Salona Global Medical Device Corporation (the “Company”, “SGMD” or “Salona Global”) (TSXV:SGMD) is pleased to announce that it has received final approval from the TSX Venture Exchange for its previously announced Change of Business and will commence trading on Wednesday, June 9th, 2021.

The Company has posted its latest corporate presentation, along with a webcast led by Chairman & interim CEO Les Cross, at www.salonaglobal.com/investors.

Salona Global on commencement of trading:

  • Revenue: Salona Global’s first acquisition (SDP), which has now closed, had $15.8M in 2019 audited annual revenue (Pre-COVID), generating positive operational cash flow.*
  • Cap Table and Concurrent Financing: SGMD has approximately 63.8 million shares (on a partially diluted basis)** upon commencement of trading, with over 30 million shares either restricted or held by management or advisors.
    • Shares were sold in the Company’s December 2020 concurrent financing (post-consolidation) at as high as $0.85 per share.
  • M&A Capacity: Salona Global has a deep and full pipeline of private firms that are discussing a potential acquisition by Salona Global – all medical device companies with between $5M - $20M in revenues with positive cash flow.
    • The Salona Global team believes it has the capacity to close 1-2 acquisitions per quarter starting Q2 2021.
  • Strong Balance Sheet, No Parent Debt: The Company has an estimated $13M in net assets, predominantly in cash and cash equivalents, with no parent debt. Management has earmarked between $4-6M in cash and 15-18M shares to close potential acquisitions in negotiations this quarter.
    • The majority of consideration would be tied to performance over a future measurement period and could be financed with debt, as priority acquisition targets under consideration are cash flow positive and debt free.
  • Experienced Wall Street Management Team: Les Cross (Chairman of the Board) the former Chairman of DJO Global (a medical device roll up that was listed on the NYSE until Blackstone bought it for $2B); Jane Kiernan (Vice Chairwoman) the former Chair of the Audit Committee for American Medical Systems (purchased by Endo Pharmaceuticals for $3.5B).
    • M&A advisors from PHM (Now Viemed on the Nasdaq/TSX and Quipt on the Nasdaq/TSXV).

*For more information on SDP and historical performance please see the Company’s Management Information Circular dated 01/26/2021 available on the Company’s Sedar Profile at www.sedar.com.‎

The SGMD post acquisition organic growth plan:

European Sales Expansion: SGMD is targeting companies that have quality products that have succeeded in the US medical device market, but have little or no revenue from Europe or other developed markets where SGMD executives have a history of marketing success.

Leveraging the Operational Platform: The State-of-the-Art FDA approved SDP facility, the building block of the SGMD plan, will be used to optimize production strategies, control costs and provide supply chain assurances to US customers who are wary of risks from trade tensions and poor-quality outsourced production methods.Any questions related to the presentation and webcast, posted at www.salonaglobal.com/investors, or any other section of the investor information section of the website, can be directed to info@salonaglobal.com.

Share Capital and Balance Sheet

  Shares
Shares* 44,677,545
Maximum shares reserved for issuance to SDP pending earn outs 19,162,000
Shares outstanding at listing (partially diluted)** 63,839,545
   
Net Assets (estimated) $13,000,000

*   The Company completed a 7.37-for-10 share consolidation on 12/21/2020.** Does not include the 15-18 million shares (described above) earmarked for potential acquisitions (with between $5m and $20m in sales) in advanced negotiations or shares issuable pursuant to options, warrants and Class A shares.

Medical Device Market Overview

  • Expanding Market Opportunity: Aging global populations coupled with accelerated healthcare research has created a unique and growing opportunity for a global focused healthcare company. Small US companies with outstanding products want to tap the global market.
  • High Margin IP Driven Businesses Command Superior Multiples: IP-driven medical device companies (the Salona Global acquisition candidates) have strong margins. As a result peers, listed below, trade in the range of 6-15 times revenue on the Nasdaq.
  • Further information available at www.salonaglobal.com/investors.
EXCHANGE COMPANY REVENUE MULTIPLE 2020 REVENUE MARKET CAP REV GROWTH EBITDA
NASDAQ Utah Medical 7.2 US$42.2M US$303.0M -10% 33%
NASDAQ Cerus Corp 8.1 US$114.2M US$923.3M 22% -47%
NASDAQ Zynex Inc 6.9 US$80.1M US$548.9M 76% 13%
NASDAQ Tandem Diabetes Care 11.1 US$498.8M US$5.532B 38% -5%
NASDAQ iRhythym Technologies 7.1 US$265.2M US$1.875B 24% -16%

Source: Yahoo Finance as of 6/7/21

“We have a very powerful business model, where we can leverage several advantages by virtue of our listing on the TSXV,” said Les Cross, Chairman & interim CEO of Salona Global. “First, we have developed a deep pipeline of IP-driven medical device companies with the potential to acquire at attractive private company multiples. We are discussing structures with a minority down payment in cash and stock with the remainder of the consideration tied to performance, and due 12-24 months after close. Upon completing an acquisition, we would endeavor to expand sales in Europe, Asia and Australia using our long-term relationships with international distributors we spent decades cultivating at DJO Global, where I was Chairman & CEO. Downstream payments could be financed with debt by virtue of the cash flow from acquisition targets, reducing the need for equity financings. In addition to revenue growth, we would plan to integrate these businesses into our state-of-the-art FDA approved facility to increase free cash flow over time.”

"This market is highly fragmented and ripe for aggregation,” continued Mr. Cross. “With over 5,000 potential targets, we feel confident we can quickly acquire, integrate and grow the targets on our way to a Nasdaq listing. Timing is always difficult to predict with sellers, but my experience is that success in closing deals can accelerate sellers’ appetites to close quickly. We look forward to providing the market in the near term with updates as we aim to swiftly enter into definitive agreements.”

For more information please contact:

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

Additional Information

There can be no assurance that any of the potential acquisitions in advanced negotiations will be completed as proposed or at all and no definitive agreements have been executed. Completion of any transaction will be subject to applicable directors, shareholder and regulatory approvals.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

Certain statements contained in this press release constitute "forward-looking information" as such term is ‎‎‎‎‎defined in applicable Canadian and United States securities legislation. The words "may", "would", "could", ‎‎"should", "potential", ‎‎‎‎‎"will", "seek", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar ‎expressions as they relate ‎‎‎‎to the Company, including: information relating to the business plans of the Company; ‎statements regarding anticipated revenue and positive cash of acquired companies; the Company’s acquisition strategy; future ‎acquisitions and the structure and financing of such acquisitions; information with respect to future growth and growth ‎strategies; the ‎Company’s ‎organic growth plan and strategy and the manner in which the ‎Company proposes to accomplish it; anticipated trends in the Company’s industry; and the Company’s intention ‎to list on Nasdaq; are intended ‎to identify ‎forward-looking information. All ‎statements other than ‎statements of ‎historical fact may be forward-‎looking ‎information. Such statements reflect the ‎Company's current ‎views and ‎intentions with respect to future ‎events, and ‎current information available to the ‎Company, and are ‎subject to ‎certain risks, uncertainties and ‎assumptions, including: the Company and a target being satisfied with due diligence; the Company successfully negotiating and executing definitive agreements for an acquisition; closing conditions being satisfied or waived; the Company obtaining all requisite approvals for a transaction; and the Company meeting all of the listing conditions for a Nasdaq listing. Many factors ‎‎could ‎cause the actual results, performance or achievements that may be expressed or ‎‎implied by such forward-‎‎looking ‎information to vary from those described herein should one or more of these risks ‎‎or uncertainties ‎‎materialize. ‎Examples of such risk factors include, without limitation: credit; market (including ‎‎equity, commodity, ‎‎foreign ‎exchange and interest rate); liquidity; operational (including technology and ‎‎infrastructure); ‎‎‎reputational; ‎insurance; strategic; regulatory; legal; environmental; capital adequacy; the ‎‎general business and ‎‎economic ‎conditions in the regions in ‎which the Company operates; the ability of the ‎‎Company to execute on key ‎‎priorities, ‎including the successful completion of acquisitions, business ‎retention, and ‎‎strategic plans and to ‎‎attract, develop ‎and retain key executives; difficulty integrating newly acquired businesses; ‎‎the ability to ‎‎‎implement business ‎strategies and pursue business opportunities; ‎‎disruptions in or ‎‎attacks (including ‎cyber-attacks) on the Company's information ‎technology, internet, network ‎‎access or other ‎‎voice or data ‎communications systems or services; the evolution of various types of fraud or other ‎‎‎criminal ‎‎behavior to which ‎the Company is exposed; the failure of third parties to comply with their obligations to ‎‎the ‎‎Company or its ‎affiliates; the ‎impact of new and changes to, or application of, current laws and regulations; ‎granting of permits and licenses in a highly regulated business; the ‎overall difficult ‎‎‎‎‎litigation environment, including in the United States; increased competition; changes in foreign currency rates; ‎increased ‎‎‎‎funding ‎costs and market volatility due to market illiquidity and competition for funding; the ‎availability of funds ‎‎‎‎and resources to pursue operations; critical ‎accounting estimates and changes to accounting ‎standards, policies, ‎‎‎‎and methods used by the Company; the occurrence of natural and unnatural ‎catastrophic ‎events ‎and claims ‎‎‎‎resulting from such events; 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; as well as those risk factors ‎discussed or ‎‎‎referred to in ‎the Company’s disclosure ‎documents filed with United States Securities and Exchange ‎Commission and available at www.sec.gov, and with the securities regulatory authorities in certain provinces of ‎Canada and available at www.sedar.com. Should any factor affect the Company in an unexpected ‎‎‎manner, or ‎should ‎assumptions ‎underlying the forward-looking information prove incorrect, the actual results or ‎‎‎events may ‎differ ‎materially ‎from the results or events predicted. Any such forward-looking information is ‎‎‎expressly qualified ‎in its ‎entirety by ‎this cautionary statement. Moreover, the Company does not assume ‎‎‎responsibility for the ‎accuracy or ‎‎completeness of such forward-looking information. The forward-looking ‎‎‎information included in this ‎press release ‎is ‎made as of the date of this press release and the Company undertakes ‎‎‎no obligation to publicly ‎update or revise ‎any ‎forward-looking information, other than as required by applicable ‎‎‎law.‎