Ovid Capital Ventures Inc.
TSX VENTURE : OCA.P

September 26, 2014 18:14 ET

Ovid Capital Ventures Inc. Provides Update Regarding Its Qualifying Transaction With iTech Medical, Inc.

MONTREAL, QUEBEC--(Marketwired - Sept. 26, 2014) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR RELEASE PUBLICATION, DISTRIBUTION OR DISSEMINATION DIRECTLY, OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES.

Ovid Capital Ventures Inc. (TSX VENTURE:OCA.P) ("Ovid" or the "Company"), a capital pool company listed on the TSX Venture Exchange (the "Exchange"), is pleased to provide an update regarding the closing of its proposed Qualifying Transaction (as defined under Exchange Policy 2.4 - Capital Pool Companies) with iTech Medical, Inc. ("iTech"). As previously disclosed in its press release dated June 5, 2014, Ovid filed a filing statement, dated as of May 30, 2014, in connection with the Company's Qualifying Transaction (the "Filing Statement") on SEDAR and received conditional acceptance from the Exchange. The Company wishes to confirm that it is continuing to pursue the closing of the Qualifying Transaction, which is now expected to occur on or about October 6, 2014, assuming all conditions to closing are satisfied. Upon completion of the proposed Qualifying Transaction, the Company is expected to meet all of the minimum listing requirements for a Tier 2 Life Sciences Issuer.

The Merger

As previously announced, Ovid entered into an agreement and plan of merger dated as of November 8, 2013 (the "Merger Agreement") to complete a business combination involving Ovid, Ovid Acquisition Corp. (a wholly-owned subsidiary of Ovid incorporated pursuant to the laws of the State of Delaware) and iTech pursuant to which Ovid Acquisition Corp. will be merged with and into iTech, the separate corporate existence of Ovid Acquisition Corp. shall cease, and iTech shall continue as the surviving corporation under the laws of the State of Delaware. Each iTech common share issued and outstanding immediately prior to the effective time of the merger will be converted into the right to receive: (i) 0.29167 of a fully paid and non-assessable Ovid common share; (ii) 0.04167 of a fully paid and non-assessable Ovid Series A Preferred Share; and (iii) 0.15 of a fully paid and non-assessable Ovid Series B Preferred Share. Therefore, in connection with the merger, it is anticipated that: (i) 27,871,216 Ovid common shares will be issued in exchange for the iTech common shares; (ii) 3,981,875 Ovid Series A Preferred Shares will be issued in exchange for the iTech common shares; and (iii) 14,333,604 Ovid Series B Preferred Shares will be issued in exchange for the iTech common shares. The Ovid Series A Preferred Shares and the Ovid Series B Preferred Shares are convertible into Ovid Common Shares in certain circumstances described below on a 1:1 ratio.

Pursuant to the Merger Agreement, Ovid has allotted and reserved for issuance a total of 15,000,000 Ovid common shares (the "Milestone Shares") upon the conversion, if any, of the Ovid Series B Preferred Shares if the surviving corporation generates a minimum of $7,500,000 in gross revenues during the three fiscal years immediately following the closing (each such fiscal year to be for a period of at least twelve months), as reflected on the surviving corporation's audited annual consolidated financial statements for such fiscal years. For greater certainty, and based upon the number of issued and outstanding iTech common shares, the 14,333,604 Ovid Series B Preferred Shares to be issued in exchange for the iTech common shares would be converted into an equivalent number of Milestone Shares. The Milestone Shares, if any, will be issued promptly following the filing of the audited annual consolidated financial statements evidencing the fact that the above-mentioned revenue milestone has been met, subject to the restriction that if the Milestone Shares are issued prior to the end of the third fiscal year ended immediately following the closing, then such Milestone Shares will be subject to a legend restricting their resale, pledge or other transfer until the date which is 36 months following the closing. If the revenue milestone is not met, then the outstanding shares of Ovid Series B Preferred Shares will automatically be cancelled and returned to treasury without any further action or formality on the part of the holder thereof or the Issuer. In addition, as soon as practicable, but in any event no later than five Business Days following the effective time of the merger, iTech and its outside accountants shall prepare and deliver to the Resulting Issuer a consolidated closing statement of financial
position of iTech as at the closing date and prior to giving effect to the merger (the "Closing Statement"). Ovid has allotted and reserved for issuance of up to 4,000,000 Ovid common shares (collectively, the "Liability Shares") upon the conversion, if any, of the Ovid Series A Preferred Shares. If, based on the Closing Statement, the consolidated liabilities of iTech are (i) equal to or less than $300,000, then the outstanding shares of Ovid Series A Preferred Shares will automatically convert into a maximum of 4,000,000 Liability Shares, (ii) greater than $300,000 but less than $400,000, then the outstanding shares of Ovid Series A Preferred Shares will automatically convert into a maximum of 2,000,000 Liability Shares, or (iii) greater than $400,000, then the outstanding shares of Ovid Series A Preferred Shares will automatically be cancelled and returned to treasury without any further action on the part of any shareholder. For greater certainty, and based upon the number of issued and outstanding iTech common shares, the maximum number of Liability Shares issuable upon the conversion, if any, of the 3,981,875 Ovid Series A Preferred Shares to be issued in exchange for the iTech common shares would be a total of 3,981,875 Liability Shares.

The Private Placement

Concurrently with the Qualifying Transaction, and as a condition to the closing of the merger, Ovid intends to complete a brokered private placement the ("Private Placement") by issuing a minimum of 12,750,000 Units and a maximum of 15,000,000 Units at a purchase price of $0.20 per Unit, for gross proceeds to Ovid of a minimum of $2,550,000 and a maximum of $3,000,000. Each Unit is comprised of one Ovid common share and one-half of one Ovid Warrant, each whole Ovid Warrant entitling the holder thereof to acquire one additional Ovid common share at an exercise price of $0.30 for a period of 24 months from the closing. Proceeds from the Private Placement will be used by Ovid to pay for the costs of the Qualifying Transaction, to fund the Resulting Issuer's operating expenses, including research and development and marketing expenses and to fund working capital.

Ovid has engaged Jones, Gable & Company Ltd. (the "Agent") to act as agent, on a best efforts basis, in connection with the Private Placement and will receive as compensation (i) a commission of 10% of the gross proceeds of the Private Placement, and (ii) compensation options (the "Agent's Options") to acquire such number of Ovid common shares which is equal to 10% of the aggregate number of Ovid common shares sold pursuant to the Private Placement. Each Agent's Option shall entitle the Agent to acquire one additional Ovid common share at an exercise price of $0.20 per share for a period of 24 months from the closing.

Conditions of the Qualifying Transaction

The Qualifying Transaction is subject to certain conditions, including but not limited to, the completion of the Private Placement, obtaining the iTech shareholder approval, no material adverse change occurring until the closing, receiving all necessary regulatory and third party approvals, and the Exchange being satisfied that, after completion of the Qualifying Transaction, the Resulting Issuer will satisfy the Exchange's minimum listing requirements in order to become a Tier 2 Life Sciences Issuer.

Annual and Special Meeting of Ovid Shareholders

The annual and special meeting of shareholders was held on June 19, 2014 in Montreal, Quebec. At the meeting, in addition to the presentation of Ovid's audited financial statements, Ovid shareholders approved the re-election of Edward Ierfino, Andre Godin and Kosta Kostic as directors of the Company and the appointment of Nexia Friedman as auditors. In addition, Ovid shareholders approved the following three separate special resolutions which may be implemented in connection with the closing of the Qualifying Transaction: (i) amending the Articles of Ovid to change the registered office of the Company from the Province of Quebec to the Province of Ontario; (ii) changing the name of the Company from "Ovid Capital Ventures Inc." to "iTech Medical Inc.", or such other name that the Board of Directors, in their sole discretion, may determine; and (iii) amending the Articles of Ovid to allow the Board of Directors to appoint one or more additional directors, who shall hold office for a term expiring not later than the close of the next annual meeting of shareholders, but the total number of directors so appointed may not exceed one third of the number of directors elected at the previous annual meeting of shareholders.

Further Information

All information contained in this news release with respect to Ovid and iTech was supplied by the parties respectively, for inclusion herein, and each party and its directors and officers have relied on the other party for any information concerning the other party.

Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and, if applicable, pursuant to the requirements of the Exchange, 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.

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.

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.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain "forward-looking statements" under applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to: the terms and conditions of the proposed Transaction; the terms and conditions of the proposed Private Placement; use of funds; and the business and operations of the Resulting Issuer after the proposed Transaction. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; delay or failure to receive board, shareholder or regulatory approvals; and the ability of the Resulting Issuer to execute and achieve its business objectives. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Ovid and iTech disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Contact Information

  • Ovid Capital Ventures Inc.
    Edward Ierfino
    President and Chief Executive Officer
    (514) 562-1374