Evome Medical Technologies Inc. — Board/Management Information 2021

Dec 9, 2021

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 5, 2021

SALONA GLOBAL MEDICAL DEVICE CORP.

(Exact name of registrant as specified in its charter)

British Columbia 333-255642

(State or other jurisdiction (Commission of incorporation) File Number)

Not Applicable

(IRS Employer Identification No.)

3330 Caminito Daniella

Del Mar, California, United States 92014

(Address of principal executive offices) (ZIP Code)

Registrant’s telephone number, including area code: (800) 760-6826

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuasnt to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☑

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Resignation of Kyle Appleby

On December 3, 2021, Kyle Appleby resigned as Chief Financial Officer and principal accounting officer of the Registrant, effective immediately.

Appointment of Richard Mejia

On December 6, 2021, the Registrant appointed Richard Mejia as its Interim Chief Financial Officer, effective immediately. After being employed by Ernst & Young Global Limited, a multinational accounting firm ("EY"), for 38 years where his practice concentrated in providing assurance services for healthcare companies, Mr. Mejia, age 73, retired as an audit partner from EY in 2008. While employed at EY, Mr. Mejia also served in leadership positions to various trade groups, including groups focused on life sciences and venture capital. Since his retirement from EY, from 2008 through 2017, Mr. Mejia served as a member of the Board of Directors of several companies, certain of which were publicly traded. Since 2018, Mr. Mejia has served as a member of the Board of Directors of Ra Medical Systems, Inc. a public company engaged in the design, manufacture and sale of medical products.

In connection with his appointment, the Registrant and Mr. Mejia have agreed that Mr. Mejia will be employed on an at will basis and receive $2000 monthly as compensation. Additionally, pursuant to the Registrant's 2021 Stock Option Plan, Mr. Mejia has been granted options to acquire up to an aggregate of 100,000 shares of the Registrant's common shares at an exercise price of $.65 per share. The options have a term of five years from the date of grant.

There are no related-party transactions in which Mr. Mejia or any of his immediate family members has an interest that would require disclosure under Item 404(a) of Regulation S-K.

Item 7.01 Regulation FD Disclosure.

On December 7, 2021, the Registrant issued a press release announcing the matters described in Item 5.02 of this Current Report on Form 8- K. The press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.

On December 9, 2021, the Registrant issued a press release announcing guidance on the Registrant's financial performance. The press release is attached as Exhibit 99.2 to this Current Report on Form 8-K.

On December 9, 2021, the Registrant held a telephonic conference call to discuss, among other matters, the matters described in Item 5.02 of this Current Report on Form 8-K and general corporate matters. The transcript of the conference call is attached as Exhibit 99.3 to this Current Report on Form 8-K.

The information in this Item 7.01, including Exhibits 99.1, 99.2 and 99.3, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of Section 18, (and shall not be deemed to be incorporated by reference into the filings of the Registrant under the Securities Act of 1933 or the Exchange Act), except as shall be expressly set forth by specific reference in any such filing. This Current Report will not be deemed an admission as to the materiality of any information contained in this Item 7.01, including Exhibits 99.1, 99.2 and 99.3.

Item 9.01 Financial Statements and Exhibits.

		(d) Exhibits
	99.1	Press Release of Salona Global Medical Device Corporation dated December 7, 2021.
	99.2	Press Release of Salona Global Medical Device Corporation dated December 9, 2021.
	99.3	Transcript of Salona Global Medical Device Corporation Conference Call held December 9, 2021 at 4:00 p.m. EST.
	104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.

SALONA GLOBAL MEDICAL DEVICE CORPORATION

Date: December 9, 2021

By: /s/ Leslie Cross Name: Leslie Cross Title: Chairman of the Board and Interim Chief Executive Officer

Salona Global Medical Device Corporation Announces Shareholder Update Call; Adds Healthcare Interim CFO to Management Team

San Diego, California - December 7, 2021 - Salona Global Medical Device Corporation (" Salona " or the " Company ") (TSXV:SGMD), an acquisition-oriented medical device company serving the global injury and surgery recovery (known as recovery science) market, announces that Salona's Chairman and Interim Chief Executive Officer Les Cross will be hosting a shareholder update call on December 9[th] , 2021 at 4 PM ET. Investors may use the below dial in information to join the call.

Dial In: 866-342-8591

Passcode: SALONA

"We have made great progress since listing six months ago. I look forward to sharing the details of that progress as well as the expanding opportunities we see as we look into 2022," said Les Cross, Chairman of Salona.

Additionally, Salona has appointed Richard Mejia Jr. as Interim Chief Financial Officer of the Company. Richard Mejia Jr. previously served as an audit partner at Ernst & Young Global Limited focused on the US healthcare market. Mr. Mejia has participated in a several public offerings and has routinely worked with NYSE and NASDAQ listed US healthcare companies on accounting matters, including DJO Global when it was listed on the NYSE.

"We're excited to welcome Rich on board as we believe his expertise will be useful in our beginning stage of our business plan," shared Mr. Cross. "We are focused on minimizing overhead as we build our revenue and profit base and as such, we have asked Rich to join as an interim CFO until we move past this initial stage of our plan."

As part of the Company's on-going strategy to incentivize key employees, managers and directors, the board of directors of the Company has approved the grant of an aggregate of 1,298,150 stock options under its Stock Option Plan to eligible persons (including 41 employees of newly acquired Simbex, LLC), and Mr. Mejia (100,000). All options have been granted at an exercise price of $0.65 per share and expire in five years.

For more information please contact:

Les Cross

Chairman of the Board and Interim Chief Executive Officer Tel: 1 (800) 760-6826 Email: Info@Salonaglobal.com

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 closing additional acquisitions. 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, including Salona cautions that the forwardlooking 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; 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; 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 Salona'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 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 Salona undertakes no obligation to publicly update or revise any forward-looking information, other than as required by applicable law.

Salona Global Medical Device Corporation Provides Guidance; Publishes Call Transcript

San Diego, California - December 9, 2021 - Salona Global Medical Device Corporation (" Salona " or the " Company ") (TSXV:SGMD), an acquisition-oriented medical device company serving the global injury and surgery recovery (known as recovery science) market, is pleased to provide guidance on the Company's performance. The Company expects to build significantly on its published annual revenue run-rate of $24 million per year announced September 30, 2021 by year end. Through a combination of organic growth and closing at least one more acquisition, management anticipates generating annual run-rate revenues of $40 million, with estimated gross margins of approximately 30-40%, by fiscal year end (February 28, 2022).

"We're very pleased with the progress to date" said Les Cross, Chairman of Salona Global. "We listed with $16 million in annual revenue and we expect to be approaching a $40 million run rate revenue by fiscal year end through the execution of our growth strategy. In addition, we expect to be able to continue our growth rate into next year as well."

Additionally, the transcript from today's shareholder update call will be available under the Company's Profile on SEDAR (www.sedar.com).

For more information please contact:

Les Cross Chairman of the Board and Interim Chief Executive Officer Tel: 1 (800) 760-6826 Email: Info@Salonaglobal.com

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 closing additional acquisitions. 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, including: acquisition targets achieving results at least as good as their historical performances; the financial information regarding targets being verified when included in the Company's consolidated financial statements prepared in accordance with GAAP ; the Company successfully identifying, negotiating and completing additional acquisitions, including accretive acquisitions; the Company organically growing including new sales from its new GPO LLC, of at least $11 million from September 30, 2021 to February 28, 2022 and completing at least one acquisition that add at least $5 million in new revenue in order to meet fiscal 2022 guidance. 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; 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; 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, selfisolations, 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 Salona'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 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 Salona undertakes no obligation to publicly update or revise any forward-looking information, other than as required by applicable law.

Welcome to the December 2021 investor update call for Salona Global Medical Device Corporation, listed on the TSXV under the ticker S-G-M-D.

Before I hand it over to Les, I would like to remind everyone that today's discussion will include forward-looking statements regarding future events and our future financial performance. These statements reflect our views as of today only and should not be considered as representing our views of any subsequent date and, except as required by law we do not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after today, many of which are beyond our control. These statements are also subject to material risks and uncertainties that could cause actual results to differ materially from expectations reflected in the forward-looking statements. A discussion of these risk factors is fully discussed or referred to in Salona's disclosure documents filed on EDGAR and SEDAR .

We intend to furnish a transcript of today's conference call in connection with our filing of a Current Report on Form 8-K.

There can be no assurance that any proposed acquisition will be completed or the timing of any acquisitions. Completion of any transaction will be subject to applicable director, shareholder and regulatory approvals.

And finally, the statements made during this conference call are for general information purposes only and do not constitute a sale, offer for sale of, or solicitation of an offer to buy, any securities in any jurisdiction.

Now I would like to introduce Les Cross, Chairman and interim CEO

Les:

Thank you for joining us on the call today. It has been six months since we listed on the TSXV and I wanted to give our shareholders and market participants an update on our progress to date. I am happy to report we are on track with our business plan. We are focused on a $30 billion global market for products that help people recover from injuries, surgery, and physical disabilities, known as recovery science.

We have completed several transactions in this market over the last two quarters and, as we announced today, we expect our fiscal year end annual run-rate revenue to be approaching $40 million all while building a fully integrated medical device company. Our plan to build a fully integrated enterprise ultimately determines the types of acquisitions we make and will serve as an important touch point for a potential future Nasdaq listing. At the end of this call, I will focus more on this important strategy.

We listed with a straightforward and powerful business plan. We are focused on acquiring revenue generating and profitable small medical device companies. The profitable companies we target for acquisition have excellent products, but generally face one major growth challenge--- their market reach and distribution is limited and they usually lack international marketing experience.

A key aspect of our strategy is that we aim to make only accretive acquisitions. That means our earnings per share is designed to increase with each acquisition. Once acquired, our plan is to grow revenues by introducing their product into untapped or underserved markets, including international markets and niche US markets, providing the opportunity for further acceleration of our earnings per share post acquisition.

I have great confidence in this plan because I built a billion-dollar company just like Salona Global. As background, I was formerly the Chairman and CEO of DJO Global, a company I led from the early days, took public on the New York Stock Exchange and later sold to Blackstone for US$1.6 billion dollars. I grew that company through 12 acquisitions and by picking superior products I knew would sell in international markets and niche US markets. I also picked products positioned to grow with the aging population and other favorable demographics.

Since selling DJO, I have seen this market change. It has become even more fragmented through product innovation. Additionally, the large businesses that serve the market, such as DJO, can no longer achieve meaningful growth by acquiring dozens of small device companies. Understandably, they are trying to move into higher risk/reward opportunities requiring large capital investments, such as implants and surgical devices. These two forces have created a terrific opportunity to recreate my success at DJO.

To fully take advantage of this opportunity, I have a very talented and experienced team of executives and advisors. Luke Faulstick, who is our COO and was the founder of SDP, our first acquisition. Luke also helped build up DJO. I also added a well-known and talented M&A and capital markets team, led by the former Chairman and Vice Chairman for Patient Home Monitoring. PHM, as it was known, is now two companies listed on the Nasdaq, Viemed and Quipt. Those companies grew out of an acquisition juggernaut lead by my M&A team. Our new interim CFO, Rich Meija Jr. was the Ernst & Young partner assigned to DJO and Jane Keirnan, our Vice Chair, was the Chair of the Audit Committee and a key board member of American Medical Systems, listed on the Nasdaq, that sold to Endo pharmaceuticals for almost $4 billion. The entire team is engaged with great urgency to take advantage of this massive opportunity.

It has been gratifying to see our business model take shape as we hoped.

As a review of our last six months, we listed with the acquisition of an FDA approved robotics facility that produces a range of medical devices serving our market called SDP. That took us to a $16 million run rate in annual revenues with a business that can produce, package and support products for global markets.

One month later, we launched a European sales channel. I have spent decades developing the European market and we were able to secure a European order for SDP within months of listing.

In September, after successfully navigating both the US and Canadian regulatory environments, we acquired a company called Simbex that took us to over $24 million in run rate annual revenues. Simbex added an incredible suite of technology and medical device development expertise.

And just last week we announced another transaction of a niche sales organization in the US market serving small hospitals and group purchasing organizations focused on smaller US cities. This is usually an underserved market, especially for smaller medical device companies that we plan to acquire, and is designed to give an immediate domestic sales boost to our company. The fact is we have seen solid revenues from this channel already in December of 2021 that will be reflected in our fourth quarter financials.

To be clear, with organic growth alone, we are currently generating additional revenue well above the $24 million in annual run-rate we announced in September and we also expect to close one additional acquisition before our year end, which is why I am comfortable with the $40 million revenue figure I mentioned at the beginning of the call.

As a result of our work - namely closing several device and channel transactions, by the fiscal year end, we will have built a fairly significant enterprise on a number of levels.

First, we grew annual revenues from 16 million at listing to our expected fiscal year end revenue approaching 40 million which demonstrates our business model is working.

Secondly, we have created a strong initial platform to expand our next line up of acquisitions. As we add revenue generating medical device companies to our portfolio of products, we can expand their sales swiftly both in the US through our new GPO channel, and in Europe through our established relationships.

Third, and perhaps more importantly, through integrating these first four ventures, we are creating a fully integrated medical device company. This is a key highlight of our business plan. To successfully list on the Nasdaq we need to be fully integrated. And we have done this by gathering the necessary components to hold the business aloft.

Let me describe the components and how they already integrate into each other. In Simbex, we have a revenue generating innovation hub that understands how to create IP and develop products quickly to market. We are already exploring new product innovations we can bring to market under our label. These have a huge return on investment profile and can super charge our organic growth. In SDP, we have a large and expandable FDA approved medical device facility that can reformulate acquired and developed products for the global market. In the European and GPO sales channels we have the ability to drive sales directly to our customers. Taking these four parts into consideration, we are well on our way to building the type of business US investors appreciate and place a high value on.

While we are proud of what we have accomplished in such a short time, we have much to do and we want to pick up the pace.

We have a pipeline of more devices and other niche and international channels that we aim to either acquire or develop as we grow.

By the time we wrap up the year, we will have grown faster than PHM in the same time frame as when they launched on the TSXV. That is the power of the team we have assembled. And this is just the beginning.

We have a strong pipeline and we see opportunities all the time. I've been in this industry for over 30 years and I am in touch with colleagues weekly as we search for qualified targets. Our world class acquisition team, the former PHM team, has closed a significant number of deals as a team and understands how to structure our deals so that we have increased EPS at the time of closing, as well as reducing our tradable float as a percentage of shares outstanding. We have acquired cash flow positive targets and we can add leverage when we choose, further increasing EPS as we close more deals.

Lastly, I am happy to report that in last few months, mostly because of our team's reputation in the market, we have been seeing opportunities that are much larger. Companies with $50 million to $100 million in sales. We are working to put our foot on one of the deals, if we can, any of them would be transformational and massively accretive. All of these companies are cash flow positive and we can use significant leverage to close them, reducing our need for equity capital. We will continue to pursue these home run style deals even as we follow our plan to grow more predictably closing at least a deal a quarter in the $5 to $20 million revenue range. There are plenty of opportunities out there and we are very careful about what we want to buy at this early stage. Every deal must be accretive, must have a profile where we can expand revenues post-closing and must have a product or channel that builds on our platform to be an ever expanding fully integrated medical device company. Our plan is to eventually list on the Nasdaq and grow both through acquisition and product development. With the sales channels we acquire, we have the ability to move our product into the market swiftly and aggressively, providing significant growth and expansion of EPS every quarter.

I want to thank our investors for being patient as we launched and holding through this first phase of growth. Our growth won't always be in a straight line, but we are committed to increasing revenue and earnings every quarter.

Thank you for your time and we will be speaking again for our earnings call in mid-January.