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CALGARY, Alberta, Jan. 19, 2021 (GLOBE NEWSWIRE) -- Roosevelt Capital Group Inc. ("Roosevelt") (TSXV: ROSV), a capital pool company, and Cloud DX, Inc. ("Cloud DX"), a leading provider of virtual care and remote patient monitoring solutions, are pleased to announce further details concerning the concurrent brokered private placement and additional updates on Roosevelt's proposed arm's length qualifying transaction (the "Transaction"), which were previously announced on May 1, 2020 and October 16, 2020.

Brokered Private Placement

Cloud DX has engaged Haywood Securities Inc. ("Haywood") and Echelon Wealth Partners Inc. (together with Haywood, the "Co-Lead Agents"), as co-lead agents on behalf of a syndicate of agents including INFOR Financial Inc. and Mackie Research Capital Corporation (the "Agents"), to act as agents on a "commercially reasonable efforts" basis in connection with a private placement offering of up to 10,000,000 subscription receipts (the "Subscription Receipts") at a price of $0.50 per Subscription Receipt (the "Offering Price") for aggregate gross proceeds of up to $5,000,000 (the "Offering"). The Offering will be completed through 12632926 Canada Ltd., a newly-created affiliate of Cloud DX ("Cloud FinCo") formed for the purposes of participating in the Offering and the Transaction.

The Agents have been granted an option (the "Agents' Option") to offer for sale up to 1,500,000 additional Subscription Receipts, on the same terms and conditions. The Agents' Option will be exercisable, in whole or in part, at any time up to 48 hours prior to the closing of the Offering.

Each Subscription Receipt will entitle the holder thereof to receive, without payment of any additional consideration or further action on the part of the holder, one unit of Cloud FinCo (a "Unit"). Each Unit will be comprised of one common share of Cloud FinCo (a "FinCo Share") and one-half of one transferable FinCo Share purchase warrant (each whole warrant, a "Warrant"). Each Warrant will entitle the holder thereof to purchase one FinCo Share (a "Warrant Share") at an exercise price equal to $0.65 per Warrant Share for a period of 24 months from the satisfaction of certain escrow release conditions and conversion of the Subscription Receipts in connection with the closing of the Transaction.

The Offering is being completed in conjunction with the Transaction, pursuant to which Roosevelt (the "Resulting Issuer") will acquire, directly and indirectly, all of the shares of Cloud DX in exchange for post-consolidation common shares of Roosevelt (the "Resulting Issuer Shares"). In connection with closing of the Transaction, all of the FinCo Shares and Warrants comprising the Units issued upon the conversion of the Subscription Receipts will be exchanged for Resulting Issuer Shares and transferable common share purchase warrants of the Resulting Issuer ("Resulting Issuer Warrants"), respectively, on a one for one basis in each case. The Resulting Issuer Warrants will have the same terms and conditions as the Warrants, including an exercise price of $0.65 per underlying Resulting Issuer Share, except they will entitle the holders thereof to purchase Resulting Issuer Shares in lieu of FinCo Shares.

Subscription funds received in connection with the Offering, less certain fees and expenses, will be held in escrow pending satisfaction of certain release conditions, such as the satisfaction or waiver of all conditions precedent to the completion of the Transaction and the receipt of all required shareholder and regulatory approvals related to the Transaction (including, without limitation, conditional approval of the TSX Venture Exchange (the "Exchange") of the Transaction and the listing of the Resulting Issuer Shares). In the event that the escrow release conditions are not satisfied on or prior to the date that is 120 days after the closing of the Offering, the escrowed subscription funds will be returned to subscribers in accordance with the terms of the subscription receipt agreement governing the Subscription Receipts.

Cloud FinCo has agreed pay the Agents a cash commission of 8.0% of the gross proceeds of the Offering (50% of which commission will be paid on the closing of the Offering and the remaining 50% of which commission will be deposited in escrow). Further, Cloud FinCo will issue to the Agents non-transferable broker warrants (each a "Broker Warrant") equal to 8.0% of the aggregate number of Subscription Receipts sold under the Offering. Each Broker Warrant will be exercisable at the Offering Price for a period of 24 months following satisfaction of the escrow release conditions. Cash consideration will be reduced to 3.0% for President's List subscriptions, and the number of Broker Warrants issued to the Co-Lead Agents will be reduced to 3.0% of the number of Subscription Receipts sold to President's List subscribers.

The net proceeds from the Offering are intended to be used for expansion of U.S. sales and marketing, scale up of Canadian operations, and the costs required to complete the Transaction.

The securities to be issued under the Offering will be offered by way of private placement in (i) certain of the provinces of Canada, (ii) the United States and (iii) such other jurisdictions as may be determined by Cloud FinCo, in each case, pursuant to applicable exemptions from the prospectus requirements under applicable securities laws. The Units to be issued under the Offering will be subject to an indefinite hold period under applicable securities laws. Upon completion of the Transaction, the Resulting Issuer Shares will not be subject to any statutory hold periods under applicable securities laws. The listing of the Resulting Issuer Shares remains subject to approval by the Exchange.

Transaction Updates

Non-Dilutive Co-Investments

In the preceding 12 months, Cloud DX has been the beneficiary of a number of non-dilutive funding agreements including: (i) a $1.75 million 'Supercluster' funding contract from the Next Generation Manufacturing Canada to create a new manufacturing centre at Cloud DX's Kitchener, Ontario facility and produce up to 10,000 units of Cloud DX's next generation Pulsewave® monitor; (ii) a $1.4 million co-investment by the Digital Technology Supercluster to fund the 'Stronger Together: Social Infrastructure and Community Health' project led by Curatio Inc., and specifically to deploy a patient engagement and coaching application, with monitoring by Cloud DX, to more than 2,000 Canadians by March 31, 2021; and (iii) a $300,000 grant from the National Research Council of Canada – Industrial Research Assistance Program to design a lower-cost iteration of the award-winning Vitaliti™ continuous vital sign monitor. None of the co-investments noted above are subject to repayment terms. Additional non-dilutive co-investments are expected in 2021.

Financial Update

Based on the unaudited financial statements of Cloud DX for the nine months ended September 30, 2020, Cloud DX had revenue of approximately $0.54 million (2019: $0.86 million), gross profit of approximately $0.13 million (2019: $0.69 million), and an operating loss of approximately $3.2 million (2019: $2.4 million), and as at September 30, 2020, Cloud had total assets of approximately $2.4 million (2019: $1.5 million) and total liabilities of approximately $5.0 million (2019: $2.9 million). The presentation currency in Cloud DX's financial statements is USD and the above figures are presented in CAD using a CAD/USD exchange rate of $1.32 based on the then prevailing rate on September 30, 2020.

Note Private Placement

In January 2021, Cloud DX completed the final closing of the non-brokered note private placement offering previously announced on October 16, 2020. In aggregate, Cloud DX raised aggregate gross proceeds of approximately US$3.7 million in the form of convertible secured promissory notes (the "Cloud Notes"), which mature 18 months from the date of issuance. Holders of Cloud Notes earn prime plus 10% per annum interest accrued and paid at maturity or conversion.  The Cloud Notes will be converted into common stock of Cloud DX ("Cloud Shares") in connection with the Transaction, as further described below.

Transaction Structure

Note Conversion

As of January 8, 2021, Cloud DX had outstanding Cloud Notes in the aggregate principal amount of approximately US$3.7 million (approximately C$4.7 million), entitling the holders thereof to acquire approximately 503,785 Cloud Shares based on a 20% discount to the deemed price of $11.67 per Cloud Share (based on a CAD/USD exchange rate of $1.28).

In connection with the Transaction each Cloud Note shall be converted pursuant to its terms into Cloud Shares, and the holders thereof will then participate in the Arrangement (as defined below) on the same basis as the other holders of Cloud Shares.

Arrangement

The Transaction will be completed by way of a court-approved plan of arrangement (the "Arrangement") pursuant to the Canada Business Corporations Act. Cloud DX has incorporated Cloud FinCo for the purpose of participating in the Transaction and the Offering. Following completion of the Transaction, Roosevelt, as the Resulting Issuer, will change its name to "Cloud DX Inc." or such other similar name as may be approved by Cloud DX.

Pursuant to the Arrangement:

• Cloud FinCo will purchase all of the issued and outstanding Cloud Shares, including Cloud Shares issued upon conversion of the Cloud Notes, in exchange for FinCo Shares on a basis of 22.3783 Finco Shares for each Cloud Share, following which Cloud DX will be a wholly-owned subsidiary of Cloud FinCo and all of the current shareholders of Cloud DX will become shareholders of Cloud FinCo on a proportionate ownership basis;
  
  
• Roosevelt, Cloud FinCo, and a newly formed Canadian subsidiary of Roosevelt ("Amalco") will complete a three-cornered amalgamation, pursuant to which Amalco and Cloud FinCo will amalgamate and exist as a wholly-owned subsidiary of Roosevelt, and each issued and outstanding FinCo Share will be exchanged for Resulting Issuer Shares on a one for one basis ("Exchange Ratio"). The Warrants will be exchanged for Resulting Issuer Warrants, having equivalent terms and conditions.
  

The Arrangement will be subject to various closing conditions, including receipt of court approval and Cloud FinCo shareholder approval.

In conjunction with the Arrangement, certain other securities of Cloud DX and Cloud FinCo, including the Broker Warrants issued in connection with the Offering, shall be exchanged for securities of the Resulting Issuer having equivalent terms and conditions.  All outstanding options of Cloud DX that are not exercised prior to completion of the Transaction shall be cancelled for no consideration in accordance with their terms.

Resulting Issuer – Share Capitalization and Funds Available

Share Capitalization

In connection with the completion of the Transaction, Roosevelt will complete a share consolidation on a 4.8123 for 1 basis.  Upon completion of the Transaction and assuming the Offering is completed for aggregate gross proceeds of $5,750,000, it is anticipated that there will be an aggregate of approximately 70.4 million Resulting Issuer Shares issued and outstanding (based on a CAD/USD exchange rate of $1.28).

Pro Forma Capitalization Table

Shareholders	Resulting Issuer Shares	Non-Diluted Percentage Ownership
Resulting Issuer Shares held by Roosevelt Shareholders(1)	3,740,415	5.3%
Resulting Issuer Shares held by former Cloud DX Shareholders	43,917,615	62.4%
Resulting Issuer Shares to be held by former holders of Cloud Notes(2)	11,273,849	16.0%
Resulting Issuer Shares to be held by subscribers under the Offering(3), (4)	11,500,000	16.3%
Total:	70,431,880	100%

Notes:
⁽¹⁾ Presented on a post-consolidation basis, assuming completion of Roosevelt's share consolidation on a 4.8123 for 1 basis.
⁽²⁾ Assumes conversion of the Cloud Notes into Cloud Shares prior to, and in connection with, completion of the Transaction.
⁽³⁾ Subscribers under the Offering will receive Subscription Receipts. Each Subscription Receipt will entitle the holder thereof to receive a Unit comprised of one FinCo Share and one half of one Warrant. As a result of the Transaction, each FinCo Share will be exchanged for a Resulting Issuer Share. In addition, each Warrant will be exchanged for a Resulting Issuer Warrant.
⁽⁴⁾ Assumes the full amount of the Offering is sold, including exercise of the Agents' Option.

The expected pro forma capitalization of the Resulting Issuer will also include the following dilutive securities: (i) up to 5,750,000 Resulting Issuer Warrants representing 6.7% of the total share capitalization of the Resulting Issuer on a fully-diluted basis (assuming the full amount of the Offering is sold, including exercise of the Agents' Option); (ii) up to 920,000 broker warrants of the Resulting Issuer (to be issued in exchange for the Broker Warrants) representing 1.1% of the total share capitalization of the Resulting Issuer on a fully-diluted basis (assuming the full amount of the Offering is sold, including exercise of the Agents' Option); (iii) 311,701 previously issued broker warrants of Roosevelt representing 0.4% of the total share capitalization of the Resulting Issuer on a fully-diluted basis; (iv) up to 7,043,188 options that will be reserved for issuance under the Resulting Issuer's option plan representing 8.2% of the total share capitalization of the Resulting Issuer on a fully-diluted basis; (v) 86,886 broker warrants of the Resulting Issuer (to be issued in exchange for previously issued finder's fee broker warrants of Cloud DX) representing 0.1% of the total share capitalization of the Resulting Issuer on a fully-diluted basis; and (vi) 600,000 restricted share units of the Resulting Issuer payable to an advisor of Cloud DX and 468,569 restricted share units of the Resulting Issuer payable as a finder's fee (to be issued in connection with the closing of the Transaction) representing in the aggregate 1.2% of the total share capitalization of the Resulting Issuer on a fully-diluted basis.

Funds Available

The funds to be available to the Resulting Issuer upon the closing of the Transaction are expected to be a minimum of approximately $5.6 million (assuming the Offering is completed for aggregate gross proceeds of $5,750,000), after taking into account the expected costs of the Transaction and the Offering. These funds are anticipated to be used towards expansion of U.S. sales and marketing and scale up of Canadian operations.

Unless otherwise indicated, all dollar amounts in this news release are in Canadian currency.

About Roosevelt Capital Group

Roosevelt Capital Group is a capital pool company that has not commenced commercial operations and has no assets other than cash. Except as specifically contemplated in the Exchange's CPC Policy, until the completion of its qualifying transaction, Roosevelt will not carry on business, other than the identification and evaluation of businesses or assets with a view to completing a proposed qualifying transaction.

For further information, please contact:

Bruce Bent, Chief Financial Officer
Roosevelt Capital Group Inc.
Telephone: (905) 567-3431
Email: bbent@msw.on.ca

About Cloud DX

Cloud DX is a leader in virtual healthcare and digital medicine with rapidly growing sales across North America. Our complete remote patient monitoring platform incorporates proprietary medical devices, mobile apps, clinical dashboards, artificial intelligence and EMR integration. Cloud DX now provides products and services to hospitals, healthcare providers and provincial health departments across North America. In 2020, Cloud DX was a co-recipient of the Roche COVID Challenge award, and is widely recognized for their ground-breaking med tech innovations, including winning the Qualcomm Tricorder XPRIZE Bold Epic Innovator Award, Fast Company magazine "World Changing Idea" and most recently a 2021 Edison Award nomination.

For further information, please contact:

Robert Kaul, Chief Executive Officer
Cloud DX, Inc.
Telephone: (888) 534-0944
Email: ceo@clouddx.com  

THE SECURITIES REFERRED TO HEREIN WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "1933 ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO A U.S. PERSON IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. The Exchange has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the content of this press release.

The information contained or referred to in this press release relating to Cloud DX has been furnished by Cloud DX. Although Roosevelt has no knowledge that would indicate that any statement contained herein concerning Cloud DX is untrue or incomplete, neither Roosevelt nor any of its respective directors or officers assumes any responsibility for the accuracy or completeness of such information.

Completion of the Transaction is subject to a number of conditions, including but not limited to, execution of a binding definitive agreement relating to the Transaction, court approval, Roosevelt and Cloud FinCo shareholder approval, completion of satisfactory due diligence, Exchange acceptance, receipt of requisite regulatory approvals, and if applicable pursuant to Exchange requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required court and shareholder approvals, and any ancillary matters thereto, are obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the 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.

Caution regarding Forward-Looking Statements

This news release includes certain forward-looking statements concerning Roosevelt, Cloud DX, and their respective businesses, which may include but are not limited to, statements with respect to the completion of the Transaction, the terms and timing on which the Transaction and the Offering are intended to be completed, the use of the net proceeds from the Offering, expectations regarding future non-dilutive co-investments in the Resulting Issuer, the ability to obtain regulatory, court and shareholder approvals in respect of the Transaction, including approval of the listing of the Resulting Issuer Shares, the expected name of the Resulting Issuer, the anticipated pro forma basic and fully-diluted capitalization of the Resulting Issuer, and the anticipated funds available to the Resulting Issuer upon completion of the Transaction. Forward-looking statements are can be identified by the use of words such as "plans", "is expected", "expects", "scheduled", "intends", "contemplates", "anticipates", "believes", "proposes", "estimates", 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. Such statements are based on the current opinions and expectations of management of each entity. The forward-looking events and circumstances discussed in this release, including completion of the Offering or the Transaction, may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the companies, including the risk that Roosevelt and Cloud DX may not obtain all requisite approvals for the Transaction, including the approval of the Exchange for the Transaction (which may be conditional upon amendments to the terms of the Transaction), economic factors, any estimated amounts, timing of the closing of the Offering, the use of proceeds, the equity markets generally, and risks associated with growth and competition. Although Roosevelt and Cloud DX have attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in the forward-looking statements herein, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statements can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made, and Roosevelt and Cloud DX undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

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