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Australis Capital Inc
Symbol AUSA
Shares Issued 113,143,755
Close 2020-07-03 C$ 0.175
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Australis amends terms to Passport acquisition deal

2020-07-06 10:13 ET - News Release

Mr. Cleve Tzung reports

AUSTRALIS CAPITAL ANNOUNCES AMENDED TERMS FOR THE PURCHASE OF PASSPORT TECHNOLOGY INC.

Australis Capital Inc. has noted that certain terms for the purchase of Passport Technology Inc. have been updated to reflect additional contract signings by Passport since the announcement of the transaction. As disclosed in a June 25 press release, AUSA agreed to pay an earnout to Passport as follows:

  • $2 million in shares of AUSA and Body and Mind Inc. ("BaM") if the Company achieves over $7 million in revenue in 2021
  • An additional $2 million in shares of AUSA and BaM if the Company achieves over $8 million in revenue in 2021
  • 25% of revenue in excess of $7 million in 2021 if Passport EBITDA for 2021 is above $3 million

Since the June 25 announcement, Passport has announced signing 16 additional Gateway Casinos in British Columbia and Alberta. Based on this signing, Passport provided an expectation of achieving $12 million of revenue in 2021 and $4 million of operating income. AUSA and Passport have agreed to amend the terms of the earnout as follows:

  • $2 million in shares of AUSA and BaM if the Company achieves over $8.5 million in revenue in 2021
  • An additional $2 million in shares of AUSA and BaM if the Company achieves over $9.5 million in revenue in 2021
  • 25% of revenue in excess of $8.5 million in 2021 if Passport EBITDA for 2021 is above $3 million

Based on the purchase price plus revised earnouts, AUSA will pay roughly 9.1x 2021 operating income if Passport achieves its expectations.

"We are pleased with the progress that Passport continues to make in its markets and are happy that Passport is willing to back up its confidence with these amended terms," said Cleve Tzung, CEO of AUSA. "With the increase in the threshold of Passport's earn-out structure, AUSA shareholders now will retain even more upside value that will be generated from this combined transaction."

All other terms of the transaction announced June 25 remain unchanged. For further details please refer to the June 25 press release.

About Australis Capital Inc.

AUSA invests in, operates and builds transformative, differentiated companies operating in highly regulated industries. Initially focused on investments in the cannabis industry, AUSA has expanded its business to offer proprietary unattended hardware and software technology to industries with the highest regulatory compliance standards along with supporting payment and fulfillment services. The globally available kiosk platforms are purpose-built in the cloud to deliver custom solutions in complex environments while emboldening customer confidence with features including data analytics, privacy, security and regulatory compliance. The Platform-as-a-Service (PaaS) technology delivers recurring revenue through long-term exclusive agreements initially focused on regulated retail environments and casino gaming while portable and scalable to profitably support organic growth and complementary acquisition opportunities.

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