Dynamo Capital and Carespan Sign Definitive Agreement
NOT FOR DISTRIBUTION TO UNITED STATES WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES.
VANCOUVER, BC / ACCESSWIRE / August 4, 2021 / Dynamo Capital Corp. (TSXV:DDD-P.VN) (the " Company " or " Dynamo "), a capital pool company (" CPC ") pursuant to Policy 2.4 of the TSX Venture Exchange (the " Exchange "), is pleased to announce that, further to the letter of intent entered into on December 23, 2020 (the " LOI ") with CareSpan Holdings, Inc. (" CareSpan "), it has entered into a binding merger agreement and plan of reorganization dated August 4, 2021 (the " Merger Agreement ") with CareSpan and Dynamo Subco, Inc., a wholly-owned subsidiary of the Company, in respect of a statutory merger under the Delaware General Corporation Law (the " Proposed Transaction "). The Proposed Transaction is intended to constitute the Company's "Qualifying Transaction" (as such term is defined in Policy 2.4 of the Exchange) and result in a reverse takeover of the Company by CareSpan.
As the Proposed Transaction is not a "Non-Arm's Length Qualifying Transaction" (as such term is defined in Policy 2.4 of the Exchange) the approval of the shareholders of the Company is not required for the Proposed Transaction; however, certain ancillary matters described below will require the approval of shareholders of the Company, including (a) the consolidation of the issued and outstanding common shares (the "Dynamo Shares" ) in the capital of the Company on the basis of 4.66667 pre-consolidated Dynamo Shares for each one (1) post-consolidation Dynamo Share as a condition of the Proposed Transaction (the "Dynamo Consolidation" ); (b) the amendment to the Company's articles to amend the rights and restrictions applicable to the Dynamo Shares (as defined herein) and to create a new class of restricted voting securities (the " Share Amendment "); (c) an amendment to the articles of the Company to change the name of the Company to "CareSpan Holdings, Inc." or such other name as CareSpan may determine (the "Name Change" ); and (d) an increase in the number of directors of the Company from three (3) to five (5). A notice of meeting and information circular pertaining to such matters will be provided to holders of Dynamo Shares (the " Dynamo Shareholders ") in due course.
Upon completion of the Proposed Transaction, it is the intention of the parties that the Company (the Company after the Proposed Transaction being referred to herein as the " Resulting Issuer ") will continue to carry on the business of CareSpan, being that of a healthcare technology and services company (Industry Segment: "Industrial or Technology or Life Sciences").
Private Placement Offering
In connection with the Proposed Transaction, CareSpan has entered into an engagement agreement dated April 6, 2021 with Canaccord Genuity Corp and Canaccord Genuity LLC (the "Agent" ) in connection with a brokered private placement offering for aggregate gross proceeds of up to CDN$6,510,000 (the "Concurrent Brokered Offering "). It is anticipated that the Concurrent Brokered Offering will be undertaken by the Agent on a "commercially reasonable best efforts" basis by way of a private placement of subscription receipts of CareSpan (the " Subscription Receipts ") at a price of CDN$0.70 per Subscription Receipt (the " Offering Price "). Each Subscription Receipt will, pursuant to its terms (without any action required from the holder thereof), be deemed exercised for 3.31961 common shares in the capital of CareSpan (a "CareSpan Share" ) immediately prior to the completion of the Proposed Transaction, ultimately resulting in the exchange of Subscription Receipts for common shares of the Resulting Issuer on a one-for-one basis (the " Subscription Receipt Conversion "). Subscription funds received in connection with the Concurrent Brokered Offering will be held in escrow pending closing of the Proposed Transaction and subject to the satisfaction of certain escrow release conditions (the " Escrowed Proceeds "), which shall include Exchange conditional approval of the Proposed Transaction. If the Proposed Transaction does not close, such subscription funds will be returned to subscribers with pro rata interest in accordance with the terms of the subscription receipt agreement governing the Subscription Receipts. The Concurrent Brokered Offering is anticipated to close on or about August 5, 2021.
It is intended that the net proceeds of the Concurrent Brokered Offering will be used for sales, marketing, hiring of additional personal and general corporate and working capital purposes of the Resulting Issuer.
Additionally, CareSpan intends to issue CareSpan Shares (" Issuer Directed Securities ") at a price of $0.70 per CareSpan Share. The proceeds from the sale of the Issuer Directed Securities will not form part of the Escrowed Proceeds but will be made immediately available to CareSpan upon delivery by the purchasers of the Issuer Directed Securities.
Pursuant to the sale of the Issuer Directed Securities, the Company intends to issue 1,833,563 CareSpan Shares for gross proceeds of CDN $1,283,494.10 to fund the Company's general working capital purposes.
In connection with the Concurrent Brokered Offering, the Agent will be paid a cash commission equal to 8% of the gross proceeds raised, (the " Cash Fee ") and be issued such number of broker warrants (the " Broker Warrants ") as is equal to 8% of the Subscription Receipts sold under the Concurrent Brokered Offering, with the exception of investors identified on a president's list in which case the Cash Fee payable and the number of Broker Warrant issuable shall be reduced to 4% of the number of Subscription Receipts sold to investors on such list. Each Broker Warrant will entitle the holder to acquire a Resulting Issuer Share at the Issue Price for a period of twenty-four months following the completion of the Proposed Transaction. As additional consideration for the services of the Agent, the Company shall pay to the Agent a financial advisory fee by way of the issuance to the Agent of 55,007 Subscription Receipts, and issue an additional 55,007 advisory warrants on the same terms as the Broker Warrants.
Convertible Note and Issuer Directed Securities
On July 13, 2021, CareSpan, as the borrower, entered into a convertible note agreement with Rembert, de Villa, as the lender in the amount of US$400,000 with interest accruing at a rate of 10% per annum (" Convertible Note "). Pursuant to the terms of the Convertible note, the principal amount then outstanding, together with all accrued but unpaid interest thereon (the " RTO Conversion Amount ") shall be automatically converted into that number of CareSpan Shares (pre-merger pursuant to the Proposed Transaction) as is equal to the RTO Conversion Amount divided by the Offering Price.
Summary of the Qualifying Transaction
The Merger Agreement contemplates Dynamo and CareSpan undertaking a statutory merger under the Delaware General Corporation Law whereby all of the issued and outstanding CareSpan Shares (including the Issuer Directed Securities) will be exchanged for securities of the Resulting Issuer on the basis of 0.30124 Resulting Issuer securities for each CareSpan security. Following completion of the Proposed Transaction, the current securityholders of CareSpan will own a majority of the issued and outstanding common shares in the capital of the Resulting Issuer (the " Resulting Issuer Shares ") and CareSpan will become a wholly-owned subsidiary of the Resulting Issuer.
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) the completion of the Concurrent Brokered Offering; (ii) the completion of the Dynamo Consolidation, the Share Amendment and the Name Change; (iii) the approval by the directors and shareholders (if required) of Dynamo and CareSpan; and (iv) the receipt of all requisite regulatory, stock exchange, or governmental authorizations and consents, including the Exchange. Subject to satisfaction or waiver of the conditions precedent referred to herein and in the Merger Agreement, Dynamo and CareSpan anticipate the Proposed Transaction will be completed on or before September 15, 2021. There can be no assurance that the Proposed Transaction will be completed on the terms proposed above or at all.
Each of Dynamo and CareSpan will bear their own costs in respect of the Proposed Transaction.
In connection with the Proposed Transaction, the Company shall pay a finder's fee to Asia Management Inc., Albion Advisors Inc., and Antera Inc. (the " Finders ") in the amount of $450,000 payable in the form of 3,000,000 pre-Dynamo Consolidation Dynamo Shares. The payment of the finder's fee is to compensate the Finders of the introduction of Dynamo to CareSpan. Payment of the finder's fee is subject to Exchange acceptance.
Sponsorship of the Qualifying Transaction
Sponsorship of a "Qualifying Transaction" of a CPC is required by the Exchange unless the Proposed Transaction qualifies for exemptions therefrom in accordance with the Exchange's policies. Given the size and nature of the Proposed Transaction, including the amount of the Concurrent Brokered Offering, the Company intends to seek exemption or apply for a waiver from the sponsorship requirements pursuant to the policies of the Exchange. If the proposed Transaction does not qualify for an exemption or a waiver is not granted by the Exchange, then the Company would be required to engage a sponsor.
At the Company's request, trading in Dynamo's Shares was halted by the Exchange on April 6, 2020. Trading is expected to remain halted until, at the earliest, the completion of the Proposed Transaction.
Upon completion of the Proposed Transaction, it is anticipated that all of the existing directors and officers of Dynamo, will resign and the management and Board of Directors of the Resulting Issuer will include the persons identified below:
Rembert de Villa - Chief Executive Officer and Vice-Chairman
Mr. de Villa assumed the role of CEO of CareSpan in August 2018. He joined the CareSpan Board in December 2017. Prior to CareSpan, Rembert was Executive Vice-President of EXL Service Holdings, a leading analytics and operations management company, and was Global Business Leader of EXL Healthcare. He held various leadership roles during his ten years at EXL, including Chief Strategy Officer and Global Head of Transformation (data analytics and operations consulting). Prior to EXL, Rembert had a career in management consulting, holding senior leadership roles at Mastercard Advisors, Capgemini Ernst & Young, A.T. Kearney and Andersen Consulting (now Accenture). He is Senior Adviser to the Philippine-American Chamber of Commerce in New York, where he served as Chairman of the Board for over three years.
Anne Burpee - Interim Chief Financial Officer
Ms. Burpee is a bilingual Chartered Professional Accountant (CPA CMA) with more than 25 years of senior corporate leadership experience in the areas of finance, operations, corporate strategy, and change management. She has served as a financial executive for several large and small publicly traded companies where she earned a reputation as a strategic leader with strong execution and communication skills. Previous employers where Ms. Burpee has worked in a senior capacity include AON Hewitt, Global Aerospace Underwriting Managers, South Western Insurance Group, Canadian Tire, and Sears Canada. Ms. Burpee is a graduate of McGill University and holds a CPA CMA designation in Ontario. In 2014, she launched a successful consulting practice providing financial and CFO services to both private and public companies. In addition, she is a financial literacy volunteer for CPA Canada, a member of the Accounting Program Advisory Committee at Humber College, and a part-time professor at Centennial College.
Terry R. Knapp, MD - Founder, Chief Medical Officer and Director
Dr. Knapp is a Stanford-trained, U.S. board-certified surgeon with a 40-year history of multinational care delivery. He is an accomplished medical device and medical services entrepreneur and corporate executive, co-founder of Collagen Corporation, and several other private and public companies, and has served in numerous executive roles and board of director positions. He has authored 15 U.S.-issued and many foreign patents in the field of medical devices and medical information technology, and has written numerous peer-reviewed medical publications, editorials and book chapters. He is former CEO of a publicly traded, diverse medical device and information technology company and was a founding member of the Board of the Bard Center for Entrepreneurship Development at the University of Colorado, Denver.
Douglas Wolfgram - Chief Technology Officer
Mr. Wolfgram joined CareSpan in January 2014 as Chief Technology Officer. Mr. Wolfgram brings 25 years' experience in developing interactive communications technology products for major clients such as Toshiba Medical, Hitachi Data Systems, NEC, AT&T and Beckman/Coulter together to create an integrated digital health platform. Previously, Mr. Wolfgram managed the Health Sites project of over 200 dedicated health information sites for MoreFocus Group. Inc. MoreFocus was acquired by LendingTree in 2012 and became HealthTree. Today, he works as a mentor to entrepreneurial students at Cal State Fullerton and speaks publicly on Digital Health Technologies. Mr. Wolfgram holds degrees in Engineering-Physics and Mathematics from Oregon State University.
JoEllen Koerner - Chief Nursing Officer
JoEllen Koerner is an author, editor, speaker, researcher, educator and nurse executive leader well known for her efforts to foster high standards in nursing. She is a former President of the American Organization of Nurse Executives and recipient of the Lifetime Distinguished Service Award from the AONE Institute for Patient Care Research & Education. Dr. Koerner has had extensive executive level management/leadership experience in health care administration, education, regulation, & e-commerce. She has written three books, numerous articles and also served as Editor or Board Advisor on multiple nursing journals; Nurse Week, Nursing Administration Quarterly, Nursing Outlook, Journal of Nursing Administration, Journal of Nursing Education, Nursing Spectrum and Journal of Professional Nursing. JoEllen has also served on many national Advisory Boards including, Robert Wood Johnson, Johnson & Johnson, PEW Health Professions, National Commission on Nursing Implementation Project, Picker Institute, Fetzer Institute, HillRom Center for Nursing Leadership, Community-Campus Partnerships for Health, International Center for Nursing, American Academy of Nursing, and American Association of Colleges of Nursing. International consultation included countries such as New Zealand, Australia, Philippines, Pine Ridge Reservation and the Ministry of Health, Prague, Czechoslovakia. Her international and voluntary work is currently focused on workforce development for underrepresented sectors of society.
John Reardon - Director, Chairman of the Board
Mr. Reardon joined the CareSpan board in early 2020 as a strategic advisor. Mr. Reardon is an accomplished healthcare executive, entrepreneur and investor working at the forefront of digital health and telemedicine. For the past 20 years he has produced exceptional outcomes for three private equity/venture capital funds focused primarily on digital health/telemedicine and technology-enabled healthcare services. His experience includes working with TelaDoc (NYSE:TDOC), Advanced ICU Care, Progeny Health, ArroHealth (acquired by CIOX Health) , Acclaris (acquired by Willis, Towers, Watson NASDAQ: WLTW), HealthMedX (acquiredbyNetsmartTechnologiesNASDAQ:NTST) and Aethon (acquiredbyOTCMKTS:SGGKF). Today, he works directly with growth stage digital health companies providing strategy and fund-raising assistance. Mr. Reardon holds an MBA from the Anderson School at the University of California, Los Angeles and holds BS Degrees in History and Economics from Arizona State University.
Holger Micheel-Sprenger - Director
Mr. Micheel-Sprenger is a Partner and the CEO of ICME, a leading management consulting firm with a European outlook and philosophy. Within the last 25 years of experience of management and consulting in the healthcare sector, Mr. Micheel-Sprenger has been representing senior management positions in leading German healthcare companies and providers. He also is the Managing Director of ICME Healthcare GmbH. His management skills and expertise include corporate strategies and development, interdisciplinary project management, process management and technical management of hospitals. He has held Executive Director level positions in a number of medical industry and health services companies and also served as a Managing Director of a 600-bed hospital. He has been involved in consulting and management programs at various health institutions, government entities and hospitals around the world regarding strategy development and organizational and efficiency improvements. Mr. Micheel-Sprenger established and directs consulting and management services within ICME International Group at a regional and global level. Mr. Micheel-Sprenger holds Master Degrees in Industrial Engineering and Business Administration from Nordakademie University Hamburg, Germany.
Carl Farrell - Director
Mr. Farrell is an experienced board member and advisor with over 30 years of global management expertise guiding large and small organizations through growth and transformation. Most recently, Mr. Farrell was the Group President of commercial real-estate leader Altus Group (TSX:AIF.TO) where he also served as an independent director on the company's Board. Prior to that, he was the Chief Revenue Officer and Board Member of SAS Institute, a global leader in data and analytics, overseeing 7,000+ staff and a P&L of more than $3bn. Before his 15-year tenure at SAS, Mr. Farrell held senior management positions at Vignette Corporation, J.D Edwards, Idiom Technologies, and JBA. Today, Mr. Farrell is a Board Member of enterprise financial software company Basware Corporation (HEL:BAS) and acts as a strategic advisor to other technology companies in Europe and North America. Originally from England, Mr. Farrell currently resides in Toronto, Canada, and studied at Wulfrun College in Wolverhampton England.
James Becker - Director
Mr. Becker brings to CareSpan insight and expertise from a distinguished career in health insurance operations and services. Since 2008, he held multiple executive roles at UnitedHealth Group (NYSE:UNH) with extensive experience leading multi-billion-dollar Commercial and Government lines of business. His most recent role was President of Optum Global Solutions, a team of 43,000 delivering services and technology in healthcare globally. Prior to this, he served as Chief Operating Officer, UnitedHealthcare Medicare and Retirement, supporting more than 12 million seniors and Medicare beneficiaries and generating $70 billion in revenues. Mr. Becker has served on the Boards of Optum Global Solutions, India, Optum Global Solutions, Philippines, XL Health, India, and Optum Solutions, Ireland. Previously, he served on the Boards of UnitedHealthcare Insurance Corporation and Harken Health. Additionally, Jim serves on The University of Michigan Precision Health National Advisory Board and The University of Minnesota School of Medicine Board of Visitors, as well as the advisory board for Ooda Health. Mr. Becker earned an MBA from the Wharton School at the University of Pennsylvania and a BBA from the Stephen M. Ross School of Business at the University of Michigan.
CareSpan is a healthcare technology and services company incorporated in Delaware. CareSpan's proprietary "Clinic-in-the Cloud" is a clinical workflow driven platform designed by doctors that integrates remote patient monitoring, diagnostic tools, the patient's electronic health record, care collaboration capabilities, patient engagement and e-prescribing and lab ordering. CareSpan's platform seamlessly supports both in-person and virtual/telehealth care. CareSpan is using this platform combined with essential business services to build provider networks across the U.S. that deliver primary and urgent care as well as behavioral health. To date, CareSpan has over 60 practitioners across its two networks. CareSpan's vision is to broaden access and improve the quality of healthcare by empowering independent practitioners with leading edge digital healthcare technologies and services. CareSpan's technology-enabled business model allows independent practitioners to focus on providing patient care without the administration burden of running an independent practice. CareSpan generates revenue from multi-year contracts with providers in the network.
The contracted and recurring nature of its business model provides for strong revenue visibility. CareSpan is in the process of completing its audited financial statements in accordance with International Financial Reporting Standards (IFRS), as required by the policies of the TSXV and applicable securities laws.
Selected Financial Information
The following table sets out selected financial information of CareSpan for the periods, and as of the dates, indicated. The selected financial information has been derived from the consolidated audited financial statements for the years ended December 31, 2020 and December 31, 2019.
As at December 31, 2020 ($USD)
As at December 31, 2019 ($USD)
|Current Assets|| |
|Total Assets|| |
|Current Liabilities|| |
|Total Liabilities|| |
|Total Shareholder's Deficiency|| |
Year Ended December 31, 2020 ($USD)
Year Ended December 31, 2019 ($USD)
|Total Operating Expenses|| |
|Net Loss|| |
About Dynamo Capital Corp.
Dynamo is a capital pool company created pursuant to the policies of the Exchange. It does not own any assets, other than cash or cash equivalents and its rights under the LOI. The principal business of Dynamo is to identify and evaluate opportunities for the acquisition of an interest in assets or businesses, once identified, and evaluated, to negotiate an acquisition or participation subject to acceptance by the Exchange so as to complete a Qualifying Transaction in accordance with the policies of the Exchange.
As noted above, completion of the Proposed Transaction is subject to a number of conditions including, without limitation, approval of the Exchange, approval of certain matters by the shareholders of CareSpan and Dynamo and completion of the Concurrent Brokered Offering. 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 Dynamo on the Exchange, if reinstated prior to completion of the Proposed Transaction, should be considered highly speculative.
ON BEHALF OF THE BOARD OF DIRECTORS:
For further information, please contact:
Chief Executive Officer and Chief Financial Officer Telephone: 604-602-0001
Disclaimer for Forward-Looking Information
This press release contains forward-looking statements and information that are based on the beliefs of management and reflect Dynamo'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 Dynamo, CareSpan, and the Resulting Issuer, the Concurrent Brokered Offering and the Proposed Transaction (including Exchange approval and the closing of the Proposed Transaction). Such statements and information reflect the current view of Dynamo. 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 Brokered Offering will be completed or as to the actual offering price or gross proceeds to be raised in connection with the Concurrent Brokered Offering. 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 Dynamo and CareSpan 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); 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 Dynamo'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 Dynamo; 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.
Dynamo cautions that the foregoing list of material factors is not exhaustive. When relying on Dynamo's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Dynamo 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.
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, and if applicable pursuant to Exchange 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 Proposed Transaction will be completed as proposed or at all.
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 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.
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.
SOURCE: Dynamo Capital Corporation