Canadian CBD Company Closes $20 Million U.S. Pharma Acquisition
Alternate Health closes Blaine Labs acquisition, launches new product
TORONTO, June 20, 2019 /CNW/ - Alternate Health Corp., ("Alternate Health" "AHC" or the "Company") (CSE:AHG) (OTCQB:AHGIF), an international leader in hemp-derived CBD extraction, product development and distribution, announced today that the Company has closed an amended acquisition agreement (the "Agreement") to acquire 100% of Blaine Labs Inc. ("Blaine Labs").
"I am excited to get started with Alternate Health, locking in the company's software solutions into our distribution system," says Dr. Robert Blaine, founder of Blaine Labs. "We are developing new hemp-derived products for our network and we anticipate strong demand from both patients and distributors."
In addition to the closing of the Agreement, Alternate Health would like to announce the immediate launch of a new hemp-derived product: Hempnesic Pain-Relieving Gel. The new product is currently available through Blaine Labs physician network and distribution partners. Alternate Health is actively soliciting sales agents for international expansion as well.
"With Dr. Blaine's experience and product expertise, we believe we are deeply poised for success in the hemp-derived CBD industry," says Howard Mann, CEO of Alternate Health. "We are excited to add Blaine Labs revenues to our Q2 results and we expect strong growth from the launch of new hemp-based products."
According to a report by industry research firm New Frontier Data, cited by a recent CNN article, total sales of hemp-based products in the United States are expected to double by 2022 from approximately US $1.1 billion in 2018*. This surge in sales outlines an increase in demand for hemp-based products from a larger share of the U.S. market and the Company expects new consumers to demand more transparency from producers.
Alternate Health believes Blaine Labs experience in FDA-approved and cGMP-certified manufacturing offers a competitive edge not only in manufacturing logistics, but also in developing trust and loyalty with patients and consumers. The Company also expects that the relationships Blaine Labs has cultivated with retailers and distributors will be a key differentiator as the FDA continues its review on CBD regulations.
* Parija Kavilanz, "These hemp farmers are making a killing on the CBD industry," CNN Business, April 10, 2019, https://www.cnn.com/2019/04/09/success/hemp-farmer/index.html |
Amended Agreement Terms
Alternate Health previously announced the USD $20 million agreement to acquire 100% of Blaine Labs on May 2, 2019. The Agreement has been amended to include the following payment terms: (i) the delivery of 7,145,000 AHC common shares within 10 business days and the number of AHC common shares equal to $2,500,000 based on AHC's closing share price on the Canadian Securities Exchange ("CSE") on the date of the initial cash payment; (ii) $5,000,000 in cash payments to be paid as follows: $1,000,000 on or before July 15, 2019, $2,000,000 within six months of the Closing Date and the remaining $2,000,000 on or before 12 months from the Closing Date; and (iii) $10,000,000 in deferred payments ("Deferred Payments") derived from 75% of ongoing net profits generated by Blaine Labs from non-CBD related products until fully paid except that any unpaid balance on the five year anniversary of the Closing Date shall be paid in AHC common stock. All stock shares will be subject to securities restrictions as set forth by the CSE or Securities Regulators. At AHC's discretion, AHC may prepay the Deferred Payments. Dr. Blaine has also signed a management agreement Dr. Blaine will earn a management fee equal to 50% of the annual net profit of the Company after excluding any Deferred Payment net profits. For greater certainty, Dr. Blaine will share in 75% of the non-CBD related products until the Deferred Payment is fully paid and 50% thereafter, plus 50% of annual net profits from CBD related products.
About Alternate Health
Alternate Health (CSE: AHG, OTCQB: AHGIF) is an international leader in the CBD industry, including extraction, product development and distribution. Alternate Health recently announced that it is acquiring Blaine Labs Inc., a Company that is a leader in cGMP medical product manufacturing and distribution, with over 50 product SKUs available from major retailers, including Walmart, Amazon, CVS and Walgreens. Alternate Health's industry-leading software systems provide the platform for the Company's diverse operations, including CBD product distribution, hemp-derived extract manufacturing, blockchain tax collection systems and electronic medical records (EMR) platforms. Alternate Health's corporate office is located in Toronto, Canada, with additional offices in Venice, California, and San Antonio, Texas. The Company is well positioned to reinvest internal operating cash flow in its platform and product development over the long term, creating an attractive investment profile for its shareholders. For more information about Alternate Health Corp., visit www.alternatehealth.com.
Neither the CSE nor its Regulation Services Provider (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release. Statements included in this announcement, including statements concerning our plans, intentions and expectations, which are not historical in nature are intended to be, and are hereby identified as "forward-looking statements". Forward-looking statements may be identified by words including "anticipates", "believes", "intends", "estimates", "expects", "plans", and similar expressions. The Company cautions readers that forward-looking statements, including without limitation those relating to the Company's intended use of the funds from the financing, and future operations, business prospects, anticipated growth and potential revenues are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements. The Company has relied on a number of assumptions and estimates in making such forward-looking statements, including, without limitation, the likelihood of the Company completing its acquisition of Blaine Labs Inc., the prospects for development of the Company's products and the Company's ability to generate cash flows. Such assumptions and estimates are made in light of the trends and conditions that are considered to be relevant and reasonable based on information available and the circumstances existing at this time. A number of risk factors may cause actual results, level of activity, performance or outcomes of such acquisitions, product development, or cash flow generation to be materially different from those expressed or implied by such forward-looking information statements including, without limitation, whether such acquisition or product development will be completed and generate commercially viable cash flows, the need for additional funding to continue development efforts, and changes in general economic, market and business conditions.
SOURCE Alternate Health Corp.
Investor Contacts: Jim Griffiths | Investor Relations; Jim Tykoliz | Company Director, 1.416.607.5757
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