Newt Receives Government Vendor Approval to Provide Payroll Lending for Employees of the Mexican State of Baja California Sur

March 23, 2022 – Toronto, Ontario – Newt Corporation (“Newt” or the “Company”) is pleased to announce its approval as a vendor to the State of Baja California Sur to provide a Payroll Lending Program to the employees of the state government and the public administration. Newt’s Lending-as-a-Service program will be one of the first in Mexico for integrated payroll lending within one mobile app, featuring bill payment, gift cards, and Mastercard-labeled credit cards, in line with the recent Mexican legislation imposing digital regulation.

In addition to the vendor approval, Newt received a signed invitation to submit a proposal from the office of the Undersecretary of Administration as the top selected technology solution.
The public administration of Baja California Sur has over 6,000 employees in all five municipalities, with the main concentration of public employees in the state capital of La Paz.

Newt will provide a branded, white-label mobile app to all government employees, enabling the following services: auto-enrollment, digital KYC, and credit score building. Most importantly, Newt will provide employees with the benefit of direct payroll advance from their future paycheck, upon a single request, directly on their mobile phone, which will provide the needed fiscal transparency to the government by avoiding historical paper-intensive, inefficient administration processes. Additionally, each employee will have the opportunity to combine the app with a Mastercard-labeled credit card, jointly issued with Element Bank.

According to HR Ratings, a Mexican credit rating agency, the total amount in payroll lending in Mexico in Q2 2020 was above $3.4 billion USD with an average of 27% interest rate and less than 2.7% in bad credit.
Around 57% of the adult Mexican population had access to credit in 2018, with 39% of the adult population accessing informal credit (family or friends, pawn shops, etc.) and just 31% accessing formal or institutional credit. Only 22% of adult Mexicans under 30 have access to formal credit, the majority of whom belong to the wealthier segment of the population. The sizable informal credit market in Mexico constitutes a clear opportunity for Newt, which is better positioned than traditional banks to onboard lower income, underbanked, or unbanked Mexicans.

Sergio Maya Aleman, Newt’s CEO for Latin America, stated: “With this approval received from one Mexican state’s administration, we hope to set the trend for Newt to be adopted by other municipalities, with the ultimate goal of integrating a payroll lending program with LaaS mobile technology across the entire Mexican government. The digital integration process with Public Administration will bring enormous benefits in transparency and efficiency in a payroll lending business model.”

About Newt

Newt Corporation is a digital payment and financial services platform enabling enterprises to serve the large underbanked population in the Americas with digital financial products and services and access to credit. Newt provides a fairer, faster, accessible ecosystem that fills the credit accessibility gap and reshapes the way businesses and consumers save, move money and conduct commerce. The Company’s financial ecosystem offers mobile and digital bill payments, cross-border money transfers, digital wallet, prepaid stored value cards, and access to a large leading catalog of digital gift cards and subscription services. Newt’s omnichannel distribution and processing capability allows consumers to conveniently connect through mobile, web, point-of-sale and Newt branded electronic payment center kiosks located across a network of merchant locations. Newt is also bringing credit financing for small to medium sized enterprises, payroll loans for consumers, credit cards, loan financing, and other credit services for those who lack access to traditional financing.

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About the State of Baja California Sur

Baja California Sur is the ninth-largest Mexican state. It is located in the southern part of the Baja California Peninsula, in the northwest of Mexico. With a territory of 73,909 km2, it is about 750 km long and averages about 100 km wide. The state is divided into five municipalities, with a population of over 780,000 inhabitants. The public administration has over 6,000 employees in all five municipalities, with the main concentration of public employees in the state capital of La Paz.
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Forward – Looking Information

Certain information set forth in this news release may contain forward – looking information that involve substantial known and unknown risks and uncertainties. This forward – looking information is subject to numerous risks and uncertainties, certain of which are beyond the control of the Company, including, but not limited to, the impact of general economic conditions, industry conditions, failure to enter into a definitive agreement and complete the Acquisition, and dependence upon regulatory approvals. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward – looking information. The parties undertake no obligation to update forward – looking information except as otherwise may be required by applicable securities law.

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