August 29, 2024 12:30 PM EDT | Source: Hank Payments Corp.
Toronto, Ontario–(Newsfile Corp. – August 29, 2024) – Hank Payments Corp. (TSXV: HANK) (“Hank” or the “Company”), an emerging North American leader in the Banking-as-a-Service (BaaS) market with a platform that modernizes budgeting and payments for businesses and consumers, wishes to provide further commentary regarding its announcement dated August 19, 2024 that it has entered into a non-binding letter of intent (the “LOI”) to acquire 100% of the shares of a privately held technology company (the “Target”).
Terms and conditions:
As previously announced, the material terms set forth in the LOI are not binding on the parties and the LOI is conditioned, among other things, on the execution of a definitive share purchase agreement (the “Definitive Agreement”) to be negotiated between the parties.
Target is a pre-revenue company that is making meaningful investments in intellectual property that matches consumers with brands, such as lenders, based on their time-based needs and enables consumers to receive offers that can improve their financial lives. Target spent $250,000 on research and development in the past year and has $1 million in debt to its parent company. As is common among technology companies, Target has not capitalized significant assets in developing its platform, but has created valuable intellectual property consistent with a typical SAAS company that is asset-light but has high technology value due to its ongoing cash flow generation. Target has preferred pricing, service levels and long-term license agreements that will be transferred as part of the sale. This allows Hank and consumers to securely store and access important personal documents related to their financial lives, such as contracts with Hank, investment statements, loan documents and other important documents that consumers need to be able to easily access, search and act upon. These licenses, backed by best-in-class content search and data correlation, bank-grade data encryption and security, have significant value, and the Company will confirm its estimate of that value through an independent valuation as part of the closing of the transaction.
In connection with the proposed transaction, it is currently contemplated that the Company will acquire all of the outstanding shares of the target company. The main terms of the transaction are as follows:
As consideration for the purchased shares, Hank will issue to Target's shareholders a number of Hank common shares equal to Target's total equity value of approximately C$7.2 million, not to exceed 49.9% of Hank's outstanding shares at the time of closing.
The majority of the Hank consideration shares will be issued or immediately distributed or transferred to the target company's shareholders, and no new shareholders or related entities will directly or indirectly own more than 10% of Hank following the closing of the transaction.
The consideration shares are subject to contractual escrow and release schedules that are currently being finalized and are subject to regulatory approvals prior to closing.
The Company intends to accelerate the redemption date of its currently issued 4,470,000 restricted stock units in accordance with TSX Venture Exchange guidelines.
A minimum of $3.94 million of Hank's liabilities, excluding working capital, is expected to be settled prior to the closing of the transaction, which the Company intends to settle through the issuance of common stock.
The target company will provide the company with a zero-interest loan of $250,000 in the form of an unsecured promissory note, which will be repaid six months from the date of prepayment or the closing date of the transaction, whichever is earlier, and which loan will be settled to the consolidated company.
Hank will assume only the $1 million in debt owed by Target to the parent company, to be repaid over five years at $16,667 per month, without interest. At any time within 12 months after the closing of the transaction, Hank can repay this debt by paying an advance of $750,000 in addition to the monthly payments to date.
The advisory fee of up to $1.425 million will be paid with 28.5 million Hank shares to be issued to the advisor.
After debt settlement, and assuming the stock trades at its current price of $0.05, and current prices ($0.05-0.06 per share), Hank expects its market cap to be in the range of $7.1 million to $7.6 million, and plans to issue up to $7.2 million worth of stock for the acquisition.
Completion of the transaction is subject to a number of conditions, including, but not limited to, the receipt of applicable regulatory approvals, the completion of sufficient due diligence, including an independent valuation, and the execution of definitive agreements and related commercial agreements. The potential transaction is not expected to become a base transaction under the policies of the TSX Venture Exchange.
About Hank Payments Corp.
Hank Payments Corp (the “Company” or “Hank”) is the leading North American consumer Fintech Software-as-a-Service (SaaS) and Banking-as-a-Service (BaaS) platform that automatically manages consumers' cash flows and budgets using proprietary algorithms that collect, store, and disburse cash as needed to timely fulfill obligations. The Hank stack offers multiple vertical market applications of the technology with capabilities specific to channels and enterprise accounts (“Partners”), which enable Partners to operate new lines of business and revenue streams with Hank. Partners benefit from new revenue streams and powerful insights that open additional opportunities to grow their assets with Hank. The Company operates exclusively across the United States, with some leadership and technology functions located in Toronto. Hank has complex technology, banking, finance, customer service, sales, and operations teams in place to acquire and serve consumers. Hank currently charges a sign-up/setup fee and a monthly recurring fee based on the type and volume of payments managed by Hank Payments for consumers (“Users”). We acquire users through various channels, including (i) small and medium-sized businesses (“SME Partners”) and (ii) large enterprises (“Enterprise Partners”). Our BaaS model is emerging and is expected to include additional fees, such as software licenses and usage fees. For more information, please visit our website at www.hankpayments.com.
Forward-Looking Statements
This news release may contain forward-looking statements (within the meaning of applicable securities laws) that reflect our current expectations regarding future events. Forward-looking statements are identified by words such as “believes,” “anticipates,” “plans,” “expects,” “intends,” “projects,” “will,” “may,” “estimates” and other similar expressions. These statements are based on our expectations, estimates, projections and projections, including, but not limited to, statements regarding the future success of our business. Financial performance figures are expressed in Canadian dollars unless otherwise indicated with a “U” representing United States dollars.
The forward-looking statements in this news release are based on certain assumptions, including, but not limited to, that the Company's shares will begin trading on the TSXV. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. A variety of factors could cause actual results to differ materially from the results described in the forward-looking statements. Therefore, readers should not place undue reliance on such forward-looking statements. Further, these forward-looking statements are made as of the date of this news release, and, except as expressly required by applicable law, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/221507
Source: Hank Payments Corp.
