AUXLY ANNOUNCES ACQUISITION OF LEADING CANADIAN CONTRACT RESEARCH ORGANIZATION KGK SCIENCE INC.
21 Août 2018 - 1:07PM
InvestorsHub Cannabis NewsWire
AUXLY ANNOUNCES ACQUISITION OF LEADING
CANADIAN CONTRACT RESEARCH ORGANIZATION KGK SCIENCE
INC.
Vancouver, BC -- August 21,
2018 -- InvestorsHub NewsWire -- Auxly Cannabis Group Inc.
(TSX.V
- XLY) ("Auxly" or the
"Company") is pleased to announce that it has
entered into a share purchase agreement (the “Share
Purchase Agreement”) with KGK Science Inc.
(“KGK”) to acquire all of the issued and
outstanding shares of KGK (the “KGK Shares”) for
total consideration of $12,300,000 payable in cash and common
shares of the Company. KGK is a leading health and wellness focused
private contract research organization based in London, Ontario,
and the Company expects to leverage KGK’s expertise and research
abilities to further the Company’s product development efforts
through collaboration with the Company’s wholly owned subsidiary,
Dosecann.
For nearly two decades, KGK has served
many of North America’s leading nutraceutical, natural health
product and consumer packaged goods companies such as Kraft Foods,
Sanofi, Nature’s Bounty, and NuSkin. KGK works with their clients
in substantiating claims for their products through randomized
clinical trials in addition to providing other research services
such as participant recruitment, regulatory compliance solutions,
research support services and consulting. Along with KGK’s
involvement in the health and wellness space, KGK has expanded
their research capabilities to include cannabinoid and animal
products in recent years.
Pursuant to the Share Purchase
Agreement, the Company will acquire all of the issued and
outstanding shares of KGK (the “Acquisition”).
Upon the completion of the Acquisition, KGK will become a
wholly-owned subsidiary of the Company. As consideration for the
KGK Shares, the shareholders of KGK (the "KGK
Shareholders") are entitled to receive 4,132,231 common
shares in the capital of the Company ("Common
Shares") priced at $1.21 per Common Share, with the
remainder of the purchase price to be paid in cash.
The Acquisition remains subject to
certain conditions precedent, including receipt of applicable
regulatory approvals and the approval of the TSX Venture Exchange.
All Common Shares are subject to a statutory hold period expiring
on 4 months and 1 day from the date of issuance. In addition, the
KGK Shareholders have agreed to enter into lock-up agreements in
favour of the Company restricting their ability to transfer their
Common Shares until the date that is 6 months following the closing
of the Acquisition.
Hugo Alves, President of Auxly
Cannabis Group commented: “The addition of KGK to the Auxly
platform adds a significant amount of depth to the company’s
knowledge base and abilities in the creation of value added
cannabis products. We believe KGK’s track record of success as a
leading health and wellness focused CRO in North America is a
testament to their ability to add a significant amount
of value to Auxly’s wholly owned
subsidiaries and partners. We look forward to working with the team
at KGK as we integrate the company as a core piece of Auxly’s
midstream segment.”
Najla Guthrie, President & CEO of
KGK Science Inc. commented, “KGK is thrilled with the opportunity
to partner and grow with Auxly Cannabis Group. Our partnership
continues a trajectory of growth in cannabis research and most
importantly enhances our expertise to offer research services to
the nutraceutical industry. Our ability to continue operating
as an independent and wholly-owned subsidiary allows us to maintain
our goals of being a high quality, objective and best practice CRO
not only in North America but globally. Our company has deep
roots in the birth of the global nutraceutical industry and we look
forward to providing our expertise in both product development and
claims substantiation to Auxly while continuing to grow our market
share in the global nutraceutical market.”
Dr. Christina Woollard, Chief
Scientific Officer commented, “The acquisition of KGK will enhance
the research capabilities within the Auxly Group. Well-designed
robust clinical studies are vital to further the science of
cannabinoid medicine and allow practitioners access to credible
evidence-based science. The talented team at KGK have the
experience and professionalism to study the physiological and
clinical performance of the products within the Dosecann
portfolio. In addition, it will enable us to have the
capability to provide turnkey services to register, manufacture,
and conduct cannabinoid related clinical trials for companies
interested in different indications.”
Jeffrey Tung, the Chief Financial
Officer of Auxly, is currently also a director of KGK and, as such,
the Acquisition constitutes a related party transaction under
Canadian Multilateral Instrument 61-101 ("MI
61-101") but is otherwise exempt from the formal valuation
and minority approval requirements of MI 61-101.
ON BEHALF OF THE BOARD
"Chuck Rifici"
Chairman & CEO
About Auxly Cannabis Group Inc. (TSX.V:
XLY)
Auxly Cannabis Group is a collective of
entrepreneurs with a passion for the cannabis industry past,
present and future. Our mandate is to facilitate growth for our
partners by providing them with financial support and sharing our
collective industry experience. Our partners all have
different visions, voices and brand values, and all share a common
goal—to build a world-class industry based on ethics, diversity,
quality and innovation.
About KGK Science
Inc.
KGK Science is the leading contract
research organization offering clinical trial services and
regulatory consulting for the cannabis, dietary supplement,
functional food, beverage, ingredient and cosmetic industry. For
over 21 years, KGK Science has been designing and conducting
clinical trials to support clients with product development, claims
substantiation and product marketing. Along with offering a
full suite of services that includes research strategy, regulatory
support, clinical trials and clinical trial management, KGK Science
operates a clinical trial unit with experience in over 250
completed clinical trials in Canada, North America and Europe. KGK
Science maintains an active database in Southwestern Ontario of
over 14,000 participants including 2,500 recreational and medicinal
cannabis users. KGK Science’s major areas of expertise include, but
are not limited to: digestive health, cognition, sport
nutrition/performance, weight management, skin and hair,
bioavailability, cardiovascular health, infant nutrition and immune
health.
Investor
Relations:
For more information about investing in
Auxly Cannabis Group, please visit: http://www.auxly.com or contact our
Investor Relations Team:
Email: IR@auxly.com
Phone: 1-833-695-2414
Stay
Connected:
Follow up on Twitter
@Auxlygroup
Media Enquiries
(only):
For media enquiries or to set up an
interview please contact:
Sarah Bain, VP External
Affairs
Email: sarah@auxly.com
Phone: 613.230.5869
Notice Regarding Forward
Looking Information:
This news
release contains certain "forward-looking information" within the
meaning of applicable Canadian securities law. Forward-looking
information is frequently characterized by words such as "plan",
"continue", "expect", "project", "intend", "believe", "anticipate",
"estimate", "may", "will", "potential", "proposed" and other
similar words, or information that certain events or conditions
"may" or "will" occur. This information is only a prediction.
Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking information
throughout this news release. Forward-looking information includes
but is not limited to: the ability to consummate the Acquisition,
including the ability to obtain the necessary regulatory approvals,
the timing of proposed research and clinical trials, the timing and
outcomes of regulatory or intellectual property decisions,
political change, future legislative and regulatory developments
involving cannabis; competition and other risks affecting the
Company in particular and the cannabis industry
generally.
A number of
factors could cause actual results to differ materially from a
conclusion, forecast or projection contained in the forward-looking
information in this release including, but not limited to, whether:
the Acquisition can be completed; the Company is able to
successfully manage the integration of KGK's operations with its
own; the counterparties to the Share Purchase Agreement and related
transaction agreements comply with their respective obligations
under the Share Purchase Agreement and related transaction
agreements; and general economic, financial market, regulatory and
political conditions in which the Company and KGK operate will
remain the same. Additional risk factors are disclosed in the
revised annual information form of the Company for the financial
year ended December 31, 2017 dated May 24, 2018.
New factors
emerge from time to time, and it is not possible for management to
predict all of those factors or to assess in advance the impact of
each such factor on the Company's business or the extent to which
any factor, or combination of factors, may cause actual results to
differ materially from those contained in any forward-looking
information. The forward-looking information in this release is
based on information currently available and what management
believes are reasonable assumptions. Forward-looking information
speaks only to such assumptions as of the date of this release. In
addition, this release may contain forward-looking information
attributed to third party industry sources, the accuracy of which
has not been verified by the Company. The purpose of
forward-looking information is to provide the reader with a
description of management's expectations, and such forward-looking
information may not be appropriate for any other purpose. Readers
should not place undue reliance on forward-looking information
contained in this release.
The
forward-looking information contained in this release is expressly
qualified by the foregoing cautionary statements and is made as of
the date of this release. Except as may be required by applicable
securities laws, the Company does not undertake any obligation to
publicly update or revise any forward-looking information to
reflect events or circumstances after the date of this release or
to reflect the occurrence of unanticipated events, whether as a
result of new information, future events or results, or
otherwise.
Neither 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.
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