GSE Systems Acquires Hyperspring, LLC and 50 Percent Interest in Intelliqlik, LLC

GSE Systems, Inc., a global energy services solutions provider, announced that its operating subsidiary, GSE Power Systems, Inc. ("GSE Power"), acquired Hyperspring, LLC, which specializes in staff augmentation, training and development, and plant operations support services, primarily in the United States nuclear industry. In conjunction with the Hyperspring acquisition, GSE Power also acquired a 50% interest in IntelliQlik, LLC, which is developing a software platform for online learning and learning management for the energy market.

GSE Power paid the sellers of Hyperspring an aggregate of $3 million at closing (subject to adjustment based on a subsequent determination of the amount of actual working capital of Hyperspring at closing). In addition, GSE Power may be required, pursuant to the terms of the Purchase Agreement, to pay the sellers up to an additional $8.4 million if Hyperspring attains certain EBITDA (earnings before interest, taxes, depreciation and amortization) targets for the three-year period ending November 13, 2017. Hyperspring will operate as a wholly-owned subsidiary of GSE Power and will be run by its current Chief Executive Officer, Paul Abbott.

Based upon its unaudited results of operations for the year ended December 31, 2013 and the nine months ended September 27, 2014, Hyperspring generated revenues of approximately $19.2 million and $13.0 million, respectively, and EBITDA of approximately $710,000 and $950,000, respectively. GSE expects the acquisition will be immediately accretive to earnings. Based upon the elimination of certain costs, GSE believes that if it had owned Hyperspring on January 1, 2013 and January 1, 2014, on a pro forma basis, Hyperspring would have generated EBITDA of approximately $1.4 million and $1.2 million, for the year ended December 31, 2013 and the nine months ended September 27, 2014, respectively.

Although GSE has received representations and warranties from the sellers of Hyperspring with respect to the accuracy of its financial statements, including its results of operations, the financial statements have not been audited or reviewed, and do not provide the same assurances as audited or reviewed financial statements. As a result, indications by GSE in this press release as to the likely results of operations of Hyperspring on a pro forma basis are subject to the same risks and uncertainties as the Hyperspring unaudited financial statements. If the Hyperspring unaudited financial statements turn out to be inaccurate in any material respect, the pro-forma results discussed above are not likely to be correct. In addition, those statements are not guarantees of results that would have been (or will be) achieved by Hyperspring going forward.

Hyperspring, founded in 2004, is headquartered in Huntsville, Alabama. Approximately 90% of Hyperspring's revenues are generated from its staff augmentation business, and approximately 70% of revenues are generated from one utility. Hyperspring primarily serves the nuclear energy industry in the United States in areas such as providing training instructors, plant operations and engineering, procedure writing, corrective action management and work management.

In connection with the Hyperspring acquisition, GSE Power invested $250,000 for a 50% interest in IntelliQlik, and is obligated to contribute an additional $250,000 upon the attainment of certain milestones by IntelliQlik. IntelliQlik is jointly owned by GSE and one of the former owners of Hyperspring. IntelliQlik is developing a software platform for online learning and learning management for all energy sectors, including nuclear, thermal, oil & gas, and hydro-electric. The IntelliQlik platform will also include applications to support plant engineering, operations and maintenance, as well as provide a platform for Software as a Service (SaaS) to deliver learning materials, industry recruitment services, and specialized simulator training programs.

Keywords: Operator Training, Training And Development, Plant Operations Support Services, ARC Advisory Group.