CVR Medical Corp. (TSXV: CVM) (OTC Pink: CRRVF) (“CVR Medical” or the “Company”) a Canadian listed and US based healthcare company in the medical device sector is pleased to announce the execution of an amended restructuring agreement among the Company, a wholly-owned subsidiary of the Company, and CVR Global, Inc. (“CVR Global”) dated April 19th, 2021 (the “Restructuring Agreement” or the “Proposed Acquisition”, as the context requires). The Restructuring Agreement has been approved by the Board of Directors for both organizations and is now subject to the approval of CVR Medical’s shareholders and the TSX Venture Exchange (the “TSXV”).
Pursuant to the terms of the Restructuring Agreement, the Company will assume all operational control of the Carotid Stenotic Scan (CSS) medical device, and all duties, responsibilities, liabilities, and obligations related to the CSS, and shall have the sole and exclusive obligation and responsibility to bring the CSS to market and to develop all improvements and innovations.
The Company will acquire all of CVR Global’s intellectual property and all of Global’s technology related to its proprietary sub-sonic, infrasonic and low frequency sound wave analysis (collectively, the “Intellectual Property”). The Company will have unrestricted ownership of the Intellectual Property to pursue additional commercial applications of the technology beyond the scope of the CSS and the carotid artery.
Following submission and pre-approval of the Restructuring Agreement to the TSXV, the Company will file an information circular and will hold an annual general and special meeting of shareholders to, among other things, approve and ratify the Proposed Acquisition. The Proposed Acquisition will constitute a Non-Arm’s Length Party transaction pursuant to the applicable rules of the TSXV and a “related party transaction” pursuant to Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions (“MI 61-101”). Accordingly, the Proposed Acquisition is subject to the minority approval (i.e., approval by a majority of the votes cast at a meeting of CVR Medical shareholders, excluding any shares held by CVR Global, its affiliates and joint actors) and formal valuation requirements of MI 61-101.
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Pursuant to MI 61-101, the Company obtained a Fairness Opinion and Related Valuation from RwE Growth Partners, Inc. (the “Valuation”). In exchange for all assets assigned, granted, and transferred to Medical and/or CVRM hereunder, Medical shall pay to Global a royalty of 8% of MSRP for CSS products, and (ii) issue 20,000,000 Units to Global, each Unit consisting of one share of Medical common stock (each a “Share”) and one common share purchase warrant (each a “Warrant”), which Warrant shall entitle the holder to purchase one common share in the capital of Medical (a “Warrant Share”) for CDN$0.10. Each Share and accompanying Warrant shall be immediately separable and will be issued separately. Subject to the approval of the TSX Venture Exchange (“TSX-V”), the Shares will, and the Warrants may, be distributed pro-rata to the shareholders of Global, with certain shareholdings to be subject to TSX policy 5.4, section 6.2 Value Security Escrow Agreements, Tier 2 Issuers (excluding CPC’s). The parties agree that the foregoing consideration is based upon a Fairness Opinion and Related Valuation obtained by the Company from RwE Growth Partners, Inc., an independent valuation company, in accordance with TSX policy. This compares to 55,000,000 units stated in the previous Restructuring of Agreements.
CVR Medical will release from escrow all common shares of the Company previously issued to Global, namely, 25,000,000 (the “Escrowed Shares”). Each Share shall be immediately separable and will be issued separately. Subject to the approval of the TSX Venture Exchange (“TSX-V”), the Shares will be distributed pro-rata to the shareholders of Global, with certain shareholdings to be subject to TSX policy 5.4, section 6.2 Value Security Escrow Agreements, Tier 2 Issuers (excluding CPC’s).
Following the issuance of the Shares and the release of the Escrowed Shares, Global Shareholders will hold 56,650,000 common shares of the Company, representing 38.7%, of the issued and outstanding shares of the Company, on an undiluted basis. For comparison, the previous Restructuring of Agreements stated that Global shareholders will hold 91,650,000 common shares of the Company, representing 50% of the issued and outstanding shares of the Company, on an undiluted basis.
Following completion of the Proposed Acquisition, CVR Medical will solidify its place as a medical device company with the ability to control its own destiny and will assume all responsibility for bringing the CSS to market including clinical trials, FDA submission and all sales. The Proposed Acquisition secures a pipeline of potential products for the future including potential updates to the CSS.
CEO, Michael Rhodes, states that “the sub-sonic, infrasonic and low frequency sound wave analysis technology that the company will acquire on execution of the Proposed Acquisition of Global can be developed and applied to numerous applications beyond the current focus of the CSS. All previous dependance on Global will be eliminated enabling CVR Medical to create a simpler, more cost-effective business model focused on bringing the best version of the CSS to market with the goal of reducing the incidence of ischemic stroke and exploring future exciting applications of the technology. ”
Source: Biospace
