Dr. Patrick Gray reports

PASCAL BIOSCIENCES SIGNS TERM SHEET FOR ACQUISITION OF THC ESSENTIALS

Pascal Biosciences Inc. is undertaking a reorganization which includes: shares for debt, a private placement of $1.5-million, arms-length acquisition of a new asset, name change and consolidation on the basis of one new share for five old shares, and a new board of directors and chief executive officer.

Change of business: Pascal has signed a term sheet dated Nov. 22, 2022, with SoRSE Technology Corp. to acquire its THC Essentials business line, which provides licence to manufacturers to provide wholesale finished cannabis drinks for retail sale in exchange for a royalty for each unit sold. The assets being acquired are all intellectual property except for a small amount of portable equipment valued at about $50,000 (U.S.) located at a client's bottling plant located near Portland, Ore. This equipment will continue to be made available to clients as required for start-up operations.

The products available for licence by THC Essentials can be seen at THC Essentials' website.

Pascal is acquiring from SoRSE:

• The THC Essentials business trademarks: Major, Happy Apple, Pearl, Utopia, Atomic Apple, Vertus, Velvet Swing and Velvet Kiss.
• All THC Essentials product formulas, designs and recipes sold under the trademarks and brands.
• Assignment of all licences and royalty agreements, and associated royalty revenue from the sale of products by SoRSE licensees in Washington, Oregon, California, Arizona, Colorado and Ohio.
• All remaining inventory and equipment.

The purchase price is $1,125,000 (U.S.) ($625,000 (U.S.) at closing and $500,000 (U.S.) in 12 months) and 3,232,000 common shares of the company postconsolidation. Pascal is to raise $1.5-million by closing, from which the $625,000 (U.S.) will be paid, and the balance to be used for reimbursement of loans of about $100,000 to pay for the cost of the reorganization, and the remainder for working capital, and marketing and expansion of the THC Essential products. The parties have agreed to certain exclusivity of the SoRSE THC (tetrahydrocannabinol) emulsion for the product, Major, in certain markets, a supply agreement for pricing, a three-year non-compete clause in the THC finished good markets and Pascal is to use the SoRSE THC emulsion exclusively for three years.

Pascal will not be involved in the manufacturing and sale of any component of the finished cannabis drinks. It will supply to manufacturers the product formulas, designs and recipes sold under the trademarks and brands. SoRSE will continue to supply to the manufacturers the THC emulsion. Revenue is derived from royalties paid to THC Essentials from wholesale sales of its products to retailers. Pascal's royalty revenues will derive from the continued licensing of the trademarks and supply of the recipes. SoRSE will continue to own the THC emulsion and receive the royalties from the THC emulsion sales.

SoRSE has been generating revenue from licensing the trademarks for the cannabis drinks since 2018. The revenue from the licence/royalty agreements which are being acquired is shown in the associated table. Revenues are not associated with the sale of the THC emulsion but from the brands and formulas. Expenses are attributed to certain packaging and administration costs amounting to approximately 50 per cent of royalty revenues. These are not audited figures.

SoRSE is a private company owned by more than 100 shareholders all of whom are arm's-length to the company, and its current and proposed new officers and directors. None of them will own 5 per cent or more of the issued shares upon completion of the reorganization.

The company is seeking a waiver from the TSX Venture Exchange of the sponsorship requirement.

Subject to TSX-V requirements, the company is not planning to obtain shareholder approval as the asset transaction is arm's-length and the company is without active business operations. There will not be a change of control as no one entity currently owns 20 per cent or more of the issued shares, this will continue to be the case on closing of the reorganization as it is anticipated that the shares issued for the private placement will be widely held. See the details of the private placement below.

A formal binding agreement is to be signed by Dec. 22, 2022, and a closing not later than Feb. 28, 2023.

Private placement: The company is planning a private placement of $1.5-million by the issue of 15 million postconsolidation units at a price of 10 cents per consolidated unit. Each unit is composed of one share and one share purchase warrant exercisable at a price of 20 cents per share for a term of 12 months, to be issued concurrently with the closing of the transaction. The financing fees are a 7-per-cent commission and 1.5 million warrants at an exercise price of 20 cents for one year.

Shares for debt: The company has arranged for the settlement of $518,000 in liabilities by the issue of 6,478,260 shares at an agreed price of eight cents per share, which will be 1,295,652 shares issued on a consolidated basis concurrently with the closing of the transaction.

Hold period: All shares for debt, shares issued for the transaction, private placement shares and shares issued upon exercise of the warrants will have a hold period of four months and one day from the date of closing.

Name change and consolidation: A consolidation on the basis of one new share for five old shares will be done concurrently with the name change and with the closing of the transaction, private placement and debt settlement.

New CEO and board of directors

The current directors and CEO will resign. John Kueber will become a director and the new CEO.

Mr. Kueber will be appointed CEO for a term of one year and will receive compensation of 1.6 million options, postconsolidation, to acquire shares at a price of 10 cents per share during his term as CEO.

Mr. Kueber has served as the executive vice-president for SoRSE Technology since February, 2019. Over this time he has been responsible for securing numerous licensing and revenue opportunities for SoRSE Technology generating in excess of $20-million in revenues.

He has also founded, operated and secured acquisitions for numerous early-stage companies including: Speechforms/Spoken (acquired by Avaya), Superbuild.com (acquired by Hardware.com/Onvia), Urban Pages Media (acquired by Tiger Oak Media) and Lucernex.com (acquired by Accruent).

Mr. Kueber is a Seattle resident and a graduate of the University of Washington.

John Bell -- director

Mr. Bell has a distinguished 40-year career of business success, including executive management, corporate governance, financing, and mergers and acquisitions. He is chairman of Stack Capital, a Toronto Stock Exchange-listed company investing in later-stage prepublic private companies. From 2014 to 2020 he was a board member and chair of Canopy Growth and Canopy Rivers as they grew the company from prelegal to the global leader with a market cap of $20-billion. Mr. Bell stepped down after the successful exit to Constellation Brands with its $5-billion investment.

A follow-up press release will be issued once all details are finalized regarding additional directors.

The reorganization is subject to the acceptance of the TSX-V.

Completion of the transactions disclosed in this press release are subject to a number of conditions, including but not limited to: exchange acceptance and, if applicable, disinterested shareholder approval. Where applicable, the transactions cannot close until the required shareholder approval is obtained. 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 management information circular or filing statement to be prepared in connection with the transactions, any information released or received with respect to the transactions may not be accurate or complete and should not be relied upon. Trading in the securities of Pascal Biosciences should be considered highly speculative.

About Pascal Biosciences Inc.

Pascal has been a biotechnology company targeting innovative therapies for cancer, including targeted therapies for acute lymphoblastic leukemia and cannabinoid-based therapeutics. Pascal's leading portfolio also comprises a small molecule therapeutic, PAS-403, that is advancing into clinical trials for the treatment of glioblastoma, and PAS-393, an immuno-stimulatory cannabinoid to be used in combination with checkpoint inhibitor therapy. The company will cease investment in its biotechnology assets but will maintain all patents, and explore options for licensing and possible divestment.

We seek Safe Harbor.