SOURCE: Vivione Biosciences Inc.

Vivione Biosciences

September 15, 2015 14:32 ET

Vivione Biosciences Inc. Announces up to US$2,500,000 Investment in Its Operating Subsidiary

CALGARY, AB--(Marketwired - September 15, 2015) - Vivione Biosciences Inc. ("Vivione" or the "Corporation") (TSX VENTURE: VBI) is pleased to announce that the Corporation, Vivione Biosciences, LLC, a wholly-owned Arkansas incorporated subsidiary of the Corporation (the "Subsidiary"), and Montalcino Holdings I, LLC ("Montalcino"), an investment entity formed in Texas, have entered into a binding agreement (the "Purchase Agreement") whereby Montalcino will purchase up to US$2,500,000 in the equity of the Subsidiary.

In the Corporation's press release dated August 6, 2015, Vivione discussed a series of financial and strategic setbacks and the associated effect on the Corporation's ability to continue operations. The Corporation has been committed to recovering from these setbacks and has been searching for alternative sources of financing to drive it's underlying potential in the biomedical field. The Corporation has been unable to find such financing and is now faced with the possibility of insolvency. The Transaction provides the Corporation with the opportunity to settle over US$1,500,000 in liabilities, increase its cash reserves, and increase the chance of the Subsidiary's success.

Details of the Transaction

Pursuant to the Purchase Agreement, Montalcino shall purchase an initial US$1,000,000 ("Initial Investment") in Series A Preferred Units of the Subsidiary on or about October 15, 2015 at a price of US$1 per Series A Preferred Unit in the Subsidiary and up to an additional US$1,500,000 ("Follow-on Investment") in Series A Preferred Units at the same price over the following year, upon the achievement of the certain milestones (four) set out in the Purchase Agreement (the "Milestones"). Each Milestone shall represent advances in the research and development of the Subsidiary's technology. Upon the achievement of each Milestone, Montalcino shall provide a pre-determined investment amount allowing the Subsidiary to continue its operations toward its achievement of the next Milestone.

Conditions to Closing

Closing of the Transaction, including the Initial Investment, is conditional upon, among other things, final approval of the TSX Venture Exchange and approval of the shareholders of the Corporation.

Effects of the Transaction

The Corporation has no remaining capital and believes that without the Transaction, the Corporation will not be able to continue operations and may have to resort to insolvency. The Corporation believes that the Transaction will provide the Subsidiary the best chance of continuing operations, and that the Corporation's equity position in the Subsidiary, together with the settlement of liabilities, will provide the Corporation the best chance of succeeding while preserving some value for current shareholders of the corporation which may not otherwise be the case.

The Corporation currently owns 100% of the equity of the Subsidiary; however this will decrease to an economic interest, on a fully diluted basis, of approximately 9% if the Follow-on Investments are completed. If the Follow-on Investments are all completed, Montalcino will own, on a fully diluted basis, an approximate 77.5% economic interest in the Subsidiary.

Employees and consultants who have entered into deferred payment agreements with respect to their salaries and fees have agreed to cancel and release Vivione from such obligations in exchange for cash in an amount not to exceed US$100,000 and Series B Preferred Units of the Subsidiary which will represent, if all Follow-on Investments are completed, approximately 3.5% of the Subsidiary's equity, on a fully diluted basis.

Glenn Smith, a director of the Corporation, has advanced the Corporation revolving loans with a current outstanding balance of US$1,420,000. Ancillary to the Transaction, Glenn Smith has agreed to sell and assign his interest in the receivables of these loans to the Subsidiary in exchange for 322,581 Series B Preferred Units of the Subsidiary, representing, on a fully diluted basis, approximately 10% of the Subsidiary if all Follow-on Investments are completed.

Vivione believes that the Transaction is a positive step for the Corporation and its shareholders and expects that the Transaction will permit the Corporation to avoid resorting to insolvency.

Stock Exchange Listing

It is expected that following the closing of the Transaction, the Corporation will be unable to meet the TSX Venture Exchange's ("TSXV") continued listing requirements and will be transferred to the NEX, a separate board of the TSXV for companies that are unable to meet the continued listing requirements of the TSXV.

Shareholder Approval

The Transaction constitutes an effective sale of all or substantially all of the assets of the Corporation, other than in the ordinary course of business. The Business Corporations Act (Alberta) requires that the Transaction be approved by at least 66⅔% of the votes cast by shareholders present in person or represented by proxy at the Annual General Meeting and Special Meeting of Vivione shareholders to take place on October 13, 2015 (the "Meeting").

About Vivione

Vivione's business is centered on the commercialization of the RAPID-B technology, which is an integrated system of hardware, software and chemical reagents that tests bacteria in key environments. This technology could have potentially diverse applicability from food safety to clinical diagnostics, by identifying and quantifying microorganism levels more rapidly and with greater precision than currently employed techniques.

About Montalcino

Montalcino Holdings I, LLC is a Texas-based limited liability corporation. Montalcino's principals have experience in investing and in the management of biotechnology companies.

Cautionary Statements

This news release contains "forward-looking statements" within the meaning of applicable securities laws. Although Vivione believes that the expectations reflected in its forward-looking statements are reasonable, such statements have been based on factors and assumptions concerning future events that may prove to be inaccurate. These factors and assumptions are based upon currently available information to Vivione. Such statements are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward-looking statements. Factors that could cause the actual results to differ materially from those in forward-looking statements include the inability to close the Initial Investment, failure to reach one or all Milestones, failure to close all or part of the Follow-on Investment, the failure to receive final TSXV approval, insufficient shareholder approval, obtaining any necessary approval from regulators in the United States, and the ability of the Corporation to pays its liabilities as they become due. Readers are cautioned to not place undue reliance on forward-looking statements. The statements in this press release are made as of the date of this release and, except as required by applicable law, Vivione does not undertake any obligation to publicly update or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. Vivione undertakes no obligation to comment on expectations or statements made by third-parties in respect of Vivione, or its financial or operating results or (as applicable), their securities.

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 RELEASE.

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