8-K: HUMBL Sells Financial Product Line to Avrio, Secures 10% Stake and Revenue Share

HUMBL, Inc. has sold its HUMBL Financial product line, including intellectual property related to BLOCK Indexes and BLOCK ETXs, to Avrio Worldwide, PBC in exchange for a 10% equity stake, a revenue share, and a board seat.

Summary

• HUMBL, Inc. has entered into an agreement to sell its HUMBL Financial product line to Avrio Worldwide, PBC.
• The sale includes all intellectual property associated with BLOCK Indexes and BLOCK ETXs.
• In return, HUMBL received 1,920,000 shares of Avrio's Class A Common Stock, representing a 10% stake in Avrio.
• HUMBL will also receive 2.5% of net revenues generated by Avrio from the sales of the acquired assets.
• The revenue share will terminate after five years or upon Avrio completing an initial public offering.
• HUMBL will gain a seat on Avrio's Board of Directors, with Brian Foote, CEO of HUMBL, as the initial designee.
• The transaction values the assets at $5,000,000 based on Avrio's pre-money valuation of $50,000,000.

Sentiment

Score: 7

Explanation: The sentiment is positive due to the strategic sale of assets, the equity stake in Avrio, and the potential for future revenue. However, there are risks associated with the reliance on Avrio's performance and the limited duration of the revenue share.

Positives

• HUMBL gains a 10% equity stake in Avrio, potentially benefiting from Avrio's growth.
• The 2.5% revenue share provides a recurring income stream for HUMBL.
• A board seat in Avrio allows HUMBL to influence the direction of the acquired assets.
• The sale allows HUMBL to focus on its core Web3 platform.
• Avrio's established market access and technology infrastructure could accelerate the growth of the HUMBL Financial products.

Negatives

• HUMBL is relinquishing control of its HUMBL Financial product line.
• The revenue share is capped at five years or until Avrio's IPO, limiting long-term potential.
• The value of the 10% stake is dependent on Avrio's future performance.
• HUMBL will no longer directly benefit from the growth of the sold assets beyond the revenue share and equity stake.

Risks

• Avrio's ability to successfully scale and monetize the acquired assets is not guaranteed.
• The revenue share is dependent on Avrio's sales performance.
• The value of Avrio's stock could fluctuate, impacting the value of HUMBL's 10% stake.
• There is a risk that Avrio may not achieve an IPO within the five-year timeframe, ending the revenue share agreement.
• The success of the transition of the HUMBL Financial products to Avrio is not guaranteed.

Future Outlook

Avrio will focus on issuing HUMBL Financial branded products and services, such as the BLOCK ETXs, into the consumer markets through digital wallets and web trading platforms. HUMBL will benefit from the potential growth of Avrio through its equity stake and revenue share.

Management Comments

• Brian Foote, CEO of HUMBL, stated that partnering with Avrio provides HUMBL Financial with the global market access needed to efficiently execute its strategies and scale rapidly.
• Brian Foote believes this is the right home for HUMBL Financial to achieve its global scaling goals, while delivering brand recognition, equity and revenue share value for HUMBL shareholders.
• Lawrence Wintermeyer, CEO of Avrio, said that HUMBL Financial has developed new and innovative products that give retail investors new ways to access digital assets.
• Lawrence Wintermeyer also stated that HUMBL becomes a significant stakeholder in Avrio with this agreement.

Industry Context

This announcement reflects a trend of companies focusing on core competencies and leveraging partnerships for growth. HUMBL is divesting its financial product line to focus on its Web3 platform, while Avrio is expanding its portfolio of financial products and services. This also highlights the growing interest in digital assets and the need for robust market infrastructure.

Comparison to Industry Standards

• The sale of a product line for equity and revenue share is a common strategy in the tech and finance industries, allowing companies to monetize assets while retaining upside potential.
• The 10% equity stake and 2.5% revenue share are within the range of typical deal structures for similar transactions.
• Avrio's focus on providing market infrastructure and technology aligns with the industry's need for robust and compliant platforms for digital assets.
• The involvement of Brian Foote on Avrio's board is similar to other strategic partnerships where key personnel are involved in the ongoing development of the acquired assets.
• Comparable companies that have divested assets for equity and revenue share include technology companies selling software or intellectual property to larger firms.

Management Changes

Stakeholder Impact

• Shareholders of HUMBL will benefit from the equity stake in Avrio and the potential revenue share.
• Customers of HUMBL Financial will see the products and services offered through Avrio's platform.
• Employees of HUMBL may experience changes as the company focuses on its core Web3 platform.
• Avrio's stakeholders will benefit from the acquisition of the HUMBL Financial product line.

Next Steps

• Avrio will integrate the HUMBL Financial product line into its platform.
• Avrio will begin issuing HUMBL Financial branded products and services.
• HUMBL will monitor Avrio's performance and its equity stake.
• Brian Foote will join Avrio's Board of Directors.
• The parties will work together to ensure a smooth transition of the assets.

Key Dates

Keywords

asset purchase, HUMBL Financial, Avrio Worldwide, BLOCK Indexes, BLOCK ETXs, equity stake, revenue share, board seat, intellectual property, digital assets