TORONTO, Jan. 6, 2016 /CNW/ - Mitec Technologies Inc. ("Mitec") announces that it has avoided receivership by negotiating an agreement with its Chairman, Abe Schwartz.
As disclosed in Mitec's news release of September 17, 2015, Mr. Schwartz had notified Mitec of his desire to negotiate the repayment of $2,000,000 in secured promissory notes and debentures that he held in addition to other non-secured debts which, as of October 31, 2015, totaled approximately $357,000. After careful consideration of Mitec's financial condition, its prospects and Mr. Schwartz's notice demanding re-payment, the transaction was negotiated and unanimously approved by Mitec's independent board members.
The repayment of the secured $2,000,000 debt will be satisfied by the transfer to Abe Schwartz of 1,496,024 shares in Covalon Technologies Inc. owned by Mitec and 967,650 warrants expiring August 30, 2016. After the settlement is completed Mitec's ownership in Covalon will be approximately 300,000 shares.
Mr. Schwartz has agreed to waive repayment of Mitec's $357,000 debt owed to him.
Further, Mitec will return to Mr. Schwartz the intellectual property ("IP") it acquired from him in October of 2013. Mitec was responsible for funding the development of the IP but had not been financially able to do so for the past six months. Mr. Schwartz had been forced to personally make up some of the shortfall. Mitec will be absolved from having to make any further payments for the development of the IP and Mr. Schwartz will arrange for the repayment of the various prior advances made by Mitec from the sales of the IP until Mitec is repaid the $944,000 it had advanced, which is inclusive of interest owed.
"Mitec has negotiated the best possible deal it could given the circumstances while, most importantly, avoiding having to seek creditor protection", said Jeffrey Mandel, Mitec's President and CEO.
Mitec has relied on the exemptions found in section 5.5(g) and 5.7(e) of MI 61-101 (financial hardship criteria) in order to complete this transaction, which has been approved by the TSX Venture Exchange
This news release contains forward-looking statements which reflect Mitec's current expectations regarding future events. The forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan, "estimate", "expect", "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions. These forward-looking statements involve risk and uncertainties, including the difficulty in predicting product approvals, acceptance of and demands for new products, the impact of the products and pricing strategies of competitors, delays in developing and launching new products, the regulatory environment, fluctuations in operating results and other risks, any of which could cause results, performance, or achievements to differ materially from the results discussed or implied in the forward-looking statements. Many risks are inherent in the industry; others are more specific to Mitec. Investors should consult Mitec's ongoing quarterly filings for additional information on risks and uncertainties relating to these forward-looking statements. Investors should not place undue reliance on any forward-looking statements. Mitec assumes no obligation to update or alter any forward-looking statements whether as a result of new information, further events or otherwise. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Mitec Technologies Inc.
For further information: Mr. Jeffrey Mandel, President & CEO, IR@mitectech.com, Tel.: (905) 822-8170