Salona Global Medical Device Corporation Executes Binding Agreement to Acquire FDA-Approved Medical Device Product Intellectual Property

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: [phone] 
Email: [e-mail]

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.‎

Source: Salona Global Medical Device Corporation

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