TORONTO, ON, December 22, 2022 – Pathway Health Corp. (TSXV: PHC) (Frankfurt: KL1) (“Pathway” or the “Corporation”) is pleased to announce it has entered into a non-binding letter of intent dated December 16, 2022 (“LOI”) whereby it is proposed that Pathway will acquire all of the issued and outstanding common shares of each of HEAL Global Holdings Corp. (“HEAL”) and The Newly Institute Inc. (“The Newly”) from their respective shareholders, in exchange for common shares in the capital of Pathway (“Shares”) currently intended to be by way of an arrangement (“Proposed Transaction”) pursuant to a plan of arrangement under the Business Corporations Act (Alberta).  It is expected that a definitive agreement for the Proposed Transaction, if agreed, executed and delivered among the parties, will provide for the Proposed Transaction to be subject to all necessary TSX Venture Exchange (“Exchange”), court and shareholder (including, as necessary, disinterested shareholder) approvals.

In connection with the Proposed Transaction it is proposed that the Shares will be consolidated on up to a 5-for-1 basis as a step in the plan of arrangement (the “Consolidation”).  As a result, it is expected that approximately 139 million post-Consolidation Shares will be issued by Pathway pursuant to the Proposed Transaction (which includes the payment of a structuring fee and other fees in Shares proposed to be issued to ADH (as defined below)), with the (a) former holders of (i) HEAL shares owning approximately 28% of the issued and outstanding Shares and (ii) The Newly shares owning approximately 38% of the issued and outstanding Shares; and (b) the current holders of Pathway Shares owning approximately 34% of the issued and outstanding Shares, in each case after giving effect to the Proposed Transaction (as currently proposed).

The Newly is an Alberta based private company, that pioneers an innovative approach to mental health treatment by fusing a bio-psycho-social-spiritual treatment model into medically managed intensive outpatient programs.  The Newly operates with an interdisciplinary team working together to care for the patient. The team includes psychiatrists, psychologists, nurses, pain doctors, addiction doctors, occupational therapists, social workers, physiotherapists and kinesiologists. The program takes a personalized approach to health and is directed at first responders, veterans, health care workers and other Canadians who are suffering with mental illness, chronic pain or addiction.

HEAL, a privately held company existing under the laws of the Province of Alberta, was established with the goal of becoming a global leader in personalized, curated healthcare.  Avonlea-Drewry Holdings Inc. (“ADH”), a related party to Pathway as its largest indirect beneficial shareholder, is also a majority shareholder of HEAL and a significant indirect shareholder of The Newly.  ADH has capitalized HEAL with $7.5 million, which will be used to support the Proposed Transaction and the continuing businesses of the resulting entity.  Each of ADH, HEAL and The Newly are non-arm’s length parties of Pathway.

In addition, in connection with the Proposed Transaction, ADH has agreed to restructure its $3.5 million loan to Pathway (the “Debt Settlement”) (see press release dated July 29, 2022) through the conversion of all the outstanding principal, accrued interest and fees into common shares of Pathway at a price of $0.15 per post-Consolidation Share (the “Settlement Shares”).  Assuming completion of the Consolidation, the Debt Settlement is expected to result in the issuance of approximately 27 million post-Consolidation Shares to ADH.  Upon issuance of the Settlement Shares, the total accrued obligations will be definitively extinguished.  The Settlement Shares are expected to be issued at the time of the closing of the Proposed Transaction, subject to shareholder and Exchange approval as well as execution of a definitive debt settlement agreement.

In addition to the Settlement Shares, the parties have agreed that ADH will receive a structuring fee payable in post-Consolidation Shares (the “Structuring Fee”), which is expected to result in an issuance of  approximately 6.6 million post-Consolidation Shares to ADH for substantially planning, arranging and implementing the Proposed Transaction.

To the extent that the payment of the Structuring Fee and completion of the Debt Settlement constitute related party transactions as defined under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions, Pathway intends to rely on available exemptions from the formal valuation and shareholder approval requirements. The shares issued upon payment of the Structuring Fee and on closing of the Debt Settlement will be subject to a statutory 4-month hold period. There are currently plans to pay finder’s fees or commissions in connection with the Debt Settlement.

“The recent acquisition of IRP and now the proposed merger with The Newly and HEAL, represents a strategic opportunity to create a leader in chronic pain, mental health and wellness with the resources to  scale and expand across Canada into a truly national inter-disciplinary clinical network, reaching more first responders, veterans, and other Canadians”, said Ken Yoon, Chief Executive Officer of Pathway Health.

The Company expects to announce additional details regarding the proposed business combination when a definitive agreement is executed, which is expected in Q1 2023.  No assurances can be made that the parties will successfully negotiate and enter into a definitive agreement, or that the Proposed Transaction will be consummated on the terms or timeframe currently contemplated, or at all.

About The Newly Institute

The Newly Institute Inc., a Calgary, Alberta based private company, believes mental health treatment is in drastic need of a paradigm shift. Their vision is to provide long-lasting change within the industry, community and patients. They have pioneered an intensive bio-psycho-social-spiritual treatment model that can be supplemented by medically managed psychedelic-assisted therapies when appropriate. Their medical professionals help patients overcome deeply embedded traumas, addiction and pain that are preventing them from living fully in their everyday lives. While their programs are based on evidence and data, the approach remains personal as it is vital that people feel safe as together the patient and The Newly do the difficult work necessary to achieve wellness.

The Company strives to become Canada’s largest and premier operator of inter-disciplinary mental health clinics.  They currently operate clinics in Calgary, Fredericton, and Edmonton with additional locations planned across Canada.

For more information, visit The Newly Institute’s website:

About HEAL

HEAL, a privately held company existing under the laws of the Province of Alberta, was established with the goal of becoming a global leader in personalized, curated healthcare.

Cautionary Note Regarding Forward Looking Statements

This news release includes certain “forward-looking statements” under applicable Canadian securities legislation, including statements with respect to the intention and timing of entering into a definitive agreement with respect to the Proposed Transaction and the completion thereof. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors that may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include but are not limited to: the ability of Pathway, HEAL and The Newly to negotiate satisfactory terms for, and to execute, a definitive agreement; the satisfaction of all conditions precedent to the completion of the Proposed Transaction, including receipt of all regulatory and shareholder approvals; the Company’s ability to continue as a going concern, general business, economic, competitive, political, and social uncertainties; delay or failure to receive applicable approvals; and the results of operations. 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. Pathway disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

For further information, please contact:

Robin Cook

Corporate Development

(416) 809-1738

[email protected]