8-K: HUMBL Completes Major Restructuring: Sells Assets for $20 Million, Acquires FinCapital

HUMBL, Inc. has finalized a two-part transaction involving the sale of its brand and technology assets for $20 million and the acquisition of FinCapital, a subsidiary of Ybyra Capital, bringing $20 million in assets to its balance sheet.

Summary

• HUMBL, Inc. has completed a two-step transaction involving a stock purchase agreement and an asset sale.
• In the first step, HUMBL acquired FinCapital, a subsidiary of Ybyra Capital, a Brazilian public company, for $20 million in HUMBL stock.
• Ybyra has already contributed $20 million in physical assets to FinCapital, which will now be on HUMBL's balance sheet.
• Thiago Moura, CEO of Ybyra, will become the new CEO and Chairman of HUMBL, Inc.
• Brian Foote will remain on the Board of Directors to ensure a smooth transition.
• In the second step, HUMBL sold its brand and technology assets to WSCG, Inc. for $20 million in a combination of stock and cash.
• WSCG will focus on integrating HUMBL's technology into real estate tokenization.
• HUMBL shareholders will maintain exposure to the sold assets through an equity stake in WSCG.
• The transaction aims to improve HUMBL's balance sheet, revenue, and profitability metrics, and establish better liquidity between the U.S. and Latin America.

Sentiment

Score: 4

Explanation: While the transactions bring in assets and capital, the sale of core assets and significant restructuring introduce considerable uncertainty and risk, leading to a negative sentiment.

Positives

• The acquisition of FinCapital brings $20 million in assets to HUMBL's balance sheet, improving its financial position.
• The sale of HUMBL's brand and technology assets for $20 million provides immediate capital and reduces operational costs.
• The new leadership under Thiago Moura is expected to bring expertise in real estate, hospitality, and commodity sectors.
• HUMBL shareholders retain exposure to the sold assets through an equity stake in WSCG, allowing them to benefit from future growth.
• The focus on real assets and revenue metrics is expected to deliver value to HUMBL shareholders.
• The transaction aims to establish improved liquidity pathways between the U.S. and Latin America.

Negatives

• HUMBL is selling its core brand and technology assets, which may impact its future identity and operations.
• The company is undergoing a significant restructuring, which may introduce uncertainty and risk.
• The transaction involves multiple parties and complex agreements, which could lead to potential challenges.
• The company is issuing a significant amount of stock to Ybyra, which could dilute existing shareholders.
• The $2 million cash payment from WSCG is due by December 31, 2024, with a 90-day grace period, which introduces a potential delay.

Risks

• The successful integration of FinCapital and its assets into HUMBL's operations is not guaranteed.
• The ability of WSCG to successfully monetize HUMBL's technology in the real estate sector is uncertain.
• The company's reliance on a private company (WSCG) for future growth introduces additional risk.
• The company is undergoing a significant leadership change, which may impact its strategic direction.
• The company's ability to uplist or engage in M+A activity on a major national exchange is not guaranteed.
• The company is issuing a significant amount of stock to Ybyra, which could dilute existing shareholders.

Future Outlook

The company aims to improve its balance sheet, revenue, and profitability metrics, and establish better liquidity between the U.S. and Latin America. They also plan to uplist or engage in M+A activity on a major national exchange.

Management Comments

• Brian Foote stated that the transaction ensures the survival of HUMBL's intellectual property and core technologies, along with ongoing investment exposure for HUMBL Inc.'s shareholders.
• Thiago Moura believes that the transaction will deliver value to HUMBL shareholders and that Ybyra's resources and access in Latin America can be capitalized on faster by building stronger liquidity and access to the North American capital markets.
• Thiago Moura stated that their focus on placing real assets onto the balance sheet, along with revenue and profitability metrics, will deliver value to HUMBL's shareholder base.

Industry Context

This announcement reflects a trend of companies seeking to leverage blockchain technology in various sectors, including real estate. The move also highlights the increasing interest in cross-border transactions and the potential for growth in Latin American markets.

Comparison to Industry Standards

• The acquisition of FinCapital and its $20 million in assets is a significant move for HUMBL, which has struggled with financial performance.
• The sale of its brand and technology assets to WSCG is similar to other tech companies divesting non-core assets to focus on specific areas.
• The involvement of Ybyra, a publicly traded Brazilian company with over $1 billion in assets, provides a strong financial backing and access to Latin American markets, which is a unique advantage compared to many other small cap tech companies.
• The focus on real estate tokenization by WSCG aligns with the growing trend of using blockchain for asset-backed securities, similar to companies like RealT and tZERO.
• The transaction structure, involving both cash and equity, is a common approach in M&A deals, but the specific terms and valuations will need to be assessed against comparable transactions.

Management Changes

Stakeholder Impact

• Shareholders will maintain investment exposure to HUMBL's assets through an equity stake in WSCG.
• Shareholders will experience dilution due to the issuance of new shares to Ybyra.
• Employees may experience changes due to the restructuring and leadership change.
• Customers may see changes in the products and services offered by HUMBL.
• Suppliers and creditors may be impacted by the changes in the company's financial structure.

Next Steps

• HUMBL will file a Form 14C step-transaction.
• Ybyra will move additional assets onto the HUMBL, Inc. (FinCapital) balance sheet.
• WSCG will integrate HUMBL's technology into real estate tokenization.
• WSCG will transfer real estate assets worth at least $45 million within 60 days of the closing date.
• HUMBL will apply to FINRA to change its name within 60 days of the closing date.
• HUMBL will offer to exchange some of the HoldCo Units to its debtholders and holders of Series C Preferred Stock.
• The company will focus on uplisting or M+A onto a major national exchange.

Key Dates

Keywords

HUMBL, Ybyra Capital, WSCG, FinCapital, Asset Sale, Stock Purchase, Real Estate, Blockchain, Tokenization, Latin America, Merger, Acquisition