Vancouver, British Columbia–(Newsfile Corp. – August 11, 2020) –  Whatcom Capital Corp. (TSXV: WHAT.P) (“Whatcom” or the “Company“), a capital pool company, is pleased to announce that it has entered into a three-cornered amalgamation agreement dated effective August 11, 2020 (the “Definitive Agreement“) with NEXE Innovations Inc. (“NEXE“) and 1260350 B.C. Ltd., a wholly-owned subsidiary of Whatcom, pursuant to which Whatcom will acquire all of the issued and outstanding securities of NEXE (the “Transaction“), as more particularly described below. The Transaction was initially announced in a Whatcom news release dated July 28, 2020, indicating Whatcom and NEXE had entered into a letter of intent with respect to the Transaction.

The Transaction is subject to a number of terms and conditions as set forth in the Definitive Agreement, including (among other things) the approval of the TSX Venture Exchange (the “Exchange“). If completed, the Transaction will constitute the “Qualifying Transaction” of Whatcom, as such term is defined in Policy 2.4 of the Exchange and will continue the business of NEXE as a “technology” issuer.

The Transaction

Pursuant to the Definitive Agreement, Whatcom will acquire all of the issued and outstanding securities of NEXE from NEXE’s securityholders. Each holder of NEXE common shares will receive one common share of the Resulting Issuer (hereinafter defined) (“Resulting Issuer Share“) for each NEXE Share held, each holder of NEXE Class A Preferred Shares, Series A (“Series A Share“) will receive one Resulting Issuer Share for each Series A Share held, each holder of NEXE Class A Preferred Shares, Series A Preferred (“Series A Preferred Share“) will receive one Resulting Issuer Share for each Series A Preferred Share held, and each holder of NEXE Class A Preferred Shares, Series 1 (“Series 1 Share“) will receive one and one-half Resulting Issuer Shares for each Series 1 Share held. All outstanding convertible securities of NEXE, including NEXE common share purchase warrants and NEXE stock options will be exchanged or replaced with convertible securities of the Resulting Issuer based on a one-to-one basis and on the same economic terms and conditions as previously issued. Upon completion of the Transaction, NEXE will become a wholly-owned subsidiary of the Company and the Company will change its name to “NEXE Innovations Inc.”, or such other name as the parties may reasonably agree upon. The combined entity (the “Resulting Issuer“) will continue the business of NEXE as a Tier 1 “technology” issuer on the Exchange.

The Transaction is conditional upon, among other things:

• the representations and warranties of each of Whatcom and NEXE, as set out in the Definitive Agreement, being true and correct in all material respects at the closing of the Transaction;

• the absence of any material adverse change in the business of each of the parties;

• the parties receiving all requisite regulatory approval, including the approval of the Exchange, and any third party approvals and authorizations;

• NEXE obtaining the requisite shareholder approval for the Transaction;

• the parties obtaining requisite board approvals for the Transaction;

• completion by Whatcom of a consolidation of the Whatcom securities on a 2.5 for 1 basis (the “Consolidation“); and

• completion of the Concurrent Financing.

Pre-Closing Capitalization of Whatcom

As of the date hereof, Whatcom’s authorized share capital consists of an unlimited number of common shares (“Whatcom Common Shares“) and an unlimited number of preferred shares in the capital of Whatcom, issuable in series, of which 10,000,000 Whatcom Common Shares and no Whatcom preferred shares are issued and outstanding. In addition, Whatcom has 400,000 stock options and 375,000 broker warrants issued and outstanding. Prior to the closing of the Transaction, Whatcom will complete the Consolidation.

Pre-Closing Capitalization of NEXE

As of the date hereof, 18,182,004 common shares of NEXE (“NEXE Common Shares“), 12,906,106 Series A Shares,7,940,117 Series A Preferred Shares, and 2,906,073 Series 1 Shares (together, the “NEXE Preferred Shares“), 5,500,000 stock options of NEXE (“NEXE Options“), 7,528,696 warrants to purchase NEXE shares (“NEXE Warrants“) and 3,250,000 performance warrants subject to certain milestone requirements (the “NEXE Performance Warrants“) are issued and outstanding and no other rights to acquire securities of NEXE exist.

The Transaction will constitute an arm’s-length transaction, and as such, the business combination will not require approval by the shareholders of Whatcom. Whatcom is preparing and will submit a filing statement in connection with the Transaction in due course.

Financing & Engagement of Canaccord Genuity Corp.

Whatcom is also pleased to announce that NEXE and Whatcom have engaged Canaccord Genuity Corp. (the “Canaccord“) to act as lead agent and sole bookrunner, on its own behalf and on behalf of a syndicate of agents, who have agreed to sell on a commercially reasonable efforts basis a financing of subscription receipts (each, a “Subscription Receipt“) at a price of $0.80 per Subscription Receipt, subject to the approval by the Exchange, for gross proceeds of a minimum of $5,000,000 and a maximum of $7,000,000 (the “Offering“). The Offering is being completed in connection with the Transaction. The Company and NEXE have also granted Canaccord an option to increase the Offering by up to an additional fifteen percent (15%) at any time up to forty-eight (48) hours prior to the closing of the Offering.

Each Subscription Receipt will, prior to the effective time of the Transaction, automatically convert into one NEXE common share and one-half of one NEXE common share purchase warrant (each a “Financing Warrant“), with each whole Financing Warrant exercisable into a NEXE common share at an exercise price of $1.00 for a period of twelve months, for no additional consideration upon the satisfaction of certain escrow release conditions, including the conditional approval of the Exchange for the Transaction and satisfaction or waiver of all of the conditions precedent to the Transaction as set out in the Definitive Agreement.

The proceeds of the Offering will be used for product sales, increase production and working capital over the next eighteen months.

NEXE and its Business

NEXE Innovations Inc. (formerly known as G-PAK Technology Inc.) is a private British Columbia-based advanced materials company which has developed a fully compostable (plant-based) single-serve coffee pod for use in Keurig Brewing Systems and was incorporated on April 27, 2015. NEXE purchased its facility in Surrey, British Columbia in 2016. In addition, NEXE has developed custom automation through its European and Canadian partners enabling NEXE to commercialize its proprietary capsules.

NEXE believes that the NEXE POD can eventually eradicate the waste created by single serve capsules. NEXE’s goal is to attract and sustain a significant portion of the single serve market, as there is a growing demand for environmentally friendly and sustainable products.

NEXE continues to see global brands shifting focus to environmentally sustainable solutions looking at compostable alternatives for their Keurig and Nespresso single serve brewing systems. According to Fior Markets, the global coffee pod and capsule market is forecasted to reach USD $29.2 Billion by 2025 at a Compound Annual Growth Rate (CAGR) of 8.5% during the forecast period from 2018-2025.

NEXE’s technology platform consists of the patented, fully compostable, NEXE POD including a growing Intellectual Property portfolio as well as the proprietary automation equipment involved with the process of making the NEXE POD. Hundreds of municipalities in the European Union, Canada, and the United States are moving in the direction of introducing comprehensive compost systems, making the NEXE POD a viable alternative to the typical plastic coffee capsules out in the marketplace.

See www.NEXE.ca for more information.

The following summary financial information is derived from the unaudited financial statements of NEXE for the year ended May 31, 2019 and 2020:

Proposed Management of the Resulting Issuer

Subject to Exchange approval, on completion of the Transaction, it is currently anticipated that the board of directors of the Resulting Issuer will consist of five (5) directors. Information with respect to certain of the proposed directors and officers of the Resulting Issuer is set forth below:

Darren Footz, Founder, CEO & Director

A serial entrepreneur, Mr. Footz is the past President of a coffee company that he built in less than 5 years from a small artisan roaster to a recognized national coffee brand. He is the innovative mind behind the 100% plant-based and fully compostable NEXE POD. His expertise, dedication and pioneering ideas are the backbone of our organization.

Ash Guglani, President & Director

Mr. Guglani spent 12 years in capital markets with a national investment bank in Vancouver. An original founder of NEXE, he plays an integral role in helping NEXE in all capacities including financing, operations, and marketing. Through Mr. Guglani’s direction, NEXE has acquired growth capital from both private and non-dilutive government sources.

Steve Lockhart, COO & Director

Mr. Lockhart has over 20 years of experience in management positions with Choices Markets, a $100 million revenue chain grocer. He played a key role in building the business from start-up to stability and profitability through the opening of over 10 large retail locations. Alway intrigued by sustainability, Mr. Lockhart joined NEXE after the sale of Choices to a large competitor.

Raj Kang, CFO & Corporate Secretary

Mr. Kang is the founder & president of RSK Management Consulting Inc. a private company that provides management services and has over 25 years of accounting and finance experience. He has proficient knowledge of capital markets, raising capital, M&A and corporate regulation of publicly listed companies. He is a designated CPA, CMA and holds an HND in Business and Finance from East Berkshire College, Berkshire, United Kingdom.

See Whatcom’s news release dated July 28, 2020 for additional information about the Transaction, NEXE and its business. Whatcom and NEXE will issue additional news releases related to the Transaction, additional independent directors of the Resulting Issuer and other material information as it becomes available. There can be no assurance that the Transaction will be completed as proposed or at all.

Trading in the shares of Whatcom is presently halted. The shares of Whatcom will remain halted until the Transaction is completed and approved by the Exchange.

Contact Information

Darren Tindale
Chief Executive Officer, Chief Financial Officer,
Director and Corporate Secretary
Tel: (604) 376-3567
Email: [email protected]

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein in the United States. The securities described herein have not been registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities law and may not be offered or sold in the “United States”, as such term is defined in Regulation S promulgated under the U.S. Securities Act, unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration requirements is available.

Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and, if applicable, pursuant to the requirements of the Exchange, shareholder approval. 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 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.

All information in this news release concerning NEXE has been provided for inclusion herein by NEXE. Although Whatcom has no knowledge that would indicate that any information contained herein concerning NEXE is untrue or incomplete, Whatcom assumes no responsibility for the accuracy or completeness of any such information.

The Exchange has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this news release.

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

Forward-Looking Statements

Certain statements in this release are forward-looking statements or information, which include completion of the proposed Transaction and related financing, development of technologies, future plans, regulatory approvals and other matters. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such information can generally be identified by the use of forwarding-looking wording such as “may”, “expect”, “estimate”, “anticipate”, “intend”, “believe” and “continue” or the negative thereof or similar variations. 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, including but not limited to, business, economic and capital market conditions, the ability to manage operating expenses, security threats, and dependence on key personnel. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which the Company will operate in the future, including the demand for its products, anticipated costs, and the ability to achieve goals. Factors that could cause the actual results to differ materially from those in forward-looking statements include, failure to obtain regulatory approval, the continued availability of capital and financing, equipment failures, litigation, increase in operating costs, the impact of Covid-19 or other viruses and diseases on the Company’s ability to operate, failure of counterparties to perform their contractual obligations, government regulations, loss of key employees and consultants, and general economic, market or business conditions. More particularly, this release contains statements concerning the anticipated Offering. Accordingly, there is a risk that the Offering will not be completely sold, or the Offering will be completed within the anticipated time or at all. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The reader is cautioned not to place undue reliance on any forward-looking information.

The forward-looking statements contained in this news release are made as of the date of this news release. Except as required by law, Whatcom disclaims any intention and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, Whatcom undertakes no obligation to comment on the expectations of, or statements made by, third parties in respect of the matters discussed above.

Not for distribution to United States newswire services or for dissemination in the United States

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