WELL HEALTH TECHNOLOGIES CORP. EARLY WARNING NEWS RELEASE

VANCOUVER, BC, Feb. 1, 2024 /PRNewswire/ – WELL Health Technologies Corp. (“WELL”), of 550-375 Water Street, Vancouver, B.C., V6B 5C6, issues this press release as required by National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues and National Instrument 62-104 – Take Over Bids and Issuer Bids with respect to the acquisition of securities in HEALWELL AI Inc. (the “Company”), of 4881 Yonge Street, Suite 300, Toronto, Ontario, M2N 5X3.

On January 25, 2024, the Company and WELL entered into a share purchase agreement (the “SPA”), pursuant to which WELL agreed to sell all of the issued and outstanding shares of its subsidiary, Intrahealth Systems Limited (“Intrahealth”), to the Company for total consideration of approximately $24.2 million (the “Transaction”).

On February 1, 2024 (the “Closing Date”), the Company and WELL closed the Transaction (the “Closing”). Upon Closing, Intrahealth became a wholly-owned subsidiary of the Company and WELL received consideration comprised of: (i) approximately $3,600,000 paid in cash; (ii) 21,682,465 Class A subordinate voting shares of the Company (each, a “Class A Share”); (iii) a deferred purchase amount of $641,667 (“Deferred Purchase Amount”), which, at the discretion of the Company, may be satisfied by issuing Class A Shares to WELL at a price which is equal to the volume weighted average trading price of the Class A Shares (the “VWAP”) on the Toronto Stock Exchange (the “TSX”). The VWAP will be calculated by dividing the total value by the total volume of the Class A Shares traded on the TSX for the five trading days immediately preceding the applicable date; and (iv) five unsecured, non-interest bearing, convertible promissory notes in the principal amount of $1,000,000 each for an aggregate principal amount of $5 million (the “Notes”). The Notes incur default interest of 18% per annum. The maturity date of the Notes (the “Maturity Date”) are staged to become due in two month intervals (due on the first day of the month that is the second, fourth, sixth, eighth, and tenth month from the Closing Date respectively). Notwithstanding the foregoing, WELL may elect, in its sole discretion, to extend the maturity date of any or all Notes by an additional 60 days upon notice to the Company. The payment date of the Deferred Purchase Amount is contingent upon the occurrence of certain payment obligations of WELL under a share purchase agreement between WELL and the former shareholders of Intrahealth dated as of March 7, 2021 which becomes due in May 2024.

At any time before five business days from the Maturity Date of a particular Note, WELL may elect, in its sole discretion, to convert on the Maturity Date all or any portion of the Note into such number of Class A Shares by the conversion price which is equal to the VWAP on the TSX. The VWAP will be calculated by dividing the total value by the total volume of the Class A Shares traded on the TSX for the five trading days immediately preceding the applicable date.

Immediately prior to the Closing and exclusive of the Call Option (as defined below), WELL directly owned and controlled 41,270,833 Class A Shares, comprised of: (i) 958,333 Class A Shares held directly, (ii) 20,000,000 Class A Share purchase warrants (each, a “Warrant”) held directly, each of which is exercisable into one Class A Share a price of $0.20 per Class A Share until October 1, 2028, (iii) 312,500 Warrants held directly, each of which is exercisable into one Class A Share at a price of $1.20 per Class A Share until December 22, 2026, and (iv) $4,000,000 principal amount convertible debentures (the “Convertible Debentures”) held directly, convertible into Class A Shares at a price of $0.20 per Class A Share at any time or from time to time, prior to October 1, 2028, or 20,000,000 Class A Shares (this amount is exclusive of any Class A Shares issuable upon conversion of interest of the Convertible Debentures). Immediately prior to the Closing, 87,986,790 Class A Shares were issued and outstanding and WELL’s Class A Shares represented approximately 1.09% of the Company’s issued and outstanding Class A Shares on a non-diluted basis and approximately 32.17% on a partially-diluted basis.

Immediately subsequent to the Closing and exclusive of the Call Option, WELL directly owned and controlled 64,352,290 Class A Shares, comprised of: (i) 22,640,798 Class A Shares held directly, (ii) 20,000,000 Warrants held directly, each of which is exercisable into one Class A Share a price of $0.20 per Class A Share until October 1, 2028, (iii) 312,500 Warrants held directly, each of which is exercisable into one Class A Share at a price of $1.20 per Class A Share until December 22, 2026, (iv) $4,000,000 in Convertible Debentures held directly, convertible into Class A Shares at a price of $0.20 per Class A Share at any time or from time to time, prior to October 1, 2028, or 20,000,000 Class A Shares (this amount is exclusive of any Class A Shares issuable upon conversion of interest of the Convertible Debentures), and (v) the Notes in the principal amount of $5,000,000, of which, $1,000,000 of the principal amount is convertible into 1,398,992 Class A Shares within 60 days of this Report based on a VWAP of $0.7148. Immediately subsequent to the Closing, 109,669,255 Class A Shares were issued and outstanding and the WELL’s Class A Shares represented approximately 20.64% of the Company’s issued and outstanding Class A Shares on a non-diluted basis and approximately 42.51% on a partially-diluted basis.

In addition to the above, on October 1¸ 2023, WELL and the Company’s founding shareholders, Dr. Sven Grail (“Dr. Grail”) and Dr. George Christodoulou (“Dr. Christodoulou”), entered into a call option agreement (the “Call Option Agreement”), under which WELL was granted a call option (the “Call Option”) to acquire up to 30.8 million Class A Shares and 30.8 million Class B Multiple Voting Shares (“Class B Shares”) of the Company from Dr. Grail and Dr. Christodoulou collectively. Dr. Grail owns 15.4 million Class A Shares and 15.4 million Class B Shares of the shares subject to the Call Option and Dr. Christodoulou owns the remaining 15.4 million Class A Shares and 15.4 million Class B Shares subject to the Call Option (together, the “Optioned Shares”). The Call Option is exercisable until October 1, 2026 and its exercise is conditional on the achievement by the Company of a number of performance milestones designed to demonstrate improvements in the Company’s financial and capital markets performance, as well as obtaining any required Exchange or regulatory approvals. The Call Option can only be exercised in pairs, such that WELL must concurrently acquire a Class A Share and a Class B Share.

Additional information with respect to the Call Option Agreement and its material terms can be found in WELL’s early warning report, and in the Company’s Notice of Meeting and Management Information Circular dated August 21, 2023 which is available on sedarplus.ca.

Immediately subsequent to the Closing, if the Call Option were to be fully exercised and all of the Optioned Shares were acquired by WELL, WELL would own, or exercise control or direction over, 95,152,290 Class A Shares and 30,800,000 Class B Shares, representing 62.86% of the Company’s currently issued and outstanding Class A Shares and 100% of the currently issued and outstanding Class B Shares. This is on a partially diluted basis assuming the conversion of all Convertible Debentures, $1,000,000 of the principal amount of Notes (convertible into 1,398,992 Class A Shares within 60 days of this Report based on a VWAP of $0.7148) and exercise of all Warrants held by WELL.

The Class A Shares and the Note were acquired for investment purposes. WELL intends to monitor the business and affairs of the Company, including its financial performance, and depending upon these factors, market conditions and other factors, additional securities of the Company may be acquired as is considered or deemed appropriate. Alternatively, some or all of the securities described herein may be disposed of in compliance with applicable securities regulatory requirements.

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SOURCE WELL Health Technologies Corp.