Hank Payments: Acquisition Update, Equity Financing, and Shares for Debt Transaction

Hank Payments Corp. (TSXV: HANK), an emerging leader in the Banking-as-a-Service (BaaS) market, has provided an update on its previously announced acquisition of 100% of the shares of FUTR Inc. (the "Target"), a private technology company. The acquisition is expected to close on or about January 29, 2025. The Target's platform will allow Hank to consume and store key customer data in a SOC 2 compliant and encrypted platform, automating key compliance and KYC work for Hank while also providing value-added digital vaults to consumers to store critical personal documents.

The principal terms of the Acquisition remain the same as previously disclosed, with the following additional information:

* As consideration for the purchase of all of the outstanding shares of the Target, Hank will issue 172,949,626 common shares of Hank, which equates to a total equity value for the Target of approximately Cdn$8.6 million at a per share value of $0.05 per share.
* No one new shareholder or related entity will own directly or indirectly greater than 10% of Hank post-completion of the Acquisition.
* Hank will assume the Target's liability of (i) $1M owed to its parent, which will be repaid beginning on August 1, 2025, in the amount of $16,667 per month until repaid, without accruing any interest, and (ii) Cdn$130,000 promissory note owed to its parent coming due on July 2nd, 2026, and accruing interest at 18% a year.
* The Target will also have Cdn$260,000 in cash that will be assumed by Hank as part of the Acquisition.
* Clarus Securities Inc. acted as advisor in connection with the Acquisition and will be paid an advisory fee of $216,250, which will be settled by way of issuance of 4,325,000 common shares of Hank on closing at a per share value of $0.05 per share.
* All shares issued pursuant to the Acquisition are subject to a contractual lock-up and leak-out agreement whereby the shares will be released as to 1/3 on July 1, 2025, January 1, 2026, and July 1, 2026. The first 1/3 can be released earlier if the common shares of Hank trade on the TSX Venture Exchange (or other recognized stock exchange) for 10 consecutive trading days at a volume weighted average price of $0.10 per share or greater, subject to the Board of Directors concluding in their sole discretion that such release will not materially impact the then stock price and trading activity beyond what would be expected given such a release from escrow.

Immediately prior to completion of the Acquisition, Hank will issue an aggregate of 14,898,420 common shares to the arm's length holders of convertible debentures that were issued on November 2, 2024, in the amount of $744,921 (the "Debentures"), which will automatically convert pursuant to their terms at a price of $0.05 per share. The Company will also repay the interest owing on the Debentures in cash upon conversion.

The Company also intends to complete a non-brokered private placement offering of 11,666,667 common shares ("Shares") at a price of $0.03 per Share for the aggregate principal amount of $350,000. The Company expects to close the Placement prior to completion of the Acquisition. It is expected that the proceeds of the Placement will be used for debt repayment and working capital purposes. Shares issued pursuant to the Placement will be subject to a statutory four-month and one-day hold period from the date of closing.

The Company is also pleased to announce agreements with certain creditors for the settlement of amounts owing in the aggregate amount of $461,675 in exchange for the issuance of an aggregate of 13,764,163 shares (the "Debt Settlements"). The Debt Settlements are also expected to close prior to completion of the Acquisition. The Debt Settlements include shares issued for $195,745 (6,591,508 shares) and $143,345 (4,760,895 shares) of principal and interest owed to arm-length and related parties respectively. Further fees owed to former directors of the Company and arms-length parties of $85,588 (1,711,760 shares) and $35,000 (700,000 shares) are included in the Debt Settlements.

The Debt Settlements include the settlement of an aggregate of $143,342 with three of the Company's management and board members (the "Related Creditors") in exchange for the issuance of an aggregate of 4,760,895 Debt Shares. The issuance of the Debt Shares to the Related Creditors constitutes a "related party transaction" as this term is defined in Multilateral Instrument 61-102.

The acquisition of FUTR Inc. by Hank Payments Corp. aligns with the company's long-term strategic goals by enhancing its platform's capabilities, automating compliance and KYC work, expanding the customer base, creating new revenue streams, improving the customer experience, and providing data-driven insights. These synergies can contribute to Hank's growth and success in the Banking-as-a-Service (BaaS) market.

However, the acquisition also presents risks and challenges, such as financial liabilities, operational integration, and regulatory compliance. To mitigate these risks, Hank Payments plans to issue shares to settle debts, raise funds through a private placement, and ensure compliance with relevant regulations.

The equity financing and shares for debt transactions will impact Hank Payments' capital structure and financial flexibility in both the short and long term. In the short term, the issuance of shares will dilute existing shareholders' ownership and potentially impact the company's stock price and trading activity. In the long term, the issuance of shares to settle debts could help the company reduce its debt obligations and improve its financial flexibility. However, the dilution of existing shareholders' ownership could make it more difficult for the company to raise additional capital through equity financing in the future.

In conclusion, Hank Payments Corp.'s acquisition of FUTR Inc., along with its equity financing and shares for debt transactions, demonstrates the company's commitment to growth and expansion in the Banking-as-a-Service (BaaS) market. While the acquisition presents risks and challenges, Hank Payments is taking proactive measures to mitigate these issues and ensure the success of the transaction. The equity financing and shares for debt transactions will impact the company's capital structure and financial flexibility, but ultimately, Hank Payments is well-positioned to capitalize on the opportunities presented by the acquisition.