Dr. Steven Theriault reports

CYTOPHAGE TECHNOLOGIES LTD. COMPLETES REVERSE TAKEOVER TRANSACTION OF CUSPIS CAPITAL III LTD.

Cytophage Technologies Ltd. (formerly Cuspis Capital III Ltd.) has completed its previously announced reverse takeover transaction with Cytophage Technologies Inc., a privately held biotechnology company. The resulting issuer has also received conditional approval to list its common shares on the TSX Venture Exchange.

The resulting issuer shares are expected to commence trading on the TSX-V under the symbol CYTO on or about Feb. 8, 2024. A further press release is expected to be disseminated prior to the commencement of trading on the trading date (as defined herein).

The transaction

The transaction was completed according to the terms of a business combination agreement dated Nov. 6, 2023, as amended on Jan. 19, 2024. Pursuant to the business combination agreement, CTI and 10188932 Manitoba Ltd. (Subco) (a wholly owned subsidiary of Cytophage incorporated under the laws of the Province of Manitoba for the purpose of completing the transaction) amalgamated today in accordance with the provisions of the Corporations Act (Manitoba) and continued operating under the name Cytophage Technologies Inc. (Amalco).

In connection with the transaction: (i) holders of the 45,309,040 issued and outstanding Class A common shares of CTI received one common share of Cytophage for each CTI share held; and (ii) as consideration for the issuance of the resulting issuer shares to effect the amalgamation, the resulting issuer received one common share of Amalco for each resulting issuer share issued to holders of CTI shares.

Additionally, the resulting issuer issued, on a one-for-one basis, approximately: (i) 6,511,344 replacement common share purchase warrants to existing holders of Class A common share purchase warrants of CTI, with each resulting issuer warrant being exercisable to acquire one resulting issuer share at an exercise price ranging between 50 cents and $1.40 per share and expiring between June 30, 2025, and Oct. 1, 2026; and (ii) 4.26 million stock options to existing holders of stock options of CTI, with each resulting issuer option being exercisable to acquire one resulting issuer share at an exercise price ranging from 10 cents to $1.30 and expiring between June 30, 2024, and Oct. 11, 2030.

Prior to the amalgamation and in connection with the transaction, Cuspis consolidated its shares on a 4.1448 basis resulting in 8,444,316 postconsolidation common shares of Cuspis and changed its name to Cytophage Technologies Ltd.

A summary of material changes resulting from the transaction is provided herein. For further information, readers are referred to the filing statement of the resulting issuer dated Jan. 30, 2024, which was prepared in accordance with the requirements of the TSX-V and filed under Cytophage's SEDAR+ profile.

Concurrent and prior financings

On Dec. 22, 2023, CTI completed a private placement of 2.5 million subscription receipts at a price of $1 per subscription receipt for aggregate gross proceeds of $2.5-million. Completion of: (i) the concurrent financing; and (ii) a non-brokered private placement of units of CTI completed in two tranches on June 30, 2023, and Aug. 31, 2023, for aggregate gross proceeds of approximately $523,000, satisfied the concurrent financing condition of the transaction.

In connection with the concurrent financing and upon closing of the transaction, certain duly registered and eligible finders will receive an aggregate cash fee of $42,525, being an amount equal to 7.0 per cent of the aggregate gross proceeds raised from subscribers introduced by the finders, collectively. As additional consideration, the finders also received an aggregate of 35,525 finders' warrants, being an amount equal to 7.0 per cent of the number of subscription receipts issued to subscribers introduced by the finders, collectively. One finder will only receive a cash fee for its efforts in connection with the concurrent financing. Upon completion of the amalgamation, each finder's warrant was exchanged for one resulting issuer finder's warrant exercisable until Feb. 2, 2026, to acquire one resulting issuer unit, comprising one resulting issuer share and one-half of one resulting issuer warrant, at a purchase price equal to $1 per resulting issuer finder warrant.

The net proceeds from the concurrent financing will be used to complete the transaction, to finance regulatory approval(s) for existing Cytophage products, to develop new Cytophage products, and for working capital and general corporate purposes.

Name change, consolidation, and board and management changes

Completion of the transaction was subject to a number of conditions that are customary for a transaction of this nature. Prior to the completion of the transaction, Cuspis effected the consolidation, changed its name to Cytophage Technologies Ltd., and reconstituted its board of directors to consist of William Ollerhead and nominees of CTI, and all existing officers of Cuspis resigned and were replaced by nominees of CTI, including Dr. Steven Theriault as chief executive officer, Julius Kalcevich as chief financial officer, Heather Medwick as president and corporate secretary, and Michael Graham as chief commercial officer.

Consolidated capitalization

After giving effect to the transaction and the concurrent financing, the following securities of the resulting issuer are issued and outstanding as of the date hereof: (i) 53,753,356 resulting issuer shares; (ii) 6,511,344 resulting issuer warrants; (iii) 5,104,432 resulting issuer options; (iv) 84,443 resulting issuer options issued to eligible charitable organizations; (v) 603,165 warrants to acquire resulting issuer shares issued to certain agents; and (vi) 35,525 resulting issuer finders' warrants.

Escrowed securities

Pursuant to the requirements of the TSX-V, upon listing of the resulting issuer shares, all securities of the resulting issuer that are held by principals of the resulting issuer (as well as certain other founding shareholders of CTI and Cuspis) will be placed into escrow pursuant to applicable TSX-V requirements and governed by escrow agreements (as defined herein). Upon the date on which the resulting issuer resumes trading on the TSX-V, which is expected to be on or about Thursday, Feb. 8, 2024, there will be an aggregate of 11,937,493 resulting issuer shares, 4,949,975 resulting issuer warrants and 3.23 million resulting issuer options held pursuant to applicable TSX-V escrow agreements entered into among the TSX Trust Company (as escrow trustee), the resulting issuer and the escrowed shareholders.

TSX-V approval

Cuspis was a capital pool company as defined under the TSX-V Policy 2.4 (Capital Pool Companies), and the resulting issuer shares, subject to the following, are expected to resume trading on the TSX-V on the trading date. The transaction remains subject to final approval by the TSX-V and fulfilment of all of the requirements of the TSX-V to obtain such approval, including, among other things, submission and acceptance of all documents requested by the TSX-V in its conditional acceptance letter and payment of all outstanding fees to the TSX-V. The resulting issuer shares will trade on the TSX-V under the stock ticker CYTO.

About Cytophage Technologies Ltd.

Cytophage is a leading-edge Canadian biotechnology company that uses advanced molecular genetic techniques and synthetic biology to create highly effective bacteriophages to address bacterial challenges affecting animal health, human health and food security. Bacteriophages are viruses that have evolved to specifically target and destroy strictly bacterial cells, and are safe for humans, animals and plants. To combat dangerous bacteria, Cytophage generates customized phages to address specific bacterial infections, including strains resistant to antibiotics. Cytophage has also recently developed a phage-display methodology to develop vaccine-like products using bacteriophages for a number of potential applications in human and animal health.

We seek Safe Harbor.