SAN DIEGO, April 14, 2022 (GLOBE NEWSWIRE) -- Salona Global Medical Device Corporation (“SGMD” 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 executed a binding agreement to acquire a portfolio of medical device intellectual property (the “Product IP”) which has already been approved for distribution in the U.S. by the U.S. Food & Drug Administration (FDA). The Product IP portfolio consists of (1) transcutaneous electrical nerve stimulation (TENS) technology, (2) neuromuscular electrical stimulation technology (NEMS), and (3) drug delivery electrode technology, three key technologies used in medical device recovery science.
As part of the Company’s corporate strategy to acquire products to increase revenues in its current distribution channels, the Company expects to market the products under the Mio-Guard brand it acquired in March 2022. The Company has agreed to pay US$185,000 in consideration for the Product IP and expects to begin generating revenues using the Product IP starting next quarter, which begins on June 1, 2022, with expected gross margins in excess of 40%.
SGMD’s management plans to use their industry contacts to acquire more medical device intellectual property quickly as detailed in its investor presentation. The plan includes both acquiring and in-licensing intellectual property, as well as continuing to acquire medical device and distribution companies.
The investor presentation detailing SGMD’s growth plan can be downloaded at: https://www.salonaglobal.com/downloads.
“I am pleased we executed on the first IP acquisition for Salona Global,” said Les Cross, Chairman of SGMD. “As a fully integrated medical device company, we are in an excellent position to take advantage of our multi-pronged growth plan. We can increase revenues and capture top-to-bottom margins by acquiring or developing devices, producing them domestically, and then marketing and distributing them as branded products. We used our many years of industry contacts to find and complete this acquisition, and we plan to continue our search using both established and new contacts.”
“With the acquisition of this particular IP, we add higher margin products to sell through our existing and future potential sales channels. I expect we will add revenues starting next quarter once we have finalized the product and added capacity to our production facility. We plan to recover our full investment costs, including the purchase of the IP and productization costs in less than a year. Additionally, our innovation leaders at our Simbex subsidiary are considering methods to refine and extend the patent life on this IP which we think might lead to additional high margin products in the near future.”
“Our deep acquisition pipeline is quite active and I am optimistic we will come to terms with one or more soon. We are also beginning to reach out to our industry contacts to acquire product IP and revenue generating product assets as well.”
Additionally, as a result of management’s decision to accelerate the operational integration of the platform, the Company has executed an agreement to amend the South Dakota Partners, Inc. (“SDP”) share purchase agreement (the “Definitive Agreement”) dated September 8, 2020. The amendment comes as SDP (acquired in May 2021) is generating revenues and profits well in excess of the earn-out target which ended March 31, 2022. Pursuant to the amending agreement, SGMD has agreed that passive SDP investors who are currently arm’s length to the Issuer will receive the maximum payout of 6,838,110 (of a total of 19,162,000 shares in the earn out) Class A shares that can be converted by the holder upon demand into tradable SGMD Common Shares and will not be subject to any further adjustments. It is expected all of the 12,323,890 shares remaining will be issued to the insider holders of SDP, including Mr. Cross and Mr. Faulstick.
In connection with Mr. Faulstick’s appointment to Chief Operating and Integration Officer as a result of accelerating the operational integration of enterprise, the board of Directors of the Company has approved a grant to him of 236,700 stock options under its Stock Option Plan at an exercise price of $0.78. The options will expire after five years, will vest 20% after 12 months, 30% after 24 months and 50% after 36 months, and will be subject to a TSXV Venture Exchange four month and one day hold.
For more information please contact:
Les Cross
Chairman of the Board and Interim Chief Executive Officer
Tel: 1 (800) 760-6826
Email: Info@Salonaglobal.com
Additional Information
There can be no assurance that any acquisition will be completed or the timing of any acquisitions. Completion of any transaction will be subject to 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.
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 Company expecting to market the Product IP under the Mio-Guard brand; the Company expecting to begin generating revenues using the Product IP starting next quarter, which begins on June 1, 2022, with expected gross margins in excess of 40%; the Company expecting to add revenues starting next quarter once it has finalized the product and added capacity to its production facility; the Company planning to recover its full investment costs, including the purchase of the Product IP and productization costs in less than a year; and the Company believing that the Product IP might lead to additional high margin products in the near future. 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. The Company 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 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 the investor call is made as of the date of the investor call and the Company undertakes no obligation to publicly update or revise any forward-looking information, other than as required by applicable law.
