Principal Technologies Announces Annual General and Special Meeting, Alignment With New CPC Policy and Provides Corporate Update

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VANCOUVER, BC, June 4 2021 /CNW/ - Principal Technologies Inc. (TSXV: PTEC.P) (the "Company"), a capital pool company listed on the TSX Venture Exchange ("TSXV"), announces that, pursuant to recent changes by the TSXV to its Capital Pool Company program and TSXV Policy 2.4 - Capital Pool Companies ("Policy 2.4"), which became effective as at January 1, 2021 (the "New CPC Policy"), the Company intends to seek the requisite approvals of the shareholders of the Company (the "Shareholders") to adopt and align the Company with the New CPC Policy at its June 30, 2021 Annual General and Special Meeting of Shareholders (the "Meeting").

Capitalized terms used herein and not otherwise defined have the meaning ascribed to them in the TSXV Corporate Finance Manual or the New CPC Policy.

At the Meeting, as required to give effect to the New CPC Policy, Shareholders will be asked to pass two separate ordinary resolutions by the affirmative vote of not less than a majority of the votes cast by disinterested Shareholders who vote in respect thereof, in person or by proxy ("Disinterested Approval"), to:

(a) approve the removal of the consequences associated with the Company not completing a Qualifying Transaction within 24 months of its listing date in accordance with the New CPC Policy; and

(b) authorize the Company to make certain amendments to the Company's escrow agreement to effect certain changes contemplated under the New CPC Policy.

Consequences of Failing to Complete a QT within 24 Months of the Listing Date

Under Policy 2.4, if the Company fails to complete a Qualifying Transaction within 24 months of its Listing Date, it faces the consequences of either (i) having its common shares delisted or suspended from the TSXV, or (ii) subject to the approval of the majority of shareholders, transferring its common shares to list on the NEX and cancelling certain Seed Shares issued to the Company's founders.

The New CPC Policy eliminates the requirement for a Capital Pool Company, such as the Company, to complete a Qualifying Transaction within 24 months of the Listing Date and eliminates the associated consequences of not completing such requirement. The Company believes that the removal of the requirement to complete a Qualifying Transaction within 24 months of Listing Date, and the associated consequences of not completing such requirement, as exists under Policy 2.4, will put the Company in a better position to complete a Qualifying Transaction that will be beneficial to the Shareholders and the Company, by allowing increased flexibility to complete such a transaction.

The Company will seek Disinterested Approval to remove the consequences of not completing a Qualifying Transaction within 24 months after its Listing Date. In seeking such Disinterested Approval, the Company shall exclude all votes attached to its common shares held by Non-Arm's Length Parties to the Company who own Seed Shares, as well as their Associates and Affiliates.

Amendments to the Escrow Agreement

Under the New CPC Policy, securities subject to a CPC escrow agreement are subject to an 18-month escrow period, as opposed to the 36-month period previously required under Policy 2.4. At the Meeting, the Company shall seek Disinterested Approval to amend the terms of the CPC Escrow Agreement to which it is a party to reduce the length of the term of any escrow provision to an 18-month escrow term, as permitted by Section 10.2 of the New CPC Policy. In seeking such Disinterested Approval, the Company shall exclude all votes attached to its common shares held by shareholders who are parties to the CPC Escrow Agreement, as well as their Associates and Affiliates.

Other Changes

Under the New CPC Policy, the Company is permitted to adopt other transition provisions without obtaining shareholder approval. As a result, the Company intends to adopt the changes under the New CPC Policy that do not require shareholder approval, including, but not limited to:

(a) increasing the maximum aggregate gross proceeds to the treasury that the Company can raise from the issuance of common shares under the Company's initial public offering, Seed Shares and private placements to the new maximum of $10,000,000, rather than $5,000,000 which was previously the limit for a CPC that had not completed its Qualifying Transaction;

(b) removing the restriction which provided that no more than the lesser of 30% of the gross proceeds from the sale of securities issued by the Company and $210,000 may be used for purposes other than identifying and evaluating assets or businesses and obtaining shareholder approval for a proposed Qualifying Transaction, and implementing the restrictions on the permitted use of proceeds and prohibited payments under the New CPC Policy, under which reasonable general and administrative expenses not exceeding $3,000 per month are permitted; and

(c) removing the restriction on the Company issuing new agent's options in connection with a private placement.

The proposed amendments remain subject to the final approval of the TSXV.

Corporate update

As announced on October 7, 2020, the Company intends to qualify as a Tier 2 Investment Issuer pursuant to Policy 2.1 of the TSXV Corporate Finance Manual. That is still the case; however, the Company now intends to transition into becoming an Investment Issuer in two stages.

The Company has identified, and pursued, several potential investment opportunities over the past several months. A number of these potential investments are still of interest to the Company. However, it has been challenging to advance the investment opportunities to the point of completing transactions because of the pandemic travel restrictions. The Company's geographic focus has been in Europe and it has proven almost impossible to meet with the principals of the companies we may wish to invest in. The directors of the Company do not feel it would be responsible to make investment commitments without being able to spend time with the principals of the target companies, and to be able to conduct physical due diligence. For this reason, we have decided to complete our qualifying transaction (subject to TSXV approval) by acquiring a controlling interest in one company at this time.

All of the material details regarding the Qualifying Transaction, will be available in the Company's filing statement which has been submitted to TSXV. The Company will be providing further updates shortly by way of a comprehensive news release. The Company intends to continue pursuing other investment opportunities once the pandemic travel restrictions allow.

Forward Looking Information

Statements in this press release regarding the Company's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties, such as terms and completion of the proposed transaction. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements.

Completion of the qualifying transaction and transition to the New CPC Policy are subject to a number of conditions, including but not limited to, execution of a binding definitive agreement relating to the qualifying transaction, TSXV acceptance and if applicable pursuant to TSXV requirements, Shareholder approval, transition to a Tier 2 Investment Issuer and the completion of subsequent investments after the completion of the qualifying transaction. Where applicable, the qualifying transaction and transition to the new CPC Policy cannot close until the required shareholder approval is obtained. There can be no assurance that the transition to the new CPC Policy, transition to a Tier 2 Investment Issuer, the qualifying transaction or any subsequent investments 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 qualifying transaction, any information released or received with respect to the qualifying 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 TSXV has in no way passed upon the merits of the proposed qualifying transaction and has neither approved nor disapproved the contents of this press release.

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

SOURCE Principal Technologies Inc.

Principal Technologies Inc., John McCoach, Interim Chief Executive Officer Telephone: [phone]