PowerBand Solutions (TSXV: PBX) (OTC: PWWBF) this morning unveiled a major development, with the company announcing that it has entered into a letter of intent to partner with CB Auto Group. The proposed arrangement will see CB Auto’s 67 million members obtain direct access to DRIVRZ, the proprietary platform built by PowerBand to buy, sell, lease, and trade vehicles virtually.
Originally established in 2016, CB Auto Group is a firm that provides union members and their families across the US with access to the Union Auto Program. That program will now direct their members to the DRIVRZ platform when they are looking to acquire new or used vehicles under an exclusive arrangement that will also enable the sale of associated products and services.
The group currently consists of more than 43 million union members and their families that are in their customer base, along with 24 million additional members referred to as affinity members. These affinity members come from other associations that include ADP and Nike, along with alumni of the University of Tennessee and Georgia Tech.
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It’s currently estimated that based on NADA data, union members currently purchase over 3.4 million vehicles on an annual basis within the US from franchise dealers.
“This partnership will put DRIVRZ in front of millions of U.S. consumers, who will be able to buy, lease, sell, trade and finance a car and truck from their smart phone, as easily as buying a product on Amazon. This is another important step in the commercialization of DRIVRZ.”
Kelly Jennings, PowerBand CEO
Under the terms of the LOI, PowerBand is to take a 15% stake in CB Auto for total consideration of US$5.0 million, with the company to also receive an option to acquire an additional 15% stake in the firm for a period of 18 months. The purchase is to consist of a US$50,000 down payment at the time of the LOI, followed by a $2.0 million payment at the time of closing of the arrangement. A payment of $1.5 million is then due on each of March 31, 2021, and June 30, 2021.
In connection with the arrangement, 750,000 common share purchase warrants are to be issued to CB Auto with an expiry of three years from the date of issue. The first 300,000 warrants will have an exercise price of $0.30 per share and be issued upon closing. A further 225,000 warrants will be issued on each of March 31, 2021 and June 30, 2021, with the exercise price being based upon the market price at time of closing.
PowerBand Solutions last traded at $0.255 on the TSX Venture.
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