Aleafia Health Completes Clinic Assets Transaction with Myconic Capital Corp.
TORONTO, May 10, 2021 – Aleafia Health Inc. (TSX: AH, OTCQX: ALEAF) (“Aleafia Health” or the “Company”) is pleased to announce that its wholly-owned subsidiaries, Canabo Medical Corporation (“Canabo”) and GrowWise Health Limited (“GrowWise”), (together the “Vendors”) have closed a transaction (the “Transaction”) with Myconic Capital Corp. (CSE: MEDI) (“Myconic”) whereby the Vendors sold certain of their respective clinic assets to Myconic. Additionally, Canabo has agreed to continue to staff and generally operate the clinics for the benefit of Myconic for a period of ten years, through a Clinic Services and License Agreement (the “Services Agreement”) between Canabo and Myconic, ensuring that there will be no interruption to medical services offered to existing patients.
Pursuant to an Asset Purchase Agreement, the Vendors sold to Myconic certain clinic leases, inventory, equipment and contracts, all relating to clinic operations (which excludes all patient records) (collectively the “Purchased Assets”).
As consideration for the Purchased Assets, Canabo and GrowWise were issued and delivered an aggregate of 7,000,000 common shares in the capital of Myconic, issued at an issue price of $1.50 per share, in satisfaction of a purchase price of $10.5 million, (the “Consideration Shares”) on the closing of the Transaction. The Consideration Shares are subject to a contractual lockup whereby the Consideration Shares will be released and become freely tradeable in several tranches over a period of 12 months following closing. No finder’s fees are payable as a result of the Transaction.
As previously announced due to the COVID-19 pandemic, since March 2020 the Company’s clinic network has conducted 100 per cent of cannabis patient consultations virtually and will continue to provide best-in-class cannabinoid therapy to patients under the virtual-only model through the clinics and other Purchased Assets licensed from Myconic.
Under the Services Agreement, Canabo will provide such services as are necessary to maintain the operation of the Clinics in respect of medical cannabinoid education, therapy and treatment substantially consistent with past practice (the “Services”). Canabo will pay Myconic a licensing fee for the use of the Purchased Assets in connection with the Services as it will retain certain third party revenue generated from the performance of the Services. Additionally, Canabo will receive a fee from Myconic for performing the Services.
Myconic intends to expand the services offered at the purchased clinics to include a broader scope of mental health treatments, including ketamine-assisted psychotherapy.
In addition, Aleafia Health and Myconic have entered into a nomination rights agreement, which provides Aleafia with, among other things, the right to nominate or appoint one of the five members of Myconic’s board of directors following closing (subject to customary eligibility criteria, applicable securities laws and stock exchange rules) and will be entitled to exercise this right at each of annual meetings of shareholders provided it (or its affiliates) continues to own, control or direct at least 1,000,000 common shares of Myconic.
For Investor & Media Relations:
About Aleafia Health:
Aleafia Health is a vertically integrated and federally licensed Canadian cannabis company offering cannabis health and wellness services and products in Canada and in international markets. The Company operates medical clinics, education centres and production facilities for the production and sale of cannabis.
Aleafia Health owns four significant licensed cannabis production facilities, including the first large-scale, legal outdoor cultivation facility in Canadian history. The Company produces a diverse portfolio of commercially proven, high-margin derivative products including oils, capsules, edibles, sublingual strips and vapes. Aleafia Health operates the largest national network of medical cannabis clinics and education centres staffed by MDs, nurse practitioners and educators and operates internationally in three continents.
Forward Looking Information
This news release contains forward-looking information within the meaning of applicable Canadian and United States securities laws. Often, but not always, forward-looking information can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes” or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained in this news release. Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information, including risks contained in the Company’s annual information form filed with Canadian securities regulators available on the Company’s SEDAR profile at www.sedar.com. Although the Company believes that the assumptions and factors used in preparing the forward-looking information in this news release are reasonable, undue reliance should not be placed on such information and no assurance can be given that such events will occur in the disclosed time frames or at all. The forward-looking information included in this news release are made as of the date of this news release and the Company does not undertake any obligation to publicly update such forward-looking information to reflect new information, subsequent events or otherwise unless required by applicable securities legislation.