Seeking $1.5M to buy 23-year-old Fintech and Go Public on OTC

Since 2007, our Toronto firm specializes in M&A of tech/e-commerce businesses. Our CEO was majority shareholder of an OTC company – he sold and exited in Nov 2022.

We seek pre-Reg A funding to set up a new Ontario corporation (“Parent”) to acquire 100% equity in a BC corporation (“Target”) that develops and deploys custom mobile banking enterprise software for its financial institution clients in US and South America. Target also services annual maintenance contracts. Target’s two Founders will be retained in their current roles as CEO and COO.

Immediately after the acquisition, Parent will submit a Reg A filing (to raise up to $50,000,000) to become an SEC reporting company. We will work with a market maker to list Parent on the OTC Markets.

Parent will use the post-Reg A funding to acquire, develop, or grow tech products/businesses to add to Parent’s portfolio.

Target:

• Established in 2000 in British Columbia
• 11 employees including 2 Founders who own 70% equity and 30% equity respectively
• 2022 – $1,100,000 Revenue and $416,000 Profit
• 2021 – $900,000 Revenue and $120,000 Profit
• 2020 – $1,020,000 Revenue and $78,000 Profit (Profit excludes Owner Compensation)

Target’s Revenue Breakdown:

• Software Sales – software license fees deliver 20% of Revenue
• Consulting – billed on a time & expense basis, up to $1,500 per day. Delivers 40% of Revenue.
• Software Maintenance – Average renewable contract is up to $80,000 annually. Delivers 40% of Revenue.

Pre-Reg A Funding Request:

Acquisition costs = $1,400,000 maximum (We expect to pay a lower Target purchase price than this. We’ll negotiate a down-payment and payment of balance or earn-out over time.)

Reg A costs = $150,000 (Our M&A firm will handle Reg A document preparation to reduce these costs.)

We do not expect to need the entire Pre-Reg A Funding Request amount upfront. We will use post-Reg A funding to cover some costs.