Avidus to acquire assets of Toronto supplement company

2014-07-16 08:39 ET - News Release

Mr. Doug Ridley reports
AVIDUS ANNOUNCES ACQUISITION OF TRUESTAR HEALTH INC.
Avidus Management Group Inc. has entered into an asset purchase agreement with Truestar Health Inc., a Toronto-based network marketing company, pursuant to which Avidus will acquire substantially all of the assets of Truestar. The Acquisition is anticipated to have an immediate and substantial impact on monthly revenue and is expected to increase annualized consolidated revenue of Avidus to over $10 million CDN, based on the historical revenues and revenue trends of Avidus and Truestar.

Post-Acquisition Avidus anticipates:Over $10 million CDN in annualized consolidated revenue; Operationally cash flow positive by the end of 2014; Sustainable profitability in 2015; Two-fold increase in distributor base; and A strong foundation for organic growth of both operating companies, Asantae and Truestar.Under the terms of the Asset Purchase Agreement, Avidus will purchase substantially all of the assets of Truestar for an aggregate purchase price (not including value of inventory) of CAD$6 million that will be paid as follows: CAD$500,000 upon close and the remaining $5.5 million based upon a 5% royalty override on Truestar's revenue. Avidus will pay for existing Truestar inventory as products are sold. The 5% royalty override does not begin until after existing Truestar current inventory is sold.As part of the transaction, Avidus is acquiring Truestar's proprietary software system that allows distributors and customers to create customized nutritional, diet and exercise plans around Truestar's 30 plus products.

Doug Ridley, Avidus CEO said, "Truestar has invested millions to create an exceptional line of nutritional supplements and a web based profiling system to recommend product on a personal basis to both distributors and customers. The result is a monthly average order size that is significantly higher than the industry average and has attracted network marketing talent with industry experience and great potential.""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" continued Mr. Ridley. "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."

Michael Boulton, President of Truestar said "With Avidus Management Group's acquisition of Truestar we are very pleased to be adding years of experience and leadership to our existing team and anticipate that this will translate into renewed vigor and enthusiasm at Truestar. We expect to see continued success and growth after this acquisition and we are very excited about Truestar's future."
Doug Ridley said, "We are very pleased to announce that Truestar's President Michael Boulton will continue to lead the Truestar corporate team. His experience with Canadian public companies together with mergers and acquisitions makes Michael a great asset for Avidus as well."Mr. Boulton has been an integral part of Truestar since its inception, leading the development team and designing the software architecture for the company. He has a degree from Carleton University and a Post Graduate Certificate from ITI in Applied Information Technology.

In addition, Avidus announces, in connection with the Acquisition, a non-brokered private placement (the "Private Placement") of up to 15,000,000 units of the Company (each a "Unit") at a subscription price of $0.10 per Unit, for gross proceeds of up to $1,500,000 CDN, subject to the approval of the TSX Venture Exchange (the "Exchange"). Avidus also will reserve up to 5,000,000 units as an overallotment. Each Unit will be comprised of one common share in the capital of the Company and one transferable common share purchase warrant (each a "Warrant"). Each Warrant will entitle the holder thereof to purchase an additional common share of the Company at an exercise price of $0.20 per common share for a period of 3 years from the date of issue.Finder's fees may be payable in connection with the completion of the Private Placement in accordance with Exchange policies. The net proceeds of the Private Placement are expected to be utilized by the Company to fund the Acquisition and for general corporate and working capital purposes.In connection with the Private Placement, Avidus advises that it intends to settle outstanding indebtedness of up to $600,000 CDN through the issuance of Common Shares at a deemed price of $0.20 per Share, subject to the approval of the Exchange. In addition, certain executives and consultants have forgiven $202,329.39 USD of accrued salary and fees. The net effect of the shares for debt and salary and fees forgiveness is a reduction of overall Avidus debt in excess of $800,000 CDN. Finally, Avidus announces that it has granted an aggregate of 1,126,000 incentive stock options pursuant to its option plan to certain employees and consultants. The options vest immediately and are exercisable at a price of CAD $0.10 per share until July 16, 2019.The information set out above with respect to the anticipated revenues and profitability of the Company is "financial outlook" within the meaning of applicable securities laws. The purpose of this financial outlook is to provide readers with disclosure regarding the Company's reasonable expectations as to the anticipated results of its proposed business activities. Readers are cautioned that this financial outlook may not be appropriate for other purposes and are directed to refer to the assumptions and risks associated with the Company's financial outlook described below under the heading "Forward Looking Statements".
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