Salona Global Medical Device Corporation (the “Company” or “Salona Global”) (TSXV:SGMD) is pleased to announce that, further to its press releases of September 17, 2020, December 21, 2021, March 15, 2021 and April 26, 2021, it has closed its proposed change of business transaction (the “COB”) with South Dakota Partners, Inc. (“SDP”), a South Dakota corporation.

Post-Closing Growth Plan for Salona Global

Upon re-listing, the Company (investor information at www.salonaglobal.com) intends to focus on completing a number of acquisitions and plans to achieve scale through a combination of further transactions and organic growth. It will be operating in the US$30 billion recovery science market including post-operative pain, wound care and other markets serving the ageing population in developed economies. Salona Global’s emphasis will include products and technologies that will be disruptive in the marketplace. After an initial growth phase, the Company has the ultimate goal of listing on a US exchange.

The acquisition oriented growth plan will aim to leverage the liquid Canadian capital markets to target smaller US-based and international private medical device companies offering stock and cash deals to acquire, integrate and grow a large, broad-based medical technology company.

The post-COB organic growth strategy is to increase revenue and profits and therefore earnings per share (EPS) by:

  • Growing revenues through expanded international distribution: Leveraging management’s existing and robust sales distribution networks in Europe, Japan and Australia to increase sales for each acquired company;
  • Expanding product lines: developing, in-licensing or acquiring new IP protected devices synergistic with the acquisitions; and
  • Increasing profits: operational integration reducing supply chain risks and increasing cash flow and margin.

Completion of the Change of Business

The Company anticipates that its Common Shares, of which there are now 44,677,545 issued and outstanding, will resume trading on the TSXV at the market open on June 9, 2021.

In connection with the COB, among other things, the 7,869,005 subscription receipts (the “Salona Subscription Receipts”) issued by the Company and 2,121,232 subscription receipts (the “Brattle Subscription Receipts”, and together with the Salona Subscription Receipts, the “Subscription Receipts”) issued by Brattle Finco B.C. Ltd. (“Brattle Finco”), a subsidiary of the Company, in contemplation of the COB (together, the “Offering”) were ultimately converted or exchanged, as applicable, for an aggregate of 9,990,237 common shares in the capital of the Company (each, a “Common Share”) and 2,121,232 Common Share purchase warrants of the Company (each, a “Warrant”), with each such Warrant exercisable for one Common Share at a price of $1.25 per share until December 18, 2022, subject to acceleration. In addition, in contemplation of the completion of the COB, the Notice of Articles and Articles of the Company (together, the “Articles”) were amended to create a new class of shares consisting of an unlimited number of Class “A” non-voting common shares (the “Class A Shares”) and restate the rights, privileges, restrictions and conditions of the Common Shares.

The COB was completed in the manner previously described in the Company’s management information circular dated January 26, 2021 (the “Circular”) with respect to the annual and special meeting of shareholders held on March 11, 2021 (“Meeting”), a copy of which is available under the Company's profile on SEDAR (www.sedar.com).

Pursuant to the COB, the Company acquired, indirectly through its subsidiary, Brattle Acquisition I Corp. (“Brattle Acquireco”), a 97% interest in SDP, which acquisition constitutes a “Change of Business” (as such term is defined by the TSX Venture Exchange (the “TSXV”)) of the Company. SDP operates a large state-of-the-art production facility incorporated and located in the State of South Dakota currently producing proprietary and white label medical devices for pain management, cold and hot therapy, NMES, PEMF and ultrasound. For additional information concerning SDP see the Circular.

In connection with the acquisition of SDP, the shareholders of SDP (the “Vendors”) were issued common shares in the capital of Brattle Acquireco (the “Exchangeable Shares”), which Exchangeable Shares will be exchangeable, at the option of the holder, for up to 19,162,000 Class A Shares at any time following approximately 12 months from closing of the COB, subject to downward adjustments if SDP does not achieve US$11,900,000 in revenues for the 12-month period after closing and/or if the net assets of SDP 12 months following closing is less than approximately US$2,800,000. Please refer to the Circular for additional details concerning the potential downward adjustment in consideration to the Vendors and prior financial history of SDP.

As a result of the COB, the Company has become an acquisition oriented, medical device company with plans to achieve scale through both further acquisitions and organic growth. It will be operating in the recovery science market, including post-operative pain, wound care and other markets serving the ageing population in the United States.

As a condition to the completion of the COB, the Articles were amended to create a new class of shares, being the Class A Shares, and restate the rights, privileges, restrictions and conditions of the Common Shares. The Class A Shares have the same attributes as the Common Shares, except that they do not carry the right to vote and are convertible, subject to certain terms and conditions, including a provision prohibiting a holder of Class A Shares from converting Class A Shares for Common Shares if it would result in such holder holding more than 9.9% of the Common Shares, into Common Shares on a one-for-one basis. The Class A shares are not tradeable on any exchange in the US or Canada.

Concurrent with the completion of the COB, Michael Dalsin and Roger Greene, M&A advisors to the Company, entered in share exchange agreements (the “Share Exchange Agreements”) with the Company, pursuant to which an aggregate of 1,355,425 Common Shares (the “Exchanged Shares”) were exchanged for 1,355,425 Class A Shares. In accordance with the Share Exchange Agreements, the Exchanged Shares acquired by the Company in consideration for the Class A Shares issued in exchange therefor were cancelled and returned to treasury.

In connection with the COB, Luke Faulstick was appointed as the Company’s Chief Operating Officer. The composition of SDP’s board and management remained unchanged.

Conversion of Subscription Receipts

Further to its press release dated December 21, 2020, the Company is pleased to announce the satisfaction of the conditions to the exchange of the outstanding Subscription Receipts. The Subscription Receipts were to be exchanged on the later of (i) the satisfaction or waiver of all conditions precedent to the COB, and (ii) the date on which the United States Securities and Exchange Commission (the “SEC”) declares a Form S-1 Registration Statement (the “US Registration Statement”) of the Company effective, and certain other ancillary conditions without any further consideration on the part of the subscriber (the “Escrow Release Date”).

On May 21, 2021, the Company’s US Registration Statement dated May 12, 2021 was declared effective by the SEC. Accordingly, on May 21, 2021, 7,869,005 Salona Subscription Receipts were converted into an aggregate of 7,869,005 Common Shares and 2,121,232 Brattle Subscription Receipts were converted into an aggregate of 2,121,232 common shares in the capital of Brattle Finco (each, a “Finco Share”) and 2,121,232 Finco Share purchase warrants (each a “Finco Warrant”).

In connection with the Offering of Salona Subscription Receipts, registered dealers were entitled (i) cash compensation in the aggregate amount of $166,449 (50% of which was paid on closing of the Offering and the balance was payable on the Escrow Release Date), and (ii) on the Escrow Release Date, an aggregate of 876,231 non-transferable compensation options, each of which are exercisable to purchase one Common Share at a price of $0.4749 per Common Share for a period of 24 months from the closing of the Offering. In addition, in connection with the Offering of Finco Subscription Receipts, registered dealers were entitled to (i) cash compensation in the aggregate amount of $83,320 (50% of which was paid on closing of the Offering and the balance was payable on the Escrow Release Date), and (ii) on the Escrow Release Date, an aggregate of 243,675 non-transferable compensation options (the “Finco Compensation Options”), each of which was exercisable to purchase one Finco Share at a price of $0.8548 per share for a period of 24 months from the closing of the Offering.

Immediately following conversion of the Subscription receipts, the Company completed a “three-cornered” amalgamation whereby a wholly-owned subsidiary of the Company (“Subco”) amalgamated with Brattle Finco pursuant to an amalgamation agreement dated April 23, 2021 among the Company, Subco and Brattle Finco (the “Amalgamation Agreement”). Pursuant to terms of the Amalgamation Agreement, an aggregate of 2,121,232 Common Shares, 2,121,232 Warrants and 243,675 compensation option were issued to Brattle Finco securityholders in exchange for the 2,121,232 Finco Shares, 2,121,232 Finco Warrants and 243,675 Finco Compensation Options held by them, respectively, which replacement Warrants and compensation options have the same terms and conditions as the Finco Warrants and Finco Compensation Options for which they replaced.

Shares for Debt Transaction

Further to the Company’s press release dated September 6, 2020, the Company also announces completion of a shares for debt transaction (the “Shares for Debt Transaction”) pursuant to which the Company settled US$88,000 of debt through the issuance of 737,000 Common Shares at a deemed price of $0.156 per share in accordance with a debt conversion agreement dated September 6, 2020 entered into between the Company and Leslie Cross. The Shares for Debt Transaction was approved by the Company’s disinterested shareholders at the Meeting. The Company determined to undertake the Shares for Debt Transaction in order to preserve its cash. Please refer to the Circular for further details in respect of the Shares for Debt Transaction, a copy of which is available under the Company's profile on SEDAR (www.sedar.com).

Option Issuances

The Company also announces that it has granted an aggregate of 2,586,290 stock options to certain of its directors, officers, and employees. 1,922,990 of the stock options have an exercise price of $0.855 per Common Share, with the balance of 663,300 stock options having an exercise price equal to the closing price of the Common Shares on the TSXV on the fifth trading date after resumption of trading thereof following completion of the COB. In each case, the stock options will have a term of 5 years from the date of the grant.

For more information please contact:

Les CrossChairman of the Board and Interim Chief Executive OfficerTel: 1 (800) 760-6826Email: Info@Salonaglobal.com

Additional Information

Investors are cautioned that, except as disclosed in the Circular, any information released or received with respect to the COB may not be accurate or complete and should not be relied upon. Trading in the securities of the Company should be considered highly speculative.

The TSX Venture Exchange Inc. has neither approved nor disapproved the contents of this news release.

Except as set out herein, the securities referred to in this news release have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from the U.S. registration requirements. This news release does not constitute an offer for sale of securities for sale, nor a solicitation for offers to buy any securities. Any public offering of securities in the United States must be made by means of a prospectus containing detailed information about the company and management, as well as financial statements.

Unless otherwise specified, all dollar amounts in this press release are expressed in Canadian dollars.

Neither the TSXV 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.

Although the Company believes, in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because the Company can give no assurance that they will prove to be correct. When used in this press release, the words “estimate”, “project”, “belief”, “anticipate”, “intend”, “expect”, “plan”, “predict”, “may” or “should” and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information. The forward-looking statements and information in this press release include: the resumption of trading of the Common Shares on the TSXV; information relating to the business plans of the Company; the business to be conducted by the Company following completion of the COB; the Company being optimistic one or more of the potential deals will proceed to close after re-listing; the Company’s intention to list on the US exchange; and the Company’s post-COB organic growth plan and strategy, including to increase revenue and profits and therefore earnings per share (EPS) and the manner in which the Company proposes to accomplish it. Such statements and information reflect the current view of the Company. Risks and uncertainties may cause actual results to differ materially from those contemplated in those forward-looking statements and information. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following risks: (i) the Company may require additional financing from time to time in order to continue its operations and financing may not be available when needed or on terms and conditions acceptable to the Company; (ii) new laws or regulations could adversely affect the Company’s business and results ‎of operations; and (iii) the stock markets have experienced volatility that often has been unrelated to ‎the performance of companies. These fluctuations may adversely affect the price of the Company’s securities, regardless of its operating performance. There are a number of important factors that could cause the Company’s actual results to differ materially from those indicated or implied by forward-looking statements and information. Such factors include, among others: currency fluctuations; disruptions or changes in the credit or security markets; results of operation activities and development of projects; project cost overruns or unanticipated costs and expenses, and general market and industry conditions and risks related to COVID-19 including various recommendations, orders and measures of governmental authorities to try to limit the pandemic, including travel restrictions, border closures, non-essential business closures, quarantines, self-isolations, shelters-in-place and social distancing, disruptions to markets, economic activity, financing, supply chains and sales channels, and a deterioration of general economic conditions including a possible national or global recession. The Company undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Company, its securities, or its financial or operating results (as applicable). The Company cautions that the foregoing list of material factors is not exhaustive. When relying on the Company’s forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. The forward-looking information contained in this press release represents the expectations of the Company as of the date of this press release and, accordingly, is subject to change after such date. Readers should not place undue importance on forward-looking information and should not rely upon this information as of any other date. The Company does not undertake to update this information at any particular time except as required in accordance with applicable laws.