VANCOUVER, British Columbia, Aug. 21, 2018 (GLOBE 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 Inc. (“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 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 backed by research and
science. We believe KGK’s track record of success as a leading health and wellness focused contract research organization in North
America is a testament to their ability to add a significant amount of value to Auxly’s midstream business segment. We look forward
to working with the team at KGK and beginning observational and clinical studies and other research initiatives to support our
product development efforts and medical supply channel execution.”
Najla Guthrie, President & CEO of KGK Science commented, “KGK is thrilled with the opportunity to partner and
grow with Auxly. 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 business unit within
the Auxly family allows us to maintain our goals of being a high quality, objective and best practice contract research
organization 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 Science Officer of Dosecann commented, “The acquisition of KGK will enhance the
research capabilities within the Auxly platform. 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.”
As a result of Jeffrey Tung, the Chief Financial Officer of Auxly, being a current director of KGK, 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. Mr. Tung holds a de
minimis equity ownership interest in KGK of less than 2%.
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.
