PSN.P Physinorth Acquisition Corporation Inc

Physinorth Acquisition Corp. (TSXV:PSN.P) (“Physinorth” or the “Corporation”) is pleased to announce that the TSX Venture Exchange (the “Exchange”) has conditionally approved the Corporation’s  proposed qualifying transaction (the “Transaction”) with 6150977 Canada Inc. and its subsidiary Excel Health Inc., 8961760 Canada Inc. and 10544485 Canada Inc., a group of privately-held Canadian companies doing business as Groupe Premier Soin  (“Premier Soin” or the “GPS Entities”) pursuant to the terms of a letter of intent (the “LOI”) signed on February 8, 2019, as amended on May 8, 2019. The Transaction was previously announced on February 11, 2019, and further details were disseminated on July 3, 2019. The conditional acceptance was received on September 26, 2019.

Corrective Details

Physinorth wishes to provide corrective details regarding the Transaction. The Transaction is deemed to be a “related party transaction” pursuant to Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions (“MI 61-101”). As a result, a meeting of the shareholders of Physinorth will be required pursuant to Policy 2.4 of the Exchange and pursuant to applicable securities and corporate laws.  Previous press releases included disclosure to the effect that the Transaction would not be a “related party transaction” pursuant to MI 61-101. Accordingly, the QT will be subject to minority shareholder approval by Physinorth shareholders pursuant to MI 61-101, with an aggregate amount of 566,664 votes been excluded in determining whether minority approval for the related party transaction is obtained, representing a total of 266,667 common shares directly or indirectly held by Hassan Al-Shawwa and 299,997 shares held directly or indirectly by Joseph Cianci.

Hasan Al-Shawwa, a director of the Corporation, indirectly holds 12% of the issued and outstanding class A and class J shares of 6150977 Canada Inc. and 8961760 Canada Inc., while Joseph Cianci, a director and the Treasurer of the Corporation, is a trustee of Fiducie Familiale Martin Legault (“FFML”), the trust that holds the remaining 88% of the issued and outstanding class A and class J shares in those two companies. In addition, FFML is the sole shareholder of 10544485 Canada Inc. As such, Mr. Al-Shawwa and Mr. Cianci could be deemed to be related parties to the Corporation and the GPS Entities under applicable securities laws. The GPS Entities have an aggregate amount of 1,545 issued and outstanding shares, of which 1,000 class E shares are held by Martin Legault, and 545 class A and class J shares are directly or indirectly controlled by Hassan Al-Shawwa, Joseph Cianci and Martin Legault.  Mr. Legault does not hold any share in the capital of Physinorth.

The common shares to be issued by the Corporation under the Transaction to Related Parties (as such term is defined in Policy 1.1 of the Exchange) to the Corporation or the GPS Entities will be placed in escrow and will be released on terms to be set by the Exchange.

Details of the new proposed Concurrent Financing

In addition to the foregoing, the Corporation has modified the structure of the concurrent private placement. In conjunction with the Transaction, and as a condition of closing, the Corporation will complete a private placement of a minimum of 5,222,222 subscription receipts at a price of $0.225 per subscription receipt for minimum gross proceeds of $1,175,000 and a maximum of 8,000,000 subscription receipts at a price of $0.225 per subscription receipt for maximum gross proceeds of up to $1,800,000 (the “Private Placement”).  Each subscription receipt (a “Subscription Receipt”) shall entitle its holder thereof to receive one (1) unit of the Resulting Issuer upon Completion of the Transaction at no additional cost (the “Units”). Each Unit shall be composed of one (1) resulting issuer common share and one half (1/2) resulting issuer share purchase warrant (each, a “Warrant”) with each whole Warrant entitling its holder thereof to purchase one (1) Resulting Issuer common share at a price of $0.35 per Resulting Issuer share for a period of twenty-four (24) months following the closing of the Transaction. In the event that the Transaction shall not close, all funds raised in connection with the Private Placement will be returned to the subscribers to the Private Placement, at no additional cost for the Corporation. The Private Placement is subject to all necessary regulatory approvals, including that of the Exchange.

The Units and underlying resulting issuer shares and Warrants issued pursuant to the Private Placement will be subject to a “hold” period of four months and one day following the closing of the Transaction. Proceeds from the Private Placement will be used to fund the continuing business objectives of GPS as well as for general corporate purposes.

Conditions for the approval of the Transaction:

The Exchange’s acceptance of the Transaction is subject to the following conditions: (1) satisfactory review of the last version of the information circular (the “Information Circular”) and the required financial statements; (2) approval of shareholders of any matters in respect of which shareholder approval has been required in connection with the Transaction and any matters in respect of which shareholder approval is required; (3) satisfactory evidence that the Resulting Issuer working capital at closing is not materially different from the information in the Information Circular; (4) closing of the minimum Private Placement of $1,175,000; (5) an aggregate of 28,000,000 shares and 807,000 stock options to be issued pursuant to the Transaction to be held under escrow pursuant to a Tier 2 Surplus Escrow Agreement and a Tier 2 Value Escrow Agreement, as applicable; (6) the nomination of an additional independent director having satisfactory public experience as director or officer of Exchange or TSX-listed issuers with corporate governance and regulatory track records, to be elected at the special meeting to be held in November and the appointment of such new independent director as lead director. A subsequent press release will be issued by Physinorth when the name of such additional independent director is known, with such press release to be issued before mailing the information circular for the Transaction; (7) the appointment of the following committees: (i) executive committee; (ii) governance committee; (iii) audit and risk committee to replace the proposed current audit committee, and the submission for Exchange review of a draft of each committee charter; (8) the implementation of the following procedures, a draft of each to be subject to the Exchange's review: (i) disclosure policy, which will include detailed provisions regarding related party transactions, blackout periods and other standard disclosure practices applicable to reporting issuers; (ii) related party transactions policy; (iii) corporate governance policy; (9) the satisfactory background searches on the resulting issuer’s insiders; (10) a resolution of the Board of Directors of the Resulting Issuer approving the terms of the advances to non-arm’s length parties; (11) a letter from the agent of the private placement that confirmation that it has completed appropriate due diligence on both the Transaction and the Information Circular that is generally in compliance with the relevant standards and guidelines applicable in this Policy 2.2; (12) the receipt of the required final documentation and fees; and (13) the closing of the Transaction on or prior to December 27, 2019.

Additional Information:

The Corporation is exempted form the formal valuation requirement of MI 61-101 pursuant to section 5.5(b) of MI 61-101, as none of its securities are listed or quoted on the Toronto Stock Exchange, Aequitas NEO Exchange Inc., the New York Stock Exchange, the American Stock Exchange, the NASDAQ Stock Market, or a stock exchange outside of Canada and the United States other than the Alternative Investment Market of the London Stock Exchange or the PLUS markets operated by PLUS Markets Group plc. 

In determining if the Transaction is suitable to the Corporation, the review and approval process adopted by the board of directors was led by Mr. Pronovost, President and CEO of the Corporation and Corporate Finance professional. Mr. Pronovost drafted a memorandum which was circulated to the whole Board of Directors. The memo included a summary of the business model of the GPS Entities, a preliminary valuation of the GPS Entities as well as a recommendation for the Board.  The memo was unanimously approved by the Board. No materially contrary views were reported during the discussion process, and no material disagreement or abstention was reported neither.

In addition to the foregoing, Physinorth is pleased to announce that a new corporate secretary, Me Didier Culat, will be nominated upon completion of the Transaction. Didier Culat has acted in financings and commercial transactions with international or cross-border implications and in securities law. In that regard he has acted as corporate secretary and coordinating counsel for Canada and the United States to a manufacturer of motor coaches, counsel to an aeronautics manufacturer, Quebec relationship manager for an environmental management firm with operations in Alberta, Ontario and Quebec and coordinating counsel for a private equity firm in regards to their legal needs in Canada and the United States. He has particular experience in cross-border mergers and acquisitions, corporate financings and securitized transactions. Didier also frequently assists other Canadian and foreign law firms in their commercial or securities work in the Province of Quebec. He has also lectured and written for audiences in Canada, the United States and Europe about the opportunities under the free trade agreements with Canada and about doing business in Quebec. In addition to a bachelor’s degree in political science and international relations from the University of British Columbia, Didier has completed a law degree in common law at the University of New Brunswick in Fredericton and a law degree in civil law at Université Laval in Quebec City. He has been a Fellow of the Institute of Canadian Bankers since 1988. He was a student-at-law in the legal department of the Canadian Intergovernmental Affairs Secretariat and the Ministry of International Affairs (1990).

For Further Information Please Contact:

Mr. Jean-Robert PronovostChief Executive OfficerPhysinorth Acquisition Corporation Inc.jrp@capepartners.ca / 514-581-1473

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 Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain “forward-looking statements” under applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to: the terms and conditions of the proposed Transaction; the terms and conditions of the proposed Private Placement; use of funds; and the business and operations of the Resulting Issuer after the proposed Transaction. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; delay or failure to receive board, shareholder or regulatory approvals; and the ability of the Resulting Issuer to execute and achieve its business objectives. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Physinorth and Premier Soin disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Factors that could cause actual results to differ materially from expectations include (i) the inability of Physinorth and Premier Soin to obtain the necessary approvals for the Transaction, (ii) an inability or unwillingness of Physinorth of Premier Soin to complete the Transaction for whatever reason, (iii) an inability to secure subscribers or obtain funds under the Private Placement and (iv) generally, an inability of Physinorth to develop and implement a successful business plan for any reason. These factors and others are more fully discussed in the filings of Physinorth with Canadian securities regulatory authorities available at www.sedar.com.