Greenstone Capital RTO Target Announces Completion of $4.7 Million Convertible Debenture Financing and Launch of $5.0 Million Subscription Receipt Financing

Calgary, Alberta–(Newsfile Corp. – February 24, 2021) – Greenstone Capital Corp. (TSXV: GSGS.P) (the “Company” or “Greenstone“), a capital pool company (“CPC“) pursuant to Policy 2.4 of the TSX Venture Exchange (the “Exchange“), is pleased to announce that Comprehensive Healthcare Systems Inc. (“CHS“) has closed a non-brokered private placement of convertible debentures (the “Debentures“) for aggregate gross proceeds of approximately $4.7 million (the “Debenture Financing“). The Company is also pleased to announce that CHS and Greenstone have entered into an engagement letter with Richardson Wealth Limited (“Richardson Wealth“) to act as lead agent in respect of a brokered private placement of up to 16,666,667 subscription receipts of CHS (the “Subscription Receipts“) at a purchase price of $0.30 per Subscription Receipt (the “Concurrent Financing Offering Price“) for aggregate gross proceeds of up to $5.0 million (the “Subscription Receipt Financing“).

The Debenture Financing and the Subscription Receipt Financing have been undertaken in connection with the previously announced statutory merger between CHS and Greenstone Capital USA Inc., a wholly-owned subsidiary of the Company (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 TSX Venture Exchange (the “Exchange“)).

Debenture Financing

An aggregate principal amount of approximately $4.7 million of Debentures were issued in connection with the Debenture Financing. The Debentures mature on the date that is one year from the date of issuance (the “Maturity Date“) and bear interest at a rate of 10% per annum. In the event that the Proposed Transaction is completed prior to the Maturity Date, the outstanding principal amount and accrued interest thereon will automatically convert into units of CHS (the “Debenture Units“) at the option of the holder at a conversion price equal to the Concurrent Financing Offering Price less a discount of 20% per Debenture Unit. Each Debenture Unit shall be comprised of one (1) share in the common stock of CHS (a “CHS Share“) and one-half of one CHS Share purchase warrant (each whole CHS Share purchase warrant, a “Warrant“). Each Warrant shall entitle the holder to acquire an additional CHS Share at a price of $0.40 per CHS Share for a period of 24 months from the date of issuance.

In connection with the Debenture Financing, CHS paid cash finder’s fees in the aggregate amount of $380,108.15 to certain eligible finders (collectively, the “Finders“) and issued an aggregate of 708,769 finder’s warrants (the “Finder Warrants“) to the Finders. Each Finder Warrant entitles the holder to acquireone CHS Share at a price of $0.40 per CHS Share for a period of 24 months from the date of issuance.

Subscription Receipt Financing

CHS and Greenstone have entered into an engagement letter with a syndicate of agents led by Richardson Wealth and including Mackie Research Capital Corp., Echelon Wealth Partners Inc., INFOR Financial Inc. and Eventus Capital Corp. (collectively, the “Agents“) in respect of the Subscription Receipt Financing, which will be undertaken on a “best efforts” agency basis. It is currently contemplated that up to 16,666,667 Subscription Receipts will be offered at a purchase price of $0.30 per Subscription Receipt for aggregate gross proceeds of up to $5.0 million. The Company has also granted Richardson Wealth an option to increase the size of the Subscription Receipt Financing by up to an additional 2,500,000 Subscription Receipts. Each Subscription Receipt will entitle the holder to receive, without payment of any additional consideration and without further action on the part of each subscriber, subject to adjustment, one unit of CHS (a “Subscription Receipt Unit“) immediately prior to the completion of the Proposed Transaction in accordance with the terms of a subscription receipt agreement to be entered into between CHS and a subscription receipt agent (the “Subscription Receipt Agreement“), including the satisfaction or waiver of the escrow release conditions described in the Subscription Receipt Agreement, including Exchange approval for the Proposed Transaction.

Upon the closing of the Proposed Transaction, the Subscription Receipt Units issued upon the conversion of the Subscription Receipts will be automatically exchanged for one common share (a “Resulting Issuer Share“) in the capital of the Resulting Issuer (as defined in Exchange Policy 2.4) and one-half of one Resulting Issuer Share purchase warrant (each whole Resulting Issuer Share purchase warrant, a “Resulting Issuer Warrant“). EachResulting Issuer Warrant will entitle the holder to acquire one (1) additional Resulting IssuerShare at a price of $0.50 for a period of two years following the date of issuance. If, at any time following the issuance of the Warrants, the daily volume weighted average trading price of the Resulting Issuer Shares on the Exchange, or such other stock exchange on which the Resulting Issuer Shares are listed, is greater than $0.60 for the preceding five (5) consecutive trading days, the Resulting Issuer may, upon providing written notice to the holders of Warrants, accelerate the expiry date of the Warrants to the date that is 15 days following the delivery of such notice.

It is anticipated that proceeds of the Subscription Receipt Financing will be used to fund CHS’s product development, execute on potential acquisitions and for general working capital purposes. Closing of the Subscription Receipt Financing is expected to close on or about March 15, 2021.

CHS agreed to pay the Agents a cash fee equal to 7.0% of the proceeds raised in the Subscription Receipt Financing and to issue to the Agents broker warrants (the “Broker Warrants“) entitling the Agents to purchase a number of CHS Shares equal to 7.0% of the number of Subscription Receipts issued under the Subscription Receipt Financing at a price of $0.40 per CHS Share for a period of 24 months from the date of closing of the Subscription Receipt Financing.

Cautionary Note

Completion of the Subscription Receipt Financing is subject to a number of conditions including, without limitation, the receipt of all requisite regulatory and stakeholder approvals (including the approval of the Exchange), completion of due diligence and other conditions that are customary for financings of this nature.

Completion of the Proposed Transaction is subject to a number of conditions including, without limitation, the receipt of all requisite regulatory approvals (including the approval of the Exchange), the approval of certain matters by the shareholders of CHS and Greenstone and other conditions that are customary for transactions of this nature. 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 Greenstone on the Exchange, if reinstated prior to completion of the Proposed Transaction, should be considered highly speculative.

About Comprehensive Healthcare Systems Inc.

Comprehensive Healthcare Systems Inc. is a corporation incorporated under the laws of the state of Delaware. CHS is a vertically integrated software as a services (SaaS) company focused on digitizing healthcare with Telehealth and Healthcare Benefits Administration solutions, providing reliable and high-volume transaction capable systems. CHS’s state of the art NPS Novus Healthcare Welfare and Benefits Administration (HWBA) SaaS platform is used by clients for all aspects of healthcare benefit administration (including insurance companies, hospitals, doctors and labor unions, through various corporation in which the majority shareholder has controlling ownership), providing healthcare administrative software, licensing and maintenance services.

All information in this Press Release relating to CHS is the sole responsibility of CHS. Management of Greenstone has not independently reviewed this disclosure nor has Greenstone’s management hired any third party consultants or contractors to verify such information.

About Greenstone Capital Corp.

Greenstone is a CPC that completed its initial public offering and obtained a listing on the Exchange in August 2019 (trading symbol: “GSGS.P”). Prior to entering into the definitive agreement with respect to the Proposed Transaction, Greenstone did not carry on any active business activity other than reviewing potential transactions that would qualify as Greenstone’s Qualifying Transaction.

ON BEHALF OF THE BOARD OF DIRECTORS:

Mo Fazil
President, Chief Executive Officer, Chief Financial Officer and Director
Email: mfazil@lionparkcapital.com
Phone: (403) 613-7310

Disclaimer for Forward-Looking Information

This press release contains forward-looking statements and information that are based on the beliefs of management and reflect Greenstone’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 Subscription Receipt Financing and the Proposed Transaction, including Exchange approval and the closing of the Proposed Transaction. Such statements and information reflect the current view of Greenstone. 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 Subscription Receipt Financing will be completed or as to the amount of gross proceeds to be raised in connection with the Subscription Receipt Financing. 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; and,
  • there is no assurance that Greenstone and CHS will obtain all requisite approvals for the Subscription Receipt Financing or the Proposed Transaction or fulfill all the conditions and obligations required for the completion of the Subscription Receipt Financing or the Proposed Transaction Agreement, including the approval of the Exchange (which may be conditional upon amendments to the terms of the Subscription Receipt Financing or the Proposed Transaction).

There are a number of important factors that could cause Greenstone’s, CHS’s and the Resulting Issuer’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 Greenstone; disruptions or changes in the credit or security markets; disruption of results of operation activities and development of projects of CHS; unanticipated costs and expenses, and general market and industry conditions.

Greenstone cautions that the foregoing list of material factors is not exhaustive. When relying on Greenstone’s forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Greenstone 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.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS PRESS RELEASE REPRESENTS THE EXPECTATIONS OF GREENSTONE AS OF THE DATE OF THIS PRESS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE GREENSTONE MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME EXCEPT AS REQUIRED IN ACCORDANCE WITH APPLICABLE LAWS.

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.

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.