Protech Home Medical Corp Disclosure Regarding Cyberscam Incident
NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
CINCINNATI, May 06, 2019 (GLOBE NEWSWIRE) -- 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.
ABOUT PROTECH HOME MEDICAL CORP.
The Company provides in-home monitoring and disease management services for patients in the United States healthcare market. The primary business objective of the Company is to create shareholder value by offering a broader range of services to patients in need of in-home monitoring and chronic disease management. The Company’s organic growth strategy is to increase annual revenue per patient by offering multiple services to the same patient, consolidating the patient’s services and making life easier for the patient.
Forward-Looking Statements
Certain statements contained in this press release constitute "forward-looking information" as such term is defined in applicable Canadian securities legislation. The words "may", "would", "could", "should", "potential", "will", "seek", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions as they relate to the Company, including: Protech successfully recovering the funds; and closing of the loan transaction and repayment of the debentures; are intended to identify forward-looking information. All statements other than statements of historical fact may be forward-looking information. Such statements reflect the Company's current views and intentions with respect to future events, and current information available to the Company, and are subject to certain risks, uncertainties and assumptions, including, without limitation: negotiation and execution of definitive agreements for the loan; and approval of the loan by the TSX Venture Exchange. Many factors could cause the actual results, performance or achievements that may be expressed or implied by such forward-looking information to vary from those described herein should one or more of these risks or uncertainties materialize. Examples of such risk factors include, without limitation: credit; market (including equity, commodity, foreign exchange and interest rate); liquidity; operational (including technology and infrastructure); reputational; insurance; strategic; regulatory; legal; environmental; capital adequacy; the general business and economic conditions in the regions in which the Company operates; the ability of the Company to execute on key priorities, including the successful completion of acquisitions, business retention, and strategic plans and to attract, develop and retain key executives; difficulty integrating newly acquired businesses; the ability to implement business strategies and pursue business opportunities; low profit market segments; disruptions in or attacks (including cyber-attacks) on the Company's information technology, internet, network access or other voice or data communications systems or services; the evolution of various types of fraud or other criminal behavior to which the Company is exposed; the failure of third parties to comply with their obligations to the Company or its affiliates; the impact of new and changes to, or application of, current laws and regulations; decline of reimbursement rates; dependence on few payors; possible new drug discoveries; a novel business model; dependence on key suppliers; granting of permits and licenses in a highly regulated business; the overall difficult litigation environment, including in the U.S.; increased competition; changes in foreign currency rates; increased funding costs and market volatility due to market illiquidity and competition for funding; the availability of funds and resources to pursue operations; critical accounting estimates and changes to accounting standards, policies, and methods used by the Company; and the occurrence of natural and unnatural catastrophic events and claims resulting from such events; as well as those risk factors discussed or referred to in the Company’s disclosure documents filed with the securities regulatory authorities in certain provinces of Canada and available at www.sedar.com. Should any factor affect the Company in an unexpected manner, or should assumptions underlying the forward-looking information prove incorrect, the actual results or events may differ materially from the results or events predicted. Any such forward-looking information is expressly qualified in its entirety by this cautionary statement. Moreover, the Company does not assume responsibility for the accuracy or completeness of such forward-looking information. The forward-looking information included in this press release is made as of the date of this press release and the Company undertakes no obligation to publicly update or revise any forward-looking information, other than as required by applicable law.
For further information please visit our website at www.protechhomemedical.com or contact:
Gregory Crawford
Chief Executive Officer
Protech Home Medical Corp.
859-300-6455
investorinfo@myphm.com
Media Enquiries:
PHM.communications@strategycorp.com