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Empower Clinics closes deal to acquire Canadian Clinics and reveals significant discussions with nationwide rollout partners

Published: 08:38 04 Jan 2021 EST

Empower Clinics Inc. -
In 2020, the firm’s proceeds from exercise of warrants exceeded $6.9 million, helping it to round out a successful year

Empower Clinics (CSE:CBDT) (OTCMARKETS:EPWCF) (FRA:8EC), an integrated healthcare company, revealed on Monday that it had closed an agreement to acquire Canada-based Lawrence Park Health and Wellness Clinic Inc.

In a statement, Empower CEO Steven McAuley said: “The closing of this acquisition is a significant milestone for both Empower and its shareholders that will provide Empower with both a growing accretive business, as well as, a winning business model with plans for immediate expansion across the Greater Toronto Area, the province of Ontario and then nationwide with at least 30 clinics in very rapid succession.”

“This nationwide expansion plan is already taking shape with discussions for new locations with significant partners already at advanced stages. With this acquisition now officially complete, I am confident that we will have developments to report regarding our Canadian expansion in the very near future.”

READ: Empower Clinics KAI Medical Lab to launch FDA-approved saliva-based COVID-19 test on December 15

In closing the acquisition and filing notice of an amended share purchase agreement, Empower elected to exclude the 4 Momentum Health Inc locations that were structured as joint ventures with fixed royalty payments only and, therefore, did not fit the company’s new Canadian national expansion model. The exclusion was so inconsequential that it did not impact the final terms of the agreement announced on December 17, 2020.

The acquisition includes para-medical clinics in the Greater Toronto Area of Ontario with immediate access to more than 20,000 patients.

More importantly, Empower said the expansion will deploy an attractive and cost-effective model of opening “clinics-within-clinics” or clinics-within-facilities. In other words, the group plans to partner with large care facilities to provide para-medical clinics inside their primary care facilities.

The company said the model provides the following win-win benefits for both Empower and the primary care facility partner:

  • Substantially improved care for patients of the primary care facility;
  • Significantly reduced start-up costs Empower;
  • Immediate access to the large patient base of the primary care facility; and
  • Immediate rental income for the primary care facility

The acquisition includes long-term performance incentives for Dr Jordan Rabinowitz and Dr Aviv Tsimerman, the two co-founders of Target Corporations, to open an additional 30 clinics across Canada.

Empower had earlier revealed the receipt in excess of $5.5 million from the exercise of warrants up to December 11, 2020. The company updated the sum, saying it now exceeds $6.9 million up to December 31, 2020. “The proceeds were generated as a result of strong equity market support for the company,” said Empower.

Steven McAuley added: “The combination of this acquisition and the receipt of nearly $7,000,000 from warrant proceeds to end 2020 has the double impact of closing our most successful year ever, as well as, positioning Empower to deliver the same magnitude of growth for our great shareholders in 2021.”

“Along with the rapidly growing demand for our KAI Medical Laboratory COVID-19 testing solutions, the launch of our FDA EUA approved KAI Saliva Test and our Tier-1 “Bubble” partnerships, Empower is heading into its biggest ever growth phase with the war chest to back it up.”

Under the terms of the deal, Empower will pay the vendors of Target Corporations $275,000 cash at closing (including $44,648 to settle an outstanding debt) with an additional $75,000 to be withheld as a holdback for adjustments, for a cash payment of $350,000. In addition, at closing Empower will issue Dr Rabinowitz and Dr Tsimerman 5,128,204 Empower shares at a price of $0.0975 per share, 2,564,102 of which will be subject to contractual resale restrictions. 

Meanwhile, Empower said it has agreed to enter into employment contracts with both Dr Rabinowitz and Dr Tsimerman to lead the Canadian clinic expansion strategy.

Contact the author Uttara Choudhury at uttara@proactiveinvestors.com

Follow her on Twitter: @UttaraProactive

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