TORONTO, May 8, 2014 (GLOBE NEWSWIRE) -- Gemoscan Canada, Inc. ("Gemoscan" or the "Corporation") – (TSX-V:GES) (MUN:1GE) wishes to announce that it has entered into a letter of intent to undertake a two stage transaction resulting in the Corporation acquiring from Novo Healthnet ("Novo") a 100% interest in 7 paramedical clinics currently owned by Novo ("Novo Businesses") in Southern and Southwestern Ontario (the "Acquisition").
Pursuant to the first phase of the acquisition, the Corporation will enter into an agreement, with the shareholders of Novo (the "Vendors"), to manage the operation of the Novo businesses, for the Corporation's own account ("Management Contract"). In consideration for the Management Contract the Corporation will pay the Vendors $150,000 by way of shares of Gemoscan, to be priced on the execution of the Management Contract and 50% of the net cash flow of the Novo Businesses during the term of the Management Contract. It is expected that the Management Contract will be executed by June 15, 2014 (the "Initial Close"). Pursuant to the Management Contract, the Vendors will provide Gemoscan with $150,000 by way of an unsecured debenture ("Debenture"). The Debenture will have the following attributes: it will be convertible into shares of Gemoscan with mandatory conversion on maturity, it will bear interest at 8.0% per annum and will have a two year term. Interest on the Debenture will be paid out of cash flow generated by the Novo Businesses only.
Gemoscan shall further have the right to acquire all of the shares of the Novo Businesses. The purchase price of the shares of the Novo Businesses will be calculated as 5 times the audited annualized net cash flow ("Net Cash Flow") of the Novo Businesses from the Initial Close to not later than May 31, 2016. The acquisition of the shares of the Novo Businesses is conditional on the purchase price calculation of the Novo Businesses as set out above being at least five million dollars. The acquisition will close within 60 days of Gemoscan triggering its option. (the "Second Close"). The consideration for the shares of the Novo Business is to be paid as 50% cash, 25% pursuant to a vendor take back mortgage (the "VTB") and 25% in shares of Gemoscan priced at the Second Close. The VTB shall bear interest at the rate of 8% per annum and shall have a term of 24 months from the Second Close. Interest shall be paid monthly but no principal payments are required until the due date. In the event there is no Second Close, the Debenture shall become null and void and not subject to conversion into shares of Gemoscan.
Completion of the transactions contemplated herein is conditional on the negotiation of definitive agreements between the parties and the receipt of all applicable regulatory and shareholder approvals including the approval of the TSX Venture Exchange.
"Our two previous acquisitions have demonstrated immediately accretive revenue through a combination of the clinics' existing and organic sales and the synergistic effect of our proprietary medically supervised diet and wellness programs. We're optimistic that the 7 Novo Healthnet Clinics will provide the same compliment to our business and further position us as growing consolidating platform in the approximately $8 billion Canadian paramedical and alternative health care market," said Brian Kalish, Gemoscan's CEO.
About Gemoscan Canada, Inc.
Gemoscan is an industry leader in food intolerance management and maintains a first-to- market position with Canada wide distribution through select retail partners. Founded in 2003, using its proprietary patented technology, Gemoscan develops, owns and markets comprehensive naturopathic dietary management solutions for consumers, including the HEMOCODE™ System and the MenuWise™ Plan, personalized medically supervised programs that promote dietary well-being. Gemoscan is the first and only provider to commercialize a food sensitivity management solution directly to consumers in partnership with retailers, and today offers the most comprehensive services available.
Gemoscan also owns and operates Physiomed Kennedy Inc., and operates Physiomed Yorkdale Inc., both being multidisciplinary paramedical clinics, located in Toronto, Ontario.
Gemoscan Canada, Inc. trades its shares on the Toronto Venture Exchange under the symbol GES and is quoted on the Munich, Frankfurt and Stuttgart Stock Exchanges under the symbol 1GE.
This news release contains certain "forward-looking information". All statements, other than statements of historical fact that address activities, events or developments that Gemoscan believes, expects or anticipates will or may occur in the future. These forward-looking statements reflect the current expectations or beliefs of Gemoscan based on information currently available to Gemoscan. Forward-looking statements are subject to a number of significant risks and uncertainties and other factors that may cause the actual results of Gemoscan to differ materially from those discussed in the forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on Gemoscan. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, Gemoscan disclaims any intent or obligation to update any forward- looking statement, whether as a result of new information, future events or results or otherwise. Although Gemoscan believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Company: Brian Kalish Chief Executive Officer Gemoscan Canada, Inc. Tel: 416.650.1200 www.gemoscan.com