Salona Global Medical Device Corporation announced it has taken assignment of a $7,500,000sales 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. To provide continuing incentives for sales in this channel, U.S. GPO salessubsidiary (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 $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 $0.60 per share in satisfaction of $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 $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 Approve 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.