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MONTREAL, April 19, 2013 /CNW Telbec/ - Ovid Capital Ventures Inc.
(TSXV: OCA.P) ("Ovid") is pleased to announce that it has signed a non-binding letter of
intent (the "LOI") with iTech Medical, Inc., a corporation existing under the laws of
Delaware ("iTech"), which outlines the general terms and conditions pursuant to which
Ovid and iTech would be willing to complete a transaction that will
result in a reverse take-over of Ovid by the shareholders of iTech (the
"Transaction"). The LOI was negotiated at arm's length and is effective as of April
The LOI is to be superseded by a definitive merger, amalgamation or
share exchange agreement (the "Definitive Agreement") to be signed on or before June 30, 2013 (or such other date as may be
mutually agreed in writing between Ovid and iTech). The Transaction is
subject to requisite regulatory approval, including the approval of the
TSX Venture Exchange (the "TSXV") and standard closing conditions, the approval of the directors of
each of Ovid and iTech of the Definitive Agreement and completion of
due diligence investigations to the satisfaction of each of Ovid and
iTech, as well as the conditions described below. The legal structure
for the Transaction will be confirmed after the parties have considered
all applicable tax, securities law and accounting efficiencies,
however, it is currently contemplated that the transaction will be
structured as an exchange of securities.
Ovid is incorporated under the provisions of the Canada Business Corporations Act with its registered and head office in Montreal, Quebec. It is a
capital pool company and intends for the Transaction to constitute its
"Qualifying Transaction", as such term is defined in the policies of
the TSXV. Ovid is a "reporting issuer" in the provinces of British
Columbia, Alberta, Ontario, Quebec and New Brunswick.
Since the Transaction is not a non-arm's length transaction, Ovid is not
required to obtain shareholder approval for the Transaction.
Trading in the common shares of Ovid is halted at present. It is
unlikely that the common shares of Ovid will resume trading until the
Transaction is completed and approved by the TSXV.
Subject to TSXV approval, Ovid has also agreed to provide to iTech a
secured loan in the principal amount of up to $250,000 as soon as
possible following TSXV approval of same and agreement on standard loan
and security documentation acceptable to Ovid and iTech, each acting
reasonably. Ovid has already advanced $25,000 to iTech.
Conditions to Transaction
Prior to completion of the Transaction (and as conditions of closing):
The parties will prepare a filing statement in accordance with the rules
of the TSXV, outlining the terms of the Transaction.
iTech and Ovid will enter into a Definitive Agreement in respect to the
Transaction on or before June 30, 2013.
iTech will obtain the requisite shareholder approvals for the
Transaction and any ancillary matters contemplated in the Definitive
All requisite regulatory approvals relating to the Transaction,
including, without limitation, TSXV approval, will have been obtained.
Ovid will close a concurrent brokered financing (described below) for
minimum gross proceeds of $2,300,000.
The Proposed Transaction
Pre-Closing Capitalization of Ovid
As of the date hereof, Ovid has 10,898,000 common shares ("Ovid Shares") issued and outstanding, and securities exercisable or exchangeable
for, or convertible into, or other rights to acquire, an aggregate of
1,451,600 Ovid Shares at an exercise price of $0.10 per Ovid Share.
Pre-Closing Capitalization of iTech
As of the date hereof, iTech has 96,511,931 shares of common stock ("iTech Shares") issued and outstanding, and securities exercisable or exchangeable
for, or convertible into, or other rights to acquire, an aggregate of
9,536,080 iTech Shares.
Terms of the Transaction
Ovid proposes to acquire all of the iTech Shares pursuant to the terms
of a Definitive Agreement. It is expected that Ovid Shares will be
issued to the holders of iTech Shares in exchange for all of the issued
and outstanding iTech Shares on the basis of one (1) Ovid Share, at a
deemed issue price of $0.20, for every three (3) iTech Shares (the "Exchange Ratio") issued and outstanding as at the effective date of the Transaction
resulting in the current shareholders of Ovid holding 25% of the common
shares of the combined entity (the "Resulting Issuer") and the former shareholders of iTech holding approximately 75% of the
common shares of the Resulting Issuer (immediately prior to giving
effect to the Private Placement (as defined below), the Finder's Shares
(as defined below) and the Milestone Shares (as defined below), if
any). In addition, the iTech Shares underlying iTech's outstanding
securities exercisable or exchangeable for, or convertible into, or
other rights to acquire iTech Shares will be exercisable into Ovid
Shares on the same terms and conditions as such original outstanding
iTech securities. Furthermore, Ovid shall allot and reserve for
issuance a total of up to 15,000,000 common shares ("Milestone Shares") to the iTech Shareholders, on a pro rata basis, if the Resulting Issuer generates $7.5 million in revenue by the
end of the third fiscal year immediately following the closing of the
Transaction, as reflected on the Resulting Issuer's audited annual
consolidated financial statements for such fiscal years. The Milestone
Shares, if vested, would be issued promptly following the filing of the
audited annual consolidated financial statements evidencing the fact
that the 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 of the Transaction,
then such securities will be subject to a legend restricting their
resale until the date which is 36 months following the closing of the
Transaction. Finally, pursuant TSXV Policy 5.1, Ovid shall issue
1,500,000 common shares ("Finder's Shares") concurrently with the closing of the Transaction to Guardian
Securities House as a finder's fee for introducing Ovid to iTech.
It is expected that the Resulting Issuer will be classified as a Tier 2
Life Sciences Issuer.
Concurrent Private Placement
Concurrently with, and as a condition of, the closing of the
Transaction, Ovid will complete a brokered private placement (the "Private Placement") of securities ("Ovid Securities") at a minimum price per Ovid Security of $0.20. The Private Placement
shall be for minimum gross proceeds of $2,300,000. The Ovid Securities
may consist of Ovid Shares or units of Ovid consisting of Ovid Shares
and Ovid common share purchase warrants, as the case may be (or such
other securities of Ovid as may be agreed among iTech, Ovid and the
agent for the Private Placement). Further details regarding the
Private Placement, including the identity of the lead agent, will be
included in a subsequent press release once additional details become
iTech Medical, Inc. is a medical device company that develops and
markets innovative medical devices and technologies to treat pain.
iTech is focusing its efforts in two key areas (i) developing
technologies that can be used in the diagnosis of conditions that cause
musculoskeletal pain, and (ii) developing products that treat pain. The
company markets its products through direct sales and through a network
of distributors worldwide.
iTech was incorporated in 1997 in Nevada as "Impact Medical Solutions,
Inc." In December 2006, iTech merged with its wholly-owned subsidiary
Freedom 1, Inc., a Delaware corporation, and effectively reincorporated
into Delaware. On September 25, 2009 a Certificate of Amendment to
iTech's Articles of Incorporation was filed with the Delaware Secretary
of State changing the name of the company to "iTech Medical, Inc."
iTech was formerly registered with the United States Securities and
Exchange Commission and ceased reporting in August 2011.
On February 15, 2013, iTech purchased BIOflex Medical Magnetics, Inc. ("BIOflex"), a private healthcare company that has been developing and selling
biomagnetic therapy devices since 1986. BIOflex's product line
comprises more than 20 items including body supports, mattress
overlays, seat cushions and products for people suffering from neck and
back pain. BIOflex's unique, patented technology incorporates a
proprietary design and magnetic field strength to maximize the effects
at the source of pain and discomfort. BIOflex operates from an
FDA-registered facility and its products are registered with the FDA as
Class I medical devices.
Muscle Pattern Recognition (MPR)
iTech is currently developing a non-invasive medical device called
Muscle Pattern Recognition (MPR). MPR is a patented technology that
objectively analyzes muscle recruitment patterns of the neck and back.
iTech is developing the MPR System to provide objective, clinically
relevant evidence on the status of underlying biomechanical and
neuromuscular integrity, or the overall health of the neck and back, to
assist healthcare and rehabilitation professionals in the evaluation
and treatment of neck and back injuries and illnesses.
According to the U.S. National Institute for Occupational Safety and
Health (NIOSH), back pain is one of the most common and significant
musculoskeletal problems in the world. In the U.S., it is estimated
that the annual direct and indirect cost of diagnosing and treating
back injuries is $75 - $100 billion (Crow W, Willis D. "Estimating Cost of Care for Patients with Acute Low
Back Pain: A Retrospective Review of Patient Records." J Am Osteopath
Assoc. 2009:109:229-233). In addition, according to information available from the NIOSH, back
pain is the leading cause of disability in the U.S. for people younger
than 45, the most expensive health care problem for those in the 20 to
50 year-old age group, and accounts for over 24% of all occupational
injuries involving days away from work. Finally, based on information
from the U.S. Bureau of Labour Statistics, occupational musculoskeletal
disorders account for $1 of every $3 spent for workers' compensation.
Within the medical community, the target markets for MPR include those
health care providers who treat patients with back pain, namely
Neurologists, Orthopedic Physicians, Physical Medicine and
Rehabilitation (PM&R), Occupational Medicine, General Practitioners and
Chiropractors. There are over 450,000 of these practitioners in the
The largest market for MPR outside the medical community is the
self-insured employer market which represents between 35 - 40 million
workers in the U.S. iTech believes that this market is acutely aware of
the economic cost associated with back problems and is highly motivated
to adopt new technologies to help save on employee health care costs.
Other significant markets include Health Maintenance Organizations
(HMOs), Workers' Compensation Carriers and Insurance Companies.
BIOflex Magnetic Devices
BIOflex has a diverse line of over 20 products (>40 SKUs) that targets a
number of large markets including the sports medicine and orthopedic
market, the low back pain market, the sleep systems market and more.
BIOflex's product line includes various body supports and braces; car,
truck and office seat cushions; a line of bedding products; and various
other health aids. Individual products sold by BIOflex are registered
as Class 1 medical devices with the FDA.
Pain is associated with a wide range of injury and disease, and is
sometimes the disease itself. Millions suffer from acute or chronic
pain every year and the effects of pain exact a tremendous cost in
terms of health care costs, rehabilitation and lost worker
productivity, as well as the emotional and financial burden it places
on patients and their families. According to a June 2011 Institute of
Medicine Report: Relieving Pain in America: A Blueprint for Transforming Prevention,
Care, Education, and Research, pain is a significant public health problem that costs society up to
$635 billion annually.
Magnetic therapy is considered a Complementary and Alternative Medicine
(CAM). CAM products and services are generally regulated under the
Federal Food, Drug, and Cosmetic Act, and although not considered part
of main-stream medicine, the market is one of the fastest growing
fields in healthcare and is more widely used today than ever before.
Millions of people worldwide are spending billions of out-of-pocket
dollars on CAM therapies - including medical magnets - and its
widespread use continues to have an impact on users, practitioners,
researchers and policy makers.
The management of pain is a large and growing market in need of
efficacious pain treatment modalities, without side-effects, that are
minimally or non-invasive and can be delivered at a low cost. According
to an article and academic study, recent estimates put the worldwide
sales of magnets for the treatment of pain at over $5 billion annually;
with approximately $300 million in the U.S. alone.
MPR Business Model
iTech expects to generate revenue from two sources (i) the sale or
leasing of the device and (ii) a recurring revenue stream based on a
per-use basis of the MPR test. Due to the proprietary nature of the
iTech MPR System, iTech are able to maintain control over the data and
data analysis. As a result, iTech is building a database of back
injuries which it believes in two years will be larger than any other
database of its kind. iTech expects this database to open up a number
of new business opportunities, including the development of unique
clinical models that can be used to further reduce the cost of health
BIOflex Business Model
iTech intends to dramatically expand BIOflex revenue through a number of
marketing and distribution initiatives, including: establishing
strategic Joint Ventures/Partnerships; building relationships with
Wholesale Distribution Centers; through Internet Catalog Sellers;
through Direct Response TV (DRTV) campaigns; through Distribution
Agreements; and through Direct Sales, and more.
Consolidated Financial Information Concerning iTech
iTech is preparing audited consolidated financial information regarding
iTech and BIOflex, which will be included in the filing statement that
will be submitted to the TSXV and released in a subsequent press
Insiders, Officers and Board of Directors of the Resulting Issuer
Upon completion of the Transaction, it is anticipated that the board of
directors of the Resulting Issuer shall be comprised of: Wayne D.
Cockburn, Charles Zablotsky and Warren Baker. In addition, it is
expected that the officers of the Resulting Issuer shall be Wayne D.
Cockburn (Chief Executive Officer) and a Chief Financial Officer and a
Chief Medical Officer to be appointed shortly. Mr. Zablotsky is
currently the President of BIOflex.
Following completion of the Transaction and the Private Placement
(assuming gross proceeds of $2,300,000), but excluding the issuance of
the Milestone Shares, it is anticipated that no one shareholder will
exercise control or direction over more than 10% of the issued and
outstanding shares of the Resulting Issuer.
The following sets outs the names and backgrounds of all persons who are
expected to be considered insiders of the Resulting Issuer.
Wayne D. Cockburn, Chief Executive Officer and Director
Mr. Cockburn joined iTech in September 2003 as co-founder of the
business. Mr. Cockburn was President and CEO of iTech from September
2003 until June 2011. Mr. Cockburn rejoined iTech in January 2012 as
President and CEO. Prior to iTech, Mr. Cockburn was President at MPR
Health Systems from January 2002 until September 2003 and Executive
Vice President from January 2000 until January 2002. From January 1995
to December 1999, Mr. Cockburn was Vice-President, Business Development
for Lorus Therapeutics Inc., a public biotechnology company. Mr.
Cockburn's background includes strategic planning, corporate finance,
corporate partnering, corporate governance and mergers and
acquisitions. Mr. Cockburn has served on the board of directors of
several private and public companies, and currently serves on the
boards of two private companies.
Charles Zablotsky, Director
Mr. Zablotsky joined iTech in February 2013 when iTech purchased BIOflex
Medical Magnetics Inc. Mr. Zablotsky is co-founder of BIOflex and has
been the CEO/COO of BIOflex since its inception in 1985. Prior to
creating BIOflex, Mr. Zablotsky was founder/owner of Shop-Rite
Supermarket, a multi-million dollar grocery store that established
national sales and profitability records. Mr. Zablotsky has extensive
experience in formulating advertising budgets and campaigns; pioneered
many successful new marketing campaigns; and brought new and innovative
marketing and operational methods to the medical magnet industry. Mr.
Zablotsky received his education at Franconia College and Nuffield
College, Oxford University, UK.
Warren G. Baker, Director
Mr. Baker is currently the President and CEO of Operculum Inc., a
medical device company focused on next generation permanent birth
control solutions for women. Additionally, he is a Senior Consultant
with Pharmatech Associates advising pharmaceutical and medical device
companies on current FDA Compliance Strategies. Mr. Baker joined iTech
in February 2011 as President, Chief Operating Officer and member of
the Board of Directors. Mr. Baker was appointed Chief Executive Officer
in March 2011 and Board Chair in November 2011. In December 2011, Mr.
Baker resigned as CEO and continues today as the Board's Chairman. From
January 4, 2004 to June 30, 2006 , he was Chief Operating Officer of
Advanced Research Technologies ("ART") of Montreal, Quebec where he lead the development and
commercialization of their optical imaging technology for the
identification and diagnosis of breast cancer and identification of
optically tagged biomarkers in preclinical pharmaceutical studies.
Prior to that, Mr. Baker was President and Chief Executive Officer of
Electromed Imaging, a global leader in cardiac image information
management systems, where he first joined as Chief Operating Officer in
2002. During his work with both ART and Electromed Imaging, Mr. Baker
was responsible for the strategic acquisition and integration of both
new intellectual property and the merger of synergistic global business
Sponsorship of a qualifying transaction of a capital pool company is
required by the TSXV unless exempt in accordance with TSXV policies.
Ovid is currently reviewing the requirements for sponsorship and may
apply for an exemption from the sponsorship requirements pursuant to
the policies of the TSXV, however, there is no assurance that Ovid will
ultimately obtain this exemption. Ovid intends to include any
additional information regarding sponsorship in a subsequent press
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, TSXV acceptance and, if applicable,
pursuant to the requirements of the TSXV, 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.
SOURCE: Ovid Capital Ventures Inc.
For further information:
For further information regarding the Transaction, please contact:
Edward Ierfino, Chief Executive Officer, Ovid Capital Ventures Inc.
Wayne D. Cockburn, Chief Executive Officer, iTech Medical, Inc.