GeneNews Limited Announces Private Placement Financing of up to $5 Million

TORONTO, March 14, 2016 (GLOBE NEWSWIRE) -- GeneNews Limited (“GeneNews” or the “Company”) (TSX:GEN) today announced that it is undertaking a non-brokered private placement of up to 50,000,000 common shares of the Company at a price of $0.10 per share (the “Offering”). Any remaining unfunded portion of the Offering may be raised with the issuance of a senior secured, collateralized convertible debenture. If needed, this convertible debenture would be issued with a term of 1 year from date of issue, interest accrued and payable at 15% and with a conversion price of $0.16 per Common Share. The conversion would become mandatory if the Common Shares trade above $0.16 for 30 consecutive trading days. In connection with the Offering, GeneNews has applied to the Toronto Stock Exchange (the “TSX”) for exemption under Section 604(e) of the TSX Company Manual for a "financial hardship" exemption, as detailed below.

As announced on November 13, 2015, the Company had earned limited revenue from royalties from its joint venture in Innovative Diagnostic Laboratory, Inc. (“IDL”).

In August 2015, the Company laid out a five-point action plan designed to reinvigorate IDL’s business. This consisted of completing the transition of IDL billings to a new third-party billing provider, bringing the contract sales force of Cobalt Healthcare Consultants, Inc. (“Cobalt”) in-house at IDL, adding marketing and sales support, building out an inside-sales effort, establishing additional contractual relationships with hospital and large practice groups, and continuing to expand IDL’s menu of advanced cancer assays. Also, in August, the Company closed a financing of $1.27 million, short of its goal of $3 million.

A substantial impediment to this, and any further financing, was the requirement that GeneNews have full control of IDL and be able to implement its reorganization plan. This involved buying out our partner in IDL, Cobalt. As outlined in GeneNews’ press release dated March 4, 2016, this has now been done. However, due to the length of time required to reach this agreement, the Company is in immediate need of finances in order to complete its restructuring, settle the aged payables and focus on the plan to reinvigorate IDL’s business.

Assuming the Offering is fully subscribed, GeneNews expects to use the proceeds of the Offering as follows: $700,000 to settle aged payables, $300,000 to pay interest associated with third-party debts and $4.0 million to fund general corporate and working capital purposes (all amounts are approximate). The actual allocation of the proceeds may vary from the uses set forth above, depending on future operations or unforeseen events or opportunities. If the Offering is not fully subscribed, the Company may apply the proceeds of the Offering in such priority and proportion as the Board of Directors of the Company determines is appropriate.

The Offering is open to all existing shareholders of the Company, subject to the limitations discussed herein. No insiders are participating in the Offering. The Offering will be conducted in reliance upon prospectus exemptions which permit the Company to distribute securities pursuant to the existing security holder's prospectus exemption available under OSC Rule 45-501 - Ontario Prospectus and Registration Exemptions and equivalent provisions of other applicable securities laws (the “Existing Shareholder Exemption”) to residents in such jurisdictions where the use of such exemption is not prohibited and subject to the terms and conditions therein. The aggregate acquisition cost to a subscriber under the Existing Shareholder Exemption cannot exceed $15,000 unless that subscriber has obtained advice from a registered investment dealer regarding the suitability of the investment. The Company has fixed March 11, 2016 as the record date for the purpose of determining existing shareholders of the Company who are entitled to participate in the Offering pursuant to the Existing Shareholder Exemption. Subscribers purchasing shares under the Existing Shareholder Exemption will need to represent in writing that they meet certain requirements of the Existing Shareholder Exemption, including that on or before the record date they became a shareholder of the Company and that they continue to be a shareholder of the Company.

In addition to conducting the Offering pursuant to the Existing Shareholder Exemption, the Offering will also be conducted pursuant to other available prospectus exemptions, including sales to accredited investors. In addition, existing shareholders who wish to exceed the $15,000 limit may also subscribe as accredited investors if they are eligible. Subscribers purchasing shares under the prospectus exemptions for accredited investors also will need to make customary representations and warranties in writing that they meet certain requirements of the exemptions.

Existing shareholders are welcome to subscribe for such amount of the Offering as they choose and are not limited to their proportionate share of the Offering; subscriptions will only be subject to pro-rationing in the event the Offering is oversubscribed.

The Offering is not subject to any minimum aggregate subscription amount; however, each individual subscription must be in the amount of $5,000 or more.

Closing of the Offering is subject to the receipt of applicable regulatory approvals including approval of the TSX. The Offering is expected to close in several tranches beginning on or about March 21, 2016 but in any event no later than on or about March 29, 2016. The securities issued will be subject to a hold period.

Existing shareholders or other subscribers interested in participating in the Offering can contact the Company by e-mail at or by telephone at (905) 209-2030 extension 2021.

Financial Hardship Exemption

As the aggregate number of Common Shares issuable pursuant to the Offering exceeds 25% of the currently issued and outstanding Common Shares of the Company and the Offering may result in a new control person of the Company and the discount on pricing is above the allowable limits, GeneNews would ordinarily be required to obtain shareholder approval pursuant to the applicable policies of the TSX, which are section 607(g)(i) and section 604(1)(i) and section 607(e), respectively, of the TSX Company Manual (the “Manual”). However, the Company has applied to the TSX, pursuant to the provisions of Section 604(e) of the Manual, for a “financial hardship” exemption from the requirement to obtain shareholder approval, on the basis that the Company is in serious financial difficulty. Under the terms of the Offering, there is 89.3% dilution based on the number of Common Shares to be issued, with a pricing discount of 46.2% from the five-day volume weighted average price (“VWAP”) ending March 11, 2016.

TSX Compliance and Disclosure

The Company has been advised that the TSX is reviewing its application for an extension of the TSX's Remedial Review Process to allow the Company additional time to demonstrate compliance with the continued listing requirements of the TSX (the "Listing Requirements").

In addition, and due to the restructuring process the Company initiated in the fourth quarter of 2015, GeneNews’ filing of its annual financial statements, management’s discussion and analysis, annual information form and the related officer certifications for the financial year ended December 31, 2015 (collectively, the “Annual Filings”) will be delayed beyond the filing deadline of March 31, 2016. The Company's auditors have advised that they will not be able to complete all their audit procedures and render an audit opinion by the filing deadline.

The Company is continuing to work with its auditors to complete its audited financial statements and the MD&A for the year ended December 31, 2015, but does not expect completion and filing to occur before April 30, 2016.

The Company confirms that it intends to satisfy the provisions of the alternative information guidelines found in sections 4.3 and 4.4 of National Policy 12-203 Cease Trade Orders for Continuous Disclosure Defaults for so long as it is delayed in filing the Annual Filings. The Company is not aware of any other material information concerning its affairs which has not been generally disclosed.

In view of this delay in filing, the Company intends to apply to the applicable Canadian securities regulatory authorities for a management cease trade order, which, if granted, would preclude members of management from trading the Company’s common shares until such time as the cease trade order is no longer in effect. There can be no certainty that such an order will be granted. The applicable regulatory authorities may instead issue cease trade orders against the Company for failure to file its Annual Filings within the prescribed time period. If a management cease trade order is granted it would generally not affect the ability of persons who are not, or who have not been, directors, officers or other insiders of the Company to trade in the Company’s securities.

About GeneNews

GeneNews is focused on developing and commercializing proprietary molecular diagnostic tests for the early detection of diseases and personalized health management, with a primary focus on cancer-related indications. The Company's lead product, ColonSentry®, is the world's first blood test to assess an individual's current risk for colorectal cancer. GeneNews' common shares trade on the Toronto Stock Exchange under the symbol 'GEN'. More information on GeneNews can be found at

About IDL

Richmond, Virgina-based IDL is a national clinical reference lab specializing in personalized blood-based testing to help find, understand, and address cancer risk in patient populations. IDL’s mission is to provide a comprehensive menu of traditional and advanced clinical evidence-based blood tests that aid in early cancer detection. Currently IDL offers risk assessment blood tests for the three most prevalent cancer types including lung, colon and prostate. IDL is actively in-licensing and commercializing an array of DNA, RNA, protein and autoantibody blood-based cancer diagnostic tests to address early detection of all major types of cancer.

Forward-Looking Statements

This press release contains forward-looking statements identified by words such as "expects", "will" and similar expressions, which reflect the Company's current expectations regarding future events, including the restructuring of its business. These forward-looking statements involve risks and uncertainties and material assumptions - including those related to general business and economic conditions as well as our ability to complete an orderly restructuring of the Company's operations which may include a strategic financing, sale, merger, or other business combination - that could cause the Company's actual events to differ materially from those projected herein. Investors should consult the Company's ongoing quarterly filings and annual reports for additional information on risks and uncertainties relating to these forward-looking statements. The reader is cautioned not to rely on these forward-looking statements. The Company disclaims any obligation to update these forward-looking statements, except as required by law.

Company Contact: James R. Howard-Tripp Executive Chairman Office: (905) 209-2030 Investor & Media Contact: Stephen Kilmer Kilmer Lucas Inc. Office: (647) 872-4849

Source:GeneNews Limited