CTS has closed a second tranche (the “Second Tranche Closing”) of its previously announced private placement offering (the “Offering”) of subscription receipts (each, a “Subscription Receipt”) through the issuance of 2,980,829 Subscription Receipts at a price of $0.45 per Subscription Receipt for gross proceeds of $1,341,373.
Good2Go2 Corp. (TSXV: GOAL.P) (“G2G2“) and Canadian Teleradiology Services, Inc. (“CTS” or the “Company“) are pleased to announce that, due to strong investor interest, CTS has closed a second tranche (the “Second Tranche Closing“) of its previously announced private placement offering (the “Offering“) of subscription receipts (each, a “Subscription Receipt“) through the issuance of 2,980,829 Subscription Receipts at a price of $0.45 per Subscription Receipt for gross proceeds of $1,341,373. The Second Tranche Closing is in addition to the approximately $3 million in gross proceeds raised by CTS pursuant to the First Tranche Closing (as defined below) including approximately $500,000 by way of the elimination of a payment obligation of CTS. Mackie Research Capital Corporation (“MRCC“) continues to act as lead agent and sole bookrunner for the Offering syndicate, which also includes Canaccord Genuity Corp. and Industrial Alliance Securities Inc. (collectively, the “Agents“). The Offering was conducted on a commercially reasonable “best efforts” agency basis in connection with the proposed business combination of G2G2 and CTS (the “Resulting Issuer”) which will constitute the qualifying transaction (the “Transaction“) of G2G2 as defined in the policies of the TSX Venture Exchange (the “Exchange“). The aggregate gross cash proceeds raised under the Offering was $3,915,230.
Each Subscription Receipt will be automatically exchanged immediately prior to the completion of the Transaction (without any further action by the holder of such Subscription Receipt and for no further payment) for one common share and one common share purchase warrant of CTS, each of which shall be exchangeable into one (1) Resulting Issuer Share and one (1) common share purchase warrant of the Resulting Issuer (the “Resulting Issuer Warrant“), upon satisfaction of certain escrow release conditions including the completion of the Transaction and the conditional listing of the Resulting Issuer on the Exchange. Each Resulting Issuer Warrant will entitle the holder thereof to acquire one additional Resulting Issuer Share at a price of $0.50 for a period of 36 months from the date of the listing of the Resulting Issuer Shares on the Exchange (the “Listing Date“).
The gross proceeds of the Second Tranche Closing (together with the gross proceeds from the First Tranche Closing, the “Escrowed Proceeds“) have been deposited into escrow with TSX Trust Company, as escrow agent, and will be released to the Company (after paying the commissions and expenses of the Agents) upon notice by the Company and MRCC, on behalf of the Agents, to the escrow agent that all conditions precedent to the Transaction have been completed, satisfied or waived (the “Release Conditions“). The Escrowed Proceeds will be returned to the holders of the Subscription Receipts and the Subscription Receipts shall be cancelled in the event that the Release Conditions are not satisfied prior to December 15, 2020.
G2G2 and CTS previously announced on November 2, 2020 the successful completion of a first tranche of the Offering (the “First Tranche Closing“) of 5,719,682 Subscription Receipts at an issue price of $0.45 per Subscription Receipt for gross cash proceeds of $2,573,857. CTS also issued: (i) 1,111,111 Subscription Receipts to Flow Capital Corp. at a deemed value of $500,000 as part of the Royalty Buy-Out (as defined below); and (ii) 250,000 Subscription Receipts as payment for a work fee and advisory fee.
In accordance with the terms of an agency agreement dated October 30, 2020 and a Supplement to Agency Agreement dated November 25, 2020 among the Agents, G2G2 and CTS, the Agents were paid the following in connection with the First and Second Tranche Closings:
- a cash commission in the aggregate amount of $313,218, representing 8% of the gross proceeds raised in the First and Second Tranche Closings which will be deducted from the Escrowed Proceeds upon release from escrow; and,
- 696,040 compensation options (the “CTS Agent Options“) in aggregate, being the number of CTS Agent Options equal to 8% of the Subscription Receipts sold under the First Tranche Closing, with each CTS Agent Option being exercisable at $0.45 per CTS Agent Option for a period of 36 months following the Listing Date to acquire (1) Resulting Issuer Share and one (1) Resulting Issuer Warrant.
After the release of the Escrowed Proceeds but prior to listing of the Resulting Issuer, G2G2, to be renamed as “Leveljump Healthcare Corp.”, the entity resulting from the completion of the Transaction, will use the net proceeds for a royalty buyout (the “Royalty Buy-Out”) from Flow Capital Corp. and Flow Capital US Corp. (collectively, “Flow Capital“).
In respect of the Royalty Buy-Out, on July 17, 2020, in connection with the Transaction, CTS and its principal shareholder, MEDD Medical Imaging Corp., entered into a Royalty Buyout Agreement with Flow Capital as amended by Buyout Amending Agreements dated October 28, 2020 and November 24, 2020 respectively, to be completed prior to listing of the Resulting Issuer pursuant to which, Flow Capital will receive:
- C$1,500,000 in cash;
- 1,111,111 Subscription Receipts (which have been issued along with the First Tranche Closing) at a deemed value of $500,000; and,
- 3,288,889 Resulting Issuer Shares, as a result of the Resulting Issuer Share allotment to be received by MEDD Medical Imaging Corp. in connection with the Transaction.
Updated Pro Forma Capitalization
After giving effect to an amended consolidation ratio in the issued and outstanding common shares of G2G2 from 2 to 1 to 1.8 to 1 and the closing of the Transaction and Offering, the table below discloses the anticipated non-diluted capitalization of the Resulting Issuer and lists the number of common shares of the Resulting Issuer expected to be held by: (i) the former shareholders of CTS; (ii) the current shareholders of G2G2; (iii) the shares to be held by Flow Capital as a result of the Royalty Buy-Out; (iv) the shares issued for the Agent’s advisory fee and work fee; and (iv) the investors in the Financing:
|Number of Resulting Issuer Shares Issued and Outstanding||Percentage of Resulting Issuer Shares|
|Resulting Issuer Shares held by G2G2 Shareholders||3,027,778||7.50%|
|Resulting Issuer Shares held by former shareholders of CTS||23,986,111||59.42%|
|Resulting Issuer Shares to be held by Flow Capital pursuant to the Royalty Buy-Out||4,400,000||10.90%|
|Resulting Issuer Shares issued for Agent’s advisory and work fee||250,000||0.62%|
|Resulting Issuer Shares issued to investors under the Offering||8,700,511||21.56%|
CTS is in the telehealth services business as it provides teleradiology services to Canadian hospitals. CTS services include, but are not limited to, reading medical imaging procedures using computer-processed combinations computed tomography “CT” scan, Magnetic Resonance Imaging “MRI”, Ultra Sound, and X-ray on an around the clock basis providing reporting and workflow solutions via secured server according to client hospital needs. Teleradiology is the process of providing remote off site reading of radiology scans. Hospital staff can scan their emergency room patients, then page the CTS radiologist on call, who can then remotely view, via secured server, the images and diagnose the patient and provide a report back to the hospital.
Teleradiology is the next level of patient care that assists small urban and rural hospitals to be connected with 24/7 care, ensuring even small communities receive care consistent with that which large urban hospitals receive. The growing digital health market is transforming the delivery of healthcare to Canadian patients.
G2G2 is a capital pool company created pursuant to the policies of the Exchange. It does not own any assets, other than cash or cash equivalents and its rights under the Definitive Agreement. The principal business of G2G2 is to identify and evaluate opportunities for the acquisition of an interest in assets or businesses and, once identified and evaluated, to negotiate an acquisition or participation subject to acceptance by the Exchange so as to complete a qualifying transaction in accordance with the policies of the Exchange.
Canadian Teleradiology Services, Inc.
Mitchell Geisler, Chief Executive Officer
James Cassina, President
This news release contains “forward-looking information” within the meaning of applicable securities laws, which involves known and unknown risks, uncertainties and other factors relating to the proposal to complete the Transaction and associated transactions that may cause actual events to differ materially from current expectations including: the receipt of all necessary regulatory approvals, the ability to conclude the Transaction, the listing of the Resulting Issuer Common Shares on the Exchange; the exchange of one Subscription Receipt into one unit of CTS; the receipt of all regulatory approvals in connection with the Transaction; the placement of the proceeds into escrow and the payment of the Agent’s compensation; the exchange of common share(s) in the capital of the resulting issuer pursuant to the Transaction; and the use of future proceeds from the Offering.
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 certain risk factors including, among other things, the risks that the parties will not proceed with the Transaction and associated transactions; that the ultimate terms of the Transaction and associated transactions will differ from those that currently are contemplated and as disclosed in this news release; that the Transaction 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 refusal of the proposed directors or officers to act for any reason, including conflicts of interest; reliance on key and qualified personnel; and regulatory and other risks associated with the medical and teleradiology industries in general. The foregoing list of risk factors is not exhaustive.
Completion of the Transaction is subject to a number of conditions including, but not limited to, Exchange acceptance, the availability of funds, the results of financing efforts, the parties’ due diligence reviews, and general market conditions. There can be no assurance that the transaction will be completed as proposed or at all. Other conditions that could cause actual results to differ materially from the Company’s expectations are disclosed in the Company’s documents filed from time to time on SEDAR (see www.sedar.com). Readers are cautioned not to place undue reliance on these forward-looking statements, which are made only as of the date of this press release. The Company disclaims any intention or obligation, except to the extent required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
The Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this release.
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