Mr. Mike Seckler reports

EVOME SELLS SIMBEX R&D BUSINESS UNIT TO RIDDELL FOR $4.83M IN CASH; IMPROVES BALANCE SHEET, REDUCES BIODEX ACQUISITION DEBT

Evome Medical Technologies Inc. has reached an agreement with EB Sports Corp., the parent company of Riddell Sports Group, an industry leader in football helmet technology and innovation, to sell Simbex LLC, the company's research and development business unit, for approximately $4.83-million in cash. The proceeds will be used to pay down Simbex debt and reduce Evome's acquisition debt to the seller of its operating subsidiary Biodex Rehab Systems LLC, strengthening the company's balance sheet, as well as increasing focus on revenue and profit growth from the Biodex product line.

This focus on revenue growth and market expansion has led Biodex to launch a new, high-tech product called the RST (reactive step trainer). The RST was launched by the company at the American Physical Therapy Association Combined Sections Meeting in Boston on Feb. 15, 2024. The RST is designed to improve balance and reduce tripping and falling, particularly among elderly patients. The reactive step trainer can provide repetitive conditioning training along with random and on-demand perturbation challenges, designed to help patients improve their compensatory step strategies and reduce fall risk. It has been meticulously engineered to be cost-effective, ensuring accessibility to a wider range of patients, while also prioritizing functionality to effectively cater to the clinical requirements of physical therapists.

Looking ahead, Evome plans to continue its innovation with the upcoming launch of the Spacetek Knee in late 2024. This isokinetic device, co-developed with NASA, represents another milestone in Evome's commitment to advancing medical technology and improving patient outcomes while improving margins and increasing sales by democratizing its technology to a broader market.

"Since July of 2023, I have worked tirelessly with our team to turn the company around," said Mike Seckler, chief executive officer. "We started with a focus on increasing revenues and margins, which led to two consecutive quarters of positive Adjusted EBITDA. In the first quarter of the year we have focused on two strategic imperatives. First, we are reducing debt and improving our balance sheet by selling non-core business units. We will work towards continuing to make progress on our balance sheet in the second quarter. Second, we have retooled our production platform to deliver on increasing demand from our Biodex products. I believe that we have the potential to have a breakout second quarter of this year in terms of Biodex products and improvement of the balance sheet."

Pursuant to a membership interest purchase agreement signed and dated April 1, 2024, between an indirect wholly owned subsidiary of the company, the buyer and the company, the buyer has acquired all of the issued and outstanding capital stock of Simbex from the seller in consideration for$3,550,000 (U.S.) (approximately $4.83-million) in cash. The gross proceeds will reduce senior debt of Simbex by $824,441 (U.S.) upon closing and acquisition debt of the Evome associated with its acquisition of Biodex by $2,115,559 (U.S.), with the remainder of funds used for transaction costs and debt reduction to subordinated and unsecured creditors.

As a result of the sale, Evome expects a reduction in annual revenue of around $6-million (U.S.). Net income is expected to decrease immaterially.

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