Colson Capital Corp. and Pathway Health Corp. Announce Execution of Definitive Agreement and Launch Concurrent Financing

Calgary, Alberta–(Newsfile Corp. – February 2, 2021) – Colson Capital Corp. (TSXV: COLS.P) (“Colson” or the “Corporation“) and Pathway Health Corp. (“Pathway“), a wholly-owned subsidiary of The Clinic Network Canada Inc. (“TCNC“), are pleased to announce that, further to the previously announced letter of intent dated September 12, 2020 between Colson and Cura-Can Health Corp. (“Cura-Can“) (the parent company of TCNC), Colson has now entered into a definitive share exchange agreement dated January 29, 2021 (the “Share Exchange Agreement“) with Pathway and each of its securityholders, pursuant to which Colson shall purchase all of the issued and outstanding shares of Pathway in exchange for the issuance of post-consolidation Colson Shares (as defined below), resulting in the reverse take-over of Colson by Pathway (the “Transaction“) to form the resulting issuer (“Resulting Issuer“). Upon completion of the Transaction, it is the intention of the parties that the Resulting Issuer will continue on the business of Pathway, subject to the terms and conditions outlined below. Colson intends that the Transaction will constitute its Qualifying Transaction, as such term is defined in Policy 2.4 of the TSX Venture Exchange (“Exchange“). In addition, the Transaction constitutes a “Non-Arm’s Length Qualifying Transaction” as defined in Policy 1.1 of the Exchange.

Summary of the Transaction

On or immediately prior to the closing of the Transaction, Colson will consolidate the 8,400,000 common shares of Colson (“Colson Shares“) currently issued and outstanding on the basis of 1 post-consolidation Colson Share for approximately every 2.941 outstanding pre-consolidation Colson Share (the “Consolidation“), resulting in an aggregate of approximately 2,856,171 post-Consolidation Colson Shares issued and outstanding. Completion of the Consolidation is subject to obtaining approval from the shareholders of the Corporation.

The parties to the Transaction are at arm’s length and therefore the approval of the shareholders of Colson in respect of the Transaction will not be required. However, the Corporation will hold a special meeting of its shareholders prior to March 31, 2021, whereat, among other things, the shareholders of Colson will be asked to approve (i) the Consolidation; (ii) the change of name of Colson to “Pathway Health Corp.” or such other name as Pathway may determine; (iii) the appointment of a new slate of directors, conditional upon completion of the Transaction; (iv) the approval of Colson’s rolling 10% stock option plan; (v) the removal of the consequences of failing to complete a qualifying transaction within 24 months of listing; and (vi) the amendment of the escrow terms on Colson Shares in light of the recent amendments to the Capital Pool Company Program of the Exchange (including the release of seed shares from escrow over an 18-month period following completion of the qualifying transaction) (collectively, the “Colson Meeting Matters“).

The Share Exchange Agreement provides that Colson and Pathway will be completing a business combination, pursuant to which: (i) post-Consolidation Colson Shares will be issued to holders of shares of Pathway (“Pathway Shares“) on the basis of one (1) post-Consolidation Colson Share for every one (1) Pathway Share; and (ii) holders of common share purchase warrants of Pathway (“Pathway Warrants“) will be exchanged for common share purchase warrants of Colson on substantially the same terms. On completion of the Transaction, the securityholders of Pathway will own a substantial majority of the issued and outstanding common shares of the Resulting Issuer (“Resulting Issuer Shares“) and Pathway shall become a wholly-owned subsidiary of the Resulting Issuer.

The completion of the Transaction is subject to, among others, the following conditions precedent be met prior to the closing of the Transaction: (a) Pathway and shareholders of Pathway shall have tendered all closing deliveries contemplated in the Share Exchange Agreement; (b) the shareholders of Pathway shall have approved the Share Exchange Agreement; (c) the board of directors of each of the Corporation and Pathway shall have approved the Transaction; (d) Pathway shall have obtained the consent of each of the holders of Subscription Receipts, if any; (e) the Resulting Issuer Shares shall have been conditionally approved for listing on the Exchange, and the Transaction shall have been conditionally approved as a Qualifying Transaction by the Exchange, subject to the customary requirements of the Exchange in respect of transactions of the nature of the Transaction; (f) the Offering (as described below) for gross proceeds of not less than $10,000,000 shall have been completed in escrow pending the completion of the Transaction; (g) all of the conditions necessary to complete the Offering shall have been satisfied (other than the completion of the Transaction); (h) the Corporation shall have convened a shareholder meeting no later than March 31, 2021 and shall have obtained shareholder approval for the Colson Meeting Matters; (i) the existing directors and officers of Colson shall have resigned; and (j) the Transaction shall close no later than April 30, 2021. The terms and conditions of the Transaction may be based on the Corporation’s due diligence (which is limited as the Corporation intends largely to rely on due diligence of other parties to the Transaction to contain its costs, among other things) and the receipt of tax, corporate and securities law advice for both the Corporation and Pathway.

For the purposes of the Transaction the deemed value of each Pathway Share (the “Pathway Share Value“) will be $0.50, such price being based on the pricing of the Offering (as defined below). In connection with the Transaction, the Colson Shares will be consolidated on the basis of one post-consolidation share for every 2.491 pre-consolidation Colson Shares, such basis resulting in the deemed value of the Colson Shares being equal to the Pathway Share Value (the “Consolidation“).

Other Significant Conditions to Closing

Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange 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 released 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 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.

Concurrent Subscription Receipt Financing

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As previously announced on November 30, 2020, in connection with the Transaction, Pathway has engaged Canaccord Genuity Corp. (the “Agent“), in connection with the offering of subscription receipts (“Subscription Receipts“) at a price of $0.50 per Subscription Receipt on a private placement basis for aggregate gross proceeds of not less than $10,000,000 (the “Offering“). Under the terms of the Offering, the Agent will be granted an over-allotment option to place up to an additional 15% of the number of Subscription Receipts issuable under the Offering for additional gross proceeds of up to $1,500,000.

On closing of the Offering, the gross proceeds of the Offering, less 50% of the Agent’s Commission (as defined below) and the Agent’s expenses incurred in connection with the Offering, will be held in escrow pursuant to a subscription receipt agreement, pending the satisfaction of the Release Conditions, whereupon the net process of the Offering will be released to Pathway and the balance of the Agent’s Commission will be paid to the Agent.

Each Subscription Receipt will be automatically converted into one unit of Pathway (each, a “Unit“), on the date (the “Escrow Release Date“) that: (i) all conditions precedent to the completion of the Transaction have been satisfied to the satisfaction of the parties but for payment of the cash portion of the purchase price to be paid by Pathway for the operating assets of TCNC; (ii) the Agent has received an officers’ certificate from the officers of each of Colson and Pathway that each party has instructed its counsel to issue the underlying securities upon the release of funds; (iii) the Agent is satisfied, in its reasonable opinion, that since the closing of the Offering, there have been no material changes in the affairs of the Corporation or Pathway and that there is no previously undisclosed fact which has or could be expected to have a significant adverse effect on the market price or value of the securities of the Resulting Issuer; and (iv) a joint notice from Colson and Pathway to the Agent stating that the Transaction has been completed and all conditions precedent to the Transaction have been satisfied or waived (the “Release Conditions“). Each Unit shall consist of one Pathway Share and one-half of one warrant, where each whole warrant shall be exercisable to acquire one Class A share of Pathway for a period of 24 months from the Escrow Release Date at an exercise price of $0.75.

The Agent is entitled to a cash commission payable to the Agent by Pathway on closing of the Offering in an amount of up to 8% of the gross proceeds of the Offering (“Agent’s Commission“). The Agent will also receive broker warrants (the “Broker Warrants“) on closing of the Offering of up to 8% of the total Subscription Receipts sold in the Offering. Each Broker Warrant will entitle the holder thereof to purchase one Resulting Issuer Share at an exercise price of $0.50 for a period of 24 months following the closing of the Offering.

In the event the Transaction does not occur by 5:00 p.m. (Calgary time) on the date that is 120 days from the closing date of the Offering, the gross proceeds of the Offering shall be returned to the purchasers pro rata without any deduction or interest and the Subscription Receipts shall be automatically cancelled.

Subject to applicable laws and the policies of the Exchange, it is anticipated that, upon completion of the Transaction, each Pathway Share issued pursuant to the Offering will be exchanged into one freely tradable Resulting Issuer Share, and each Pathway Warrant shall be exchanged for one Colson Warrant.

It is intended that the net proceeds raised pursuant to the Offering will be used to expand the Resulting Issuer’s portfolio of clinics across Canada, expand its distribution channels, add interdisciplinary pain services to its clinics, and for working capital and general corporate purposes.

Pathway

Pathway was incorporated pursuant to the provisions of the Canada Business Corporations Act on September 18, 2020 for the purposes of completing the transaction (the “TCNC Asset Acquisition“) contemplated under the TCNC Asset Purchase Agreement (as defined below) and participating in the Transaction. On January 18, 2021, Pathway entered into an asset and share purchase agreement with TCNC (the “TCNC Asset Purchase Agreement“), pursuant to which it acquired substantially all of the operating assets of TCNC, including the shares of TCNC’s operating subsidiaries. Since the TCNC Asset Acquisition, Pathway has continued to operate TCNC’s business. Unless otherwise indicated, references to the business of Pathway also include the business as operated by TCNC prior to the closing of the TCNC Asset Acquisition.

Pathway’s principal business is the operation of medical clinics that offer multidisciplinary therapies to patients that suffer from chronic pain, including pharmaceutical and medicinal cannabis-related therapies. The clinical services are delivered in inter-disciplinary pain clinics operated by Pathway and through virtual care by physicians and other health care providers, who are trained in managing chronic pain through proper assessment and multi-modality treatment that includes minimally-invasive approaches, intravenous therapies, allied health methods and the prescription of medical cannabis which is supplied to the patient directly by sellers and producers licensed by Health Canada (“LPs“) under the Access to Cannabis for Medical Purposes Regulations.

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Pathway’s physicians and nurse practitioners prescribe medical cannabis to qualified patients from LPs, in accordance with the Cannabis Act (Canada) and regulations. Patient educators then inform qualified patients of LP product options and fulfill the order with the patient’s choice of LP. Pathway operated clinics are not dispensaries and, as such, do not carry inventory or distribute cannabis products.

Pathway generates revenue through the operation of nine physical inter-disciplinary clinics in four provinces, Québec, Ontario, Manitoba and Saskatchewan, and the provision of virtual care across Canada. Pathway’s clinical patient services are paid for by provincial health insurance, third-party insurance companies and privately by patients. Clinical services paid for by provincial and third-party insurance includes: medical assessment and follow-up, multi-modality diagnostic imaging, intravenous therapies, medical implants, nerve block injections and other interventional therapies.

Resulting Issuer

Following completion of the Transaction, the Resulting Issuer will carry on the business currently carried on by Pathway. The Resulting Issuer will be a Life Sciences issuer under the policies of the Exchange.

It is expected that following completion of the Transaction, and assuming that the Offering is fully subscribed (including pursuant to the exercise of the Over-Allotment Option), there will be an aggregate of 88,346,837 Resulting Issuer Shares outstanding, and 22,594,684 Resulting Issuer Shares will be reserved for issuance pursuant to convertible securities of the Resulting Issuer. It is expected that following completion of the Transaction the current holders of Colson Shares will hold approximately 3.2% of the outstanding Resulting Issuer Shares, the subscribers in the Offering will hold approximately 26.0% of the outstanding Resulting Issuer Shares and the holders of Pathway Shares will collectively hold approximately 70.6% of the outstanding Resulting Issuer Shares, all as calculated on a non-diluted basis immediately following the closing of the Transaction.

To the knowledge of the directors and executive officers of the Corporation and Pathway, the only persons who will beneficially own, directly or indirectly, or exercise control or direction over more than 10% of the Resulting Issuer Shares is TCNC, which will hold approximately 58.4% of the Resulting Issuer Shares assuming completion of the Concurrent Financing and exercise of the Agent’s Option (as hereafter defined) in full. TCNC is a wholly-owned subsidiary of Cura-Can, and: (i) Avonlea-Drewry Holdings Inc., a company of which Mr. Michael Steele (a proposed director of the Resulting Issuer) is a director and officer, owns or controls, 10,456,168 Class A Shares of Cura-Can representing approximately 40% of the issued and outstanding shares of Cura-Can; and (ii) Mr. Kim Wei, a proposed officer of the Resulting Issuer, owns or controls, directly or indirectly, 2,649,641 Class A Shares of Cura-Can representing approximately 10% of the issued and outstanding shares of Cura-Can.

Summary Financial Information of Pathway

The following table presents selected financial statement information on the financial condition and results of operations for TCNC prior to the completion of the TCNC Asset Acquisition. Such information is derived from the audited financial statements of TCNC for the years ended December 31, 2019 and 2018 and the unaudited financial statements of TCNC for the period ended September 30, 2020. The information provided herein should be read in conjunction TCNC’s audited financial statements, which will be contained in the filing statement to be filed on SEDAR in connection with the Transaction.

Management of the Resulting Issuer

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Subject to Exchange approval, upon completion of the Transaction, it is expected that the board of directors and the senior officers of the Resulting Issuer will be the following proposed individuals. Please see below for a brief biography for each proposed individual:

Ken Yoon – proposed Chief Executive Officer, Corporate Secretary and Director

Mr. Yoon has over 20 years of experience in advising, consulting, financing, investing in and building innovative private and public companies with over $500M in transactions both as chief financial officer and investment professional. Mr. Yoon joined Pathway in Q2 2019 having worked most recently as Chief Financial Officer of Acerus Pharmaceuticals Corporation where he was instrumental in raising $27 million in financing. Prior to Acerus, Mr. Yoon was Chief Financial Officer and Vice President of Corporate Development at Vive Crop Protection Inc. Mr. Yoon is a Charter Professional Accountant /Chartered Accountant, holds a B.Sc. from University of Western Ontario, law degree from Queen’s University and MBA from the University of Toronto, and is the recipient of the Queen Elizabeth II Diamond Jubilee Medal.

Aura Balboa – proposed Chief Financial Officer

Ms. Balboa has over 15 years of finance and operations experience. Ms. Balboa began her career in public accounting with Deloitte. She then held a number of finance roles with increasing responsibilities at multiple pharmaceutical companies both in Canada and the U.S. Her most recent role was Director of Finance at Acerus Pharmaceuticals, a Canadian pharmaceutical company listed on the Toronto Stock Exchange. Ms. Balboa is a Chartered Professional Accountant / Chartered Accountant and holds a Bachelor of Commerce (Honours) from Queen’s University.

Wayne Cockburn – proposed President

Mr. Cockburn has over 25 years of healthcare experience, including 20 years at the C-level, specializing in strategic planning, corporate finance and capital market strategies, corporate partnering, corporate governance and mergers and acquisitions. Mr. Cockburn has also served on the board of directors of U.S. and Canadian private and public companies for more than 20 years.

Kim Wei – proposed Chief Commercialization Officer

Mr. Wei has over 30 years of executive level leadership experience in healthcare. He has a track record for developing and delivering innovative allopathic and complementary medicine models in North America. Mr. Wei is a co-founder of TCNC and has helped grow Pathway to be a Canadian delivery system with corporate and joint-venture clinics, in multiple healthcare disciplines. Mr. Wei has acted as a director on multiple Canadian and international company boards.

Michael Steele – proposed Chairman and Director

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Mr. Steele is an engineer and financier with over 30 years of experience in structured investments and new business start-ups. His company, Avonlea-Drewry Holdings Inc., provides consulting, restructuring, finance and operational advice. Mr. Steele has provided consulting services to various industry sectors including real estate, mining, oil and gas, and recently the Canadian medical marijuana sector.

Since 2013, Mr. Steele has consulted to or provided financing to various companies in the Canadian medical marijuana industry including Canadian Cannabis Corp, Cura-Can Health Corp., Maricann Group Inc., and The Hydropothecary Corporation. Mr. Steele was a previous director of Barkerville Gold Corp. Mr. Steele graduated from the University of Waterloo with a P.Eng (BASc) in civil engineering and received his MBA in 1981.

Alison Wright – proposed Director

Ms. Wright has over 20 years of experience in the construction and property management industries. Ms. Wright was a director of Capform Inc., a full-service concrete contractor based in Dallas, Texas, with projects throughout the southern United States. Currently, Ms. Wright is the President of Alwright Investments Inc., a Canadian property management and investment company she founded in 2012. Ms. Wright has served as a director on several boards of private companies in both Canada and the United States. Ms. Wright graduated from the University of Toronto in 1991 and holds a Bachelor of Science.

Kenneth Howling – proposed Director

Mr. Howling has over 25 years of healthcare industry experience in senior financial positions; including 11 years with Bausch Health (formerly Biovail Corporation), as Chief Financial Officer, and Senior Vice President, Finance and Corporate Affairs; five years as Chief Financial Officer of Acerus Pharmaceuticals Corporation; and five years as Chief Financial Officer with Pharma Patch PLC. During his career, Mr. Howling has contributed to the success of multiple start-up companies, taken companies through the IPO process, and has collectively raised over US$2.3 billion in various forms of capital.

Earlier in his career, Mr. Howling worked in senior financial management positions at Roberts Company Canada Limited, including roles of General Manager, Corporate Secretary and Controller, at GlaxoSmithKline (formerly Beecham Pharmaceuticals Ltd), and as an auditor with PricewaterhouseCoopers. Mr. Howling is a graduate of the ICD/Rotman Director Program and formerly a Certified Public Accountant (inactive license).

Renee John – proposed Vice President, Clinic Operations

Ms. John has over 20 years of experience in the healthcare industry in a variety of capacities and increasingly senior roles, including sales, business development, and operations. Prior to joining Pathway, Ms. John was Vice President of Operations for Agility Health. For over a decade, she previously served as Director, Western CDA Sales and Operations at Shoppers Home Health Care, a division of Shoppers Drug Mart, where she was responsible for a diverse six-figure portfolio. Ms. John holds an Executive MBA from the Ivey School of Business – University of Western Ontario.

Pram Sandhu – proposed Vice President, Pharmacy Programs and Regulatory Affairs

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Mr. Sandhu has over 20 years of experience in various facets of the healthcare sector. He is the former Vice President of Medical Operations and Business Optimization for National Access Cannabis Medical. Mr. Sandhu is also an active clinical pharmacist, who has a passion for developing innovative programs in regulated environments. In 2014, he was a recipient of the Trillium Health Partners Allied Health Professional Award. Mr. Sandhu holds a Professional Certificate in Cannabis Science and Medicine from the University of Vermont, Larner College of Medicine.

Sponsorship

Under the policies of the Exchange, the parties to the Transaction will be required to engage a sponsor for the Transaction unless an exemption or waiver from this requirement can be obtained. The Corporation expects that the Transaction will be exempt from the sponsorship requirement of the Exchange as a result of the Offering being undertaken in connection with the Transaction. There is no assurance that an exemption or waiver from this requirement can or will be obtained.

Trading Halt

The Colson Shares are currently suspended from trading for failing to complete a Qualifying Transaction within the required timeframe as prescribed by Exchange policies, and the trading of Colson Shares is expected to remain suspended pending completion of a Qualifying Transaction.

Additional Information

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

Neither the TSX Venture Exchange, Inc. nor its Regulation Services Provider (as that term is defined in the polices of the TSX Venture Exchange) has in any way passed upon the merits of the Transaction and associated transactions and neither of the foregoing entities accepts responsibility for the adequacy or accuracy of this release or has in any way approved or disapproved of the contents of this press release.

For further information, please contact:

Colson Capital Corp.
Murray Moore, CFO, Corporate Secretary and Director
Telephone: (403) 471-4039

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

Cautionary Statements

This news release contains “forward-looking information” within the meaning of applicable securities laws relating to the proposal to complete the Transaction and associated transactions, including statements regarding the terms and conditions of the Transaction and the Offering, the business plans and objectives of Pathway and the Resulting Issuer, expectations for other economic, business and competitive factors and approval of regulatory bodies. The information about TCNC and Pathway contained in the press release has not been independently verified by the Corporation. Although the Corporation believes in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because the Corporation can give no assurance that they will prove to be correct. 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, among other things, the risks that the parties will not proceed with the Transaction and the Offering; the Transaction, the Offering and associated transactions will differ from those that currently are contemplated; and that the Transaction, the Offering 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 terms and conditions of the Transaction may change based on the Corporation’s due diligence (which will be limited as the Corporation intends to rely upon the due diligence conducted by the Agent in connection with the Offering) and the receipt of tax, corporate and securities law advice for Colson, Pathway, TCNC and its parent holding entity. The statements in this press release are made as of the date of this release.

The common shares have not been and will not be registered under the United States Securities Act of 1933, as amended and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirement. 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 jurisdiction in which such offer, solicitation or sale would be unlawful.

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/73508