Cloud DX Announces $4.0 Million Private Placement of Secured Convertible Debentures with Opening Orders for $1.72 Million, Amendments to Existing Secured and Unsecured Convertible Debentures and Warrant Repricing

KITCHENER, ON / ACCESSWIRE / July 11, 2023 / Cloud DX Inc. (“Cloud DX” or the “Company“) (TSXV:CDX)(OTC:CDXFF), is pleased to announce its intention to complete a non-brokered private placement offering of up to 4,000 secured convertible debentures of the Company (the “Convertible Debentures“) at a price of $1,000 per Convertible Debenture for aggregate gross proceeds of up to $4.0 million (the “Offering“).

The Convertible Debentures will mature on the date that is 36 months from the date of issuance thereof (the “Maturity Date“) and shall bear interest at a rate of 18.0% per annum, payable upon the earlier of the conversion date or the Maturity Date. Subject to the approval of the TSX Venture Exchange (“TSXV“), accrued and unpaid interest shall be payable in the form of (i) common shares in the capital of the Company (the “Common Shares“) at a price per Common Share equal to the closing price of the listed Common Shares on the TSXV on the last trading day immediately prior to the Maturity Date or the conversion date, as applicable or (ii) cash, at the sole discretion of the Company.

The principal amount of the Convertible Debentures will be convertible into units of the Company (the “Units“), at the election of the holder of the Convertible Debentures, at any time prior to the Maturity Date, at a conversion price of C$0.10. Each Unit shall be comprised of one Common Share and one common share purchase warrant (the “Warrants“). Each Warrant will entitle the holder thereof to purchase one additional Common Share at a price of $0.15 per Common Share for a period of 36 months following the closing date of the Offering. The Warrants will be subject to an accelerated expiry provision that allows the Company to accelerate the expiry date of the Warrants to 15-days from delivery of such notice, in the event that the closing price of the Common Shares listed on the TSXV is greater than $0.30 for twenty (20) consecutive trading days.

The Convertible Debentures shall be secured against all present and after-acquired personal property of the Company, pursuant to a general security agreement (the “GSA“) and shall rank pari passu with all current holders of secured debentures of the Company, whether of the same issue or previous issue, as per the terms of the GSA, an intercreditor agreement and debenture indentures of the Company.

To demonstrate continued support of the Company’s growth plans, insiders of Cloud DX subscribed for an aggregate of 1,501 Convertible Debentures. B&M Miller Equity Holdings Inc., a company controlled by Brad Miller, a director of the Corporation, subscribed for 364 Convertible Debentures, Gaurav Puri, a director of the Corporation subscribed for 691 Convertible Debentures, and Constantine Zachos, a director of the Corporation, subscribed for 446 Convertible Debentures, for total gross proceeds of $1,501,000. Such participation is considered a related party transaction within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101“). The related party transaction is exempt from minority approval, information circular and formal valuation requirements pursuant to the exemptions contained in Section 5.5(a) and 5.7(1)(a) of MI 61-101, as neither the fair market value of Convertible Debentures issued to insiders in connection with the Offering nor the consideration paid by the insiders exceeds 25% of the Company’s market capitalization.

The Company anticipates using the net proceeds of the Offering for inventory and working capital. In connection with the Offering, the Company may pay a finder’s fee in cash or securities or a combination of both, as permitted by the policies of the TSXV. Closing of the Offering is expected to occur in one or more tranches, with the first tranche expected to close on or about July 18, 2023.

The Convertible Debentures and any securities issuable upon conversion thereof will be subject to a statutory hold period of four months and one day from the date of issuance of the Convertible Debentures. The Offering is subject to final approval by the TSXV.

The Convertible Debentures will be offered and sold by private placement in Canada pursuant to exemptions from the prospectus requirements under National Instrument 45-106 Prospectus Exemptions, and in certain other jurisdictions on a basis which does not require the qualification or registration of the securities issued pursuant to the Offering.

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. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended (the “1933 Act“) and may not be offered or sold to, or for the account or benefit of, persons in the United States or “U.S. persons” (as such term is defined in Regulation S under the 1933 Act) absent registration or an applicable exemption from the registration requirements of the 1933 Act any application state securities laws.

Amendments to 18% Secured Convertible Debentures

The Company is also pleased to announce that it has extended the maturity date of $1,990,000 of principal amount of secured convertible debentures of the Company (the “18% Secured Convertible Debentures“) issued on July 6, 2022 pursuant to a debenture indenture among the Company and Odyssey Trust Company (the “Trustee“) dated October 1, 2021, as amended and supplemented by a supplemental convertible debenture indenture dated January 27, 2022, by twelve months to July 6, 2024 (the “Maturity Extension“).

By way of an extraordinary resolution, holders of greater than 66.66% of the outstanding principal amount of the 18% Secured Convertible Debentures have approved the issuance of the Convertible Debentures which shall be secured against all present and after-acquired personal property of the Company, pursuant to the GSA and that shall rank pari passu with holders of the 18% Secured Convertible Debentures.

The Maturity Extension remains subject to receipt of final approval of the TSXV.

More information on the private placement offering pursuant to which the 18% Secured Convertible Debentures were issued can be found in the Company’s news release dated July 6, 2022.

Amendments to 10% Unsecured Convertible Debentures and 10% Debenture Warrants

The Company is also pleased to announce that it expects to make the following amendments to $4,207,000 of principal amount of unsecured convertible debentures (the “10% Unsecured Convertible Debentures“) issued pursuant to a debenture indenture among the Company and the Trustee dated October 1, 2021, as amended and supplemented by a supplemental convertible debenture indenture dated January 27, 2022:

• to increase the interest rate of $4,207,000.00 of principal amount of the 10% Unsecured Convertible Debentures from 10% per annum to 18% per annum;
• to amend the payment terms of the 10% Unsecured Convertible Debentures, such that interest shall be payable on the earlier of the conversion date and the maturity of the 10% Unsecured Convertible Debentures (as opposed to quarterly), subject to TSXV policies, in the form of (i) Common Shares at a price per Common Share equal to the closing price of the listed Common Shares on the TSXV on the last trading day immediately prior to the maturity date or the conversion date, as applicable or (ii) cash, at the sole discretion of the Company;
• to amend the conversion price of the 10% Unsecured Convertible Debentures from $0.35 to $0.15 per Common Share;
• to amend the terms of the 10% Unsecured Convertible Debentures to authorize the principal amount outstanding as at the maturity date, to be repaid by way of issuing Common Shares at a price per Common Share equal to the closing price of the listed Common Shares on the TSXV on the last trading day immediately prior to the maturity date; and
• to settle/capitalize all accrued and unpaid interest from January 1, 2023 to March 31, 2023 owed pursuant to the 10% Unsecured Convertible Debentures through the issuance of additional convertible debentures (the “PIK Debentures“) on the same terms as the 10% Unsecured Convertible Debentures (collectively, the “10% Unsecured Convertible Debenture Amendments“).

Furthermore, the Company expects to make the following amendments to 6,016,010 common share purchase warrants (the “10% Debenture Warrants“) issued together with the 10% Unsecured Convertible Debentures pursuant to a warrant indenture among the Company and the Trustee dated October 1, 2021 and a warrant indenture among the Company and the Trustee dated January 27, 2022:

• to amend the exercise price of the 10% Debenture Warrants from $0.50 to $0.19 (the “Proposed Exercise Price“); and
• to amend the terms of the 10% Debenture Warrants to include an accelerated expiry clause such that the exercise period of the 10% Debenture Warrants will be reduced to 30 days from notice thereof, if, for any ten consecutive trading days during the unexpired term of the 10% Debenture Warrants, the closing price of the Common Shares listed on the TSXV exceeds the Proposed Exercise Price by 25% or more (collectively, the “10% Debenture Warrant Amendments“).

The 10% Unsecured Convertible Debenture Amendments and the 10% Debenture Warrant Amendments remain subject to receipt of all necessary regulatory approvals, including the final approval of the TSXV. Upon receipt of the TSXV’s approval, the Company expects to enter into an amended and restated convertible debenture indenture with the Trustee and to enter into supplemental warrant indentures with the Trustee.

More information on the private placement offering pursuant to which the 10% Unsecured Convertible Debentures and the 10% Debenture Warrants were issued can be found in the Company’s news releases dated September 1, 2021, October 1, 2021, January 4, 2022, January 13, 2022, January 27, 2022, March 18, 2022 and April 14, 2022.

Certain insiders of the Company hold the 18% Secured Convertible Debentures, 10% Unsecured Convertible Debentures and 10% Debenture Warrants. As a result, the Maturity Extension, 10% Unsecured Convertible Debenture Amendments and the 10% Debenture Warrant Amendments constitute related-party transactions under MI 61-101. The Maturity Extension, 10% Unsecured Convertible Debenture Amendments and the 10% Debenture Warrant Amendments are exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 pursuant to sections 5.5(a) and 5.7(1)(a) of MI 61-101 as neither the fair market value of the 18% Secured Convertible Debentures, 10% Unsecured Convertible Debentures and the 10% Debenture Warrants held by insiders, nor the consideration provided therefore exceeds 25% of the Company’s market capitalization.

About Cloud DX

Accelerating digital healthcare, Cloud DX is on a mission to make healthcare better for everyone. Our Connected Health TM remote patient monitoring platform is used by healthcare enterprises and care teams across North America to virtually manage chronic disease, enable aging in place, and deliver hospital-quality post-surgical care in the home. Our partners achieve better healthcare and patient outcomes, reduce the need for hospitalization or re-admission, and reduce healthcare delivery costs through more efficient use of resources. Cloud DX is the co-winner of the Qualcomm Tricorder XPRIZE, 2022 Top Innovator by Canadian Business, a 2021 Edison Award winner, a Fast Company “World Changing Idea” finalist, and one of “Canada’s Ten Most Prominent Telehealth Providers.” Cloud DX is an exclusive partner to Medtronic Canada, Teladoc Health Canada, and Equitable Life of Canada.

For more information on Cloud DX (TSXV:CDX), please visit www.clouddx.com and see the Cloud DX Investor Site

Social Links:

Twitter: https://twitter.com/CloudDX
Facebook https://www.facebook.com/clouddxinc/
LinkedIn https://www.linkedin.com/company/cloud-dx/
Instagram https://www.instagram.com/cloud.dx/

For media inquiries please contact:

Cloud DX Marketing
888-543-0944
marketing@clouddx.com

For investor inquiries please contact:

Jay Bedard
Cloud DX Investor Relations
647-881-8418
jay.bedard@clouddx.com

Forward-Looking Information

This news release contains forward-looking statements and information within the meaning of applicable securities legislation. Often, but not always, forward-looking statements and information can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements or information involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements or information contained in this news release. In particular, this news release includes certain forward-looking statements concerning the timing and completion of the Offering, the use of proceeds of the Offering, receipt of TSXV and other regulatory approvals, the Maturity Extension, 10% Unsecured Convertible Debenture Amendments and the 10% Debenture Warrant Amendments.

Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information. In making the forward-looking statements in this news release, the Company has applied several material assumptions, including without limitation, information concerning the receipt of approval from the TSXV and holders of the 18% Secured Convertible Debentures, 10% Unsecured Convertible Debentures and 10% Debenture Warrants, the use of proceeds of the Offering, expected closing dates, and its ability to close the Offering.

Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. 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 and forward-looking information.

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 release.

SOURCE: Cloud DX Inc.

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