Pooled investment fund Authorised Investment Fund (ASX: AIY) is seeking to add another string to its bow after making a move to acquire a 30% equity stake in SpartaCard, a tech company focusing on commercialising the growing suite of services in what has become known as the “cryptocurrency generation”.
The non-binding term sheet signed by both parties also allows Authorised Investment Fund to increase its holding to 55% at a later date, with the agreed 30% stake valued at $5.7 million.
SpartaCard is said to be a ground-breaking product that combines a secure hardware wallet with transactional capabilities.
Founded in 2018, SpartaCard allows cryptocurrency investors to securely store their assets offline and to use their cryptocurrencies to purchase goods and services from participating merchants, without the need for a computer or cables.
The card has been designed to work with any merchant that accepts Bitcoin transactions and has been branded as “the world’s first ever secure transactional hardware wallet” by the upstart company.
In practical terms, it is offering a digital smartcard weighing 5 grams.
SpartaCard’s key features include “banking-grade security”, NFC and Bluetooth connectivity, PIN protection and an auto-recovery feature.
SpartaCard says that it also offers its customers an auto-wipe feature with security being one of its primary unique selling points.
The SpartaCard ecosystem will include both customer and merchant apps, currently under development but set to be released by October 2019, and coinciding with SpartaCard’s product shipping date.
Both apps are expected to be built to be compatible with iPhone and Android mobile platforms and will see continual development over time.
At this stage, SpartaCard is expected to begin shipping in October this year with manufacturing set to be done in Shenzhen, China.
SpartaCard’s contract manufacturer already supplies digital smart cards to a number of banks and financial institutions and has over a decade of experience in the digital smart card manufacture space.
Authorised Investment Fund reported that SpartaCard’s production line has the capacity to manufacture tens of thousands of SpartaCard units each month.
“We are also excited to have partnered with one of the leaders in the manufacture of digital smart card products in the world and look forward to working with them to bring our innovative product to market,” said George Parthimos, co-founder of SpartaCard.
Breaking down the deal
Currently, the signed deal remains non-binding and is dependent on a “number of waivable conditions precedents” with the capital required for the deal set to be raised by Authorised Investment Fund issuing SpartaCard with 19 million shares at A$0.30 per share as part of the proposed transaction.
Some of the other precedent conditions include due diligence and a supplemental binding agreement that must be signed to cement the deal.
A key consideration, and what is likely to affect the material terms of the deal, is the condition that SpartaCard has been set a sales target of 2,000 units of its cryptocurrency transactional hardware wallet, to be achieved by no later than 30 December 2019.
If SpartaCard achieves this goal, Authorised Investment Fund will be required to issue a further 2 million shares.
According to the company, in the event of its board not approving the intended share issue, Authorised Investment Fund will advance a cash amount to SpartaCard “in lieu of the Authorised Investment Fund scrip consideration but still subject to the same conditions”.
“Our enthusiasm for our investment in SpartaCard cannot be underestimated as this technology has enormous and unprecedented potential to capitalise on the convergence of blockchain technology with mainstream transactional banking.”
The technology also coincides at an extremely important time in the evolution of cryptocurrencies and the enormous role they will play in the future of payment systems and conventional banking, according to Ben Genser, chairman of Authorised Investment Fund.
“AIY welcomes SpartaCard to its growing stable of smart technology and digital investments and we trust will sit comfortably with and will enhance and benefit from our current investments in Asian Integrated Media (AIM), E-Mersion, Aenea and others,” said Mr Genser.
The announcement helped Authorised Investment Fund shares to jump more than 23.8% in morning trade to $0.13.