Mr. Dennis Wilson reports

CONVALO EXECUTES FINAL BINDING PURCHASE AGREEMENTS FOR HOLLYWOOD DETOX AND ARTS; INCREASES RUN RATE REVENUES TO OVER $23 MILLION AND ADJUSTED EBITDA TO OVER $5.5 MILLION

Convalo Health International Corp. has executed final binding purchase agreements for the acquisition of Hollywood Detox Center and Accredited Rehab and Treatment Services (ARTS), two profitable Southern California companies.

Hollywood Detox and ARTS are behavioural health facilities offering detox and residential treatment services for both men and women in and around the Hollywood and central Los Angeles area.

When added to the outpatient treatment services currently offered by BLVD Treatment Centers, Convalo now has a full-service behavioural health platform spanning Hollywood and central Los Angeles capable of treating patients at every level of the addiction treatment continuum. The combined annual run-rate revenue for this Hollywood and central Los Angeles business now exceeds $23-million and annualized run-rate adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) now exceeds $5.5-million.

By the end of the year, Convalo will expand this platform to include additional detox and residential treatment centres for both men and women on the west side of Los Angeles.

Three of the companies' top-level executives, Keith Fowler, Brent Ortner and Ryan Newport, will remain on after the transaction and are expected to play key roles in Convalo moving forward.

Terms of the acquisition

Management has reported combined trailing 12-month revenues in excess of $14-million and adjusted EBITDA in excess of $3.6-million. This acquisition is expected to increase Convalo's revenues by over 150 per cent and adjusted EBITDA by more than 220 per cent.

According to the purchase agreements, Convalo will acquire the businesses for a mix of cash and stock. Convalo will pay a total of $7,937,500 in cash and up to eight million shares or under 3 per cent of the fully diluted shares of the company. After the acquisition, Convalo will have over $21.5-million in cash on the balance sheet, with which to make further acquisitions. Convalo has no debt.

"We are now a fully established addiction services company in the heart of Los Angeles with over $23-million in revenues and significant profitability," said Michael Dalsin, chairman and chief executive officer of Convalo. "While there is a significant positive impact on revenue and profits, this acquisition really only covers Hollywood and central Los Angeles. The acquisition of the management team gives us the ability to create a similar business in terms of revenues and profits in West Los Angeles and in San Francisco this year.

"When closed, this acquisition will be EPS [earnings per share] accretive," continued Mr. Dalsin. "We continue to invest heavily in our [merger and acquisition] activities and continue to expect to close deals in other major U.S. cities in the near future."

At the request of the Investment Industry Regulatory Organization of Canada, the attached table is a management-provided unaudited balance sheet as at June 10, 2015, for Hollywood Detox and ARTS.

                               BALANCE SHEET
                     (rounded to the nearest $1,000)

Assets
Cash                                                         $   151,000
Accounts receivable                                          $ 2,145,000
Furniture and fixtures                                       $   305,000
Security deposits                                            $   100,000
Total assets                                                 $ 2,701,000
Liabilities and shareholder equity
Trade account payable                                        $   456,000
Taxes due                                                    $   327,000
Accrued payroll                                              $   201,000
Total liabilities                                            $   984,000
Total shareholder equity                                     $ 1,717,000

We seek Safe Harbor.