NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
TORONTO, Nov. 19, 2018 (GLOBE NEWSWIRE) -- Maclos Capital Inc. (“Maclos”) and Gefion Canada Inc. (“Gefion”), a private company incorporated under the Canada Business Corporations Act (the “CBCA”), are pleased to announce today that they have entered into a definitive business combination agreement (the “Definitive Agreement”), which, subject to certain conditions and applicable Canadian Securities Exchange (“CSE”) approval, will result in the reverse takeover of Maclos by Gefion (the “RTO”).
The RTO is currently structured as a three-cornered amalgamation (the “Amalgamation”) whereby: (i) Gefion will amalgamate with a newly incorporated company under the CBCA (and a direct, wholly-owned subsidiary of Maclos) to form an amalgamated corporation (“Amalco”); (ii) the holders of Gefion’s Class A Common Shares will receive one common share of Maclos (“New Common Shares”) for each Gefion Class A Common Share; (iii) the holders of Gefion’s Class B Common Shares will receive one multiple voting share of Maclos (the “Multiple Voting Shares”), as described herein, for each Class B Common Share of Gefion; and (iv) Amalco will become a wholly-owned subsidiary of Maclos.
The Multiple Voting Shares each carry the right to three votes at meetings of the holders of New Common Shares and Multiple Voting Shares and the New Common Shares shall have one vote per New Common Share held.
The Resulting Issuer (as hereinafter defined) shall seek a listing of the New Common Shares of Maclos on the CSE. The Multiple Voting Shares will not be listed for trading on any exchange.
The Multiple Voting Shares are convertible into New Common Shares at any time after the earlier of (i) the Resulting Issuer achieving minimum pre-tax earnings of CAD$20 million in any fiscal year or (ii) the date on which the market capitalization of the Resulting Issuer exceeds CAD$400 million. The Multiple Voting Shares are convertible into New Common Shares of the Resulting Issuer on a 1:1 basis.
A listing statement in respect of the RTO will be prepared and posted on the CSE website and filed on SEDAR at www.sedar.com in accordance with Policy 2 of the CSE prior to the closing of the RTO. A press release will be issued once the listing statement has been filed.
Gefion is also pleased to announce the closing of a private placement offering (the “Prior Private Placement”) for aggregate gross proceeds of $1,833,754.20 raised over three closing tranches, with the last tranche closing on November 2, 2018. The Prior Private Placement was led by Kingsdale Capital Markets Inc. (“Kingsdale”) and included the sale of 3,056,257 Class A Common Shares of Gefion at a price of $0.60 per Class A Common Share.
Name Change
In connection with the transactions contemplated in the Definitive Agreement, Maclos or the resultant entity after the Amalgamation (the “Resulting Issuer”) intends to effect, among other items of special business, a change of its name to “Gefion Holdings Inc.” and will also apply to change its stock symbol.
Proposed Private Placement
Gefion is in the process of completing a brokered private placement of Gefion Class A Common Shares (the “Current Private Placement Financing”). Gefion has engaged Kingsdale as lead agent to assist in the Current Private Placement Financing. Pursuant to the Current Private Placement Financing Gefion will issue up to 20,000,000 Class A Common Shares at $1.00 per Class A Common Share and up to 2,000,000 broker warrants, entitling holders to acquire up to 2,000,000 Gefion Class A Common Shares at $1.00 per Class A Common Share, and expiring on the earlier of (a) the date that is two (2) years after the Gefion Class A Common Shares become publicly tradeable on a securities exchange and (b) on the date which is five years from the closing date of the Current Private Placement Financing. It is anticipated that the Current Private Placement Financing will close on or about November 30, 2018. The broker warrants issuable on the Current Private Placement Financing shall be exchanged for warrants of the Resulting Issuer on a 1:1 basis.
Kingsdale and Cameron Prange, President of Maclos and Kingsdale, have a combined ownership position of 540,584 shares of Maclos representing 2.09%.
Gefion will use the proceeds of the Current Private Placement Financing for marketing, inventory, scientific development, technology acquisition, Health Canada filings and general working capital purposes.
This news release does not constitute an offer to sell or a solicitation of an offer to sell 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.
Capitalization
Maclos currently has 25,787,781 Common Shares issued and outstanding. All existing warrants and other securities convertible into shares of Maclos will be cancelled prior to the completion of the RTO without cost or other compensation; provided that 2,400,000 options to acquire common shares of Maclos which had previously expired will be reissued by Maclos for a term of five years from the date of issuance with an exercise price of CAD$0.06 per Common Share. After the Consolidation (as hereinafter defined) the options shall be exchanged for 141,176 options of the Resulting Issuer and each such option shall be exercisable at CAD$1.02 for one New Common Share of the Resulting Issuer.
Under the terms of the Transaction Agreement and prior to the Amalgamation, Maclos will undertake a 17:1 share consolidation such that it will have 1,516,928 Common Shares issued and outstanding immediately prior to the completion of the Amalgamation (the “Consolidation”). The RTO is being completed with an ascribed value of $910,156 for Maclos, which equals approximately $0.035 per Common Share on a pre-Consolidation basis and approximately $0.60 per Common Share on a post-consolidation basis.
Gefion, as at the date hereof has, following the completion of the Prior Private Placement, 3,056,257 Class A Common Shares and 50,000,000 Class B Common Shares issued and outstanding. Gefion also has issued the following broker warrants pursuant to the Prior Private Placement: 133,367 Gefion Class A Common Share purchase warrants to purchase Gefion Class A Common Shares, exercisable at $0.60 per Gefion Class A Common Share and expiring on the earlier of (a) the date that is two (2) years after the Gefion Class A Common Shares become publicly tradeable on a securities exchange and (b) September 26, 2023; 66,496 Gefion Class A Common Share purchase warrants to purchase Gefion Class A Common Shares, exercisable at $0.60 per Gefion Class A Common Share and expiring on the earlier of (a) the date that is two (2) years after the Gefion Class A Common Shares become publicly tradeable on a securities exchange and (b) October 17, 2023; and 105,763 Gefion Class A Common Shares exercisable at $0.60 per Gefion Class A Common Share and expiring on the earlier of (a) the date that is two (2) years after the Gefion Class A Common Shares become publicly traded on a securities exchange and (b) November 2, 2023. Each Gefion Class A Common Share will be exchanged on the Amalgamation for one New Common Share, and each Gefion Class B Common Share will be exchanged for one Multiple Voting Share such that, following the Amalgamation, but excluding the effect of the Current Private Placement Financing, the shareholders of Gefion will hold, in the aggregate, 3,056,257 Common Shares and 50,000,000 Voting Shares. All issued broker warrants of Gefion shall be exchanged for warrants of the Resulting Issuer on a 1:1 basis.
Assuming completion of the transactions contemplated in the Definitive Agreement, but excluding the effect of the Current Private Placement Financing, the Resulting Issuer will have 4,573,185 Common Shares and 50,000,000 Multiple Voting Shares outstanding, with the largest shareholder being BioPhysics Pharma, Inc. (“BioPhysics”) holding 50,000,000 Multiple Voting Shares comprising 91.6% of the votes of Common Shares and Multiple Voting Shares in the aggregate. Maclos shareholders would hold an aggregate of 1,516,928 New Common Shares of the Resulting Issuer, being approximately 2.78%.
Assuming full subscription of the Current Private Placement Financing, the Resulting Issuer will have 24,573,185 New Maclos Common Shares issued and outstanding and aggregate broker warrants entitling holders to acquire up to an additional 2,305,626 New Common Shares.
Gefion also intends to issue incentive compensation options and/or warrants to employees and consultants, which incentive securities could result in up to 6,000,000 Gefion Class A Common Shares being issued to such eligible individuals (the “Gefion Incentive Securities”). The exercise price for such incentive securities will be determined in accordance with the rules and polices of the CSE and other applicable legislation. The Gefion Incentive Securities will be exchanged for comparable securities of the Resulting Issuer on a 1:1 basis.
License Agreement
Gefion entered into a licensing agreement with BioPhysics dated as of September 26, 2018 (the “License Agreement”). The License Agreement grants Gefion an exclusive world-wide royalty free right to use BioPhysics’ transdermal delivery technology for the development and sale of herbal extract products, including cannabis and hemp products (the “License”).
In consideration for the grant of the License, Gefion agreed to pay to the Licensor the sum of US$6,000,000 with US$400,000 payable within 30 days of the date of the License Agreement and the remaining balance on a payment schedule to be agreed, provided that the remaining balance shall be due on the earlier of (a) Gefion becoming a publicly traded company or (b) one year from the date of the License Agreement.
Given the issue of the 50,000,000 Class B Shares of Gefion to BioPhysics on incorporation of Gefion, Gefion was able to obtain the License on substantially more favourable terms than such License would have been issued were BioPhysics not a significant shareholder of Gefion.
Maclos Meeting
Maclos will convene an annual and special meeting of its shareholders to approve the amendment to the articles of Maclos to create the new share provisions for the New Common Shares and the Multiple Voting Shares, the Consolidation, a new Omnibus Equity Incentive Plan, an updated set of by-laws (which will include advance notice provisions) and the election, conditional upon and effective as of the completion of the RTO, of new directors of the Resulting Issuer, and the change of name of the Resulting Issuer, which matters will be set out in a management information circular of Maclos mailed to shareholders of Maclos (and filed at www.sedar.com).
Information about Gefion
Gefion is a private Canadian corporation which has licensed transdermal delivery technology from BioPhysics. The license is an exclusive royalty free world-wide right to use any BioPhysics transdermal delivery technology for the development and sale of herbal extracts products which include cannabis and hemp based products. Gefion plans to use the GT4 transdermal delivery technology. The GT4 transdermal technology is covered by a pending patent.
GT4 is a breakthrough transdermal technology (not a topical). GT4 quickly and efficiently moves the active drug including herbal extracts through all of the skin layers into the blood stream or deep local tissue depending upon how it is formulated. The stable complex emulsion can be in the form of a cream or gel (not a patch). GT4 is the most advanced, chemically active controlled dosing transdermal technology developed for the cannabinoid space. This technological capability allows for the creation of innovative products with built-in advantages compared to other drug delivery methods.
The GT4 technology can be applied through a single dose system to precisely control dosage. Further, it is an active delivery system designed to quickly penetrate into the skin unlike passive topicals that remain for an extended period on the surface of the skin as messy odorous creams or oils that allow for cross contamination of clothes or other individuals. The GT4 technology provides the safety of transdermal (no gastro-intestinal impact or first pass liver effect) with the convenience of a pill.
Gefion plans to participate in four different industry categories. The first is prescription drug products. Initially Gefion has five possible products to begin clinical testing. Among these pre-clinical products are possible treatments for epilepsy, decubitus ulcers (bed sores/diabetic foot ulcers), fibromyalgia, peripheral muscular/skeletal pain (osteoarthritis) and back pain.
Gefion has developed products for entry into the cannabinoid over-the-counter (“OTC”) market in Canada. These products can enter the Canadian market following Health Canada review and approval. In addition, with the recent legalization of cannabis recreationally in Canada, the GT4 technology provides a better user experience without the problems of smoking and edibles. Gefion’s management believes that the Herbal Plus line could become the definitive product line and brand in the OTC medical and recreational markets in Canada.
Due to the regulatory situation in the United States, Gefion has developed a unique strategy to address these markets. In the United States, cannabinoids are not legal. However, many states have approved the sale of cannabinoids at the state level, derived from state licensed growers and extractors, and such through state licensed dispensaries.
In the United States, Gefion’s business model provides for the sale of the formula bases (without cannabinoids but containing the GT4 technology) in bulk to extractors who then blend their extracted cannabinoids into Gefion’s formula base and create their own “white labeled” product line which is anticipated to provide higher margins than bulk extractions.
Since Gefion does not “touch the flower”, the bases can be shipped throughout the United States and fully comply with both federal and state regulation. Gefion has already successfully test marketed this concept.
Gefion has created a line of “Extract Plus” products that combine the GT4 technology with hemp and various herbal extracts to create a series of life style products for the consumer market. Examples of these products include “Be Active” with White Willow, Comfrey and Rosemary; “Be Healthy” with Echinacea, Reishi and Chlorella; “Be Intimate” with Maca, Yohimbe and Ginkgo; “Be Positive” with Valerian and Lemon Balm Leaf; and “Be Sleepy” with Chamomile, Wild Lettuce, Rhodiola Root and Melatonin.
Gefion plans to launch these “Extract Plus” hemp products into the United States and Canadian consumer markets.
About Maclos
Maclos was incorporated under the CBCA on December 8, 1993. Until 2009, Maclos (formerly LMS Medical Systems inc. ) had been actively developing and commercializing a series of leading-edge software-based products to be used as decision support tools for physicians. After a sale of its assets on July 23, 2009, Maclos has not carried on any active business and its principal business became to identify and evaluate assets or businesses with a view to potentially merging or acquiring an interest therein. The shares of Maclos are not listed on any stock exchange, but trade on the Over the Counter Bulletin Board in the United States. Further information about Maclos can be found at www.sedar.com
About the Resulting Issuer
The Resulting Issuer’s business objective will be to build a business based on the transdermal delivery of herbal extracts which include cannabis and hemp based products through the GT4 transdermal delivery technology licensed to Gefion by BioPhysics.
Upon completion of the transactions contemplated in the Definitive Agreement, including the Amalgamation, the current directors and officers of Maclos will resign and it is currently expected that the proposed board of directors and senior management of the Resulting Issuer will include the following individuals:
- Ronald Heselgrave (Director)
- Jack Altshuler (Director)
- James Mongiardo (Chief Executive Officer and Director)
- Frank Manguso (Chief Financial Officer)
Ronald Heslegrave, Ph.D. is Chief of Research, William Osler Health System, Brampton, Ontario, Canada. Dr. Heslegrave has extensive experience in evaluation of innovative treatment and medical care innovation and study design. Dr. Heslegrave has extensive experience chairing Institutional Review Boards approving clinical trial protocols for major hospitals in Toronto.
Jack Altshuler, Esq., is a General Practice, Family Law Attorney who is a graduate of Northeastern University (B.S.) and Boston College (J.D.).
Frank Manguso, CPA, M.B.A., is our Chief Financial Officer. Mr. Manguso previously served as Chief Financial Officer of Star Solutions and as Chief Executive Officer and Chief Financial Officer of Z-LOK Industries, Inc. Mr. Manguso also served as Director of Management Information Consulting at Bank Boston Corporation and held management positions at two Gillette companies, Sterilon and Gillette of Puerto Rico. Mr. Manguso holds an A.B. from Harvard College and an M.B.A. from Babson College.
James Mongiardo, J.D., our Chief Executive Officer, is a former senior manager at Schering-Plough where he headed United States marketing and launched multiple OTC and prescription drug products. He initially served as FDA regulatory counsel for Schering-Plough. Mr. Mongiardo also has extensive experience in building companies. He has served as Chief Executive Officer for public biotechnology and healthcare services companies. He has raised capital for clients through institutional private placements, directed business start-ups from concept to marketing, completed a successful turn-around, designed operative business plans, raised venture and public equity financing, created marketing and promotional plans for new products, directed acquisitions and divestitures and developed and administered sales budgets over $ 300 million. Mr. Mongiardo holds a B.A. from Johns Hopkins University and a J.D. from Harvard University.
Gefion Media Contact
Gefion Canada Inc.
Attention: Laura Stephens
Phone: +1-978-473-7007.
Maclos Media Contact
Maclos Capital Inc.
Attention: Yves Grou
Phone: +1-514-237-7757
Forward-Looking Information Statement
This news release contains statements and information that, to the extent that they are not historical fact, constitute "forward-looking information" within the meaning of applicable securities legislation, including statements in respect of the entering into of definitive agreements and completion of the proposed Amalgamation. Forward-looking information is based on the reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. There is no assurance that the transactions contemplated by the Definitive Agreement (including the Amalgamation) will be completed as proposed or at all.
Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to differ materially from any future results, performance or achievements expressed or implied by the forward-looking information. Accordingly, readers should not place undue reliance on any such forward-looking information. Further, any forward-looking statement speaks only as of the date on which such statement is made. New factors emerge from time to time, and it is not possible for the Company's management to predict all of such factors and to assess in advance the impact of each such factor on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. The Company does not undertake any obligation to update any forward-looking information to reflect information, events, results, circumstances or otherwise after the date hereof or to reflect the occurrence of unanticipated events, except as required by law including securities laws.
The CSE has in no way passed upon the merits of the transactions contemplated in the Definitive Agreement (including the Amalgamation) and has neither approved nor disapproved the contents of this news release. Neither the CSE nor its Regulation Services Provider (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.