DEF 14C: HUMBL, Inc. to Sell Substantially All Assets to WSCG, Inc. in Landmark Deal

HUMBL, Inc. announces the sale of substantially all of its assets to WSCG, Inc. for $3.025 million, stock, and membership units, effective January 15, 2025.

Summary

• HUMBL, Inc. is selling substantially all of its assets to WSCG, Inc. under an Asset Purchase Agreement dated December 2, 2024.
• The sale was approved by a majority of HUMBL's stockholders via written consent on November 25, 2024.
• The transaction includes a payment of $3,025,000 to HUMBL, with $500,000 already paid and $525,000 covered by the cancellation of debt.
• The remaining $2,000,000 is due by December 31, 2024, with a 90-day grace period.
• WSCG will issue 2,455,556 shares of its Class B Common Stock to HoldCo, and HoldCo will grant 24,555,556 membership units to HUMBL, representing approximately 27.5% of WSCG's equity with a value of approximately $17,000,000.
• Within 60 days of the closing date, WSCG's principals will transfer real estate assets valued at least $45,000,000 to WSCG.
• The sale is expected to be effective on January 15, 2025, at least 20 days after the Information Statement is mailed to stockholders on or about December 26, 2024.
• Brian Foote will be appointed to WSCG's board of directors and as CEO of WSCG within five days of the Closing Date.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While the company is selling its assets, it is receiving consideration in the form of cash, stock, and membership units. The future success depends on WSCG's performance.

Positives

• HUMBL receives $3,025,000 in cash and debt cancellation, plus equity in WSCG.
• HUMBL retains exposure to the purchased assets through HoldCo Units.
• HUMBL intends to exchange some HoldCo Units to eliminate debt and reduce potential future dilution to common stockholders.
• Brian Foote will be appointed to WSCG's board of directors and as CEO of WSCG within five days of the Closing Date.
• WSCG will obtain ownership of certain assets having an enterprise value of at least a $45,000,000 within sixty (60) days of the Closing Date.

Negatives

• HUMBL is selling substantially all of its assets, indicating a significant change in the company's business strategy.
• The remaining $2,000,000 of the cash purchase price is due by December 31, 2024, with a 90-day grace period, which introduces uncertainty regarding timely payment.
• HUMBL will cease using the brand name HUMBL and any associated trademarks or other intellectual property within sixty (60) days of the Closing Date.

Risks

• The $2,000,000 payment is subject to a 90-day grace period, creating a risk of delayed payment.
• The value of the HoldCo Units is dependent on WSCG's performance and the HUMBL assets purchased by WSCG.
• The transfer of the Acquired Assets and the consummation of the transactions contemplated hereby will not occur until twenty days (20) following the date that Seller files its DEF14 with the SEC with respect to the transaction.
• The escrow agreement will provide that the Escrowed Patent will be transferred to HoldCo if the Subsequent Payment has not been made by Buyer to Seller by December 31, 2024; provided, however, that Buyer will have a 90-day cure period within which to make the Subsequent Payment before the Escrowed Patent will be released.

Future Outlook

HUMBL intends to keep a portion of the HoldCo Units to maintain exposure to WSCG's performance and the HUMBL assets purchased by WSCG and will offer to exchange some of the HoldCo Units to its debtholders and holders of Series C Preferred Stock as a way to eliminate debt and reduce potential future dilution to common stockholders.

Management Comments

• The corporate action is taken by consent of the holder of a majority of the voting shares outstanding, and pursuant to Delaware law and the Company's Bylaws that permit holders of a majority of the voting power to take a stockholder action by written consent.
• Proxies are not being solicited because the majority stockholders holding the majority of the voting power of the issued and outstanding voting capital stock of the Company have voted in favor of the proposals contained herein.

Industry Context

This announcement reflects a strategic shift for HUMBL, potentially exiting its previous business model by selling its assets and pivoting towards a new direction under WSCG's leadership.

Comparison to Industry Standards

• It is difficult to compare this transaction to industry standards without knowing the specific assets being sold and the financial performance of HUMBL's business segments.
• Asset sales vary widely depending on the industry, the size of the company, and the market conditions at the time of the transaction.
• Comparable transactions would involve similar technology or digital asset companies selling their assets to larger entities or undergoing restructuring.

Management Changes

Stakeholder Impact

• Shareholders will see a significant change in the company's direction.
• Employees may be affected by the asset sale, depending on whether they are transferred to WSCG or remain with HUMBL.
• Customers of HUMBL's products and services will likely experience changes as WSCG integrates the acquired assets.

Next Steps

• Finalize the asset transfer to WSCG.
• WSCG to make the remaining $2,000,000 payment to HUMBL by December 31, 2024.
• WSCG principals to transfer real estate assets valued at least $45,000,000 to WSCG within 60 days of the closing date.
• Brian Foote to be appointed to WSCG's board of directors and as CEO of WSCG within five days of the Closing Date.
• HUMBL to apply to FINRA to change its name and cease using the HUMBL brand within 60 days of the closing date.

Key Dates

Keywords

asset sale, WSCG, HUMBL, acquisition, stockholders, assets, HoldCo, equity