CALGARY, ABMay 27, 2022 /CNW/ – Pathway Health Corp. (TSXV: PHC) (“Pathway” or the “Company“) announces that it has issued a secured promissory grid note (the “Bridge Note“) to Avonlea-Drewry Holdings Inc. (the “Lender“) for available proceeds to the Corporation of up to Cdn.$1,000,000 (the “Loan“). The Loan has a term of 90 days from the date of issuance (the “Term“), and is secured against all of the assets of the Corporation, pledges of the shares of the Company’s subsidiaries and is supported by a secured guarantee of the Company’s wholly-owned subsidiary, Pathway Health Services Corp. The Corporation may draw on the available proceeds of the Loan from time to time during the Term, and any amounts outstanding under the Bridge Note shall bear interest of 15% per annum, payable with any outstanding principal at the end of the Term.

The Loan contains certain other customary financial and other covenants, and will be used for general working capital purposes. The Bridge Note is intended to provide immediate capital to the Company while it seeks additional sources of capital, which may include the future issuance of other debt or equity securities, including, without limitation, a formal credit facility, whether with the Lender or otherwise, to meet the Company’s long term capital needs.

The Bridge Note is not subject to any interest, fees, and bonuses, including cash bonuses, future bonuses, or bonus of common shares in the capital of the Company. The Lender is a company of which Mr. Michael Steele, Chairman of Pathway, and Ms. Alison Wright, a director of the Company, are directors, officers and shareholders (the “Insider Subscription“). The Insider Subscription is considered to be a “related party transaction” as defined under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101“). The Company has relied on exemptions from the formal valuation and minority shareholder approval requirements contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101 in respect of the Insider Subscription as the Company is not listed on certain specified markets and neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the Insider Subscription, insofar as it involved related parties, exceeded 25% of the Company’s market capitalization. The Company did not file a material change report more than 21 days before issuing the Bridge Note as the details of the above mentioned Insider Subscription were not settled until shortly prior to closing, and the Company wished to close on an expedited basis.

The Loan was approved by the members of the board of directors of the Company who are independent for the purposes of the Loan, being all directors other than Mr. Steele and Ms. Wright. No special committee was established in connection with the Bridge Note, and no materially contrary view or abstention was expressed or made by any director of the Company in relation thereto.

None of the securities sold in connection with the private placement will be registered under the United States Securities Act of 1933, as amended, and no such securities may be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This news 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.

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 proposed transaction and has neither approved nor disapproved the contents of this press release.

Cautionary and Forward-Looking Statements

This news release contains forwardlooking statements and forwardlooking information within the meaning of applicable securities laws. These statements relate to future events or future performance. All statements other than statements of historical fact may be forwardlooking statements or information. Forwardlooking statements and information are often, but not always, identified by the use of words such as “appear”, “seek”, “anticipate”, “plan”, “continue”, “estimate”, “approximate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe”, “would” and similar expressions.  More particularly and without limitation, this news release contains forward-looking statements and information concerning the use of proceeds of the  Bridge Note and the Company’s future financing activities. The forward-looking statements and information are based on certain key expectations and assumptions made by the Company.  Although the Company believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable in the circumstances, undue reliance should not be placed on the forward-looking statements and information because the Company can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed. These risks and uncertainties, include, but are not limited to the Company being unable to use the proceeds of the Bridge Note as described, legal or regulatory impediments regarding the Bridge Note, the Company defaulting on the Bridge Note leading to enforcement under the security, the proceeds being insufficient for the Company’s purposes, the Company’s inability to repay the Bridge Note at the end of the Term and the Company being unable to raise additional funds on terms acceptable to the Company or at all. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date hereof, and to not use such forward-looking information for anything other than its intended purpose. The Company undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law or the TSX Venture Exchange.

For further information: Pathway Health Corp., Robin Cook, Corporate Development, (416) 809-1738, [email protected]