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.
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