Dr. Kah Meng Lim reports

COMPASS VENTURE ANNOUNCES PROPOSED QUALIFYING TRANSACTION TO ACQUIRE CANNIOASIS PTE. LTD.

Compass Venture Inc. has entered into a new non-binding letter of intent dated June 4, 2024, to acquire all of the issued and outstanding ordinary shares of CanniOasis Pte. Ltd., a Singapore-based biopharmaceutical company focused on utilizing cannabinoid medicine to develop effective personalized and targeted treatment regimens for neurological diseases, in exchange for the issuance of common shares of Compass to the shareholders of CanniOasis. Upon completion of the transaction, CanniOasis will become a wholly owned subsidiary of Compass, the business of CanniOasis will become the business of Compass, the shareholders of CanniOasis will have a controlling interest in Compass, and CanniOasis will appoint new directors and officers to manage the resulting entity and its business. The letter of intent replaces the previous letter of intent between CanniOasis and the company which was announced by the company on Sept. 26, 2023.

The transaction constitutes the company's qualifying transaction (as defined by Policy 2.4 -- Capital Pool Companies of the TSX Venture Exchange) and is not a non-arm's-length qualifying transaction (within the meaning of the exchange's policies). The transaction is subject to the approval of the exchange and the minority shareholders of the company, among other conditions of closing.

The transaction

The letter of intent provides that the company and CanniOasis will negotiate and enter into a definitive agreement in respect of the transaction which shall include standard representations, warranties and covenants for an agreement of this nature. Pursuant to the transaction, the company will acquire 100 per cent of the issued and outstanding ordinary shares of CanniOasis in exchange for common shares of the resulting issuer, based on a share exchange ratio to be determined by the parties (the share exchange ratio). It is anticipated that upon closing of the transaction, the name of the resulting issuer will be changed to such name as CanniOasis may determine and as acceptable to the exchange.

The shares of the resulting issuer issued to principals (within the meaning of the exchange's policies) of the resulting issuer will be subject to escrow restrictions in accordance with the exchange's polices. In addition, the shares of the resulting issuer issued to other shareholders of CanniOasis may be subject to resale restrictions as required by the exchange's policies.

The completion of the transaction will be subject to customary closing conditions including, among others, the parties completing satisfactory due diligence reviews, the negotiation and execution of the definitive agreement, receipt of all required approvals and consents for the transaction, the definitive agreement and the concurrent financing (as defined herein), and all related matters, including approval of the disinterested shareholders of both parties, if required by the exchange or applicable corporate or securities laws and the approval of the exchange and completion of the concurrent financing and other standard closing conditions.

Related party transaction and minority shareholder approval

Dr. Kah Meng Lim, the chief executive officer and a director of the company, is also the controlling shareholder, director and chairman of the board of CanniOasis. Dr. Lim owns 124,377,941 CanniOasis shares which represent approximately 95.7 per cent of the current total issued shares of CanniOasis (prior to the concurrent financing described herein). Dr. Lim owns 400,000 Compass shares, which represent 3.8 per cent of the current total issued and outstanding shares of Compass and are subject to escrow restrictions in accordance with the exchange's policies. The transaction is therefore considered a related party transaction for the purposes of Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions (MI 61-101). As required by MI 61-101, the company will call a special meeting of shareholders to seek approval of the transaction by the company's minority shareholders (excluding Dr. Lim) by majority vote. In connection with the requirement for minority shareholder approval, Compass will file an information circular on its issuer profile on SEDAR+, which will contain prospectus-level disclosure regarding the transaction, CanniOasis and the resulting issuer.

The company is relying on the exemption from the formal valuation requirement provided in section 5.5(b) of MI 61-101, which is available because the company's common shares are listed on the exchange.

About CanniOasis

CanniOasis is a personalized and targeted cannabinoid-based biopharmaceutical company based in Singapore. CanniOasis aims to be a leader in utilizing innovation-driven cannabinoid medicine to develop effective personalized treatment regimens for neurological diseases. CanniOasis has created a therapeutic and diagnostic platform for the development of precision cannabinoid-based drugs that includes state-of-the-art prognostic clinical testing and molecular mapping to guide the personalized treatment of neurological disorders. Management believes that a key differentiator and competitive advantage for CanniOasis is its midbrain organoid model, which is designed to derisk and shorten the drug development process for neurological disorders.

Concurrent financing

The transaction is subject to completion by CanniOasis of a private placement equity financing for aggregate gross proceeds of a minimum of $3.6-million or such other amount as required in order to meet the requirements under the exchange's policies. The concurrent financing is expected to be carried out by way of a private placement of CanniOasis shares at an anticipated price of 20 cents per CanniOasis share. The CanniOasis shares issued pursuant to the concurrent financing will be immediately exchanged on closing of the transaction for shares of the resulting issuer at the share exchange ratio or such other share exchange ratio as may be mutually agreed upon between the company and CanniOasis. The proceeds of the concurrent financing will be used to satisfy the business development and working capital requirements of the resulting issuer. The final terms as to the structure of the concurrent financing and any commission and/or finders' fees are subject to the final agreement between the company and CanniOasis.

Deposits paid by CanniOasis

Each of Compass and CanniOasis will generally bear their own respective costs and expenses associated with the transaction and related transactions, except that CanniOasis has paid to Compass: (i) $50,000 as a refundable deposit to be used by Compass toward payment of legal costs and other professional fees associated with the transaction; and (ii) an additional $50,000 as a non-refundable deposit to be used by Compass toward payment of the costs of a valuation opinion and sponsorship, if required. The refundable deposit must be refunded to CanniOasis if the letter of intent or the definitive agreement, as applicable, is terminated for any reason; provided that the refund will be limited to the balance of the deposit, if any, remaining after payment of legal costs and other professional fees.

Sponsorship

Sponsorship of the transaction is required by the exchange unless an exemption or waiver from this requirement is obtained in accordance with the policies of the exchange. The company has not yet engaged a sponsor in connection with the transaction. Additional information respecting the engagement of a sponsor will be provided once available.

Additional information

Additional information concerning the transaction, Compass, CanniOasis and the resulting issuer, including financial information of CanniOasis and the proposed board and management of the resulting issuer, will be provided in subsequent news releases, including at the time of execution of the definitive agreement, and in Compass' management information circular to be filed in connection with the transaction, which will be available under Compass's SEDAR+ profile.

The final terms as to pricing and structure of the concurrent financing and any commission or finders' fees on the concurrent financing will be subject to final agreement by the parties.

In accordance with exchange's policy, the company's shares are currently halted from trading and will remain so until such time as the exchange determines, which may not occur until the completion of the transaction.

About Compass Venture Inc.

The company is a capital pool company within the meaning of Policy 2.4 of the exchange. Except as specifically contemplated in such policy, until the completion of its qualifying transaction, the company will not carry on business, other than the identification and evaluation of companies, businesses, or assets with a view to completing a proposed qualifying transactions. Investors are cautioned that trading in the securities of a capital pool company is considered highly speculative.

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