Myconic Capital Acquires Clinic Assets From Aleafia Health

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VANCOUVER, British Columbia, May 10, 2021 (GLOBE NEWSWIRE) — Myconic Capital Corp. (formerly, Auralite Investments Inc.) (CSE: MEDI) (the “Company” or “Myconic“) is pleased to announce that the Company has executed and closed an asset purchase agreement (the “Purchase Agreement”) for the acquisition of certain clinical assets as an investment (the “Asset Purchase”) from Canabo Medical Corporation (“Canabo”), a wholly-owned subsidiary of Aleafia Health Inc. (TSX: AH) (“Aleafia”). The Company intends to expand the services offered through the network of 14 national medical cannabis clinics (the “Clinics”) to include a broader scope of mental health treatments including intravenous ketamine treatments, ketamine-assisted psychotherapy and the administration of esketamine nasal spray. During 2020, the Clinics generated approximately $3.5 million in revenues for Aleafia, which has since increased on an annual run-rate basis due to providing treatments related to the mental health effects of the COVID-19 pandemic.

Pursuant to the terms of the Purchase Agreement, Myconic will acquire certain assets relating to the Clinics in exchange for 7,000,000 common shares of the Company at a deemed price of $1.50 per common share of the Company as at the closing date (the “Consideration Shares”). The Consideration Shares are subject to a lock-up period of 12 months on issuance, with 5% of the Consideration Shares released at closing, one fourth of the Consideration Shares released at intervals of four, six and nine months and the remaining 20% released on the first anniversary following the closing of the acquisition, as required in the Purchase Agreement. In connection with the completion of the transaction, the Company has issued 500,000 common shares to an arm’s-length third party that assisted in the facilitation of the Asset Purchase.

To ensure the stability of the current cash flow stream being acquired, Myconic and Canabo have entered into a services agreement (the “Services Agreement”) pursuant to which Canabo will provide the services necessary to maintain the current operations of the Clinics (the “Services”). In consideration for the Services, Myconic will pay a fee equal to Canabo’s cost of performing the Services plus a 5.0% margin. The Services Agreement has a term of 10 years and shall be renewable at Aleafia’s option. The Company’s planned conversion of the Clinics is not expected to negatively impact the Clinics’ existing revenue streams. Based on the Clinics’ established stream of cash flows, the Company believes that the Asset Purchase can provide a clear path to profitability with relatively low-risk business opportunities available to build upon current operations. The Company intends to retain key team members to assist with the Clinics’ management as Myconic seeks to expand the Clinics’ offerings.

Myconic’s Chief Executive Officer, Robert Meister, commented, “Thanks to Aleafia, Canadians today have better access to high-quality and low-cost medical cannabis products with professional assistance through this portfolio of Clinics. We believe that by expanding the scope of the treatments offered to patients to include others based on the use of ketamine, we can unlock new value through this investment for shareholders and the general public alike.”

Aleafia’s Chief Executive OfficerGeoffrey Benic added, “We are pleased to support Myconic’s goal of providing a broader scope of treatments and services for our long-time and prospective patients. Concurrently, we will continue providing best-in-class cannabinoid therapy from our experienced team of physicians, nurse practitioners, and educators.”

Through the national network of clinics, Aleafia has seen more than 75,000 unique patients both in-person and virtually. In December 2020, Aleafia announced a partnership with Unifor (Canada’s largest private sector union with over 315,000 members) pursuant to which Aleafia will provide dedicated support to union members with respect to accessing medical marijuana clinics as part of their respective benefits and insurance coverage, and these services will continue to be administered by Aleafia Health clinic employees.

The Company is at arm’s length from Aleafia and its shareholders. The Asset Purchase does not constitute a fundamental change or change of business for the Company, nor is it expected to result in a change of control, within the meaning of the policies of the Canadian Securities Exchange (“CSE”). The Asset Purchase may constitute a significant acquisition pursuant to National Instrument 51-102 (Continuous Disclosure Obligations), so the Company will file a business acquisition report within 75 days from the date hereof if and as required. More information about Aleafia can be found on its website: https://aleafiahealth.com/.

ABOUT MYCONIC

Myconic Capital Corp is an investment issuer with a diversified portfolio that is focused on emerging companies active in the high-tech, real estate, cannabis, mining and health and wellness sectors.


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