Ponderous Panda Capital Corp. Announces Proposed Qualifying Transaction

Tickers: XTSX:PPCC.P
Tags: Mining

Vancouver, British Columbia / TheNewswire / June 19, 2018 - Ponderous Panda Capital Corp. ("PPCC" or the "Company") (TSX VENTURE: PPCC.P), a capital pool company, is pleased to announce that it has entered into a Letter of Intent dated May 31, 2018 (the "LOI") for the acquisition (the "Proposed Transaction") of Trait Biosciences Inc. ("Trait"), a private company incorporated pursuant to the laws of British Columbia. Upon completion of the Proposed Transaction, the business of Trait will become the business of PPCC.

PPCC is a capital pool company and the Proposed Transaction is intended to constitute the Company's qualifying transaction ("Qualifying Transaction") under Policy 2.4 of the TSX Venture Exchange (the "Exchange"). The Proposed Transaction is an arm's length transaction and accordingly will not require the approval of PPCC's shareholders.

All amounts referred herein are in Canadian dollars unless otherwise indicated.

About Trait

Trait was incorporated by articles of incorporation dated April 5, 2017 under the Business Corporations Act (British Columbia). The registered head office of Trait is located at 2300 - 1066 West Hastings Street, Vancouver, B.C., V6E 3X2.

The future success of licensed cannabis producers will depend on their ability to remain competitive. To accomplish this, they will have to increase crop yields, meet exacting quality standards, protect crops from herbivores and diseases, and adopt sustainable business strategies in the face of rising competition, falling prices and reduced margins.

Cannabis and hemp face the same challenges as traditional crops including harmful pests and plant diseases, both fungal and viral. Pesticides, fungicides and herbicides developed for non-cannabis plants cannot always be applied to cannabis or hemp and many of these treatments are illegal or "off-label" to use. Further, when certain of these chemicals are applied to cannabis, which may then be heated for extraction or smoking, they can become toxic. Beyond that, alternative chemical spray applications take years to develop and secure regulatory approval.

As the medical, recreational, nutraceutical, and beauty markets drive tremendous demand for cannabis, production is evolving into a major agricultural enterprise. The challenge to provide highly specific cannabinoid extracts, maximize yields and produce a safe, quality product under highly competitive market conditions is real. Today's alternative product growers are discovering what traditional agricultural producers learned decades ago - the need for modern plant science. It's much more than simply improved lighting and better fertilizers. The industry must develop plant science that enables growers to maximize and protect crop yields as cannabis becomes a commodity crop and prices and margins come under more pressure.

Trait is bringing big science to the emerging, multi-billion-dollar, global cannabis and hemp industry. Trait has assembled a team of world renowned plant scientists who have developed and are developing novel, natural plant technologies that seek to protect crops from mildew, fungus, viruses, and pests as well as developing agricultural technologies leveraging the plant's natural metabolic pathways to substantially increase yields.

The firm's science hopes to boost yields in two ways. The first is via patented technology that allows cannabis plants to produce in excess of 4x the cannabinoids, the active plant compound. Using advanced biological techniques, Trait enables the plant to naturally produce sugars that allow cannabinoids to accumulate throughout the entire plant, including leaves, stems and roots, as opposed to only in the trichrome (the hair-like structures on flowers).

Second, by seeking to allow storage of these cannabinoids throughout the plant, Trait hopes to eliminate the need to harvest during the flowering stage at 20 weeks; harvest could potentially take place after just 10 weeks when plant biomass is optimal. By cutting the harvest cycle in half and enabling plant-wide cannabinoid production, Trait technology seeks to boost overall yield four-fold.

Trait is also researching technology that would allow plants to produce industry-first, truly water soluble, full spectrum cannabinoids. Existing oil-based cannabinoid products can be difficult to formulate into food and beverages and are not as readily absorbed by the body as are water soluble molecules. Currently, technology only allows for cannabinoids in lipid nano-emulsions, which are water compatible, but separate from the aqueous layer - like oil and vinegar salad dressing.

The world of agriculture is dominated by global companies that focus on food crops. To date none of them have entered the bourgeoning cannabis space. Trait is aggressively working to fill this void and become a pioneer in cannabinoid yield and plant protection thus broadening the potential for and applications of the cannabis plant.

Trait is an early stage biotech company and therefore its main focus is research and development. It is seeking financing for furthering its research and most particularly with a focus on product development and optimization, obtaining relevant regulatory approvals, scale-up and commercialization and developing a product pipeline. Trait expects its products to be available to market by 2020.

As of its fiscal year end of December 31, 2017, Trait's audited financial statements show that it has $3,211 of current assets that are part of its $646,211 total assets. Trait has current liabilities of $774,514. It had no revenue and general and administrative expenses totaling $131,688 for a net loss of $131,688.

Trait has four shareholders who beneficially own, direct or control more than 10% of Trait's common shares on a non-diluted basis: Richard Sayre - C.S.O. (14.83%), Kimberly A. Landry - C.E.O. (12.47%), Edward Cheung - director (11.87%) and Michael B. Harrison - Chairman (10.67%)

Terms of the Proposed Transaction

Pursuant to the terms of the LOI, PPCC and Trait will complete a business combination by way of a share purchase agreement whereby PPCC will acquire all the shares of Trait, which will become a subsidiary of PPCC. Trait shareholders will receive one PPCC common share for every Trait Share currently held (the "Transaction Shares"),. The Transaction Shares will be issued to the shareholders of Trait pursuant to exemptions from the registration and prospectus requirements of applicable securities laws. The Transaction Shares may be subject to resale restrictions as required under the applicable securities legislation and the Exchange and may also be subject to escrow restrictions as required by the Exchange.

In connection with the Proposed Transaction, the resulting issuer (the "Resulting Issuer") will change its name to Trait Biosciences Inc. subject to approval by the applicable regulatory authorities (the "Name Change").

It is expected that upon completion of the Proposed Transaction, the Resulting Issuer will be listed as a Tier 2 Diversified Industries Issuer on the Exchange.

In addition the parties have agreed that a $250,000 break fee will be payable in the event either party decides to terminate the LOI.

Completion of the Proposed Transaction is subject to a number of conditions, including execution of a definitive share purchase agreement, completion of satisfactory due diligence and receipt of applicable regulatory approvals. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

Proposed Private Placement

Prior to or concurrent with the Closing of the Proposed Transaction, either Trait, or PPCC, or a combination of the two will complete a financing or financings (debt or equity) (the "Private Placement") for up to $10,000,000 at a price of not less than $0.75 per share. The resulting funds will provide the Resulting Issuer with sufficient working capital. All securities issued pursuant to the Private Placement will be subject to a hold period of four months and one day.

The proceeds raised will be used to fund the costs associated with completing the Proposed Transaction, product development and optimization, obtaining relevant regulatory approvals, scale-up and commercialization, developing a product pipeline and for general working capital.

Commissions may be paid on proceeds raised commensurate with industry norms. It is not known if any investment dealer or other registrant will be engaged to assist with fund raising activities.

Capitalization of the Resulting Issuer

0.1There are currently 41,579,245 Trait common shares issued and outstanding and 1,000,000 stock options. This will result in PPCC issuing an aggregate of 41,579,245 common shares to Trait shareholders. These numbers will be adjusted accordingly to account for any common shares issued by Trait in connection with the Private Placement.

0.3There are currently 3,065,004 PPCC common shares issued and outstanding, as well as 306,500 stock options of PPCC currently exercisable at $0.30 and expiring ten years from the date of issuance. As part of the terms of the LOI the holders of PPCC options have agreed to amend the terms of their options so as they will be exercisable at $0.75 and will expire two years after the closing of the Proposed Transaction.

0.5Upon completion of the Proposed Transaction and including those securities issued in the Private Placement discussed above, there are expected to be a maximum of 54,644,249 PPCC common shares issued and outstanding and 1,306,500 stock options of PPCC.

Upon completion of the Proposed Transaction, all PPCC common shares to be issued to holders of Trait shares upon completion of the Proposed Transaction may be subject to resale restrictions under securities laws and the policies of the Exchange, as applicable. In addition, all common shares held by Principals of PPCC (as such term is defined in the policies of the Exchange) will be held in escrow in accordance with the policies of the Exchange.

Sponsorship

PPCC will choose a suitable Canadian securities company to act as sponsor in connection with the Proposed Transaction. Any agreement to sponsor should not be construed as any assurance with respect to the merits of the transaction or the likelihood of completion.

Conditions Precedent

The parties' obligations to complete the Proposed Transaction are subject to the satisfaction of customary conditions precedent including:

  1. (a)all necessary approvals of the Exchange and all other regulatory authorities and third parties to the Proposed Transaction and the Private Placement being obtained;

  2. (b)the approval or consent by shareholders of Trait of the Proposed Transaction, has been obtained to the extent applicable;

  3. (c)PPCC has completed the Name Change on the terms set forth above;

  4. (d)The Private Placement has been completed;

  5. (e)the parties have been satisfied with the results of their respective due diligence reviews in connection with the Proposed Transaction; and

  6. (f)the Exchange has conditionally accepted the common shares of the Resulting Issuer for listing, subject to the Resulting Issuer fulfilling the listing requirements of the Exchange.

Directors, Officers and Insiders of Resulting Issuer

On completion of the Proposed Transaction, the directors, officers and insiders of the resulting issuer are anticipated to be the following individuals.

Michael B. Harrison - Chairman and Director

Mr. Harrison was previously a partner in and instrumental in building an international franchise organization that provides management training and development programs throughout the world. He was also previously an investment banker and worked for one of Canada's oldest brokerage firms achieving the position of Chief Development Officer by 1994.

Mr. Harrison has a proven track record of arranging large scale financing for both public and private companies in both North America and Asia. He was part of a biotech company that successfully commercialized its technology and divested it to a large pharmaceutical company. He has also been heavily involved in mining, acting as President of two public companies and a private company in Asia, one of which was sold for in excess of $800 million.

Rodney W. Reum - Director

Rodney Reum, B.Comm., CPA, CGA, has over 35 years of experience in business, accounting and finance in both the public and private sectors. Mr. Reum received his Bachelor of Commerce from the University of Alberta and obtained a professional accounting designation (CGA) shortly thereafter. Mr. Reum was a Director, President and Chief Executive Officer of several publicly listed companies on the Canadian, US, and German Exchanges and is currently a director of several publicly listed companies. Mr. Reum also consults to both public and private companies in the area of finance, corporate governance and securities compliance.

David T. Chu - Director

Mr. Chu has 20 years of global experience in financial management, investment analysis and entrepreneurship. Recently with Early Growth Services as a consulting CFO, providing senior financial and strategic guidance to early stage and technology-oriented clients. Mr. Chu holds an MBA from Harvard Business School and graduated magna cum laude from Georgetown University with a BSBA degree in Finance and International Business.

David W. Smalley - Director and Chief Legal Counsel

Mr. Smalley is the principal of David Smalley Law Corporation where he practices corporate and securities law. He was called to the bar of the Law Society of British Columbia in 1989. Mr. Smalley earned a Bachelor of Laws degree from the University of British Columbia and a Bachelor of Arts degree from the University of Victoria.

He has been an officer and director of numerous public companies over the last 20 years as well as serving as chair of numerous audit and governance committees. Mr. Smalley was one of the founders of Canaco Resources (now Orca Gold) and was previously a director of Mission Ready Services Inc. and a director and chair of the audit committee of Scorpio Gold Corporation. Mr. Smalley was also a director Extreme CCTV Inc. and chair of its mergers and acquisitions committee in relation to the sale of the company to a private German company for $93 million.

Mr. Smalley is a director and officer of both PPCC and Trait and currently holds 1,644,942 common shares of Trait.

Edward T. L. Cheung - Director and Vice President

Mr. Cheung has over 20 years experience at global investment banks including JPMorgan, Lehman Brothers and Credit Suisse, advising on equities and derivatives to institutions, hedge funds and sovereign wealth funds. He has experience in setting up new businesses including a trading division at a US bank and has been a board member of several startups. Mr. Cheung holds a B.Sc. in Economics from University College London and a Masters degree in Property Valuation & Law from London Cass Business School.

(.f.a)Kimberly A. Landry - Chief Executive Officer

Ms. Harrison has 25 years experience as an entrepreneur across multiple industries. She is experienced in strategy, product development, venture capital funding, patents, distribution/licensing and government relations. She has served on numerous international product certification and standardization committees.

(.f.b)Richard T. Sayre - Chief Science Officer

Dr. Sayre is a former Level 6 Scientist at the Los Alamos National Laboratory and was recognized by Nature Journal as one of the top five crop researchers who could change the world. He is the author of over 130 biotechnology papers and patents, with over 7000 citations. He has received over US$100 million in grant funding for various projects. Dr. Sayre completed his Ph. D. at the University of Iowa and did postdoctoral work at Harvard University.

(.f.c)Erik Briones - Chief Operating Officer

Mr. Briones has 20 years experience in the horticulture and marijuana industry, within the commercial growing and retail space. He is the founder and C.E.O. of New Mexico's leading and largest medical marijuana dispensary and grow operation (Minnerva Canna). Mr. Briones holds a B.Sc. in Horticulture and Landscape Architecture.

(.f.d)Eugene A. Hodgson - Chief Financial Officer

Mr. Hodgson is an accomplished senior executive in both private industry as a banker, financial and public policy advisor. He is an experienced negotiator with First Nations groups and a strategic Board member for a number of business and community associations. Currently he is Founder/President of an independent consultancy providing strategic and financial advisory primarily to startups in the bioscience, green energy, and mining sectors. Concurrently he is President/CFO of separate biosciences and metals mining companies.

He has served on multiple boards and advisory councils, including for Rover Metals Corp. (Chair, Audit Committee); Redfund Capital Corp. (Chair, Audit Committee; Investment Advisor); Pebble Labs (Chair, Audit Committee); Maxtech Ventures (Chair, Audit Committee); Vancouver Board of Trade (Chair, Communications Committee); Sea Breeze Power; IPPBC (Chair, Governance Committee); Pacific Cascade Minerals (Chair); Alda Pharmaceuticals; Metron Capital Corporation; and Equitable Real Estate Investment Corporation. He was Co-Founder of Families for School Seismic Safety (FSSS) that successfully lobbied for $1.8B+ in British Columbia government funding for seismic upgrades in schools. He is a recipient of the Queen's Silver Jubilee Medal.

(.f.e)Dr. Anne Lo - Director of Strategic Development

Dr. Lo trained as a veterinary surgeon and worked in a number of clinical positions. She subsequently joined management consulting firm Bain & Co in London, before moving to a strategy role with WorldPay. Dr. Lo was most recently with Horizons Ventures based in Hong Kong, where she primarily covered science and healthcare investments. Dr. Lo received her BSc and BVM&S degrees from the University of Edinburgh and PhD from the University of Cambridge.

Andrew T. Hunter - Corporate Secretary

Mr. Hunter is a Scottish solicitor who obtained his LLB from the University of Dundee in 2006 and his LLM in Professional Legal Practice from the University of Strathclyde in 2013. Mr. Hunter has 4 years experience of private practice in Scotland and has worked as a corporate and securities paralegal since moving to Canada in 2015. He has experience all manner of corporate and securities law issues and in conducting effective corporate governance procedures.

Mr. Hunter is the corporate secretary of both PPCC and of Trait and holds 50,000 shares (subject to vesting) in Trait.

Trading Halt

The shares of PPCC will remain halted until completion of the Qualifying Transaction.

General

Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the Proposed Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the filing statement or other disclosure document to be prepared in connection with the Proposed Transaction, any information released or received with respect to the Proposed 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 TSX Venture Exchange Inc. has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this press release.

All information contained in this news release with respect to PPCC and Trait was supplied by the parties, respectively, for inclusion herein, and PPCC and its directors and officers have relied on Trait for any information concerning Trait.

For further information please contact:

David W. Smalley, President and C.E.O.

Ponderous Panda Capital Corp.

Phone: 604.684.4535

Forward Looking Statements

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

This news release contains forward-looking statements relating to the timing and completion of the Proposed Transaction, the future operations of the Company and other statements that are not historical facts. Forward-looking statements are often identified by terms such as "will", "may", "should", "anticipate", "expects" and similar expressions. All statements other than statements of historical fact, included in this release, including, without limitation, statements regarding the Proposed Transaction and the future plans and objectives of the Company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's expectations include the failure to satisfy the conditions to completion of the Proposed Transaction set forth above and other risks detailed from time to time in the filings made by the Company with securities regulations.

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. As a result, the Company cannot guarantee that the Proposed Transaction will be completed on the terms and within the time disclosed herein or at all. The reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release and the Company will update or revise publicly any of the included forward-looking statements as expressly required by Canadian securities law.

In the case of Trait, this news release includes certain "forward-looking statements" which are particular to Trait and are not comprised of historical facts. Forward-looking statements include estimates and statements that describe Trait's future plans, objectives or goals, including words to the effect that Trait or its management expects a stated condition or result to occur. Forward-looking statements may be identified by such terms as "believes", "anticipates", "expects", "estimates", "may", "could", "would", "will", or "plan". Since forward-looking statements are based on assumptions and address future events and conditions, by their very nature they involve inherent risks and uncertainties. Although these statements are based on information currently available to Trait, Trait provides no assurance that actual results will meet management's expectations. Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information. Forward looking information in this news release includes, but is not limited to, Trait's objectives, goals or future plans, statements, research results, timing of the commencement of operations and estimates of market conditions. Factors that could cause actual results to differ materially from such forward-looking information include, but are not limited to, the ability of the Trait to successfully implement its scientific research and product development strategy and whether these will yield the expected benefits; competitive factors in Trait's industry sector; the success or failure of product development programs; currently existing applicable laws and regulations or future applicable laws and regulations that may affect Trait' s business; decisions of regulatory authorities and the timing thereof; claims or concerns regarding the safety or efficacy of marketed products or product candidates; the economic circumstances surrounding Trait's business, including general economic conditions in Canada, the US and worldwide; changes in exchange rates; changes in the equity market; inflation; uncertainties relating to the availability and costs of financing needed in the future; and those other risks to be disclosed in the filing statement or other disclosure document to be prepared in connection with the Proposed Transaction. Although Trait believes that the assumptions and factors used in preparing the forward-looking information in this news release are reasonable, undue reliance should not be placed on such information, which only applies as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. Trait disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by law.

Copyright (c) 2018 TheNewswire - All rights reserved.

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