On March 16, 2022 Pascal Biosciences Inc. ("Pascal" or the "Company") (TSXV:PAS) (OTC:PSCBF) (FSE: 6PB-FF). Pascal reported that it has signed a term sheet dated March 16, 2022 with Shape Capital Pty Ltd. of Melbourne, Victoria ("Shape"), an investment and advisory firm, which will provide a three-year, convertible note for $2,000,000 (Press release, Pascal Biosciences, MAR 16, 2022, View Source [SID1234610468]).
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The note is non-interest bearing and is structured to advance to Pascal tranches of $55,000 per month which, at the option of the investors in the note ("Investors"), can be doubled to $110,000 on any given month. At the company’s option the draw down can be paused for up to two periods of up to three months per period. With each drawdown Pascal will issue common shares ("Shares") to satisfy the note. The number of shares issued will be based on a Conversion Price equal to 90% of the average of five daily VWAPs, selected by the Investor, during the 22 trading days prior to the Conversion Notice. If that price is less than the Discounted Market Price, as defined by the TSX.V, the Conversion Price will be the Discounted Market Price. The Company is being charged an administration fee by Shape of $130,000 ($65,0000 within 3-days of acceptance, and $65,000 at twelve months), and a commitment fee of $80,000. The $210,000 will be paid by the issue of 2,100,000 Shares at deemed price of $0.10 per Share. Investors will be issued 2,200,000 Share purchase warrants ("Warrants") to acquire, for one year, one further Share. These Warrants will be distributed pro-rata with the tranche distributions during the first year and will be priced at a 100% premium to the conversion price of the underlying tranche.
The Notes are subject to the acceptance of the TSX.V. All Shares will have a hold period of four months and one day from the date of issue.
In addition to this convertible note, the Company is working on arranging a private placement of up to $1,000,000, by the issue of units at a price of $.08. Each unit consists of one Share and one Share purchase warrant to purchase one additional Share, at a price of $.15 per Share for a term of two years.
Dr. Brian Bapty, Pascal Biosciences CEO, stated "We are thankful for the support provided by Shape Capital in the form of the convertible note. The note is well structured to offset the majority of near-term forecast monthly expenses and, combined with the proposed private placement, allows some flexibility as we focus our research efforts on the strongest drug candidates to advance towards clinical trials. Using good science to add value to products in development is our goal, and the measure of our success should be share price appreciation. With this in mind, shareholders should anticipate going forward a leaner pipeline and efforts from Pascal to capture other aspects of the biotechnology value chain."