Salona Global Announces Debt Reduction, Provides Update on Cost Cuts and Debt Restructuring; Appoints Mike Seckler as permanent Chief Executive Officer

NEW YORK, July 25, 2023 (GLOBE NEWSWIRE) -- Salona Global Medical Device Corporation ("SGMD", "Salona Global" or ?the "Company") (TSXV:SGMD) today announced a 15% debt reduction as part of a restructuring effort with the seller of Biodex Medical Systems, Inc. ("Biodex") and provided an update on costs cuts and other debt restructuring plans. Additionally, the Company announced Mr. Mike Seckler has moved from interim CEO to permanent CEO.

Update on Cost Cuts and Turn Around Plan

Effective July 2023, management has taken action to cut over US$2 million of annualized salary and other costs, including senior management and mid-level staff as well as other operational expenses. While Q2 (April-June) is expected to see significant sales increases as a result of the acquisition of Biodex in April 2023 (details in the March 16, 2023 and April 3, 2023 press releases), losses continued to mount during that quarter. Unfortunately, Biodex operated at a loss when first acquired. The new management team started implementing cuts during June 2023. Given the current revenue run rate, the new expense budget is designed to generate a profit for the quarter ending September 30, 2023.

Debt Restructuring

On April 3, 2023, the Company acquired Biodex. As a result of the acquisition, SGMD assumed three payment obligations to the seller of Biodex totaling approximately US$10 million: approximately US$1.5 million in debt associated with nuclear medicine medical device inventory (the "Inventory Debt"), of which SGMD is a supplier of a key component of these medical devices produced by the seller of Biodex; approximately US$1.5 million in a working capital loan; and US$7 million in deferred cash payments for the acquisition.

SGMD and the seller of Biodex have agreed to an offset for the Inventory Debt (approximately US$1.5 million) in exchange for product already delivered, reducing the aggregate debt from approximately US$10 million to approximately US$8.5 million. The Company is in late-stage discussion with the seller of Biodex to restructure all remaining payment obligations as a result of the acquisition. SGMD has discussed an outline of a payment plan with the Biodex sellers that it finds acceptable, however the plan must still be documented in a binding agreement. There can be no guarantee that a final written amendment will be executed.

"I have worked hard to implement major and rapid change with the goal of achieving profitability this quarter," said Mike Seckler, CEO. "After restructuring debt and cutting costs, I plan to conduct a strategic review with an aim to put us back on a path to revenue growth and achieve a market multiple consistent with our peers thereby increasing our share price. We have a sizable revenue base, solid product offerings and reasonable gross margins in this vast and growing healthcare market, all attributes that can serve to build a stronger and more focused business."

In connection with his appointment as permanent CEO, Mr. Seckler has ?been granted options under the Company's ?2021 Amended and Restated Stock Option Plan to purchase up to 750,000 ?common shares, vesting equally over a three year period, with a term ?of five years and an ?exercise price of $0.29. The options and underlying common shares are ?subject to a four ?month and one day hold period pursuant to the TSX Venture Exchange.?

For more information please contact:?

Mike Seckler
Chief Executive Officer
Tel: 1 (800) 760-6826
Email: [email protected]

Additional Information

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.?

There can be no assurance that definitive agreements with the sellers of Biodex and Simbex will be completed or the timing of any agreements and the Company will continue to be indebted to such sellers for certain payments until such time. Completion of any transaction will be subject to, amongst other things, negotiation and execution of definitive agreements, applicable director, shareholder and regulatory approvals.

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 believing it can operate profitably for the quarter ending September 30, 2023; and the Company ?increasing its share price.?

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 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; ?? ongoing or new ?disruptions in the supply chain, the extent and scope of such supply chain disruptions, and the timing ?or extent of the resolution or improvement of such disruptions; 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; 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.?