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Stormcrow Holdings Corp. Announces Qualifying Transaction with Highmark Innovations Inc.
Toronto, Ontario–(Newsfile Corp. – December 11, 2020) – Stormcrow Holdings Corp. (TSXV: CROW.P) (“Stormcrow” or the “Corporation“) is pleased to announce that it has entered into a letter of intent (the “LOI“) dated December 11, 2020 with Highmark Innovations Inc. (“Highmark“), a software developer for medical diagnostics doing business as Highmark Interactive (the “Transaction“). The LOI outlines the principal terms and conditions for the Transaction, which will result in a reverse takeover of Stormcrow by Highmark and its shareholders (the “Resulting Issuer“).
The Corporation is a Capital Pool Company and intends for the transaction with Highmark to constitute a Qualifying Transaction (as such terms are defined in Policy 2.4 – Capital Pool Companies (the “Policy“) of the TSX Venture Exchange (the “TSXV“)).
Trading in the common shares of the Corporation has been halted while the parties advance their respective due diligence and finalize the terms of the proposed transaction. Trading will remain halted until, among other things, the Corporation completes certain regulatory filings in connection with the Qualifying Transaction with the TSXV and the TSXV has completed certain matters it considers necessary or advisable.
The Transaction
It is currently anticipated that Stormcrow will acquire Highmark, by way of a three-corner amalgamation, share exchange, plan of arrangement or other similar form of transaction as agreed by the parties.
Under the terms of the LOI, the Transaction values Stormcrow at $2.6 million and Highmark at $13.692 million (prior to giving effect to the Private Placement and the Acquisitions (as defined below)).
Immediately prior to and as a condition to closing of the Transaction, Stormcrow shall complete a share consolidation on the basis of one new share for every six outstanding Stormcrow Shares (the “Share Consolidation“). Post Share Consolidation, Stormcrow shall have 4.35 million common shares issued and outstanding (the “Stormcrow Shares“). Prior to completion of the Private Placement and the Acquisitions, Highmark currently has the following securities issued and outstanding: (i) 15,327,438 common shares (the “Highmark Shares“); (ii) 1,557,500 options; (iii) 1,677,495 warrants; (iv) secured promissory notes in the aggregate principal amount of $231,400 (the “Highmark Notes“).
Pursuant to the Transaction: (i) $81,400 in principal amount of the Highmark Notes (together with all accrued and unpaid interest thereon) shall be converted into Highmark Shares at a conversion ratio of one Highmark Shares for each $0.893 of such principal; (ii) holders of issued and outstanding Highmark Shares will receive 1.4888 Stormcrow Shares (post-consolidation) at a deemed issuance price of $0.60 per Stormcrow Share for each Highmark Share (1.4888 being the “Exchange Ratio“) held by them; and (iii) all options, warrants or other securities convertible into Highmark Shares shall be exchanged, based on the Exchange Ratio, for similar securities to purchase Stormcrow Shares on substantially similar terms and conditions. It is anticipated that, immediately following completion of the Transaction, but not including any Private Placement or Acquisition, existing Highmark shareholders will hold approximately 86% of the Resulting Issuer (on a non-diluted basis) with the existing shareholders of Stormcrow holding approximately 14%.
Private Placement
In conjunction with, or prior to the closing of the Transaction, Highmark may, but is not required to, complete a private placement of Highmark Shares for gross proceeds of up to $5,000,000 (the “Private Placement“) on such other terms and conditions to be determined. Customary commissions and finders’ fees may be provide to arm’s length parties who assist in sourcing subscriptions for the Private Placement. Details of the Private Placement will be disclosed when and if the Private Placement is undertaken, however completion of the Private Placement is not a condition to the closing of the Transaction. Any securities issued by Highmark pursuant to the Private Placement shall be exchanged for post-consolidation securities of Stormcrow based on the Exchange Ratio.
The Acquisitions
Highmark may, prior to closing of the Transaction, but not as a condition thereto, complete acquisitions, upon terms and conditions to be agreed upon (the “Acquisitions“). Any securities issued by Highmark pursuant to the Acquisitions shall be exchanged for post-consolidation securities of Stormcrow based on the Exchange Ratio.
Definitive Agreement
The LOI contemplates the negotiation of a definitive agreement, which will be subject to a number of conditions precedent, including but not limited to:
a) receipt of and satisfaction by Stormcrow with historical financial statements of the Highmark business as required under applicable securities law;
b) completion of mutual satisfactory due diligence investigations of Highmark and Stormcrow;
c) approval of the Transaction by the boards of directors of Highmark and Stormcrow;
d) execution of a definitive agreement effecting the Transaction;
e) approval of the Transaction by Highmark shareholders, if required;
f) receipt of all regulatory approvals with respect to the Transaction and the listing of the resulting issuer’s common shares on the TSXV;
g) completion of the Share Consolidation, as well as Stormcrow shareholders approving a change of name and the approval of a new slate of directors to take position at closing of the Transaction; and
h) confirmation of no adverse material change of Stormcrow or Highmark.
About Highmark
Highmark was incorporated under the Business Corporations Act (Ontario) on July 17, 2014 as Global Health Concierge Corporation, which name was later changed to Highmark Innovations Inc. by way of Articles of Amendment dated February 14, 2017. Its offices are located in Toronto, Ontario. Highmark was created to change the paradigm of neurological testing and management. Its goal is to become a leader in digital diagnostics and therapeutics by fusing the engagement of mobile gaming with machine learning, and to build, test, study and refine the world’s first mobile, gamified, FDA-cleared neuro-diagnostic software.
Insiders, Board of Directors and Management of the Resulting Issuer
The Board of Directors of the Resulting Issuer shall consist of Highmark’s three (3) existing directors and up to two (2) additional directors subject to the mutual agreement of Highmark and Stormcrow. The officers of the Resulting Issuer shall comprise Dr. Sanjeev Sharma as Chief Executive Officer and Don Harkness as Chief Financial Officer.
Dr. Sanjeev Sharma
Dr. Sharma is co-founder and CEO of Highmark Interactive, one of Canada’s leading digital health companies. A visionary leader and serial entrepreneur with over 20 years of healthcare experience, Dr. Sharma is driven to disrupt healthcare delivery both in Canada, and globally. He has held senior leadership positions in both Canadian and global corporations, including serving as Global Director of Product Management with Baxter Healthcare. He would go on to be the founding CEO of Wellpoint Health, one of Canada’s largest occupational health and safety providers. In addition to his work at Highmark Interactive, he is an active investor and entrepreneur, having supported multiple start-ups in the health care, and technology verticals. Most recently, Dr. Sharma was a founding member of New York based MedPro Investors, and was on the Board of Directors for B-temia Corp; a global leader in Human Augmentation Robotic technology. Dr. Sharma completed medical school at McMaster University, post-graduate medical residency at the University of Toronto, and a Master of Business Administration from Wilfrid Laurier University.
Don Harkness
Don Harkness is seasoned financial executive with over 20 years of CFO experience. Don has spent his career in the technology and medical products sectors in both private and public companies. Don was most recently CFO of Lone Wolf Real Estate Technologies, a private equity backed residential real estate software company. He was also CFO of Intelliware Development and GeoDigital International Inc. His medical products CFO experience includes Prism Medical Inc. and Vitalaire Healthcare. Don is results-oriented and bottom-line focused with a successful track record of strategic change management, process improvement, financing, mergers and acquisitions and system implementations. He has leant his financial expertise to a number of not for profit organizations as a volunteer board member. Don completed his undergraduate business degree at the University of Western Ontario’s Ivey Business School and is a Chartered Accountant.
Sponsorship for Qualifying Transaction
Sponsorship of a Qualifying Transaction of a capital pool company is required by the TSXV unless exempt in accordance with the policies of the TSXV. The parties may engage a sponsor to satisfy the sponsorship requirements pursuant to the policies of the TSXV.
Stormcrow Shareholder Approval
Since the Transaction is not a “Non-Arm’s Length Transaction” under the policies of the TSXV, Stormcrow will not be required to obtain shareholder approval of the Transaction.
Filing Statement
In connection with the Transaction and pursuant to the requirements of the TSXV, Stormcrow will file a filing statement on its issuer profile on SEDAR (www.sedar.com), which will contain details regarding the Transaction, Stormcrow, Highmark and the resulting issuer.
For further information:
Highmark Innovations Inc.
Sunil Sharma
secretary@highmark.tech
Stormcrow Capital Corp.
Chris Schnarr
cschnarr@loriangroup.com
Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable pursuant to TSXV Requirements, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction 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 the transaction, any information release 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.
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.
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 RELEASE.
This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.
Cautionary Statement Regarding Forward-Looking Information
This news release contains “forward-looking information” within the meaning of Canadian securities legislation. Forward-looking information generally refers to information about an issuer’s business, capital, or operations that is prospective in nature, and includes future-oriented financial information about the issuer’s prospective financial performance or financial position.
The forward-looking information in this news release includes disclosure about the terms of the Transaction, the proposed structure of the Transaction and the terms of the Private Placement and he Acquisitions.
Stormcrow and Highmark made certain material assumptions, including but not limited to: prevailing market conditions; general business, economic, competitive, political and social uncertainties; delay or failure to receive board, shareholder or regulatory approvals; the terms of the Private Placement, and the Acquisitions; and the ability of the resulting issuer to execute and achieve its business objectives, to develop the forward-looking information in this news release. 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.
Actual results may vary from the forward-looking information in this news release due to certain material risk factors. These risk factors include, but are not limited to: adverse market conditions; the inability of Stormcrow or Highmark to complete the Transaction on the terms disclosed in this news release, or at all; the unavailability of exemptions from prospectus requirements for the issuance of Highmark Shares; the risks associated with the marketing and sale of Highmark Shares; 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 digital gaming industry in general. The foregoing list of material risk factors and assumptions is not exhaustive.
Stormcrow assumes no obligation to update or revise the forward-looking information in this news release, unless it is required to do so under Canadian securities legislation.
(Not for distribution to US wire services or for dissemination in the United States of America)
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/70084