Whatcom Capital II Corp. Enters into a Letter of Intent with Terrazero Technologies Inc. for a Proposed Qualifying Transaction

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Vancouver, British Columbia–(Newsfile Corp. – September 22, 2022) – Whatcom Capital II Corp. (TSXV: WAT.P) (“Whatcom II” or the “Company“) is pleased to announce that it has entered into a letter of intent dated September 21, 2022 (the “LOI“) with Terrazero Technologies Inc. (“TZ“) regarding a proposed transaction to acquire all of the issued and outstanding securities of TZ (the “Transaction“). Upon completion of the Transaction, the combined entity (the “Resulting Issuer“) will continue the business of TZ as a Tier 1 “technology” issuer. The Transaction is intended to constitute the “Qualifying Transaction” of Whatcom II, as such a term is defined in Policy 2.4 – “Capital Pool Companies” of the TSX Venture Exchange (the “Exchange“).

The proposed Transaction is an Arm’s Length Qualifying Transaction pursuant to the policies of the Exchange and, as such, the Company is not required to obtain shareholder approval for the proposed Transaction.

Darren Tindale, Whatcom Capital II Corp., CEO, commented, “We are very excited that Dan Reitzik and his impressive team at Terrazero wish to partner with Whatcom Capital II. In its pursuit of becoming one of the significant players in the Metaverse and Web 3 space, we believe Terrazero is well positioned.”

Dan Reitzik, founder and CEO of Terrazero Technologies Inc. commented, “TerraZero is a well capitalized, revenue producing company with three main business divisions. Our studio division creates immersive metaverse activations for global brands and companies. Our technology division creates solutions to bridge the real world with the virtual world, and our data analytics division aggregates data from across the metaverse to help guide the Company’s and our clients’ decision making. I see the metaverse as simply the next version of the internet as we know it today, but instead of a 2D environment, it is a 3D environment providing greater engagement between brands and consumers, and between people themselves. There will soon be significant consolidation and opportunities in the metaverse and Web 3 space, and TerraZero will be positioned to capitalize on these as needed.”

About Terrazero Technologies Inc.

TZ is a private company and was incorporated on May 28, 2021 by Certificate of Incorporation issued pursuant to the provisions of the Business Corporations Act (British Columbia) under the name “Terrazero Technologies Inc.”. TZ is a vertically integrated Metaverse development group and leading Web 3.0 technology company specializing in helping brands create immersive experiences. The company’s Metaverse-agnostic vision is to develop and implement products and services with scalable commercial applications to flourish engagement across gamified experiences where enterprise-level businesses, Metaverse platforms, and Web3 creators can seamlessly bridge and actionably grow their virtual world and the physical world endeavors together as one. TZ owns digital real estate for brands to establish presence in existing virtual worlds and can also offer brands their own private worlds to provide offices and services to those interested in the Metaverse. Furthermore, TZ acquires, designs, builds, and operates virtual assets and solutions to monetize the Metaverse ecosystem. The Company’s businesses are segmented into five (5) divisions which include: (1) Immersive experience creation in existing or private virtual worlds; (2) advertising; (3) data analytics; (4) events and marketing; and (5) infrastructure. TerraZero aims to support the community, foster innovation, and drive adoption.

See www.terrazero.com for more information.

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:

Dan Reitzik, Founder, CEO & Director

Mr. Reitzik is the founder, Chief Executive Officer and a director of TZ. Mr. Reitzik has years of experience, knowledge and understanding of blockchain, digital assets and cryptocurrency through his previous role as the co-founder and CEO of DMG Blockchain Solutions Inc. (from 2016 to March 2021), a vertically integrated blockchain and cryptocurrency company that manages, operates and develops end-to-end digital solutions to monetize the blockchain ecosystem.

Ryan Cheung, CFO, Corporate Secretary & Director

Mr. Cheung is the Chief Financial Officer, Corporate Secretary and a director of TZ. Mr. Cheung, CPA, CA, is founder of MCPA Services Inc. Chartered Professional Accountants, providing accounting, management, securities regulatory compliance services to private and publicly-listed companies. Mr. Cheung also serves as an officer and/or director of a number of publicly-listed companies. Mr. Cheung holds a Bachelor of Commerce degree from the University of Victoria and is a member of the Chartered Professional Accountants of British Columbia. Mr. Cheung was previously worked alongside Dan Reitzik as the Chief Financial Officer of DMG Blockchain Solutions Inc. from September 2017 to July 2021.

Lance Morginn, Director

Mr. Morginn is a director of TZ. Mr. Morginn is the co-founder, President and a director of BIGG Digital Assets Inc. With over 20 years of industry experience in technology-based start-ups, he brings a vast and proven track record for growing and developing businesses from the ground-up. His background includes roles as Founder/CEO/Director in several publicly and privately traded companies.

It is anticipated that the Resulting Issuer will also appoint two additional independent directors.

The Qualifying Transaction

Terms of the Transaction

Subject to the execution of a definitive agreement (“Definitive Agreement“), Whatcom II proposes to acquire from the shareholders of TZ all of the issued and outstanding securities of TZ in exchange for securities of Whatcom II. In consideration under the Transaction, upon closing of the Transaction (“Closing“), Whatcom II will issue: (i) one post-Consolidation (as defined below) common share of Whatcom II (“Payment Shares“) for each common share of TZ; and (ii) one-Payment Share for each Series A1 Preferred share of TZ. The parties anticipate a total of 52,947,539 Payment Shares will be issued to the shareholders of TZ with a deemed issuance price of approximately $0.70 per Payment Share, representing a deemed valuation of TZ of approximately C$37,063,277.

It will be a condition of Closing that immediately prior to Closing there will not be outstanding any securities convertible into shares of TZ other than the existing stock options (the “Options“) and warrants to purchase common shares of TZ (the “Warrants“), and that pursuant to the Transaction, the Options and Warrants will be exchanged or replaced with the equivalent securities of Whatcom II. There are no finder fees payable in connection with the Transaction.

In connection with the Closing, TZ may complete an equity financing by way of a non-brokered private placement financing relying on the prospectus exemptions pursuant to National Instrument 45-106 and other applicable laws, rules and regulations, of subscription receipts, common shares or units of TZ (the “Financing“), to raise gross proceeds of up to $2,000,000, at a price per security to be determined among the parties. Finder’s fees may be paid in connection with the Financing. The Financing is subject to the approval of the Exchange and satisfaction or waiver of all the conditions precedent to the Transaction as set out in the Definitive Agreement. Notwithstanding the foregoing, TZ may issue additional securities in connection with a financing or any other type of transaction (e.g. asset acquisitions) prior to the Closing of the Transaction, with the prior written approval of Whatcom II.

It will be a condition of Closing that Whatcom II will have consolidated its common shares on the basis of one (1) new common share for each three and one-half (3.5) existing common shares (the “Consolidation“). All issued and outstanding securities of Whatcom II will be consolidated on the 3.5:1 ratio pursuant to the Consolidation.

Whatcom II intends to make an application for an exemption from the Exchange’s sponsorship requirements.

The Transaction is conditional upon, among other things:

  1. the parties will have received all necessary regulatory and third-party consents, approvals and authorizations as may be required in respect of the Transaction, including, but without limitation, acceptance of the Exchange;

  2. completion of due diligence to the satisfaction of the parties;

  3. approval of the board of directors of each of Whatcom II and TZ to final terms and conditions of the Transaction as set forth in the Definitive Agreement and all other necessary matters related thereto prior to the signing of the Definitive Agreement;

  4. the signing of the Definitive Agreement;

  5. completion of all matters, and the satisfaction of all conditions (unless waived in writing), under the Definitive Agreement required to be completed or satisfied on or before closing of the Transaction including but not limited to completion of the Financing;

  6. the shareholders of TZ will have approved the Transaction; and

  7. completion by Whatcom II of the Consolidation, effective immediately prior to the closing of the Transaction.

Pre-Closing Capitalization of Whatcom II

As of the date hereof, Whatcom II’s authorized share capital consists of an unlimited number of common shares and an unlimited number of preferred shares, issuable in series, of which 15,000,000 (4,285,714 post-Consolidation) common shares and no preferred shares are issued and outstanding. In addition, Whatcom II has 800,000 (228,571 post-Consolidation) stock options and 755,000 broker warrants (215,714 post-Consolidation) issued and outstanding.

Pre-Closing Capitalization of TZ

As of the date hereof, TZ’s authorized share capital consists of an unlimited number of common shares and an unlimited number of preferred shares, issuable in series, of which 48,047,539 common shares and 4,900,000 Series A1 Preferred shares of TZ are issued and outstanding. In addition, TZ has 4,775,000 Stock Options, 3,200,000 Warrants and 551,288 broker/finder warrants to purchase common shares of TZ issued and outstanding.

Other Information

Whatcom II will issue additional news releases related to the final legal structure and terms of the Transaction, post-Closing capitalization of the Resulting Issuer, Financing terms, financial information regarding TZ, the names and background of insiders of the Resulting Issuer and other material information as it becomes available.

Trading in the shares of Whatcom II is presently halted. The shares of Whatcom II 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. 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 news 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, 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. 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.

There can be no assurance that the proposed Transaction or Financing will be completed or, if completed, will be successful. The forward-looking statements contained in this news release are made as of the date of this news release. Except as required by law, the Company 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, the Company 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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