Vancouver, British Columbia – TheNewswire - September 20, 2021 - A-Labs Capital II Corp. (the "Company") (TSXV:ALAB.P) is pleased to announce that it has entered into a letter of intent (the "LOI") dated September 15, 2021 with Orcanos Ltd., an Israeli private company ("Orcanos"). Pursuant to the LOI, the Company and Orcanos have agreed to a proposed acquisition (the "Transaction") by the Company of 100% of the issued and outstanding securities of Orcanos in exchange for the issuance of securities of the Company. The Transaction is intended to constitute the Company’s Qualifying Transaction under Policy 2.4 – Capital Pool Companies of the TSX Venture Exchange (the "Exchange"). On closing of the Transaction, the business of the Company will be the business of Orcanos.

The Transaction is an Arm’s Length Qualifying Transaction, as defined in the policies of the Exchange, and is therefore not ordinarily subject to shareholder approval by the Company’s shareholders. The Company may seek shareholder approval for special matters in connection with the Transaction, to the extent required by applicable law or as deemed advisable by the parties.

About Orcanos

Orcanos is a private company incorporated under the laws of Israel on December 16, 2004. Orcanos Compliance, pivoted on 2016, is pioneering an adaptive Compliance SaaS platform, providing for the first-time application lifecycle management (ALM) combined with quality management (QMS) and regulatory compliance, that can be fully customized to the customer needs. Traditionally, R&D, quality and compliance phases are managed separately thus creating risk for product recalls and 'back-to-square-one' development procedures, resulting in multibillion dollar loses for companies worldwide. Orcanos prevents the 'post-factum' realization of regulatory product design faults that lead to said recalls and losses, by streamlining the process, and enabling real-time quality and regulatory compliance auditing within the entire development process, instead of after the development is already done. 

Orcanos operates a recurring revenue subscription model and markets globally with a blue-chip clientele that includes enterprises such as      Medtronic, GE      Healthcare and many others. 

The current controlling shareholders of Orcanos are Mr. Zohar Peretz and Mr. Rami Azulay, who each hold an aggregate of 8,419 ordinary shares in the capital of Orcanos, individually representing 40.95% of the issued and outstanding ordinary shares of Orcanos, on a non-diluted basis.

Summary of Transaction Terms of LOI with Orcanos

Pursuant to the LOI with Orcanos, the parties will negotiate a definitive agreement (the "Definitive Agreement") providing for the definitive terms of the Transaction. Other than certain provisions, including confidentiality and standstill provisions, the LOI is non-binding and is subject to the entering into of the Definitive Agreement. Unless the parties agree otherwise, the LOI will terminate if, among other things, the Definitive Agreement has not been entered into by December 15, 2021.

The parties intend to complete a business combination – the structure of which will be determined after receiving tax, legal and other advice – whereby the Company will acquire all of the securities of Orcanos that are issued and outstanding immediately prior to completion of the Transaction in exchange for the issuance of securities to Orcanos securityholders in accordance with an agreed upon exchange ratio taking into account the respective valuations of the parties (the "Exchange Ratio").

Accordingly, if the Transaction is completed, the ordinary shareholders of Orcanos will each receive, for every one (1) Orcanos ordinary share ("Orcanos Share") held immediately prior to the completion of the Transaction, such number of common shares of the Company based on the Exchange Ratio, as agreed upon by the parties, acting reasonably.  Furthermore, in connection with closing, the convertible securities of Orcanos outstanding immediately prior to closing will either automatically adjust in accordance with their terms or will be replaced with equivalent convertible securities of the Company, with necessary adjustment to number and price to account for the Exchange Ratio (and taking into account any share consolidation agreed to by the parties), with such additional adjustments (including to price) as needed.

In connection with the Transaction, it is currently expected that the Company will issue, on a pre-Consolidation basis (as defined below), approximately 86,443,500 common shares in the capital of the Company in exchange for the currently issued and outstanding Orcanos Shares, and without taking into account the securities to be issued pursuant to the Pre-Listing Financing (as defined below) and the Concurrent Financing (as defined below) and excluding any convertible securities of Orcanos to be outstanding immediately prior to the closing of the Transaction or otherwise issuable in connection with the completion of the foregoing transactions. Additional information regarding the terms of the Transaction will be announced in due course by way of press release in accordance with the requirements of Exchange Policy 2.4 – Capital Pool Companies.

On closing of the Transaction, the business of the Company will be the business of Orcanos, and, therefore, the Company is expected to operate as a Tier 2 issuer in the Technology and Innovation sector as such terms are defined by the Exchange.

Financings

Prior to, and as a condition to, the closing of the Transaction, Orcanos proposes to complete:

1. (i)a pre-listing financing (the "Pre-Listing Financing") of up to US$1,500,000, which is expected to be comprised of the issuance of the same type of securities issued under the Concurrent Financing at a 25% discount to the price per security issued under the Concurrent Financing; and 

 

1. (ii)a concurrent financing of US$,000,000, the terms of which will be determined in the context of the market (the "Concurrent Financing").  

Further terms regarding the Pre-Listing Financing and the Concurrent Financing will be announced in a subsequent press release and/or the filing statement.

In connection with the closing of the Pre-Listing Financing and the Concurrent Financing, and subject to completion of the Transaction, Orcanos expects to issue to an advisor a cash fee equal to 5% of the gross proceeds raised under the pre-Listing Financing and the Concurrent Financing and such number of Orcanos Share purchase warrants ("Advisor Warrants") equal to 5% of the gross proceeds raised under the Pre-Listing Financing and the Concurrent Financing. The terms of the Advisor Warrants will be announced in a subsequent press release and/or the filing statement. In connection with the closing of the Transaction, the Advisor Warrants will either automatically adjust in accordance with their terms or will be replaced with equivalent convertible securities of the Company, with necessary adjustment to number and price to account for the Exchange Ratio.

Proposed Consolidation and Name Change

The common shares of the Company are expected to be consolidated prior to closing of the Transaction at a ratio to be determined by the parties in the context of the Transaction (the "Consolidation").  Upon completion of the Transaction, the Company will change its name to such name to be determined by Orcanos and acceptable to the Exchange. Additional information regarding the proposed Consolidation and name change will be provided at a later date.

Proposed Directors and Officers of the Resulting Issuer

In connection with closing of the Transaction, it is expected that the current directors and officers of the Company will resign from their respective positions and the board will be reconstituted with four directors, three of whom shall be nominated by Orcanos and one of whom shall be nominated by agreement between Orcanos and the Company. Information and biographies regarding the incoming directors and officers will be provided at a later date.

Sponsorship

The Company will seek a waiver from the Exchange to the requirement to engage a sponsor in connection with the Transaction. If a sponsor is required, the Company will identify a sponsor and pay the sponsorship fee in cash or common shares of the Company or a combination of cash and common shares of the Company. An agreement with a sponsor should not be construed as any assurance with respect to the merits of the Transaction or the likelihood of completion.

Trading Halt

In accordance with Exchange policies, the common shares of the Company are halted from trading and will remain so until certain documentation required by the Exchange for the Transaction can be provided to the Exchange. The common shares of the Company may resume trading following the Exchange's review of the required documentation or may remain halted until completion of the Transaction.

Conditions to Closing the Transaction with Orcanos

Closing of the Transaction is conditional upon, among other things, receipt of all required regulatory, corporate, and third party approvals, including Exchange approval, the negotiation and execution of the Definitive Agreement, satisfactory due diligence by both the Company and Orcanos, no material adverse change having occurred to the assets or share capital of either the Company or Orcanos, completion of the Pre-Listing Financing and Concurrent Financing, and, if required by the Exchange, filing of a sponsorship report with the Exchange. There can be no assurance that the Transaction will be completed on the terms proposed above or at all.

For further information on the Company, please contact:

 

Doron Cohen, CEO and Director of the Company

Email: doron@alabs.co

Telephone number: 972-545-224-017

 

For further information on Orcanos, please contact:

 

Zohar Peretz, CEO

Email: zoharp@orcanos.com

Telephone number: 972-525-582-578

 

NEITHER THE TSX VENTURE EXCHANGE INC. NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, 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 has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Information concerning Orcanos has been provided to the Company by Orcanos for inclusion in this press release. References to US$ are to United States dollars.

 

This press release does not constitute an offer to sell or a solicitation of an offer to buy 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 or for the account or benefit of U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Caution Regarding Forward-Looking Information

The information in this news release includes certain information and statements about management’s view of future events, expectations, plans and prospects that constitute forward-looking statements. These statements are based upon assumptions that are subject to significant risks and uncertainties. Forward looking statements in this news release include, but are not limited to, anticipated plans regarding the business of Orcanos, including proposed business operations, the proposed terms and closing of the Pre-Listing Financing, Concurrent Financing and the Transaction, the anticipated benefits of the Transaction, including the proposed business of the Company after completion of the Transaction. Because of these risks and uncertainties and as a result of a variety of factors, including with respect to the closing of the Transaction and related matters, including the expected timing for execution of a Definitive Agreement, the expected capitalization of the Company after completion of the Transaction, the proposed terms of financings, certain proposed directors and officers of the Company, the timing and receipt of all applicable regulatory, corporate, shareholder and third party approvals, the anticipated benefits from the Transaction and the satisfaction of other conditions to Closing, the actual results, expectations, achievements or performance may differ materially from those anticipated and indicated by these forward looking statements. Although the Company or Orcanos, as the case may be, believes that the expectations reflected in forward-looking statements are reasonable, it can give no assurances that the expectations of any forward-looking statement will prove to be correct. Except as required by law, the Company disclaims any intention and assumes no obligation to update or revise any forward-looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward-looking statements or otherwise.

/NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/