Protech Home Medical

  • Simplifying the Patient Experience!

  • 859-300-6455

    investorinfo@myphm.com

  • 1019 Town Drive

    Wilder, KY 41076

  •   9:00AM EST

PROTECH HOME MEDICAL CORP DISCLOSURE REGARDING CYBERSCAM INCIDENT

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES AND DOES NOT CONSTITUTE AN OFFER OF THE SECURITIES DESCRIBED HEREIN.

Cincinnati, Ohio – May 6, 2019 – Protech Home Medical Corp. (“Protech” or the “Company”) (TSXV: PTQ), a healthcare services company with operations in the United States, has been subject to a cyberscam breach of its email system.

The unlawful intrusion into one employee’s account, discovered on May 3, 2019, led to fraudulent banking information being relayed regarding a planned wire transfer of CAD $9.2 million toward the redemption of the Company’s 7.5% non-convertible unsecured subordinated debentures issued in August 2014 (the “Debentures”).

The Company has notified the appropriate authorities including the Royal Canadian Mounted Police (RCMP), the Canadian Centre for Cyber Security and local police in Canada, the Federal Bureau of Investigation (FBI) in the United States, and the Hong Kong Police Force and Hong Kong Joint Financial Intelligence Unit (JFIU). The Company is working with authorities to support their investigations and is making all attempts to recover the funds.

The Company has retained RoundTower Technologies LLC, a leading cybersecurity firm, which has moved to close the breach. RoundTower is conducting a comprehensive forensic review and ensuring the Company’s head office computer systems are secure moving forward.

While the potential loss associated with this fraud is significant, the Company’s financial position and operations are sound, and management is confident in its ability to continue to provide a high level of service to its clients. In this regard, the Company is pleased to be in a position to fully redeem the Debentures using a portion of its current cash on hand and US$2.7mm to be loaned to the Company by the Company’s CEO and Chairman, Gregory Crawford (the “Loan”). The Loan will mature 24 months from closing and shall bear interest at a rate equal to the United States Prime Rate per annum from the date of issue, payable semi-annually in arrears on the last day of June and December in each year. The Loan will be secured by the assets of the Company and will be fully redeemable, without bonus or penalty, at any time by the Company.

Following the redemption of the Debentures, the Company will have sufficient liquidity and working capital to operate the Company without interruption or change, and an otherwise healthy balance sheet.

“I am terribly disappointed with the occurrence of this cyberscam breach,” said Greg Crawford. “Although this loss, if realized, is a setback for the Company, given the work that we have done over the past several quarters, the Company’s operations and margins are unaffected by these events and our balance sheet will remain in a healthy overall position. I am also very pleased to support the Company with additional capital to enable us to redeem the Debentures and continue to make the substantial strides we have made since December 2017.”

The loan by Mr. Crawford is a “related party transaction” as defined under Multilateral Instrument 61-101 (“MI 61-101”). The transaction is exempt from the formal valuation approval requirements of MI 61-101 since none of the securities of the Company are listed on a prescribed stock exchange. The proposed transaction is exempt from the minority shareholder approval requirements of MI 61-101 since, at the time the transaction was agreed to, neither the fair market value of the transaction, nor the fair market value of the consideration for the transaction, insofar as it involves interested parties, exceeded 25% of the Company’s market capitalization.

While the Company is actively and aggressively taking all measures to recover the funds, there can be no assurance that one or more measures will result, or successfully conclude in a timely manner or at all. Additional information will be released by the Company as it occurs.



  Posted by:

PHM Admin