(TheNewswire)
Toronto, ON - TheNewswire - November 6, 2023 - Cuspis Capital III Ltd. (TSXV:CIII.P) (“ Cuspis ” or the “ Corporation ”), a capital pool company asdefined under TSX Venture Exchange (“ TSXV ” or the“ Exchange ”) Policy 2.4 – Capital Pool Companies (“ Policy 2.4 ”), andCytophage Technologies Inc. (“ Cytophage ”) are pleased to announce that,further to Cuspis’ news release dated June 1, 2023 (the“ Prior PressRelease ”), Cuspis, Cytophage and 10179321Manitoba Ltd. (“ Subco ”), awholly-owned subsidiary of Cuspis, have entered into a businesscombination agreement dated November 6, 2023 (the “ Definitive Agreement ”) in connection with the proposed business combination ofCuspis and Cytophage to ultimately form the resulting issuer (the“ ResultingIssuer ”) that will continue on the business ofCytophage, subject to the terms and conditions outlined below and inthe Prior Press Release. Cuspis and Cytophage intend that thetransactions contemplated by the Definitive Agreement (the“ Transaction ”) will constitute Cuspis’ Qualifying Transaction, assuch term is defined in the policies of the Exchange. Followingcompletion of the Transaction, the Resulting Issuer intends to list asa Tier 2 Biotechnology Issuer on the Exchange. Unless otherwiseindicated herein, the terms of the Transaction are as set forth in thePrior Press Release.
Under the terms of the Definitive Agreement, theTransaction will be completed by way of a three-cornered amalgamationunder the laws of the Province of Manitoba, whereby Subco andCytophage will amalgamate (the “ Amalgamation ”), andthe resulting amalgamated entity will survive as a wholly-ownedsubsidiary of Cuspis. Each issued andoutstanding Class A common share of Cytophage (each a “ Cytophage Share ”)will be exchanged for common shares (the “ Resulting Issuer Shares ”) of the Resulting Issuer on the basis of one (1)Resulting Issuer Share for one (1) Cytophage Share (the“ Exchange Ratio ”). In addition, it is contemplated that all securitiesconvertible, exercisable or exchangeable into Cytophage Sharesoutstanding at the effective time will be exchanged for similarsecurities of the Resulting Issuer on the basis of the Exchange Ratio. Immediately prior to or concurrently withclosing of the Transaction (the “ Closing ”) , Cuspis is expected: (i) to consolidate (the “ Consolidation ”) allof its issued and outstanding common shares (each, a “ Cuspis Share ”) onthe basis of one (1) post-Consolidation Cuspis Share for approximately4.1448 (the “ ConsolidationRatio ”) pre-Consolidation Cuspis Shares; (ii) change its name to “Cytophage Technologies Inc.” (the“ Name Change ”) or such other name as isacceptable to Cytophage, the TSXV and the Director appointed under the Business CorporationsAct (Ontario); and (iii) complete the Offering(as described below). It is also contemplated that all securitiesconvertible, exercisable or exchangeable into Cuspis Shares will beconsolidated at the Consolidation Ratio.
Cuspis expects to hold an annual and special meeting ofits shareholders on or about December 1, 2023, to approve certainrelated matters in connection with the Transaction, including anamendment to the articles of the Corporation to effect the previouslyannounced Consolidation, the Name Change, and the election ofdirectors, among other matters and as will be set forth in theinformation circular that Cuspis will shortly be mailing out toshareholders in connection with this meeting.
Subscription Receipt EquityFinancing
In connection with the Transaction, Cytophage will beconducting a non-brokered private placement offering (the“ Offering ”), for a minimum of $2,500,000 inaggregate gross proceeds of subscription receipts of Cytophage (each,a “ SubscriptionReceipt ” and collectively, the “ Subscription Receipts ”) at $1.00 per Subscription Receipt (the “ Offering Price ”).Completion of the Offering for minimum gross proceeds of $2,500,000,along with the proceeds of a non-brokered private placement of unitsof Cytophage completed following the Prior Press Release for aggregategross proceeds of approximately $523,000, is expected satisfy theconcurrent financing condition as required by the DefinitiveAgreement.
Immediately prior to Closing and provided the EscrowRelease Conditions (as defined below) are satisfied or waived (to theextent waiver is permitted), each one Subscription Receipt shall beexchanged automatically, for no additional consideration and with nofurther action on the part of the holder thereof, into one unit ofCytophage (a “ Unit ”). Each Unit will consist of oneCytophage Share (each an “ Underlying Share ”) and one-half of onecommon share purchase warrant (each whole warrant, an “ Underlying Warrant ”). Each Underlying Warrant will entitle the holder topurchase one Cytophage Share (a “ Warrant Share ”, andtogether with the Underlying Shares and the Underlying Warrants, the“ UnderlyingSecurities ”) at an exercise price equal to$1.40 until the date that is 24 months following the date of theClosing (the “ ClosingDate ”), subject toacceleration by Cytophage, in its sole discretion, if the volumeweighted average trading price of the Cytophage Shares on the Exchangeequals or exceeds $1.75 for a period of 10 consecutive trading days.
In connection with the Transaction, it is intendedthat, among other things: (i) the Subscription Receipts will beautomatically converted, without payment ofadditional consideration or further action on the part of the holderthereof into Units; (ii) all of the outstandingCytophage Shares (including the Underlying Shares) will be exchangedfor Resulting Issuer Shares based on the Exchange Ratio; and (iii) theUnderlying Warrants and Finder’s Warrants (as defined below) will beexchanged for warrants and finder’s warrants, respectively, of theResulting Issuer with the number and the exercise price adjusted basedon the Exchange Ratio, on economically equivalent terms?.
The net proceeds from the Offering will be used tocomplete the Transaction, fund regulatory approval(s) for existingCytophage products, the development of new Cytophage products and forworking capital and general corporate purposes.
Upon closing of the Offering, the gross proceeds (the“ Escrowed Funds ”) will be delivered to and held by an escrow agent(currently expected to be the TSX Trust Company) (the “ Escrow Agent ”)pursuant to the terms of a subscription receipt agreement (the“ Subscription ReceiptAgreement ”) to be ?entered into on theclosing date of the Offering among Cytophage, Cuspis and the EscrowAgent. The Escrowed Funds will be released (together with the interestthereon) to Cytophage upon satisfaction of the following escrowrelease conditions and the Escrow Agent receiving a certificate fromCytophage and Cuspis prior to the Termination Time (defined below) tothe effect that:
(A) all conditions precedent to theTransaction in accordance with the Definitive Agreement, have beencompleted, satisfied, or waived;
(B) Cytophage and Cuspis, as applicable, notbeing in breach or ?default of any of their material covenants orobligations under the Definitive Agreement or the Subscription?Receipt Agreement;
(C) all required shareholder and regulatoryapprovals, including, without limitation, the conditional approval ofthe TSXV for the listing of the Resulting Issuer Shares on the TSXVand the Transaction, have been received;
(D) the Resulting Issuer securities issuedin exchange for the Underlying Securities are not subject to anystatutory or other hold period in Canada, other than as may berequired by the TSXV;
(E) the satisfaction of such other customaryescrow release conditions requested by Cytophage or Cuspis, actingreasonably, to be set out in the Subscription ReceiptAgreement;
(F) Cytophage and the Cuspis have delivereda joint notice and direction to the Escrow Agent, confirming that theconditions set forth in (A) to (D) above have been met or waived(together from (A) to (F), the “ Escrow Release Conditions ”).
If (i) the satisfaction of the Escrow ReleaseConditions does not occur on or prior to the date that is 180 daysfollowing the closing date of the Offering, or such other date as maybe mutually agreed to in writing among Cytophage and Cuspis, or (ii)Cytophage and Cuspis has advised the public that either of them doesnot intend to proceed with the Transaction (in each case, the earliestof such times being the “ Termination Time ”), then all of the issuedand outstanding Subscription Receipts shall be cancelled and theEscrowed Funds shall be used to pay holders of Subscription Receiptsan amount equal to the Offering Price of the Subscription Receiptsheld by them (plus an amount equal to a pro rata share of any interestor other income earned thereon (less applicable withholding tax, ifany)). If the Escrowed Funds are not sufficient to satisfy theaggregate Offering Price paid for the then issued and outstandingSubscription Receipts (plus an amount equal to a pro rata share of theinterest earned thereon), it shall be Cytophage’s soleresponsibility and liability to contribute such amounts as arenecessary to satisfy any such shortfall.
The securities to be issued under the Offering will beoffered by way of private placement in each of the provinces of Canadaand such other jurisdictions as may be determined by Cytophage andCuspis, in each case, pursuant to applicable exemptions from theprospectus requirements under applicable securities laws.
The Offering is expected to close on or about November24, 2023, or such other date as determined by Cytophage, actingreasonably. In connection with, and as a condition to, the completionof the Transaction, the Resulting Issuer Shares (including thoseissued in exchange for the Underlying Shares and issuable pursuant tothe warrants and options of the Resulting Issuer) will be listed onthe TSXV.
In connection with the Offering, Cytophage may (on acase by case basis) pay certain duly registered and eligible finders(the “ Finders ”) a cash fee equal to up to 7.0% of the aggregate grossproceeds raised from subscribers introduced by them. The Finders mayalso receive such number of finder’s warrants (“ Finder’s Warrants ”) as is equivalent to up to 7.0% of the number ofSubscription Receipts issued to subscribers introduced by them. EachFinder’s Warrant will be exercisable at an exercise price of $1.00to acquire one Unit at any time during the twenty-four (24) monthsfollowing the Closing Date. Upon the completion of the Transaction,the Finder’s Warrants will be exchanged for finder’s warrants ofthe Resulting Issuer on economically equivalent terms.
The securities described herein have not been, and willnot be, registered under the United States Securities Act of 1933, asamended (the “ U.S.Securities Act ”), or any state securitieslaws, and accordingly, may not be offered or sold within the UnitedStates except in compliance with the registration requirements of theU.S. Securities Act and applicable state securities requirements orpursuant to exemptions therefrom. This press release does notconstitute an offer to sell or a solicitation to buy any securities inany jurisdiction.
Engagement of PI FinancialCorp.
In connection with the Transaction, Cytophage hasengaged PI Financial Corp. as an independent financial advisor.
About Cuspis and 10179321 ManitobaLtd.
Cuspis completed its initial public offering onFebruary 1, 2022. The common shares of Cuspis are listed for tradingon the TSXV under the symbol “CIII.P”. Cuspis has not commencedcommercial operations and has no assets other than cash. Cuspis wasincorporated under the laws of the Province of Ontario.
Subco is a private company incorporated under the Corporations Act (Manitoba) on October 25, 2023, for the purpose ofcompleting the Transaction.
Cytophage is a leading-edge Canadian biotechnologycompany that uses advanced molecular genetic techniques and syntheticbiology to create highly effective bacteriophages to address bacterialchallenges affecting animal health, human health, and food security.Bacteriophages are viruses that have evolved to specifically targetand destroy strictly bacterial cells and are safe for humans, animals,and plants. To combat dangerous bacteria, Cytophage generatescustomized phages to address specific bacterial infections, includingstrains resistant to antibiotics. Cytophage has also recentlydeveloped a ‘phage-display’ methodology to develop vaccine-likeproducts using bacteriophages for a number of potential applicationsin human and animal health.
On August 15, 2023, Cytophage announced it has enteredinto a distribution agreement with a leading animal health company inSouth Asia. This collaboration aims to expand Cytophage’s marketreach and accelerate growth in the thriving South Asian market. Thedistribution company is one of the leading pharmaceutical and animalhealth companies in its home region in South Asia. Their extensivemarket knowledge, consumer network and commitment to excellence alignwell with Cytophage’s vision and goals.
Cytophage Chief Financial Officer andChief Commercial Officer
Julius Kalcevich has joined Cytophage as its ChiefFinancial Officer. Michal Graham, the previous CFO, is now the ChiefCommercial Officer of Cytophage. Both individuals will assume thesame roles with the Resulting Issuer upon Closing. The otherproposed directors and officers of the Resulting Issuer are as setforth in the Prior Press Release
Mr. Kalcevich is an experienced finance and investmentbanking professional with an extensive background in corporatefinance, strategy development and financial management. Most recently,Mr. Kalcevich held the position of CFO of iAnthus Capital Holdings,Inc., which owns and operates licensed cannabis cultivation,processing, and dispensary facilities throughout the United States. As a founding team member of iAnthus, Mr. Kalcevich helped grow thecompany from a staff of 10 people to an organization with over 1000personnel and revenue of $200 million. Previously, Mr. Kalcevichwas a partner with BG Partners Corp., a Toronto based merchant bankfocused on early stage and venture financings. Prior to this, he wasa director in the investment banking groups of CIBC World Markets andDundee Capital Markets where he assisted in the completion of over 40transactions representing over $5 billion of transaction volume. Mr. Kalcevich earned a B.A. in Economics at McGillUniversity and an MBA at Columbia University.
Conditions to the Transaction
Completion of the Transaction remains subject to anumber of conditions, including but not limited to:
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completion of the Offering;
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completion of the Consolidation (including theconsolidation of all issued outstanding securities of Cuspis) and theName Change;
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preparation and filing of a disclosure document, asrequired by the TSXV (the Disclosure Document ”) outlining the definitive terms ofthe Transaction and describing the business to be conducted by Cuspisfollowing completion of the Transaction, in accordance with thepolicies of the TSXV;
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receipt of all shareholder, third party and requisiteregulatory approvals (including Cytophage shareholder approval)relating to the Amalgamation and the Transaction; and
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acceptance by the TSXV.
There can be no assurance that the Offering or theTransaction will be completed as proposed or at all.
Sponsorship
Cuspis and Cytophage are in the process of identifyingseveral appropriate sponsors to prepare a detailed Sponsor Report inthe form prescribed under Exchange Policy 2.2 – Sponsorship and SponsorshipRequirements .
Further Information
The full details of the Transaction are as set forth inthe Prior Press Release, updated by this press release.
All information contained in this press release withrespect to Cuspis and Cytophage (but excluding the terms of theTransaction) was supplied by the parties respectively, for inclusionherein, without independent review by the other party, and each partyand its directors and officers have relied on the other party for anyinformation concerning the other party.
Investors are cautioned that, except as disclosed inthe Disclosure Document to be prepared in connection with theTransaction, any information released or received with respect to theTransaction may not be accurate or complete and should not be reliedupon. Trading in the securities of a capital pool company should beconsidered highly speculative.
The TSXV has in no way passed upon the merits of theTransaction and has neither approved nor disapproved the contents ofthis press release. Trading in the listed securities of theCorporation will remain halted pursuant to Section 2.5 of ExchangePolicy 5.2 – Changes ofBusiness and Reverse Takeovers and Section2.3(b) of Policy 2.4.
For more information regarding Cuspis, please contactWilliam Ollerhead, the Chief Executive Officer of the Corporation.
William Ollerhead, CEO
Cuspis Capital III Ltd.
(416) 214-0876
For more information regarding Cytophage, pleasecontact Dr. Steven Theriault, the Chief Executive Officer of Cytophage
Dr. Steven Theriault, CEO
Cytophage Technologies Inc.
Neither the TSX Venture Exchange norits Regulation Services Provider (as that term is defined in thepolicies of the TSX Venture Exchange) accepts responsibility for theadequacy or accuracy of this release.
CAUTIONARY STATEMENT REGARDINGFORWARD-LOOKING INFORMATION: This press release contains “forward-looking information” and“forward-looking statements” (collectively, “ forward-lookingstatements ”) within themeaning of applicable Canadian securities legislation. All statements,other than statements of historical fact, are forward-lookingstatements and are based on expectations, estimates and projections asat the date of this press release. Any statement that involvesdiscussions with respect to predictions, expectations, beliefs, plans,projections, objectives, assumptions, future events or performance(often but not always using phrases such as “expects”, or “doesnot expect”, “is expected” “anticipates” or “does notanticipate”, “plans”, “budget”, “scheduled”,“forecasts”. “estimates”, “believes” or intends” orvariations of such words and phrases or stating that certain actions,events or results “may” or “could, “would”, “might” or“will” be taken to occur or be achieved) are not statements ofhistorical fact and may be forward-looking statements. In this pressrelease, forward-looking statements relate, among other things, to:the Transaction and certain terms and conditions thereof; the businessof Cytophage, the Offering; the Distribution Agreement and regulatoryapproval of Cytophage’s products; plans or expectations with respectto the selling and distribution of Cytophage’s products; the TSXVsponsorship requirements; shareholder, director and regulatoryapprovals; and future press releases and disclosure. Forward-lookingstatements are necessarily based upon a number of estimates andassumptions that, while considered reasonable, are subject to knownand unknown risks, uncertainties, and other factors which may causethe actual results and future events to differ materially from thoseexpressed or implied by such forward-looking statements. Such factorsinclude, but are not limited to: general business, economic,competitive, political and social uncertainties; and the delay orfailure to receive shareholder, director or regulatory approvals.There can be no assurance that such statements will prove to beaccurate, as actual results and future events could differ materiallyfrom those anticipated in such statements. Accordingly, readers shouldnot place undue reliance on the forward-looking statements andinformation contained in this press release. Except as required bylaw, Cuspis assumes no obligation to update the forward-lookingstatements of beliefs, opinions, projections, or other factors, shouldthey change, except as required by law.
This news releaseshall not constitute an offer to sell or the solicitation of an offerto buy any securities, nor shall there be any sale of securities inany state in the United States in which such offer, solicitation orsale would be unlawful. The securities referred to herein have notbeen and will not be registered under the United States Securities Actof 1933, as amended, and may not be offered or sold in the UnitedStates absent registration or an applicable exemption fromregistration requirements.
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