Hank Payments Provides Additional Information About Non-Binding LOI to Acquire a Technology Platform Company

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 budgets and payments for enterprises and consumers wishes to provide additional commentary on the announcement of its entering into a non-binding letter of intent dated August 19, 2024 (“LOI“), for the acquisition of 100% of the shares of a private technology company (the “Target”).

Transaction Terms:

As previously announced, the material terms and conditions outlined in the LOI are non-binding on the parties and the LOI is, among other things, conditional on the execution of a definitive share purchase agreement (the “Definitive Agreement“) to be negotiated between the parties.

The Target is pre-revenue with meaningful investment in intellectual property that affords consumers and brands, like lenders, to be matched based on time-based needs that enable consumers to receive offers that may improve their financial lives. The Target has spent $250,000 in R&D expenses in the past year and owes $1.0 million in liabilities to its parent. As is common with technology companies, the Target has not capitalised any material assets as it has developed its platform, while creating valuable intellectual property which aligns with typical SAAS companies being light on assets but high on technology value given the recurring cash streams they generate. The Target has preferred pricing, service levels and long-term licensing agreements that will transfer with the sale that affords Hank and consumers the ability to securely store and access key personal documents related to their financial lives, including agreements with Hank, investment statements, loan documents and any other important documents that need to be easily accessible, searchable and actionable by the consumer. These licenses, underpinned by best-in-class content search and data correlation and bank level data encryption and security, have material value and the Company will, as part of the conclusion of the transaction, confirm it’s estimates of value through an independent valuation.

In connection with the proposed transaction, it is currently contemplated that all the issued and outstanding shares of the Target will be acquired by the Company. Key terms of the transaction are as follows:

1. as consideration for the shares purchased, Hank will issue to the shareholders of the Target, that number of common shares of Hank which equates to a total equity value for the Target of approximately Cdn$7.2 million, not to exceed 49.9% of Hank shares outstanding at the closing of the transaction;

2. the majority of the consideration shares of Hank will be issued to or immediately distributed or transferred to the shareholders of the Target such that, no one new shareholder or related entity will own directly or indirectly 10% of Hank post completion of the transaction;

3. the consideration shares will have a contractually imposed escrow and release schedule currently being finalized and subject to regulatory approval prior to closing;

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   the Company will accelerate the redemption date of 4,470,000 of its currently issued and outstanding Restricted Share Units subject to guidelines the TSX Venture Exchange;

5. a minimum of $3.94 MM of Hank’s liabilities, excluding working capital is to be settled prior to the closing of the transaction, which the Company expects to settle through issuance of common shares;

6. the Target will provide a non-interest bearing loan in the amount of $250,000 to the Company in the form of an unsecured promissory note that is repayable on the earlier of 6 months from the advance date or the closing of the transaction, in which the loan will settle into the consolidated Company;

7. Hank will assume the Target’s sole liability of $1 million owed to its parent, which will be repaid over 5 years at $16,667 per month without accruing any interest. At any time up to 12 months following closing, Hank can prepay $750,000 on top of what will have been paid monthly to date to retire this obligation;

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   advisory fees up to $1.425 million will be paid in shares of Hank expected to be 28.5 million shares issued to the advisor; and

9. Post the settlement of liabilities at current share price of $0.05, and assuming trading at current prices ($.05-$.06 per share), Hank expects to have a market capitalisation in the range of $7.1 and $7.6 million and will be issuing shares worth up to $7.2 million for the acquisition.

Completion of the Transaction is subject to a number of conditions, including, but not limited to, receipt of applicable regulatory approvals, completion of satisfactory due diligence including independent valuation, and the execution of the Definitive Agreement and related commercial agreements. The potential transaction is not expected to be a Fundamental Transaction under the policies of the TSX Venture Exchange.

About Hank Payments Corp.

Hank Payments Corp (the “Company” or “Hank”) is a North American leader in consumer Fintech Software-as-a-Service (SaaS) and Banking-as-a-Service (BaaS) platforms that manages consumer cash flow and budgets on an automated basis using proprietary algorithms that collect, store and disburse cash as required to discharge obligations in a timely fashion. The Hank stack provides for several vertical market applications of the technology, with features specific to channels and enterprise accounts (“Partners”) that allow those partners to operate new lines of business and revenue streams, using Hank. The Partners benefit from new revenue streams and powerful insights that open up additional opportunities for Partners to grow assets using Hank. The Company operates exclusively across the USA, with certain leadership and technology functions in Toronto. Hank houses the complex technology, banking, treasury, customer service, sales and operations teams that acquire and service consumers. Hank currently charges upfront enrolment/setup fees and recurring monthly fees based on the types and quantity of payments that Hank Payments administers for the consumer (the “Users”). The Company acquires Users through various channels including (i) small to medium sized enterprises (the “SME Partners”) and (ii) large enterprise businesses (the “Enterprise Partners”). The Company’s BaaS model is emerging which is expected to add additional fees including software licensing and usage fees. For more information 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) which reflect the Company’s current expectations regarding future events. Forward-looking statements are identified by words such as “believe”, “anticipate”, “project”, “expect”, “intend”, “plan”, “will”, “may”, “estimate” and other similar expressions. These statements are based on the Company’s expectations, estimates, forecasts, and projections and include, without limitation, statements regarding the future success of the Company’s business. Financial performance figures in Canadian Dollars unless otherwise indicated by “U” representing United States Dollars.

The forward-looking statements in this news release are based on certain assumptions, including without limitation the Shares beginning trading on the TSXV. The forward-looking statements are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements. Readers, therefore, should not place undue reliance on any 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 assumes no obligation to publicly update or revise any forward-looking statement, 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