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Hampton Bay Capital Inc. Provides Further Details on Its Proposed Qualifying Transaction with Lendified Holdings Inc.



TORONTO, ONTARIO - TheNewswire - January 20, 2020 - As previously announced on December 24, 2019, Hampton Bay Capital Inc. (the "Corporation" or "Hampton Bay") (TSXV:HPB.P) has entered into a letter of intent dated December 20, 2019 (the "LOI") with Lendified Holdings Inc. ("Lendified") to effect an arm's length transaction that will result in the reverse takeover of Hampton Bay by Lendified (the "Proposed Transaction") to ultimately form the resulting issuer (the "Resulting Issuer"). It is intended that the Proposed Transaction will constitute the Corporation's "Qualifying Transaction" as such term is defined under the policies of the TSX Venture Exchange (the "TSXV" or the "Exchange"). Upon completion of the Proposed Transaction, the Resulting Issuer will operate in the Financial Technology sector.

About Lendified Holdings Inc.

Lendified, a federally-incorporated private lending company based in the Province of Ontario, is a leading Canadian FinTech company operating both a lending platform which provides working capital loans to small businesses across Canada through its wholly-owned subsidiary, Lendified Inc., as well as a software as a service technology platform providing AI-enabled credit origination and analytics to financial institutions across Canada through its wholly-owned subsidiary, JUDI.AI. Lendified was incorporated on February 25, 2015 by its founders, Troy Wright, CEO of Lendified (Advanced Management Program, Harvard Business School; BA, Western University), and Kevin Clark, President of Lendified (MBA, Richard Ivey School of Business; BA, Western University), each of whom have over 30 years of experience in the commercial lending business with a major Canadian bank.

About Lendified Inc.

Lendified Inc., a wholly-owned subsidiary of Lendified Holdings Inc., is a standalone lender to small and medium sized enterprises. To date, the company has funded over $80 million in small business loan transactions. Its growth rate has in part been due to its proprietary loan underwriting IP and technology, developed by JUDI.AI, its sister company, which manages an advanced application process that minimizes data input requirements. Lendified is a recognized brand in the "alternative" commercial lending segment, serving small businesses across Canada. The company is viewed as a "go to" lender for price, transparency and quick funding in an annual serviceable market of $5 billion (Source: Government of Canada). Continuous loan origination is ensured through its own direct channel, broker and partners and through a strategic channel which is characterized by relationships with larger commercial partners that have significant small business customer relationships.

About JUDI.AI

Lendified Technologies Inc., conducting business as JUDI.AI ("JUDI"), a wholly-owned subsidiary of Lendified Holdings Inc., is managed by its CEO, Gord Baizley (LLB/MBA, University of British Columbia; BA, University of Western Ontario; CFA). JUDI has developed a proprietary standalone analytics and credit approval platform which does not conflict with lending institutions' legacy systems. It enables a superior frictionless digital experience for existing or new customers and provides automated decision making and workflow that results in cost savings and/or increased capacity together with better risk decisions. JUDI's technology platform is designed to address the needs of credit unions and community banks, as well as Tier 3, 4 and 5 U.S. banks, which encompasses banks with less than $2 billion in assets. Total market potential is estimated to be $20 billion (Source: Government of Canada).

The Proposed Transaction

It is currently anticipated that the Proposed Transaction will be effected by way of a share exchange, merger, amalgamation, arrangement or other similar form of transaction as is acceptable to the parties. The parties to the Proposed Transaction are at arm's length and, as to the knowledge of the Corporation, no insider, promoter or control person of the Corporation has any material equity ownership or interest in Lendified prior to giving effect to the Proposed Transaction. As the Proposed Transaction is not a "Non-Arm's Length Qualifying Transaction" (as such term is defined in TSXV Policy 2.4 - Capital Pool Companies), approval of the Corporation's shareholders will not be required pursuant to the policies of the TSXV.

There are currently an aggregate of 15,819,500 common shares in the capital of Hampton Bay (each, a "Hampton Bay Common Share") issued and outstanding, as well as 1,581,950 stock options and 621,950 broker warrants, each of which is exercisable to acquire one Hampton Bay Common Share at an exercise price of $0.10. On or immediately prior to completion of the Proposed Transaction, it is anticipated that Hampton Bay will effect a consolidation on the basis of 1.88 "old" Hampton Bay Common Shares to one "new" Hampton Bay Common Share (subject to adjustments in certain circumstances (the "Consolidation") resulting in approximately 8,414,627 post-Consolidation Hampton Bay Common Shares.

In connection with the Proposed Transaction, all outstanding stock options and warrants of Hampton Bay will, on a post-Consolidation basis, remain in effect on substantially the same terms and in accordance with the policies of the TSXV.

The terms of the Proposed Transaction will provide that, upon completion of the Proposed Transaction, shareholders of Lendified ("Lendified Shareholders") will receive one post-Consolidation Hampton Bay Common Share for every share of Lendified held. Upon completion of the Proposed Transaction, it is anticipated that existing Lendified Shareholders will hold an aggregate of approximately 87,587,632 post-Consolidation Hampton Bay Common Shares, assuming the completion of the Concurrent Financing (as defined below) for aggregate gross proceeds of $4,000,000 and the conversion of the aggregate convertible debt of Lendified into equity. In addition, all existing options, warrants and other securities convertible into shares of Lendified shall be exchanged for similar securities of the Resulting Issuer following completion of the Proposed Transaction on a one-for-one basis (post-Consolidation) on substantially similar terms and conditions. For the purposes of the Proposed Transaction, the parties have agreed that Hampton Bay shall have a deemed value of $2,100,000 and Lendified shall have a deemed value of $17,900,000 for an aggregate value of $20,000,000 (prior to giving effect to the Concurrent Financing (as defined below)). Upon completion of the Proposed Transaction, the securityholders of Lendified will own a large majority of the issued and outstanding common shares of the Resulting Issuer, and the common shares of the Resulting Issuer will be listed for trading on the TSXV.

On or immediately prior to the completion of the Proposed Transaction, it is anticipated that the Corporation will effect a name change to Lendified Holdings Inc. or such other name as may be determined by Lendified and acceptable to the TSXV (the "Name Change").

The obligations of Hampton Bay and Lendified pursuant to the LOI shall terminate in certain specified circumstances, including in the event that the Proposed Transaction is not completed by February 28, 2020, unless otherwise agreed to by the parties. Hampton Bay and Lendified have agreed to act in good faith to draft, negotiate and execute a definitive acquisition agreement (the "Definitive Agreement") with respect to the Proposed Transaction. Upon entering into of the Definitive Agreement, the terms of the Definitive Agreement shall supersede the terms of the LOI.

Proposed Management of the Resulting Issuer

It is the intention of the Corporation and Lendified to establish and maintain a board of directors of the Resulting Issuer (the "Board") with a combination of appropriate skill sets that is compliant with all regulatory and corporate governance requirements, including any applicable independence and residency requirements. Upon completion of the Proposed Transaction, the board of directors of the Resulting Issuer is expected to be comprised of Troy Wright, Kevin Clark, Perry Dellelce, Benjy Katchen, Sheila Murray and Jeremy Edelman. In addition, it is contemplated that up to two additional nominees of Lendified will be announced at a later date. Upon completion of the Proposed Transaction, all existing officers of the Corporation shall resign and be replaced with officers appointed by the new Board. The following sets out the names and backgrounds of all persons who are expected to be directors and officers of the Resulting Issuer upon closing of the Proposed Transaction:

Troy Wright - Chief Executive Officer and Director

Troy Wright is the CEO of Lendified Holdings Inc. He has held this position since February 2005. Previously he was the executive Vice President and CEO of Scotiabank Mexico as well as being a member of the executive management team of Scotiabank group. Mr. Wright has been a financial services executive for 30 years and has held positions in Canada, the United States and in various Latin American jurisdictions. He has extensive background in corporate and investment banking as well as having lead large multi business banking organizations. Mr. Wright holds a bachelor of arts degree from the University of Western Ontario as well an AMP from Harvard Business School. Mr. Wright also supports non-profit and charitable organizations and is the chair of RSI.

Kevin Clark - President and Director

Kevin is the President & Co-Founder of Lendified - one of Canada's now-established lending technology companies in Canada. Founded in 2015, and operating as two companies, Lendified.com (in which Kevin is CEO) is a lender providing capital to the small business community across Canada. Its sister company, Judi.ai, is a software-as-a-service technology company, providing credit risk adjudication software to lending, leasing and commercial businesses in Canada and the United States. Prior to Co-Founding Lendified, Kevin spent 30 years with The Bank of Nova Scotia, in various capacities culminating in the running of several of the Bank's global business lines. In his current activities in the "Fintech" community, Kevin is a board member (and past Chair and Co-Founder) of the Canadian Lenders Association - an organization supporting and representing the Lendtech & Innovative/alternative lending marketplace in Canada, and has past membership on the Steering Committee for Small Business Finance - a committee promoting the development and support of small business finance in Ontario, chaired by the Toronto Finance International Organization.

Perry Dellelce - Director

Perry Dellelce is a founder and managing partner of Wildeboer Dellelce LLP, one of Canada's leading corporate finance and transactional law firms. Perry practices in the areas of securities, corporate finance and mergers and acquisitions. Perry serves on the boards of many of Canada's leading businesses. Perry is chair of the NEO Exchange, Canada's newest stock exchange. He is also a member of the board of Mount Logan Capital Inc. and Lendified Holdings Inc. He has received many awards and recognitions for his public service. Perry has been bestowed an honorary Doctorate of Laws from Laurentian University. In addition, the University of Notre Dame honoured Perry with the Distinguished Alumni Award from the Mendoza College of Business. He has also been recognized by the Western University with the Purple and White Award for long-standing dedication to the University and by the University of Ottawa by being admitted to the Common Law Honour Society recognizing the Law School's most accomplished graduates. Perry is the past chair and a current member of the board of directors of the Sunnybrook Foundation and the current chair of the Canadian Olympic Foundation. Recently, Perry was awarded the Paul Harris Award by the Rotary Club of Sudbury, the Rotary Club's highest recognition for community service.

Benjy Katchen - Director

Benjy Katchen is the Chief Digital and Strategy Officer of Home Capital Group. Benjy joined Home Trust in 2012 as Vice President Deposits where he founded and led the growth of Oaken Financial, Home's direct to consumer brand. Over the last several years he led various businesses for Home Trust including Credit Cards and Retail Lending and played a key part in several strategic transactions such as the post-acquisition integration of CFF Bank (now Home Bank), the Berkshire Hathaway investment in Home and other measures to restore liquidity and confidence in 2017. He currently leads Home's deposit businesses as well as Digital and Corporate Strategy. Prior to joining Home Trust, Benjy's career spanned work in investment banking with RBC Dominion Securities, strategy consulting with Bain & Company, and leading sales effectiveness and channel strategy for President's Choice Financial while at Amicus Bank. Benjy has also been involved in several start-ups and has consulted for many innovative and disruptive retail banking models. He serves as Chairman of the Hammer Band - from Violence to Violins a non-profit in Toronto. Benjy holds an HBA (Dean's List) from the Richard Ivey School of Business, an MBA (with distinction) from INSEAD and is an Institute Certified Director (ICD.D) from the Institute of Corporate Directors.

Sheila Murray - Director

Sheila Murray is the former President of CI Financial Corp., a position she held from 2016-2019. Previously, she had been Executive Vice-President and General Counsel since 2008, following a 25-year career at Blake, Cassel's and Graydon LLP. She is Chair of the Dean's Council at Queen's University Law School, and has been an adjunct professor at Osgoode Hall Law School, and has taught Securities Regulation and Corporate Finance at University of Toronto's Global Professional LLM in Business Law Program for several years. Ms. Murray is a member of the Board of Directors of Teck Resources Limited, Lendified Holdings Inc., and the SickKids Foundation, a trustee of the Toronto Symphony Foundation and Granite Real Estate Investment Trust, and is a director of several other private and public companies including Granite REIT Inc. In 2016, Ms. Murray was the recipient of the Canadian General Counsel Award for Business Achievement. Ms. Murray received her B.Comm. and LLB degrees from Queen's University.

Jeremy Edelman - Director

Mr. Edelman is an admitted solicitor to the Supreme Courts of Western Australia and New South Wales. He worked for some for the world's leading investment banks, including Bankers Trust and UBS Warburg, in debt and acquisition finance. He has held consulting and director positions in stock exchange listed companies in the UK and Australia with a focus on resource exploration and development including investment companies established with the specific objective of investing in oil and gas projects. Mr. Edelman also has experience in corporate finance, having been responsible for co-coordinating a number of companies in making acquisitions in a variety of resource sectors. He worked in various regions of the world including the Republic of Kazakhstan, Russia, South Africa and Australia. Mr. Edelman holds Bachelor degrees in Commerce and Law together with a Master's degree in Applied Finance.

Norman Tan - Chief Financial Officer

Norman Tan is the CFO of Lendified Holdings Inc. He joined Lendified in 2018 and has been responsible for building out the company's financial systems and processes. Prior to joining Lendified, Norman worked in Deloitte's audit and assurance practice where he worked with finance leaders in industries including fintech, manufacturing and professional services. He has also held roles in management consulting, technology equity research and private equity. Norman received his B.Comm from the University of British Columbia, his MBA from Queen's University and is a CFA charterholder.

Concurrent Financing

In connection with and prior to closing of the Proposed Transaction, Lendified proposes to complete a private placement financing led by Haywood Securities Inc. (the "Agent") of subscription receipts (the "Subscription Receipts") at a price of $0.25 per Subscription Receipt for aggregate gross proceeds of not less than $4,000,000 (the "Concurrent Financing"). Lendified has granted to the Agent an option exercisable up to 48 hours prior to the final closing date of the Concurrent Financing to arrange for the purchase of up to an additional 2,400,000 Subscription Receipts for additional gross proceeds of $600,000. Each Subscription Receipt will automatically convert into one unit of Lendified (each, a "Unit") on the satisfaction or waiver of all conditions precedent to the Proposed Transaction and certain other ancillary conditions customary for transactions of this nature (collectively, the "Release Conditions"), without the payment of additional consideration or the taking of further action on the part of the subscriber. Each Unit will consist of one common share in the capital of Lendified (a "Unit Share") and one-half of one Lendified common share purchase warrant (each whole warrant, a "Warrant"). Each Warrant will be exercisable to acquire one common share in the capital of Lendified at an exercise price of $0.38 for a period of 24 months from the date of issuance.

The gross proceeds of the Concurrent Financing (less the Agent's expenses and 50% of the Commission, as defined below) will be held in escrow pending the satisfaction of the Release Conditions. In the event the event the Proposed Transaction does not occur on the date that is 120 days following the final closing date of the Concurrent Financing, the gross proceeds shall be returned to the purchasers pro rata without any deduction or interest, and the Subscription Receipts shall be automatically cancelled.

Upon completion of the Proposed Transaction, each Unit Share will automatically be exchanged for a post-Consolidation common share of the Resulting Issuer (each, a "Resulting Issuer Share") and each Warrant will automatically be exchanged for one warrant of the Resulting Issuer exercisable to acquire one Resulting Issuer Share at an exercise price of $0.38 for a period of 24 months from the date of issuance of the Warrants.

In connection with the Concurrent Financing, the Agent will be entitled to a cash commission equal to 7% of the aggregate gross proceeds raised in connection with the Concurrent Financing (the "Commission") as well as non-transferrable compensation options (each, a "Compensation Option") exercisable for that number of common shares in the capital of Lendified equal to 7% of the number of Subscription Receipts issued pursuant to the Concurrent Financing at a price of $0.25 per share for a period of 24 months from the applicable closing date. In connection with the Concurrent Financing, the Agent will be entitled to a corporate finance fee of $75,000, of which $50,000 will be paid in cash and $25,000 will be paid in common shares in capital of Lendified (the "Corporate Finance Fee Shares") at a deemed price equal to $0.25 per Corporate Finance Fee Share. In connection with the closing of the Proposed Transaction, the Compensation Options and Corporate Finance Fee Shares will be exchanged for like securities of the Resulting Issuer.

The net proceeds of the Concurrent Financing, after giving effect to the Proposed Transaction, are expected to be used by the Resulting Issuer for corporate and general working capital purposes.

Selected Financial Statement Information

The following table presents selected information on the financial condition and results of operations for Lendified. Such information is derived from the audited financial statements of Lendified for the financial year ended December 31, 2018.

Lendified

December 31, 2018

(audited)

Balance Sheet

Current Assets

$17,944,797

Other assets

$5,635,553

Total Assets

$23,580,350

Current Liabilities

$33,531,054

Non-Current Liabilities

$5,892,689

Total Liabilities

$39,423,743

Share capital

$8,247,730

Contributed Surplus

$1,764,856

Earnings / (Deficit)

$(25,855,979)

Shareholders' Equity

$(15,843,393)

Total Liabilities and Shareholders' Equity

$23,580,350

In the normal course of business, Lendified provides working capital loans to small businesses which are funded by two senior debt facilities secured against the underlying small business loans. The foregoing selected financial information accounts for all of the senior debt facilities of Lendified. In addition, the foregoing accounts for the aggregate outstanding convertible debt of Lendified, which is likely to be converted into equity of Lendified, subject to negotiations with current convertible debtholders, contemporaneously with the completion of the Proposed Transaction, thus significantly reducing the outstanding debt of Lendified.

Bridge Loan

It is also intended that Hampton Bay will provide Lendified with a bridge loan of $225,000 bearing an interest rate of 10% per annum (the "Bridge Loan"), subject to the policies of the TSXV. The terms of the Bridge Loan will be set out in a definitive loan agreement between Hampton Bay and Lendified and will be covered by a general security agreement on Lendified's assets. The proceeds of the Bridge Loan are expected to be used by Lendified for general working capital purposes. Upon completion of the Proposed Transaction, the Bridge Loan will be consolidated as part of the debt assumed by the Resulting Issuer.

Sponsorship

In connection with the Proposed Transaction, the Corporation intends to apply for an exemption from the sponsorship requirements of the TSXV pursuant to section 3.4 (a)(ii) of TSXV Policy 2.2 - Sponsorship and Sponsorship Requirements; however, there is no assurance or guarantee that the TSXV will exempt the Corporation from all or part of the applicable sponsorship requirements.

Trading Halt

Trading in the Hampton Bay Common Shares has been halted and shall remain halted pending closing of the Proposed Transaction, subject to the earlier re-commencement of trading only upon TSXV approval and the filing of all required materials with the TSXV as contemplated by its policies.

Significant Conditions of Closing

Completion of the Proposed Transaction is subject to a number of conditions including, but not limited to, satisfactory diligence review by each party, TSXV acceptance, Lendified shareholder approval, the completion of the Consolidation and Name Change and completion of the Concurrent Financing.

Insiders of the Resulting Issuer

Gesmex Corporation ("Gesmex"), an entity existing under the federal laws of Canada, holds approximately 42.2% of the issued and outstanding shares of Lendified (on a fully-diluted basis) as of the date hereof. Upon completion of the Proposed Transaction and assuming completion of the Concurrent Financing for gross proceeds of $4,000,000, Gesmex is expected to hold approximately 30.6% (on a non-diluted basis) and approximately 22.4% (on a fully-diluted basis) of the outstanding Resulting Issuer Shares. Gesmex is expected to be an "Insider" and "Control Person" (as each term is defined in the policies of the TSXV). [

Other than has been previously referred to in this press release, and to the knowledge of the directors and senior officers of the Corporation or Lendified, it is not anticipated that any person will become an insider of the Resulting Issuer as a result or upon completion of the Proposed Transaction

Forward-Looking Statements

This press release contains statements which constitute "forward-looking information" within the meaning of applicable securities laws including, but not limited to, statements regarding the plans, intentions, beliefs and current expectations of the Corporation and Lendified with respect to future business activities and operating performance. Forward-looking information is often identified by the words "may", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" or similar expressions and includes information regarding: (i) expectations regarding whether the Proposed Transaction will be consummated, including whether conditions to the consummation of the Proposed Transaction will be satisfied including, but not limited to, the necessary regulatory approvals and the timing associated with obtaining such approvals; (ii) the proposed structure of the Proposed Transaction, including the consideration contemplated thereunder; (iii) the timing for completing the Proposed Transaction; (iv) entering into of the Definitive Agreement; (v) the completion of the Concurrent Financing; (vi) completion of the Name Change and Consolidation; (vii) issuance of the Bridge Loan; (ix) composition of the Board following completion of the Proposed Transaction; (x) conversion of Lendified's existing convertible debt into equity; and (xi) the business plans and expectations of the Resulting Issuer.

Investors are cautioned that forward-looking information is not based on historical facts but instead reflects the Corporation and Lendified's respective management's expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Corporation and Lendified each believe that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material

adverse effects on future results, performance or achievements of the Resulting Issuer. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: the ability to consummate the Proposed Transaction as anticipated or at all; the ability to obtain requisite regulatory and shareholder approvals and the satisfaction of other conditions to the consummation of the Proposed Transaction on the proposed terms and schedule; the completion of the Concurrent Financing; changes in general economic, business and political conditions, including changes in the financial markets; changes in applicable laws and regulations; compliance with government regulation and the costs associated with compliance; costs of developing projects and product opportunities; the risks and uncertainties associated with lending markets; and the diversion of management time on the Proposed Transaction. This forward-looking information may be affected by risks and uncertainties in the business of the Corporation and Lendified and/or general market conditions.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Corporation and Lendified have attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended and such changes could be material. The Corporation and Lendified do not intend, and do not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.

This press release does not constitute an offer to sell or a solicitation of an offer to buy the Subscription Receipts or Resulting Issuer Shares in any jurisdiction, nor will there be any offer or sale of the Units in any jurisdiction in which such offer, solicitation or sale would be unlawful. The Subscription Receipts and Resulting Issuer Shares have not and will not be registered under the U.S. Securities Act or any U.S. state securities laws, and therefore will not be offered or sold within the United States except pursuant to exemptions from the registration requirements of the U.S. Securities Act and applicable state securities laws.

About Hampton Bay

Hampton Bay is a CPC created to identify and evaluate potential acquisitions of commercially viable businesses and assets that have the potential to generate profits and to add shareholder value. Except as specifically contemplated in the CPC policy of the TSXV, until completion of a qualifying transaction, the Corporation will not carry on business other than the identification and evaluation of businesses or assets with a view to completing a proposed qualifying transaction.

For further information please contact:

Jeremy Edelman
Chief Executive Officer and Chief Financial Officer +61 455 553 363
jeremy@edelman.cc

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as such term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

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