SAN DIEGO, July 26, 2022 (GLOBE NEWSWIRE) -- Salona Global Medical Device Corporation (“SGMD”, “Salona Global” or the “Company”) (TSXV:SGMD), an acquisition-oriented medical device company serving the global injury and surgery recovery (known as recovery science) market, announced today it has taken assignment of a US$7,500,000 sales order (the “Sales Order”) for medical supplies. The Sales Order is coming through a large customer using the sales channel announced on November 30, 2021. The Sales Order, the first shipment of which has already been delivered, is expected to positively impact gross profits in the current quarter, ending August 30, 2022, and may stretch into the third fiscal quarter ending November 30, 2022. Although this is a large Sales Order, representing nearly 20% of current annualized run rate revenue, the Company expects to deliver the full amount subject to supply chain constraints. The Sales Order, if fully delivered, is expected to boost gross profits by approximately $1,000,000 for the fiscal year. While this is made as a one-time order, it is an important step to securing potential future orders for other products. Because of the size and nature of the Sales Order relative to the Company’s revenue and operations, the Company is working with an outside accountancy firm to determine if both revenue and profits should be recognized or exclusively the profits.
“We have established ourselves as a high-quality provider in the market and that translates to additional deal flow and large orders, such as the one we have secured from our group purchasing organization (GPO) channel,” said Les Cross, Executive Chairman of Salona Global. “Our goal is to find additional opportunities in the U.S. and internationally as we continue to operate and grow in the recovery science market. We continue to identify and capitalize on several engines of revenue growth. We have several proposed acquisitions we are working to finalize. We have several products we are developing for additional sales into this and our other sales channels. We are working to identify additional products we can distribute. And we are always on the hunt for product IP we can acquire to boost sales as well.”
To provide continuing incentives for sales in this channel, our U.S. GPO sales subsidiary (the “LLC”) has agreed to amend the LLC’s limited liability agreement to give the Agent (as such term is defined in the Company’s November 30, 2021 press release) until August 31, 2022 to generate the US$1,000,000 in sales for the Agent to earn 1,000,000 non-voting, non-participating units of the LLC that are exchangeable pursuant to a contribution and exchange agreement with Salona into Class “A” non-voting common shares of Salona. In addition, the Company and a manufacturer for Salona controlled by the Agent have agreed to complete a debt conversion transaction pursuant to which the Company will issue an aggregate of 260,921 common shares of the Company at a deemed price of US$0.60 per share in satisfaction of US$156,552.71. No discount was granted for the shares.
The consideration for the assignment will be two Class “A” non-voting common shares exchange for each US$1.00 in EBITDA earned off the Sales Order with a maximum of 1,500,000 shares, all of which are expected to be free cash flow. The foregoing transaction is subject to approval of the directors of the Company and regulatory approval from the TSX Venture Exchange (the “Exchange”). The foregoing securities will be issued in reliance on exemptions from the registration requirements of the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), and applicable state securities laws, and will be issued as “restricted securities” (as defined in Rule 144 under the U.S. Securities Act). In addition, the securities issuable pursuant to the transactions noted herein will be subject to a Canadian four-month hold period.
“We are pleased the team was nimble and opportunistic in landing this order and creating a structure that rewards our shareholders with additional unexpected profits,” said Luke Faulstick, CEO of Salona Global. “We seek to use our network and experience to secure additional opportunities that will build our profits.”
Additionally, an update to the investor presentation has been posted on the investor web site. www.salonaglobal.com/download.com
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For more information please contact:
Melissa Polesky-Meyrowitz
Chief Financial Officer
Tel: 1 (800) 760-6826
Email: Info@Salonaglobal.com
Additional Information
There can be no assurance that any acquisition (including with the targets Salona Global is currently negotiating within its pipeline) will be completed or the timing of any acquisitions. Completion of any transaction will be subject to, amongst other things, negotiation and execution of definitive agreements, applicable director, 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.
Unless otherwise specified, all dollar amounts in this press release are expressed in Canadian dollars.
Certain statements contained in this press release constitute "forward-looking information" within the meaning of the Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. These statements can be identified by the use of forward-looking terminology such as “expects” “believes”, “estimates”, "may", "would", "could", "should", "potential", "will", "seek", "intend", "plan", and "anticipate", and similar expressions as they relate to the Company, including: the amount of sales and gross profit expected from the Sales Order; the Company finalizing additional acquisitions; the Company developing several products for additional sales; the Company identifying additional products that can be distributed; the Company acquiring product IP to boost sales; and closing of the debt conversion transaction noted herein. 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. Salona cautions that the forward-looking statements contained herein are qualified by important factors that could cause actual results to differ materially from those reflected by such statements. Such factors include but are not limited to: disputes that could arise from the failure of the parties to memorialize and execute a definitive written agreement for the Sales Order; the general business and economic conditions in the regions in which Salona operates; the ability of Salona 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 Salona’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 Salona is exposed; the failure of third parties to comply with their obligations to Salona 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 Salona; 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 Salona’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 Salona 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, Salona 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.
