Avidus Management Group (TSX:V.AVD, Stock Forum), a Mesa Arizona-based network marketer and direct seller for the health and wellness market, added another company to its fold with today's announcement that the firm had entered into an asset purchase agreement with Truestar Health, Toronto-based networking marketing company.
According to the news release, the transaction, where the company will acquire substantially all of Truestar's assets, will have immediate and considerable impact on monthly revenue and is expected to up the company's annualized consolidated revenue to over $10 million dollars.
The transaction will also result in a two-fold increase in its distributor base and will be operationally cash flow positive by the end of 2014 with sustainable profitability arriving in 2015.
The company will complete the acquisition with a payment of $500,000 upon close and a forwarding of $5.5 million based on a 5% royalty override on Truestar's revenue. The company will pay for Truestar's existing inventory as products are sold and the 5% override will not trigger until said inventory is sold.
Company CEO, Doug Ridley, commented on the transaction, “The acquisition of Truestar following the February purchase of Akea demonstrates the viability of Avidus' stated business model and "it validates our ability to attract up and coming companies" who recognize the addition of Avidus' management and field leadership is what they need to reach their potential.”
He then concluded, “Our distribution base has doubled with each acquisition and we will continue to aggressively pursue other such opportunities while deploying our growth strategies within Asantae and now Truestar. The foundation is now in place for considerable growth and we look forward to continuing to build upon the significant momentum we have established since the beginning of this year.”
In other news, the company also announced that in connection with the acquisition, it would also be offering a non-brokered private placement of up to 15.0 million units at a subscription rate of $0.10 per unit for gross proceeds of up to $1.5 million, subject to regulatory approval.
Avidus was in the news recently when the company released Q1 2014 financial results at the end of May.
Shares gained 14.29% on the news to $0.08 per share.
Currently there are 57.1m outstanding shares with a market cap of $4.6 million.