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.