TORONTO, Nov. 4, 2013 (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 a 100% interest in Physiomed Yorkdale Inc. ("PYI") which operates a paramedical clinic in Toronto Ontario (the "Acquisition").
Pursuant to the first phase of the acquisition, the Corporation will enter into an agreement, with the shareholders of PYI (the "Vendors"), to manage the operation of the PYI business, for the Corporation's own account ("Management Contract"). In consideration for the Management Contract and the acquisition of $164,000, owed to the Vendors of PYI, (the "Debt"), the Corporation will pay the Vendors $164,000 by way of shares of Gemoscan, to be priced on the closing of the acquisition of the Management Contract and the Debt. The entering into of the Management Contract is expected to close by November 30, 2013 (the "Initial Close").
Gemoscan shall further acquire all of the shares of PYI. The purchase price of the shares of PYI will be calculated based on 5 times the audited annualized net cash flow of PYI from the Initial Close to not later than March 31, 2015. The acquisition of the shares of PYI is expected to close, at Gemoscan's discretion, on or before May 31, 2015 (the "Second Close"). The consideration for the shares of PYI is to be paid as 40% cash, 37% pursuant to a vendor take back mortgage (the "VTB") and 23% either in cash or in shares of Gemoscan priced upon the determination of the purchase price. The VTB shall bear interest at the rate of 7% 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.
Completion of the transactions contemplated herein are 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.
"We continue to see tremendous value in the paramedical clinic market. Physiomed Yorkdale; Physiomed Kennedy, acquired in August of this year; and other similar businesses, represent immediately accretive sales engines for Gemoscan, while functioning as organic distribution channels for our patented and proprietary medically supervised diet and wellness programs. Physiomed Yorkdale is yet another stepping stone towards our stated objective of becoming a leading platform in the multibillion dollar retail healthcare space," said Brian Kalish, Gemoscan's CEO.
Scott Wilson, a director of Gemoscan, owns one-third of the shares of PYI through a related company. He owns not more than 42.4% of the Debt that is being transferred to Gemoscan at the Initial Close. As a result, the transactions described herein are related party transactions as such term is defined in Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The acquisition of the Debt and the entering into of the management contract by the Corporation is exempt from the valuation and minority shareholder approval requirements of MI 61-101 by reason of the exemptions contained in sections 5.5(a) and 5.7(1)(a) as the total consideration being received by Mr. Wilson does not exceed 25% of Gemoscan's market capitalization. With respect to the acquisition of the shares of PYI, the Corporation will assess its obligations under MI 61-101 once the purchase price has been determined.
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 food sensitivity and dietary management solutions for consumers, including the HEMOCODE™ Food Intolerance System and the MenuWise™ Food Intolerance Plan, personalized naturopathically supervised nutritional programs that promote well-being. Gemoscan is the first and only provider to commercialize a food intolerance 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., a multidisciplinary paramedical clinic, 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 signify cant 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.