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News Release – Vancouver, British Columbia – July 28, 2020: Whatcom Capital Corp. (TSX-V: WHAT.P) (“Whatcom” or the “Company”) is pleased to News Release – Vancouver, British Columbia – July 28, 2020: Whatcom Capital Corp. (TSX-V: WHAT.P) (“Whatcom” or the “Company”) is pleased to announce that it has entered into a letter of intent dated July 28, 2020 (the “LOI”) with NEXE Innovations Inc. (“NEXE”) regarding a proposed transaction to acquire all of the issued and outstanding securities of NEXE (the “Transaction”). Upon completion of the Transaction, the combined entity (the “Resulting Issuer”) will continue the business of NEXE as a “technology” issuer. The Transaction is intended to constitute the “Qualifying Transaction” of Whatcom, as such a term is defined in Policy 2.4 – “Capital Pool Companies” of the TSX Venture Exchange (the “Exchange”).  

Darren Tindale, Whatcom Capital Corp., CEO, commented, “We are excited to become a player in the plant-based revolution.  NEXE has commenced commercialization of the fully compostable coffee capsule for the K-Cup format and has entered the pre-commercial phase of the Nespresso format.  With a significant IP portfolio, NEXE also aims to be an innovator of other plant-based, non-coffee-based products.  With funded capacity nearing a quarter billion pods, we anticipate 2021 to be an exciting year for all our current and future stakeholders. Additionally, we see the potential of NEXE becoming an innovative materials company through their inhouse R&D lab and their reach into the consumer-packaged goods (CPG) sector to develop future products, SKUs, and continued intellectual property.”

Darren Footz, founder and CEO of NEXE Innovations Inc. commented, “This transaction marks a team effort spanning 5 years and over CAD $15m of invested capital to develop a coffee capsule that is truly differentiated.  Our POD has passed scientific tests for eco-toxicity, industrial tests for compostability, and consumer ‘pour-over’ tests that meet commercial requirements of the premium, ethical coffee brands. These companies are looking for a smart alternative to plastic pods that currently litter landfill and oceans.  In addition, we look forward to launching other plant-based formats and innovative packaging in other sectors.”

About NEXE Innovations Inc.

NEXE Innovations (formerly known as G-PAK Technology Inc.) is a private British Columbia-based advanced materials company that has developed  fully compostable (plant-based) single-serve beverage capsules for use in existing single-serve beverage machines. Incorporated on April 27, 2015, NEXE purchased its facility in Surrey, British Columbia in 2016. Since then, NEXE has gone on to purchase a variety of equipment to roast, produce and package coffee into the Company’s proprietary and fully compostable single serve beverage capsules, known as the NEXE POD. NEXE believes that the NEXE POD can eradicate the waste created by single serve pods. NEXE’s goal is to attract and sustain a significant portion of the single serve pod market, as there is a growing demand for environmentally friendly products knowing brands will continue to shift to environmentally sustainable solutions for Keurig and Nespresso single serve brewing systems.

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

See www.nexe.ca 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:

Darren Footz
CEO

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

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

Steve has over 20 years of experience in management positions with Mr. Lockhart has over 20 years of experience in management positions with Choices Markets, a $100 million revenue local chain grocer. He played a key role in building the business from start-up to stability and profitability through the opening of 10 large retail stores.


Raj Kang
CFO

Rajwant S. Kang is the founder & president of RSK Management Consulting Rajwant S. 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. Raj has an HND in Business and Finance from East Berkshire College in Berkshire, United Kingdom.

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

The Qualifying Transaction

Terms of the Transaction

SuSubject to the execution of a definitive agreement (“Definitive Agreement”), Whatcom proposes to acquire all of the issued and outstanding securities of NEXE in exchange for securities of Whatcom. 

The closing will be conditional upon NEXE completing on a brokered private placement basis a financing of subscription receipts (the “Subscription Receipts”), each of which 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 to be determined, 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, at price to be determined (the “Concurrent Financing”), to raise a minimum of gross proceeds of $5,000,000,  to be completed within sixty days of receiving conditional approval of the Transaction by the Exchange. It is anticipated that the Concurrent Financing will be sold through a leading investment bank as the lead selling agent (the “Selling Agent”). Whatcom intends to make an application for an exemption from the Exchange’s sponsorship requirements.

The Transaction is conditional upon, amonThe 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 and NEXE 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 Concurrent Financing;
  6. the shareholders of NEXE will have approved the Transaction; and
  7. completion by Whatcom of a consolidation of the Whatcom securities on a 2.5 for 1 basis, effective immediately prior to the closing of the Transaction.

Whatcom will issue additional news releases related to the final legal structure and terms of the Transaction, capitalization of the Company and NEXE, financing terms, financial information regarding NEXE, the names and background of insiders of the Resulting Issuer and other material information as it becomes available.  

Trading in the shares of Whatcom is presently halted. The shares of 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: stonerockltd@gmail.com

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 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. 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 Concurrent 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.