mHealth Capital Corp.
TSX VENTURE : DOC.P

January 17, 2012 16:35 ET

mHealth Capital Corp. Announces Proposed Qualifying Transaction

CALGARY, ALBERTA--(Marketwire - Jan. 17, 2012) - mHealth Capital Corp. (the "Corporation") (TSX VENTURE:DOC.P), a capital pool company, announces that it has entered into a letter of intent ("Letter of Intent") dated January 17, 2012 with Heltheo, Inc., a U.S. (Illinois) corporation ("Heltheo") with respect to the proposed acquisition of certain specified assets (the "Assets") of Heltheo by the Corporation.

About the Assets to be Acquired:

Heltheo, the vendor of the Assets, carries on the business of research and development of devices and services for delivering healthcare wirelessly, via mobile devices such as Smartphones and tablets. The directors of Heltheo are Burton Slotky, of Glencoe, Illinois, Michael Slotky, of Glencoe, Illinois and Rudolph Russo of Pougkeepsie, New York. The President and Chief Executive Officer of Heltheo is Howard Leventhal of Deer Park, Illinois.

The Assets include certain issued and provisional United States patent rights, software and source code rights, certain manufacturing and production assets, certain wireless network assets, trademarks, copyrights and domain registrations. A summary of significant financial information respecting the Assets will be provided in a further press release.

Terms of the Proposed Transaction:

The Letter of Intent contemplates that the Corporation will, subject to acceptance by the TSX Venture Exchange (the "Exchange") and meeting other regulatory requirements, issue a total of 4,750,000 post-transaction shares ("Transaction Shares") at a deemed price of Cdn.$0.20 in payment for all of the Assets (the "Acquisition") for a total value of Cdn . $950,000. This value is subject to obtaining an audited statement of development costs incurred in relation to the Assets. If the final valuation is lower than Cdn.$950,000, the number of Transaction Shares will be recalculated by dividing the final valuation by Cdn.$0.20. The Transaction Shares will be distributed to the shareholders of Heltheo. In addition, the Corporation will reimburse, Heltheo in cash in the amount of US$130,000 for certain development expenses incurred by Heltheo during 2011, which development expenses are to be audited.

Upon completion of the Qualifying Transaction, a consulting fee payable in Common Shares at a deemed price of $0.20 per share will be paid to Loomac Management Ltd. and will equal 3% of the issued shares of the Resulting Issuer after giving effect to the issuance of the Transaction Shares. Assuming the number of Transaction Shares remains unchanged, a total of 413,400 shares would be issued for the consulting fee. Loomac Management Ltd., which is at arm's length to the Corporation and Heltheo, provides co- ordination and guidance to Heltheo in obtaining corporate financing.

Subject to Exchange acceptance, it is intended that the Acquisition will constitute the Qualifying Transaction of the Corporation in accordance with Policy 2.4 of the Exchange.

The Letter of Intent contemplates that the Corporation will raise, concurrently with the closing of the Acquisition, a minimum of $1,500,000 and a maximum of $4,000,000 (the Financing") by way of an offering of units of mHealth at a price of $2,500 per unit (a "Unit"), each Unit consisting of 1,250 Common Shares at a price of Cdn$0.20 per Common Share and one convertible debenture in the principal amount of $2,250, with the principal amount due in 24 months, bearing interest at the rate of 12% per annum and due and payable at maturity, and with the principal amount convertible into Common Shares at $0.20 per Common Share. If the Corporation enters into an engagement agreement with an agent in relation to the Financing, the details will be announced in a subsequent press release. The proceeds of the Financing will be used for working capital, product development and product marketing.

The transaction contemplated in the Letter of Intent is subject to, among other things, the following conditions:

  1. completion of due diligence by the Corporation and Heltheo, including but not limited to audit of the development costs of the Assets;
  2. completion of the Financing;
  3. entering into of a formal agreement; and
  4. meeting all regulatory requirements, including approval of the Exchange, and meeting all conditions of the formal agreement.

The proposed Qualifying Transaction will be at arm's length, and accordingly, will not require approval by the majority of the minority shareholders of the Corporation; however, detailed information on the Qualifying Transaction and the Resulting Issuer (as defined in the Exchange policies) will be included in a Filing Statement to be filed on SEDAR.

The Corporation will be required to engage a Sponsor in relation to the proposed Qualifying Transaction. The name of the Sponsor and the details of the Sponsorship will be announced in a further press release.

Management:

It is proposed that upon completion of the Qualifying Transaction, the directors and officers of the Corporation will remain unchanged. These directors and officers will be the only insiders of the Resulting Issuer. The following is a description of the directors and officers of the Resulting Issuer:

President, Chief Executive Officer and Director

Jacques Boulet is President, Chief Executive Officer and a Director of the Corporation. He has over 30 years' experience in various aspects of finance, including banking, financial accounting, the securities and insurance industry, and manufacturing. He is currently a broker with Equity Associates Inc. and Qualified Financial Services, which provide financial advice to clients, and is a financial coach with JC Mitchell Financial. He is also director of Stone Investment Group Limited, a mutual fund which is a reporting issuer in Canada. Mr. Boulet is Chair of the Audit Committee and a member of the Compensation and Governance Committee of Stone Investment Group Limited.

Chief Financial Officer, Secretary and Director

Neil B. Ramsay is Chief Financial Officer, Secretary and a Director of the Corporation. Mr. Ramsay holds a Bachelor of Commerce degree from the University of Alberta, a Master of Accountancy from Bowling Green State University of Ohio, and holds the professional designation of Chartered Accountant from the Institute of Chartered Accountants of Alberta. Since November, 1983, Mr. Ramsay has been a Chartered Accountant and President of Neil Ramsay Professional Corporation.

Director

Massimiliano Brezzi is a Director of the Corporation. Mr. Brezzi is a self-employed advisor. He is general partner of CVA Partners LP, a Delaware limited partnership which operates from Burlingame, California and is a California licensed lender to businesses. He was the founder and managing director of Cantara (Switzerland) S.A. ("Cantara"), based in Geneva, Switzerland, until February, 2011. Founded in 1997, Cantara manages a microcaps fund whose primary objective is investing in small and micro capital companies primarily in the United States. The fund invested in technology, biotechnology and energy companies. He received Master in Law degree cum laude from the University of Genoa, Italy in 1978. He obtained the qualifications to be admitted to the Italian bar and is a Swiss and Italian citizen.

Director

Rene Branchaud is a Director of the Corporation. Mr. Branchaud is a lawyer with the law firm of Lavery, de Billy, L.L.P., practicing in Montreal in the areas of securities law, mergers and acquisitions and corporate law. He assists companies on their incorporation, corporate structure, shareholders' agreements, private placements, public offerings, stock exchange listings as well as dispositions and takeovers. Mr. Branchaud serves on the board of directors and is corporate secretary of several public companies and non-profit organizations. He also serves on several committees of the board of public companies, including audit committees, corporate governance committees and ad hoc committees created for specific transactions such as mergers and take-overs. In addition, he advises directors who sit on ad hoc committees. Mr. Branchaud received his Bachelor of Laws from the Universite Laval in Quebec in 1982. Mr. Branchaud was admitted to the Quebec Bar on November 30, 1983.

Trading will be halted until such time as the Qualifying Transaction is completed and the Financing is closed.

Upon completion of the Qualifying Transaction, the Resulting Issuer will be classified as a technology issuer on the Exchange.

Completion of the 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 transaction 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 transaction, any information released or received with respect to the 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.

"This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available."

NEITHER THE 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 RELEASE.

Statements in this press release contain forward-looking information within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "contemplates", "intends", "plan", "expect", "project", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. In particular, forward-looking information in this press release includes, without limitation, statements with respect to: completion of the Acquisition; receipt of all necessary regulatory and third party approvals, if applicable; and the composition of the board of directors and management of the Resulting Issuer. Readers are cautioned that assumptions used in the preparation of forward-looking information may prove to be incorrect. Although the Corporation believes that the expectations reflected in the forward-looking information is reasonable, there can be no assurance that such expectations will prove to be correct. The Corporation cannot guarantee future results, level of activity, or performance of achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information.

Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors (many of which are beyond the control of the Corporation) that could cause actual events or results to differ materially from those anticipated in the forward- looking information. Some of the risks and other factors could cause results to differ materially from those expressed in the forward-looking information include, but are not limited to: general economic conditions in the United States, Canada and globally; the risks associated with the selling and marketing of products; and exchange rate changes. Industry related risks could include, but are not limited to: delays or changes in plans; competition for, among other things, capital, acquisitions, skilled personnel and supplies; governmental regulation of the health and medical products; technical problems; the uncertainty of estimates and projections of costs and expenses; unanticipated operating events or performance which can reduce productivity; the need to obtain required approvals from regulatory authorities; stock market volatility; liabilities inherent in technology operations; access to capital; and other factors. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

The forward-looking information contained in this news release is expressly qualified by this cautionary statement. The Corporation undertakes no obligation to update or revise any forward-looking statements to conform such information to actual results or to changes in its expectations except as otherwise required by Exchange Requirements and applicable securities legislation. Readers are cautioned not to place undue reliance on forward-looking information.

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.

Contact Information

  • mHealth Capital Corp.
    Jacques Boulet
    President and Chief Executive Officer
    (416) 237-7790