity arm of Pequot Capital Management, Inc., a leading investment firm.

The acquisition of Network Catalyst expands MTM Technologies’ presence from New York and Southern New England to major markets in Southern California, including Los Angeles. Network Catalyst founder and CEO Bill Corbin and his senior management team will be leading MTM Technologies’ West Coast business, with four offices serving Southern California.

“VOIP, IT infrastructure, and security, Network Catalyst’s core competencies, are three of the cornerstones of MTM Technologies’ strategy,” said Francis J. Alfano, MTM Technologies’ CEO. “The addition of Network Catalyst provides our combined clients with an exciting array of IT solutions specifically engineered to meet the needs of middle market businesses. This acquisition expands MTM Technologies’ offerings into the West Coast market and helps drive our continuing national expansion program. Since launching its growth-through-acquisition strategy, MTM Technologies has grown significantly. MTM Technologies and the acquired businesses would have had combined FY2003 annual revenues of $91 million. We are on track to have a significant national practice within 18 months, as we continue executing our strategy of acquiring solutions-oriented IT providers.”

“As the marketplace for integrated services and managed solutions continues to evolve, it is of paramount importance for Network Catalyst to align itself with an organization that has national scope. These combined capabilities will enable the company to deliver a broad range of offerings that reach across our client’s network into the applications that are driving their decisions. We believe that MTM Technologies’ strategy, vision, execution, and solution offerings, combined with our networking expertise, will create the benchmark for delivering integrated services for the future,” said Bill Corbin, CEO of Network Catalyst.

On May 20, 2004, MTM Technologies’ shareholders approved an investment of up to $25 million by Pequot Ventures. The approved transactions authorized the sale to Pequot Ventures of up to $25 million of convertible preferred stock and warrants in tranches. MTM Technologies completed the initial $7 million tranche of the Pequot Ventures investment on May 21, 2004 and completed a second $5.5 million tranche on September 16, 2004. The second tranche of $5.5 million is in the form of preferred stock, convertible into 2,000,000 shares of MTM Technologies’ common stock at a conversion price of $2.75 per share, and 400,000 warrants with an exercise price of $3.44 per share. The purchase of any or all of the third tranche, in an aggregate investment amount of up to $12.5 million, is solely at Pequot Venture’s option.

Pequot Venture’s Managing General Partner and MTM Technologies’ Chairman of the Board, Gerald A. Poch, noted that “MTM Technologies is well positioned to become a leading national provider of IT solutions to the middle market. This acquisition, by adding a major West Coast presence and significant VOIP capabilities, is a key milestone in MTM Technologies’ build-out of a national middle market solution provider. We are very excited about the completion of our second investment in MTM Technologies’ growth strategy.”

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MTM Technologies Acquires Assets and Business Operations of Network Catalyst
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