Colson Capital Corp. and The Clinic Network Canada Inc. Announce Proposed Qualifying Transaction

Not for distribution in the U.S. or to U.S. newswire services.CALGARY, Alberta, Nov. 30, 2020 (GLOBE NEWSWIRE) — Colson Capital Corp. (TSXV: COLSP) (“Colson” or the “Corporation“) and The Clinic Network Canada Inc. (“TCNC”), through its parent holding corporation, are pleased to announce that they have entered into a non-binding letter of intent (the “LOI”) dated September 12, 2020 with respect to a proposed reverse takeover whereby Colson will acquire all of the issued and outstanding shares of a newly incorporated federal corporation, Pathway Health Corp. (“SpinCo”), following the acquisition by SpinCo of all of the business and assets of TCNC in consideration for the issuance of common shares of the Corporation (the “Transaction”).
Colson intends that the Transaction will constitute its Qualifying Transaction, as such term is defined in the Policy 2.4 – Capital Pool Companies (the “CPC Policy”) of the TSX Venture Exchange (the “TSXV”). The deemed price of the Qualifying Transaction is $1.428 million. The Corporation, upon completion of the Transaction, expects to change its name to “Pathway Health Corp.” or such other name as may be approved by TCNC’s parent holding corporation (the “Name Change”), such entity to be referred to herein as the “Resulting Issuer”. The Transaction does not constitute a Non-Arm’s Length Qualifying Transaction, as such term is described in the CPC Policy of the TSXV.The Resulting Issuer will own and operate medical clinics across Canada that offer multidisciplinary therapies for patients that suffer from chronic pain and certain other disease states. TCNC was founded in 2017 and operates virtual and bricks-and-mortar medical clinics across Canada that offer multidisciplinary therapies for patients. TCNC is incorporated pursuant to the federal laws of Canada. The price paid for the TCNC assets by SpinCo shall be satisfied by the payment of between $3 – $5 million in cash with the remainder to be paid by such number of shares of SpinCo equal to the balance of the purchase price owed to TCNC divided by the final purchase price of a Subscription Receipt (as described below) under the Offering (as described below).General Information Regarding the TransactionThe Transaction is expected to be structured as a reverse takeover (“RTO”) under the rules and policies of the TSXV. Upon completion of the Transaction, the Resulting Issuer will continue to carry on the business of TCNC.The purchase price for the acquisition of the outstanding equity securities of SpinCo will be satisfied through the issuance of common shares of the Corporation to the shareholders of SpinCo, to ultimately form the Resulting Issuer.The transaction terms outlined in the LOI are non-binding, and the Transaction is subject to the parties successfully entering into a definitive agreement (the “Definitive Agreement”) in respect of the Transaction by January 15, 2021, or such other date as Colson and TCNC’s parent holding corporation may mutually agree. The LOI also contemplates other material conditions precedent to the closing of the Transaction (the “Closing”), including the completion by SpinCo of a concurrent financing of subscription receipts (“Subscription Receipts”) at a price of $0.50 per Subscription Receipt, to raise minimum aggregate gross proceeds of $10,000,000 (the “Offering”), SpinCo owning or holding all intellectual property assets necessary for the operation of the business of TCNC as it is currently conducted and contemplated, customary due diligence, compliance with all applicable regulatory requirements and receipt of all necessary regulatory, corporate, third-party, board and shareholder approvals being obtained.Summary of the OfferingIn connection with the Transaction, Colson, TCNC and TCNC’s parent holding corporation have entered into an engagement letter with Canaccord Genuity Corp. (the “Agent”), as agent, in connection with the Offering. Under the terms of the Offering, the Agent has been granted an over-allotment option to place up to an additional 15% of the number of Subscription Receipts issuable under the Offering for additional gross proceeds of up to $1,500,000.On closing of the Offering, the proceeds of the Offering will be held in escrow pursuant to a subscription receipt agreement. Proceeds of the Offering will be used to expand the Resulting Issuer’s portfolio of clinics across Canada, expand its distribution channels and add interdisciplinary pain services to its clinics.Each Subscription Receipt will be automatically converted into one unit of SpinCo (each, a “Unit”), on the date that: (i) all conditions precedent to the completion of the Transaction have been satisfied to the satisfaction of the parties but for payment of the cash portion of the purchase price to be paid by SpinCo for the operating assets of TCNC; (ii) the Agent has received an officers’ certificate from the officers of each of Colson and SpinCo that each party has instructed its counsel to issue the underlying securities upon the release of funds; and (iii) a joint notice from Colson and SpinCo to the Agent stating that the Transaction has been completed and all conditions precedent to the Transaction have been satisfied or waived (the “Escrow Release Date”). Each Unit shall consist of one common share of SpinCo and one-half of one common share purchase warrant (each whole warrant, a “Warrant”). Each Warrant shall be exercisable to acquire one common share of SpinCo for a period of 24 months from the Escrow Release Date at an exercise price of $0.75 per common share.Finder’s FeeIn connection with the proposed Transaction, Colson entered into a finder’s fee agreement dated as of September 10, 2020 with Industrial Alliance Securities Inc. (the “Finder”), as finder. As compensation for the Finder’s introduction of Colson and the TCNC group of companies, should the Transaction be completed, the Resulting Issuer will pay to the Finder an amount equal to 5.0% of the deemed value of Colson as constituted immediately prior to Closing. The Finder is not a Non-Arm’s Length Party (as such term is defined in the policies of the TSXV) of the Corporation. The finder’s fee is expected to be paid in cash, and shall be subject to approval of the TSXV.Additional InformationIf and when a Definitive Agreement between the Corporation and SpinCo is executed, the Corporation will issue a subsequent press release in accordance with the policies of the TSXV containing the details of the Definitive Agreement and additional terms of the Transaction including information relating to sponsorship, summary financial information in respect of TCNC and SpinCo, and additional information with respect to the Offering and the proposed directors, officers, and insiders of the Resulting Issuer upon completion of the Transaction.Completion of the Transaction is subject to a number of conditions including, but not limited to, completion of the Offering, the satisfaction of the Corporation and TCNC’s parent holding corporation in respect of the due diligence investigations to be undertaken by each party, the completion of a Definitive Agreement in respect of the Transaction, closing conditions customary to transactions of the nature of the Transaction, approvals of all regulatory bodies having jurisdiction in connection with the Transaction, TSXV acceptance of the Transaction as the Qualifying Transaction of Colson and, if required by the TSXV policies, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approvals are obtained and there can be no assurance that the Transaction or the Offering will be completed as proposed or at all.Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.Trading HaltThe common shares of Colson are currently halted from trading for failing to complete a Qualifying Transaction within the required timeframe as prescribed by TSXV policies, and the trading of common shares of Colson is expected to remain halted pending completion of a Qualifying Transaction.For further information, please contact:Cautionary Statements
This news release contains “forward-looking information” within the meaning of applicable securities laws relating to the proposal to complete the Transaction and associated transactions, including statements regarding the terms and conditions of the Transaction and the Offering. The information about TCNC and SpinCo contained in the press release has not been independently verified by the Corporation. Although the Corporation believes in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because the Corporation can give no assurance that they will prove to be correct. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the Transaction and the Offering; the Transaction, the Offering and associated transactions will differ from those that currently are contemplated; and that the Transaction, the Offering and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The terms and conditions of the Transaction may change based on the Corporation’s due diligence (which will be limited as the Corporation intends to rely upon the due diligence conducted by the Agent in connection with the Offering) and the receipt of tax, corporate and securities law advice for both Colson, TCNC and its parent holding entity. The statements in this press release are made as of the date of this release.
Neither the TSX Venture Exchange, Inc. nor its Regulation Services Provider (as that term is defined in the polices of the TSX Venture Exchange) has in any way passed upon the merits of the Transaction and associated transactions and neither of the foregoing entities accepts responsibility for the adequacy or accuracy of this release or has in any way approved or disapproved of the contents of this press release.The common shares have not been and will not be registered under the United States Securities Act of 1933, as amended and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirement. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

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