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Pathway Health Corp. Announces TSXV Conditional Approval and Filing Statement for Its Qualifying Transaction with Pathway Health Corp., and Closing of Qualifying Transaction

·7 min read

Calgary, Alberta--(Newsfile Corp. - May 31, 2021) - Pathway Health Corp. (TSXV: PHC) (formerly Colson Capital Corp.) ("Pathway" or the "Company") is pleased to announce that it has received conditional approval from the Exchange for the closing of, and has completed its previously announced "Qualifying Transaction" (as defined in Policy 2.4 of the TSX Venture Exchange (the "Exchange") involving a share exchange transaction (the "Transaction") pursuant to which the Company acquired all of the issued and outstanding shares of Pathway Health Services Corp. (formerly Pathway Health Corp.) ("Old Pathway") in exchange for common shares in the capital of the Company. As a result of the Transaction, Old Pathway became a wholly-owned subsidiary of the Company. In addition, the Company is pleased to announce the exchange of the subscription receipts ("Subscription Receipts") issued by Old Pathway in connection with the previously announced private placement offering of Subscription Receipts undertaken in connection with the Transaction as detailed in the Company's news release dated March 16, 2021. The Subscription Receipt offering was made through a syndicate of agents, led by Canaccord Genuity Corp., and included iA Private Wealth Inc. and Leede Jones Gable Inc., for aggregate gross proceeds of $13,800,000. In accordance with the terms of the agreement governing the Subscription Receipts, the net proceeds of approximately $12.6 million were released to the Company upon completion of the Transaction.

A Filing Statement in respect of the Transaction has been prepared in accordance with the requirements of the Exchange and has been filed under the Company's issuer profile on SEDAR at www.sedar.com.

Prior to the Transaction, the Company consolidated its issued and outstanding common shares on a 2.941 to 1 basis (each post-consolidation common share, a "Common Share") and changed its name from "Colson Capital Corp." to "Pathway Health Corp." The Company's new CUSIP number for the Common Shares is 70324L105 and the new ISIN for the Common Shares is CA70324L1058. Shareholders of the Company are not required to take any action with respect to the name change or consolidation, and are not required to exchange any existing certificates bearing the Company's old name. The Company's transfer agent, AST Trust Company (Canada), will send registered shareholders a new Direct Registration System advice ("DRS") representing the number of Common Shares held by such shareholders.

The Transaction was completed pursuant to the terms of the Share Exchange Agreement dated January 29, 2021, as amended, pursuant to which 90,252,819 Common Shares were issued to former shareholders of Old Pathway (including 27,600,000 Common Shares to former holders of Subscription Receipts), at a deemed price of $0.50 per Common Share.

Final acceptance of the Transaction will occur upon the issuance of the Final Exchange Bulletin by the Exchange. Subject to final acceptance by the Exchange, the Common Shares are expected to commence trading on the Exchange under the symbol "PHC" on or about June 10, 2021, and the Company will be classified as a Tier 2 issuer pursuant to Exchange policies.

In connection with the Transaction, the Company's incumbent board of directors has been reconstituted and is now comprised of the following individuals: Michael Steele, Kenneth Howling, Alison Wright and Ken Yoon. Additionally, the board has appointed Ken Yoon as Chief Executive Officer and Corporate Secretary, Aura Balboa as Chief Financial Officer, Wayne Cockburn as President, Kim Wei as Chief Commercial Officer, Renee John as Vice President - Clinic Operations, and Pram Sandhu as Vice President - Pharmacy Programs and Regulatory Affairs.

Capital Structure

Upon completion of the Transaction, including the conversion of the Subscription Receipts, the issued and outstanding share capital of the Company consists of 93,108,990 Common Shares, including the 27,600,000 Common Shares issued upon conversion of the Subscription Receipts.

A total of 53,043,334 Common Shares will be subject to escrow agreements, including 816,048 Common Shares originally issued to the Company's principals upon listing the Company as a "capital pool company" (the "CPC Escrow Shares"), and 52,227,286 Common Shares issued to principals in connection with the Transaction (the "Value Escrow Shares"). All CPC Escrow Shares will be released from escrow as to 25% upon the date of the Final Exchange Bulletin, with an additional 25% every six months thereafter. The Value Escrow Shares are subject to a Tier 2 value security escrow agreement, and will be released from escrow over 36 months from the date of the Final Exchange Bulletin, with 10% released upon listing.

A total of 52,227,286 Common Shares (the "Lock-up Shares") are subject to voluntary lock-up agreements (the "Lock-up Agreements") entered into in connection with the Subscription Receipt financing. Under the terms of the Lock-up Agreements, the Lock-up Shares are restricted from transfer and will be released in accordance with the following schedule: (i) 50% of the Lock-up Shares will be released on the date that is six months from the completion of the Transaction; and (ii) 50% of the Lock-up Shares will be released on the date that is one year from the date of the Transaction.

The Company also has 16,188,228 Common Shares reserved for issuance pursuant to exercise or conversion of:

  • 13,800,000 Common Share purchase warrants;

  • 2,096,228 broker warrants;

  • 292,000 Common Shares that may be issued as contingent consideration payable pursuant to the terms of: (i) a convertible grid promissory note dated January 18, 2021 issued by Old Pathway in the name of NACM Management Ltd.; and (ii) an assumption and amending agreement dated January 18, 2021 between Old Pathway and National Access Canada Corporation.

For additional information concerning the Transaction and the foregoing matters, please refer to the Company's filing statement dated May 31, 2021, or the Company's press releases dated March 16, 2021, February 2, 2021 and November 30, 2020.

Investor Relations Contract

The Company also announces that it has engaged The Howard Group Inc. ("TGHI") for the provision investor relations consulting services to the Company, consisting of marketing communications and advisory services, in compliance with the policies and guidelines of the Exchange. THGI will focus on expanding the Company's investor audience and online media management. Under the terms of the agreement, THGI will receive fees in the amount of $8,000 per month, for a one year term expiring in February, 2022.

TGHI is a Calgary, Alberta based company, providing investor and financial relations, business development solutions and in-depth strategic planning to public companies since 1988. The agreement with TGHI will be filed and available on the Company's SEDAR profile at www.sedar.com.

Results of Colson Shareholder Meeting Respecting Transition to Certain New CPC Policy Provisions

The Company also announces certain amendments to the escrow provisions undertaken by Colson Capital Corp. ("Colson") prior to and in connection with the Transaction, as summarized below.

Removal of the Consequences of Failing to Complete a Qualifying Transaction within 25 Months of the Listing Date

Prior to changes to the Exchange's Policy 2.4 - Capital Pool Companies on January 1, 2021 (the "New CPC Policy"), there were certain consequences if a Qualifying Transaction was not completed within 24 months of the listing date of the capital pool company. These consequences included the potential for shares to be delisted or suspended, or, subject to the approval of the majority of the Company's shareholders, transferring shares to list on NEX and cancelling certain seed shares. The New CPC Policy has removed these consequences assuming disinterested shareholder approval is obtained. Disinterested shareholders of Colson voted in favour of the resolution to remove such consequences at its shareholder meeting held on March 31, 2021.

Amendments to the Escrow Agreement

Prior to changes to the New CPC Policy, "Seed Shares" of a capital pool company were subject to a 36 month escrow in the event the Resulting Issuer (as defined in the New CPC Policy) was a Tier 2 issuer. The New CPC Policy permits such escrow period to be 18 months in duration assuming disinterested shareholder approval is obtained. At the March 31, 2021 meeting, disinterested shareholders of Colson voted in favour of the resolution to make certain amendments to the CPC escrow agreement, including allowing the Company's escrowed securities to be subject to an 18 month escrow release schedule as detailed in the New CPC Policy, rather than the 36 month escrow release schedule in the former CPC Policy. The amendments only apply to the escrowed securities issued prior to the completion of the Transaction, and the escrow agreement was amended and restated on May 28, 2021.

For further information, please contact:

Pathway Health Corp.
Wayne Cockburn, President
Telephone: (905) 505-0770

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This news release includes certain "forward-looking statements" under applicable Canadian securities legislation, which may include by are not limited to statements with respect to obtaining the final bulletin from the Exchange. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors that may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; delay or failure to receive board, shareholder or regulatory approvals; and the results of operations. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Colson and Pathway disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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 Press Release. The TSX Venture Exchange Inc. has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the contents of this press release.

Not for distribution in the U.S. or to U.S. newswire services.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/85956