TORONTO, Ontario (April 25, 2023) — PowerBand Solutions (TSXV: PBX) (OTCQB: PWWBF) (Frankfurt: 1ZVA) (“PowerBand” “PBX” or the “Company”), a comprehensive e-commerce solution transforming the online experience to lease and finance vehicles, provides the following update on corporate activities.
Following a detailed review of the business units operated within the Company’s corporate structure, the management team provided shareholders with its updated corporate strategy (see press release dated September 29, 2022) which allocated all growth capital and resources to its used and new vehicle leasing platform, Drivrz Financial, LLC (“DrivrzFinancial”), as management believes it represents the highest near-to-medium-term return to shareholders.
During the business unit review, management was notified by one of the financial institutions providing lease financing to DrivrzFinancial (the “Financial Institution”) that certain vehicle leases originated in fiscal year 2021, and in the first quarter of 2022 fell within the repurchase criteria set forth in the Forward Flow Purchase and Security Agreement entered into between DrivrzFinancial and the Financial Institution. As noted in the Q3 September 30, 2022 Financial Statements and Management Discussion and Analysis, DrivrzFinancial repurchased vehicle leases for CAD $4,785,665 (CAD $2,829,395 in Q3 2022 and CAD $1,956,270 in Q4 2022).
Since the beginning of Q1 2023, DrivrzFinancial and the Financial Institution have been in negotiations on additional lease contracts that the Financial Institution has identified fall within the repurchase criteria of the Forward Flow Purchase and Security Agreement. While the discussions have been ongoing the Financial Institution has not provided additional funding to DrivrzFinancial to originate vehicle leases. DrivrzFinancial’s second lease funding provider is also currently withholding financing, although the lease portfolio of the second lease funding provider is performing within guidelines. The Company’s management team is working to resolve matters with both financial institutions as soon as possible and be in a position to resume originating leases.
In the first quarter of 2023, DrivrzFinancial was not able to obtain alternative sources of financing to fund new lease originations, and instead self-funded a total of five vehicle leases. To conserve working capital, the Company has decided to not self-fund any additional leases at this time. As a result, the Company is currently not originating any new vehicle leases while it works to resolve matters with its funding partners.
DrivrzFinancial has implemented several measures to improve operations and to prevent future repurchase obligations. The executives and employees at DrivrzFinancial responsible for operations and underwriting when the repurchased leases were funded are no longer employed with the firm. The management team at PowerBand / DrivrzFinancial has hired several new experienced executives and employees, including a VP of Compliance and a new VP Servicing, to oversee the lease origination business.
DrivrzFinancial has adopted a revised Credit Underwriting Policy & Procedures Manual and an updated DrivrzFinancial Funding Checklist.
Additionally, DrivrzFinancial completed a comprehensive analysis of its entire lease portfolio and has identified dealers that it will no longer transact business with, thereby improving the credit profile of the portfolio and mitigating the risk of future lease repurchases. DrivrzFinancial has filed lawsuits against four dealers to recover damages and costs and has received judgements against three of these dealers. DrivrzFinancial has also issued additional demands to other dealers to repurchase leases that do not meet certain credit or legal criteria.
PowerBand’s management team continues to work diligently with the Financial Institution to resolve issues with the repurchasing of vehicle leases and to re-commence the origination of leases through the Forward Flow Purchase and Security Agreement. The Company is also seeking to secure additional funding lines for DrivrzFinancial.
About PowerBand Solutions, Inc.
PowerBand Solutions Inc., listed on the TSX Venture Exchange and the OTCQB markets, is a fintech provider disrupting the automotive industry. PowerBand’s integrated, cloud-based transaction platform facilitates transactions amongst consumers, dealers, and funders. PowerBand’s transaction platform – being trademarked under DRIVRZ™ – is being made available across the United States.
For further information, please contact:
Darrin Swenson
Chief Executive Officer and Director
P: 1-866-768-7653
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this news release.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements relating to the Company and other statements that are not historical facts. Forward-looking statements are often identified by terms such as “will”, “may”, “should”, “anticipate”, “expects”, “believes” and similar expressions. All statements other than statements of historical fact, included in this release, including, without limitation, statements regarding future plans and objectives of the Company, expected benefits and results from operations, expected return to shareholders as a result of allocating growth capital and resources to the DrivrzFinancial platform, expected results of cost-saving initiatives, the resolution of lease repurchases with the financial institution, the re-commencement of lease originations through the Forward Flow Purchase and Security Agreement and the ability of PowerBand to secure additional funding lines for DrivrzFinancial are forward looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.
The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company. As a result, we cannot guarantee that any forward-looking statement will materialize, and the reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated.
Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as at the date of this news release, and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by Canadian securities law.
