MPX Announces Acquisition of Spartan, a Canadian Veteran Advisory Group

Acquisition exemplifies MPX’s commitment to fighting opioid addiction amongst veterans and is expected to drive market share expansion in Canada


TORONTO, Sept. 19, 2018 (GLOBE NEWSWIRE) -- MPX Bioceutical Corporation (“MPX” or the “Company”) (CSE: MPX; OTC: MPXEF) today announced it has entered into a binding share purchase agreement (the “Purchase Agreement”) to acquire all of the outstanding shares (the “Spartan Shares”) in the capital of Spartan Wellness Corporation (“Spartan”) from Ninth Square Capital Corporation and Veteran Grown Corporation (the “Sellers”) both of which are at arm’s length to the Company. Spartan is a Canadian organization whose mission is to help veterans suffering from various ailments, mostly psychological, to reduce or eliminate dependencies on opioids by directing them towards medical cannabis.

Pursuant to the terms of the Purchase Agreement, MPX will acquire all of the Spartan Shares for a total purchase price of up to $6,000,000 comprised of the following consideration and based upon the achievement of certain milestones  as set out below during the period beginning on the Closing Date and ending on the date that is twenty-four (24) months following the date on which Canveda is fully licensed to produce, distribute and sell Cannabis products under Health Canada’s Access to Cannabis for Medical Purposes Regulations (the “ACMPR”) (the “Sales Period”):

  1. up to $4,500,000 satisfied through the issuance of 4,687,500 common shares in the capital of MPX (the “MPX Shares”) issued at a price of $0.96 per MPX Share; and
     
  2. up to $1,500,000 satisfied through the issuance of 1,304,348 common share purchase warrants (the “Warrants”) each exercisable into one (1) MPX Share at an exercise price of $1.15 for a period of three (3) years from the Closing Date.

The first tranche of the aforementioned securities will be issued on closing with the remainder being issued based upon Spartan reaching certain milestones, including directing a percentage of its sales through Canveda Inc. (“Canveda”), a wholly-owned subsidiary of the Company. Canveda is a Licensed Producer under the ACMPR having received its Cultivation License on June 12, 2017. Following the closing of the acquisition of all the Spartan Shares by MPX which is expected to take place on or about October 1, 2018, Spartan will be rebranded as “Spartan Wellness by MPX.”

Spartan is one of the leading Cannabis Access point providers for Veterans in Canada with its network of 500 patients consuming close to 500 kilograms annually. MPX plans to utilize Spartan as an additional sales channel to ensure continued growth in its patient user base and expects that Spartan will convert much of its pre-existing patient base over to its MPX/Salus Medical products. In addition to this valuable patient network, the acquisition of the Spartan Shares is expected to immediately contribute to revenue growth at the Company as Spartan receives sales commission from the licensed producers that supply its patients with cannabis.

Veterans benefit from insurance coverage provided by Blue Cross in cooperation with the Canadian Department of Veteran Affairs Canada, which provides them with improved access to medical cannabis. In 2017-2018, 7,298 veterans were reimbursed by Blue Cross for cannabis for medical purposes, at a cost of approximately $51 million. Under these policies, veterans are provided with reimbursement coverage for up to 3 grams of cannabis per day. However, Spartan can help these veterans through the exceptional approval process to secure coverage for up to 10 grams a day, thereby reducing their reliance on highly addictive and unsafe opioids as their only treatment option. As a result of these insurance policies that provide favorable coverage to veterans, the Company believes that men and women who have served in the military represent a major market for its medical cannabis products.

“We are proud to contribute to the fight against opioid addiction, which has taken a devastating toll on veterans in Canada,” said Michael Arnkvarn, Executive Vice President of MPX Canada. “Medical cannabis can offer a safer, much less addictive alternative for patients, and potentially help them reduce or completely avoid opioid use. Spartan has a unique profile in the Canadian veteran community and attends military veterans' events across Canada on a regular basis. Through information sessions, they recruit and support new members/patients who are struggling with opioid addiction. We look forward to using this platform to engage more closely with veterans and emergency services personnel to help them live healthy, happy and productive lives.”

According to a report in the Globe and Mail from May 2018, the number of Canadian veterans prescribed opioids or tranquilizers has declined significantly in recent years while those authorized to use medical cannabis has significantly increased, echoing trends in the U.S. where states that have legalized cannabis report declines in opioid overdoses.

“Spartan is cash flow positive and acquiring it will enable us to build on its prior success to rapidly secure market share, grow patient numbers and ultimately secure retail sales for our Canveda operation in the highly competitive Canadian market,” stated W. Scott Boyes, MPX’s Chairman, President and CEO. “Veteran patients have a premium value in Canada due to their enhanced insurance coverage. Furthermore, we expect Spartan to grow its patient numbers over time as it opens additional information rooms across the country to increase veteran support and awareness, among other initiatives. Achievement by Spartan of the final milestones will represent sales of the full production capacity of MPX’s Canveda facility in Peterborough, Ontario.”

Robert Kennedy, Co-Founder and Vice President of Spartan, commented, “Many men and women who are serving or have served in the Canadian military struggle with addiction. Veterans who have traumatic experiences associated with military operations or day-to-day life in the military may also suffer from a mental illness, such as depression or post-traumatic stress disorder along with chronic physical injuries.”

“There is a major need for better support services for these patients, and here at Spartan we have put together a team of experts with a proven history of successfully treating veterans, understanding their needs and culture,” stated Riad Byne, Co-Founder and CEO of Spartan. “We are excited to become part of MPX’s cannabis operations, which will give us the necessary resources to expand our network and help even more veterans beat opioid addiction.”

As part of the acquisition, MPX along with the Sellers will create the Veteran Growth Fund (the “Fund”) that will be established using some MPX Shares and Warrants as an additional effort to assist veterans in need. The Fund will more effectively connect MPX with the Canadian veteran community, which is estimated to be approximately 700,000 individuals.

By reaching the milestones set out below, the Company will issue the following MPX Shares and Warrants to the Vendors:

MilestoneSales of Cannabis Sales
Units
SellersFund
AggregateThrough
Canveda
MPX
Shares
WarrantsMPX
Shares
Warrants
Closing

N/AN/A781,250108,696130,209108,696
1

200,000N/A585,93886,957130,208108,696
2485,000

90,000585,93786,957130,208108,696
3885,000

315,000585,93886,956130,208108,696
41,290,000

570,000585,93765,2171,041,667434,783
Totals  3,125,000434,7831,562,500

869,565

A “Cannabis Sales Unit” is deemed to be 1 gram of dried cannabis or equivalent amount of a class of cannabis specified in Schedule 3, “Equivalent Amounts”, of the Cannabis Act (Canada), being: (a) 1 gram of dried cannabis; (b) 5 grams of fresh cannabis; (c) 15 grams of solids containing cannabis; (d) 70 grams of non-solids containing cannabis; (e) 0.25 grams of solid or non-solid concentrates; or (f) 1 cannabis plant seed; however, notwithstanding the equivalence formula in the Cannabis Act (Canada), for the purposes of determining the milestones for the purchase price and cannabis oils shall be converted to grams of dried cannabis according to the equivalency supplied by the selling licensed producer as indicated on their website and the label on each product as required by the ACMPR.

MPX has agreed to pay a finder’s fee equal to 5% of the MPX Shares issued to the Sellers at the deemed price of $0.96 per MPX Share to Michael Yosher such that Mr. Yosher will be issued up to 156,200 MPX Shares, with 39,062 MPX Shares issued upon closing and an additional 29,297 MPX Shares issued upon the achievement of each of the above milestones within the Sales Period.

To be added to the distribution list, please email MPX@kcsa.com with “MPX” in the subject line.

About MPX Bioceutical Corporation

MPX, through its wholly-owned subsidiaries in the U.S., provides substantial management, staffing, procurement, advisory, financial, real estate rental, logistics and administrative services to medicinal cannabis enterprises in Arizona operating under the Health for Life (dispensaries) and the award-winning Melting Point Extracts (high-margin concentrates wholesale) brands. The successful Health for Life brand operates in the rapidly growing Phoenix Metropolitan Statistical Area. With the acquisition of The Holistic Center, MPX added another operating medical cannabis enterprise to its footprint in Arizona.

GreenMart of Nevada NLV, LLC (“GreenMart NV”) is an award-winning licensed cultivation, production and wholesale business, licensed for both the medical and “adult use” sectors in Las Vegas, Nevada, and is already selling wholesale into the Nevada medical cannabis market. GreenMart NV has also optioned suitable locations and intends to enter the higher-margin retail arena by applying for at least two dispensary licenses in the Las Vegas market which will operate under the “Health for Life” brand.

In Massachusetts, MPX is building out and will operate a cultivation and production facility as well as up to three dispensaries and manages three full service dispensaries and one producer in Maryland.

In Canada, MPX has acquired Canveda, which has received its cultivation license from Health Canada and will operate a cultivation and production facility in Peterborough, Ontario. The Company also leases a property in Owen Sound, Ontario, for which an application to Health Canada has been made for a cannabis production and sales license. In addition, the Company will continue its efforts to develop its legacy nutraceuticals business

About Spartan

Spartan is comprised of a network of Veterans, Physicians, Specialists and a support team of top-level administrators that work to support veterans and retired emergency services personnel with the support and tools necessary to lead healthy, happy and productive lives after serving their country.

Spartan has hand selected and been aligned with top-tier Canadian health care professionals. The team consists of subject matter experts with a proven history of successfully treating veterans, understanding their unique needs and culture. The team’s benefit specialists ensure that all patients are aware of available options to get the best treatment and care for veterans and their families through existing platforms which may provide coverage. There are no fees or up-front costs for veterans or their families.

Cautionary Statement Regarding Forward-Looking Information

This news release includes certain “forward-looking statements” under applicable Canadian securities legislation that are not historical facts. Forward-looking statements involve risks, uncertainties, and other factors that could cause actual results, performance, prospects, and opportunities to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements in this news release include, but are not limited to, MPX’s objectives and intentions.  Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties and other factors which may cause actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic and social uncertainties; litigation, legislative, environmental and other judicial, regulatory, political and competitive developments; delay or failure to receive board, shareholder or regulatory approvals; those additional risks set out in MPX’s public documents filed on SEDAR at www.sedar.com; and other matters discussed in this news release. Although MPX believes that the assumptions and factors used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. Except where required by law, MPX disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

On behalf of the Board of Directors

MPX Bioceutical Corporation (formerly The Canadian Bioceutical Corporation)
W. Scott Boyes, Chairman, President and CEO

For further information, please contact:

MPX Bioceutical Corporation (formerly The Canadian Bioceutical Corporation)
W. Scott Boyes, Chairman, President and CEO
T: +1-416-840-3725
info@mpxbioceutical.com
www.mpxbioceutical.com

Media Contact:
Anne Donohoe
KCSA Strategic Communications
212-896-1265
adonohoe@kcsa.com

Investor Contact:
Phil Carlson / Elizabeth Barker
KCSA Strategic Communications
212-896-1233 / 212-896-1203
pcarlson@kcsa.com / ebarker@kcsa.com