Greenstone Capital Corp. Announces LOI for Qualifying Transaction with U.S. Based Comprehensive Healthcare Systems Inc.

Calgary, Alberta–(Newsfile Corp. – October 27, 2020) – Greenstone Capital Corp. (TSXV: GSGS.P) (the “Company” or “Greenstone“), a capital pool company (“CPC“), is pleased to announce that it has entered into a non-binding letter of intent dated October 23, 2020 (the “LOI“) to enter into an arm’s length business combination transaction (the “Proposed Transaction“) with Comprehensive Healthcare Systems Inc. (“CHS“).

CHS is a vertically integrated software and services (SaaS) company focused on digitizing healthcare with Telehealth and Healthcare Benefits Administration solutions. Its state of the art NPS Novus Healthcare Welfare and Benefits Administration (HWBA) SaaS platform is used by clients for all aspects of healthcare benefit administration, providing reliable and high-volume transaction capable systems.

CHS upcoming “Telehealth” user-facing app available on the web, iOS and Android will be fully integrated with the HPS NOVUS Platform. Any user, including the 600,000+ members currently using Novus can interact with doctors, clinics, and hospitals in the CHS network. The app will allow its users to connect to most major electronic medical records databases, payment gateways and billing systems. All the records on the app will be encrypted giving full control to its users.

Upon completion of the Proposed Transaction, the combined entity (the “Resulting Issuer“) will be a healthcare services company listed on the TSX Venture Exchange (the “Exchange“).

Greenstone intends that the Proposed Transaction will constitute its “Qualifying Transaction”, as such term is defined under Policy 2.4 of the Exchange and will be listed as a Tier 2 technology issuer on the Exchange. Upon completion of the Proposed Transaction, the Company expects that the Resulting Issuer will be named “Comprehensive Healthcare Systems Inc.” or such other name as acceptable to CHS and will continue to carry on the business of CHS as currently constituted. The Proposed Transaction is not a Non-Arm’s Length Qualifying Transaction (as defined in Exchange Policy 2.4).

Summary of the Qualifying Transaction

The LOI contemplates Greenstone and CHS undertaking an arm’s length business combination transaction. Following completion of the Proposed Transaction, the current securityholders of CHS would own a majority of the issued and outstanding common shares in the capital of the Resulting Issuer and CHS will become a wholly-owned subsidiary of the Resulting Issuer.

Upon completion of the Proposed Transaction, and assuming the Concurrent Financings (as defined below) are fully subscribed, existing holders of common shares in the capital of Greenstone (the “Greenstone Shares“) are anticipated to hold, in the aggregate, 3,000,000 common shares in the share capital of the Resulting Issuer (the “Resulting Issuer Shares“) representing approximately 3.82% of the outstanding Resulting Issuer Shares (3.27% on a fully diluted basis). Former security holders of CHS (including holders of Convertible Debentures (as defined below) are expected to hold, in the aggregate, 60,000,000 Resulting Issuer Shares, representing approximately 76.43% of the outstanding Resulting Issuer Shares (65.31% on a fully diluted basis) and a deemed price per share of $0.30 (an aggregate deemed value of CHS of $18 million). Investors under the Brokered Concurrent Financing (as defined below) will hold, in the aggregate, 6,666,667 Resulting Issuer Shares, representing approximately 8.49% of the outstanding Resulting Issuer Shares (7.26% on a fully diluted basis). Investors under the Non-Brokered Concurrent Financing (as defined below) will hold, in the aggregate, 8,333,333 Resulting Issuer Shares, representing approximately 10.62% of the outstanding Resulting Issuer Shares (9.07% on a fully diluted basis).

Concurrent Private Placement Financings

In connection with the Proposed Transaction, CHS anticipates completing a brokered private placement financing (the “Brokered Concurrent Financing“) for aggregate gross proceeds of up to CDN$2,000,000. It is anticipated that the Brokered Concurrent Financing will be undertaken as a “commercially reasonable best efforts” private placement of up to 6,666,667 subscription receipts of CHS (the “Subscription Receipts“) at a price of CDN$0.30 per Subscription Receipt (the “Offering Price“). Concurrently with the closing of the Proposed Transaction, each Subscription Receipt would automatically pursuant to its terms (without any action required from the holder thereof) be deemed exercised for common stock in the capital of CHS (the “CHS Shares“) on a one-for-one basis immediately prior to the completion of the Proposed Transaction and subsequently exchanged for Resulting Issuer Shares. Subscription funds received in connection with the Brokered Concurrent Financing would be held in escrow pending closing of the Proposed Transaction and subject to the satisfaction of certain escrow release conditions, which shall include Exchange approval of the Proposed Transaction. If the Proposed Transaction does not close, such subscription funds would be returned to subscribers with pro rata interest in accordance with the terms of the subscription receipt agreement governing the Subscription Receipts.

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In addition, CHS anticipates completing a non-brokered private placement financing (the “Non-Brokered Concurrent Financing” and together with the Brokered Concurrent Financing, the “Concurrent Financings“) of convertible debentures (the “Convertible Debentures“) for aggregate gross proceeds of up to CDN$2,000,000. The Convertible Debentures will be issued on such terms and conditions as may be agreed to by the parties, but shall be convertible into CHS Shares at 20% discount to the Offering Price. The Convertible Debentures shall have conditions, which shall provide for the forced conversion of the Convertible Debentures into CHS Shares immediately prior to the completion of the Proposed Transaction.

Conditions to Closing

The completion of the Proposed Transaction is subject to the satisfaction of various conditions that are customary for a transaction of this nature, including but not limited to (i) execution of a definitive agreement (the “Definitive Agreement“) on or prior to November 30, 2020; (ii) the completion of the Concurrent Financings; (iii) the approval by the directors and shareholders (if required) of Greenstone and CHS, (iv) receipt of all requisite regulatory, stock exchange, or governmental authorizations (if any) and third party consents, including the Exchange; and (v) the completion of satisfactory due diligence by each of the parties. There can be no assurance that the Proposed Transaction will be completed on the terms proposed above or at all.

Pursuant to the terms of the LOI, CHS and Greenstone have agreed not to solicit or negotiate with any other entities in regard to a transaction similar to the Proposed Transaction. In addition, the LOI contemplates that the directors and officers of Greenstone and the directors, officers and material shareholders of CHS would enter into support agreements whereby they will agree to vote their Greenstone Shares or CHS Shares, as applicable, in favour of the Proposed Transaction and matters ancillary thereto at any meeting of shareholders called for such purpose.

Sponsorship of the Qualifying Transaction

Sponsorship of a “Qualifying Transaction” of a CPC is required by the Exchange unless exempt therefrom in accordance with the Exchange’s policies. Given the size and nature of the Proposed Transaction, including the amount of the Concurrent Financings, Greenstone intends to apply for an exemption from the sponsorship requirements pursuant to the policies of the Exchange. If the exemption is not granted by the Exchange, then Greenstone would be required to engage a sponsor.

Trading Halt

At the Company’s request, trading in Greenstone’s Shares has been halted by the Exchange. Trading is expected to remain halted until, at the earliest, the completion of the Proposed Transaction.

General

Other than adjustments required to reflect the Proposed Transaction exchange ratios, none of the terms of any outstanding securities of Greenstone would be amended and the Resulting Issuer will honour all of Greenstone’s existing obligations to issue securities, including, without limitation, the share purchase warrants issued in connection with Greenstone’s initial public offering and all outstanding stock options. Each of Greenstone and CHS will bear their own costs in respect of the Proposed Transaction.

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Additional disclosure concerning CHS as required pursuant to Policy 2.4 (inclusive of the requisite financial statement disclosure with respect to CHS), the Resulting Issuer and the Concurrent Financings will be included in a subsequent news release and also included in the disclosure document prepared in connection with the Proposed Transaction.

About Greenstone Capital Corp.

Greenstone is a CPC that completed its initial public offering and obtained a listing on the Exchange in August 2019 (TSXV: GSGS.P). Prior to entering into the LOI, Greenstone did not carry on any active business activity other than reviewing potential transactions that would qualify as Greenstone’s Qualifying Transaction.

About Comprehensive Healthcare Systems Inc.

CHS is a vertically integrated software and services (SaaS) company focused on digitizing healthcare with Telehealth and Healthcare Benefits Administration solutions. Its state of the art NPS Novus Healthcare Welfare and Benefits Administration (HWBA) SaaS platform is used by clients for all aspects of healthcare benefit administration, providing reliable and high-volume transaction capable systems.

CHS upcoming “Telehealth” user-facing app available on the web, iOS and Android will be fully integrated with the HPS NOVUS Platform. Any user, including the 600,000+ members currently using Novus can interact with doctors, clinics, and hospitals in the CHS network. The app will allow its users to connect to most major electronic medical records databases, payment gateways and billing systems. All the records on the app will be encrypted giving full control to its users.

All information in this Press Release relating to CHS is the sole responsibility of CHS. Management of Greenstone has not independently reviewed this disclosure nor has Greenstone’s management hired any third party consultants or contractors to verify such information.

Cautionary Note

As noted above, completion of the Proposed Transaction is subject to a number of conditions including, without limitation, approval of the Exchange, approval of the shareholders of CHS and Greenstone and completion of the Concurrent Financing. Where applicable, the Proposed Transaction cannot close until the required approvals have been obtained. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the continuous disclosure document containing full, true and plain disclosure regarding the Proposed Transaction, required to be filed with the securities regulatory authorities having jurisdiction over the affairs of the Company, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. The trading in the securities of Greenstone on the Exchange, if reinstated prior to completion of the Proposed Transaction, should be considered highly speculative.

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ON BEHALF OF THE BOARD OF DIRECTORS:

Mo Fazil
President, Chief Executive Officer, Chief Financial Officer and Director
Email: mfazil@lionparkcapital.com
Phone: (403) 613-7310

Disclaimer for Forward-Looking Information

This press release contains forward-looking statements and information that are based on the beliefs of management and reflect Greenstone’s current expectations. When used in this press release, the words “estimate”, “project”, “belief”, “anticipate”, “intend”, “expect”, “plan”, “predict”, “may” or “should” and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information. The forward-looking statements and information in this press release include information relating to the business plans of Greenstone, CHS, and the Resulting Issuer, the Concurrent Financings and the Proposed Transaction (including Exchange approval and the closing of the Proposed Transaction). Such statements and information reflect the current view of Greenstone. Risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information.

By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Such factors include, among others, the following risks:

• there is no assurance that the Concurrent Financings will be completed or as to the actual offering price or gross proceeds to be raised in connection with the Concurrent Financings. In particular, the amount raised may be significantly less than the amounts anticipated as a result of, among other things, market conditions and investor behaviour;
• there is no assurance that Greenstone and CHS will obtain all requisite approvals for the Proposed Transaction, including the approval of their respective shareholders (if required), or the approval of the Exchange (which may be conditional upon amendments to the terms of the Proposed Transaction);
• following completion of the Proposed Transaction, the Resulting Issuer may require additional financing from time to time in order to continue its operations. Financing may not be available when needed or on terms and conditions acceptable to the Resulting Issuer;
• new laws or regulations could adversely affect the Resulting Issuer’s business and results of operations; and
• the stock markets have experienced volatility that often has been unrelated to the performance of companies. These fluctuations may adversely affect the price of the Resulting Issuer’s securities, regardless of its operating performance.

There are a number of important factors that could cause Greenstone’s actual results to differ materially from those indicated or implied by forward-looking statements and information. Such factors include, among others: currency fluctuations; limited business history of Greenstone; disruptions or changes in the credit or security markets; results of operation activities and development of projects; project cost overruns or unanticipated costs and expenses, fluctuations in commodity prices, general market and industry conditions and the impact of the COVID-19 pandemic.

Greenstone cautions that the foregoing list of material factors is not exhaustive. When relying on Greenstone’s forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Greenstone has assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS PRESS RELEASE REPRESENTS THE EXPECTATIONS OF GREENSTONE AS OF THE DATE OF THIS PRESS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE GREENSTONE MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME EXCEPT AS REQUIRED IN ACCORDANCE WITH APPLICABLE LAWS.

This press release is not an offer of the securities for sale in the United States. The securities have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration. 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 state in which such offer, solicitation or sale would be unlawful.

Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

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Investors are cautioned that, except as disclosed in the filing statement to be prepared in connection with the Proposed Transaction, any information released or received with respect to the Proposed 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.

The TSX Venture Exchange Inc. 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 TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

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