- Completed the acquisition of Sun Valley Certification Clinics Holdings LLC
- Operates a network of professional medical cannabis and pain management practices, with five clinics in Arizona, one clinic in Las Vegas, a tele-medicine platform serving California, and a fully developed franchise business model for the domestic cannabis industry
- Will expand Empower’s multi-state operations, having a combined patient count of 165,000 patients, in Washington, Oregon, Illinois, Arizona, Nevada and California
VANCOUVER, May 1, 2019 -Â EMPOWER CLINICS INC. (CSE: CBDT) (Frankfurt 8EC)Â (“Empower” or the “Company“) is pleased to announce that, pursuant to the terms of a membership interest purchase agreement dated April 30, 2019, it has completed the acquisition of Sun Valley Certification Clinics Holdings LLC (“Sun Valley“) from Andrea Klein and Dustin Klein (together, the “Vendors“) and a minority shareholder, through its wholly-owned subsidiary, Empower Healthcare Assets Inc. (“Empower Health“), for cash and share consideration having an aggregate value of US$3,835,000Â (CAD$5,160,376), effective as of April 30, 2019 (the “Transaction“). Sun Valley operates a network of professional medical cannabis and pain management practices, with five clinics in Arizona, one clinic in Las Vegas, a tele-medicine platform serving California, and a fully developed franchise business model for the domestic cannabis industry.
In connection with the Transaction, Empower also acquired the 30%
minority membership interests held by Green Global Properties Inc. (“Green Global“), a subsidiary of Aura Health Inc. (CSE: BUZZ), in three partially-owned subsidiaries of Sun Valley, operating clinics in Mesa and Phoenix, Arizona, and Las Vegas, Nevada, such that Empower now indirectly owns all of the membership interests in each of such subsidiaries (the “GG Acquisition“).
Over the past five years, Dustin and Andrea have built one of the most reputable and organized clinic networks in Arizona, developing a patient list of more than 45,000 unique patients, and have performed over 61,000 certifications to date. Sun Valley supports its patients with a dynamic dedicated team consisting of 52 staff, including 30 physicians.
“The acquisition of the Sun Valley clinic group has fundamentally changed the direction and growth prospects for Empower,” said Steven McAuley,
Empower’s Chairman & CEO. “We have repositioned Empower as a
vertically integrated global health and wellness company, helping
consumers access products and specialized medical care for serious
qualifying conditions. Having Dustin and Andrea Klein join me in leadership to rapidly expand Empower’s clinic and distribution network across the United States is a major step toward our ambitious objectives.”
“This acquisition is a testament to the hard work and dedication our
team has provided to our community for the past five years and I look
forward to being a valuable resource to the Company and on the board of
directors,” said Dustin Klein, Sun Valley Co-founder.
Andrea Klein, Sun Valley Co-founder, stated, “I am
delighted with our acquisition by Empower Clinics! It is the evolution
of our dream, to positively affect the lives of patients across the
country, and to become an adaptive and strategic organization that can
harness the phenomenal and exciting growth of the cannabis industry.
Steve’s vision for Empower is inspiring, and I am eager to bring our
team together with his vision and grow into a dominating national brand
that leads the way in patient care, employee satisfaction, and potential
shareholder profitability!”
The Transaction is expected to create one of the largest clinic groups in the medical cannabis sector in the United States,
which, together with Empower’s existing medical cannabis clinics, will
expand Empower’s multi-state operations, having a combined patient count
of 165,000 patients, in Washington, Oregon, Illinois, Arizona, Nevada and California, and the potential to rapidly expand the clinic network via the Sun Valley franchise program.
TRANSACTION HIGHLIGHTS
-
Improved Capital Markets Profile Empower is
diversifying its business model to become a vertically integrated
operator in the global cannabis sector with a focus on patient care, CBD
product distribution, research & development and CBD product
extraction. The Company believes this will appeal to a broader base of
shareholders and investors and provide greater access to capital and
improved trading liquidity.
-
Increased Patient Access With a rapidly expanding company-owned clinic network and significant expansion opportunity through the Sun Valley
franchise model, Empower anticipates it will grow its total patient
list substantially in the years ahead. This is expected to provide
greater opportunity for treatment analysis using artificial intelligence
(AI), validating the Company as a leader in understanding the efficacy
of cannabis-related therapies.
-
Focus on CBD Product Sales Empower’s patient base and
customers are expected to benefit from access to high margin derivative
products, including CBD lotion, tinctures, spectrum oils, capsules,
lozenges, patches, e-drinks, topical lotions, gel caps, hemp extract
drops and pet elixir hemp extract drops. Patients and customers will be
able to access Empower’s customer service, home delivery and e-commerce
platform.
-
Market Leading Technology Empower utilizes a
market-leading patient electronic management and POS system that is
HIPAA compliant and provides deep insight to patient care. The Company
supports remote patients using its tele-medicine portal, enabling
patients who do not live near one of its clinic locations, or are
disabled or unable to come to a location, to still benefit from a doctor
consultation.
- The Sun Valley Clinic Locations
4218 W Dunlap Ave, Phoenix, AZ
12801 W Bell Rd #145, Surprise, AZ
4015 E Bell Rd #130, Phoenix, AZ
2011 E University Dr, Mesa, AZ
7074 E Speedway Blvd, Tucson, AZ
2550 S Rainbow Blvd, Las Vegas, NV
In connection with the closing of the Transaction (the “Closing“), Empower: (i) paid the Vendors an aggregate cash payment of US$775,000 (CAD$1,042,840), of which US$150,000 (CAD$201,840)
is being heldback by Empower, half of which is to be released six
months from the date of Closing and the other half of which is to be
release twelve months from the date of Closing and (ii) issued the
Vendors an aggregate of 22,058,823 common shares in the capital of the
Company (each a “Share“) at a deemed price of US$0.136 (CAD$0.183)
per Share, representing the average daily closing price of the Shares
on the Canadian Securities Exchange for the 10-day trading period ended April 26, 2019. 14,705,882 of the Shares will be held in escrow by Odyssey Trust Company pursuant to an escrow agreement dated April 30, 2019, and will vest in quarterly installments over 36 months from the date of the Closing. The Company also paid US$12,318 (CAD$16,575) and issued 350,602 Shares to a minority shareholder of one of the Sun Valley subsidiaries in order to acquire her minority interest therein.
Each of the Vendors have also entered into employment agreements with an affiliate of the Company pursuant to which Dustin Klein will serve as the Vice President of Business Development, and Andrea Klein
will serve as the Vice President of Operations. In these roles, they
will continue to provide their extensive industry knowledge and
expertise to Sun Valley and the Company. In addition, Dustin Klein has been appointed as a director of the Company, effective as of the Closing.
In consideration for the GG Acquisition, Empower Health issued Green Global a promissory note in the principal amount of US$125,000, which bears interest at the rate of 4.0% per annum and has a maturity date of July 31, 2019.
None of the Shares to be issued in connection with the Transaction will be registered under the United States Securities Act of 1933, as amended (the “1933 Act“), or applicable state securities laws, and may not be offered or sold to, or for the account or benefit of, persons in the United States
or “U.S. Persons” (as such term is defined in Regulation S under the
1933 Act), absent registration or an applicable exemption from such
registration requirements.
ABOUT EMPOWER
Empower is a leading multi-state operator of a network of
physician-staffed clinics focused on helping patients improve and
protect their health through innovative physician recommended treatment
options. It is expected that Empower’s proprietary product line
“Sollievo” will offer patients a variety of delivery methods of doctor
recommended cannabidiol (CBD) based products in its clinics, online and
at major retailers. With over 165,000 patients, an expanding clinic
footprint, a focus on new technologies, including tele-medicine, and an
expanded product development strategy, Empower is undertaking new growth
initiatives to be positioned as a vertically integrated, diverse,
market-leading service provider for complex patient requirements in 2019
and beyond.
ON BEHALF OF THE BOARD OF DIRECTORS:
Steven McAuley
Chief Executive Officer
DISCLAIMER FOR FORWARD-LOOKING STATEMENTS
This news release contains certain “forward-looking statements”
or “forward-looking information” (collectively “forward looking
statements”) within the meaning of applicable Canadian securities laws. All
statements, other than statements of historical fact, are
forward-looking statements and are based on expectations, estimates and
projections as at the date of this news release. Forward-looking
statements can frequently be identified by words such as “plans”,
“continues”, “expects”, “projects”, “intends”, “believes”,
“anticipates”, “estimates”, “may”, “will”, “potential”, “proposed” and
other similar words, or information that certain events or conditions
“may” or “will” occur. Forward-looking statements in this news release
include, but are not limited to, statements regarding the direction and
growth prospects of the Company, the expansion of the company’s clinic
and distribution network, the expected effect of the Vendors in their
new roles with the Company, the effect on the lives of patients, the
growth into a national brand, the effect of the Transaction, the
diversification of the Company’s business model, the potential appeal to
shareholders, the growth of the Company’s patient list and the effect
thereof, the expected benefits for the company’s patient base and
customers, the release of the cash consideration, the release of Shares
being held in escrow in connection with the Transaction and statements
regarding the Company’s proprietary product line “Sollievo”. Such
statements are only projections, are based on assumptions known to
management at this time, and are subject to risks and uncertainties that
may cause actual results, performance or developments to differ
materially from those contained in the forward-looking statements,
including that the Company may not be able to expand, that the
Transaction may not have the expected results, and other factors beyond
the Company’s control. No assurance can be given that any of the events
anticipated by the forward-looking statements will occur or, if they do
occur, what benefits the Company will obtain from them. Readers are
cautioned not to place undue reliance on the forward-looking statements
in this release, which are qualified in their entirety by these
cautionary statements. The Company is under no obligation, and expressly
disclaims any intention or obligation, to update or revise any
forward-looking statements in this release, whether as a result of new
information, future events or otherwise, except as expressly required by
applicable laws.
SOURCE Empower Clinics Inc.
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Investors: Steve Low, Boom Capital Markets, 647-620-5101; For French inquiries: Remy Scalabrini, Maricom Inc., E: [email protected], T: (888) 585-6274; Investors: Steven McAuley, CEO, [email protected], 604-789-2146Copyright CNW Group 2019
