Mr. Brian Kalish reports

GEMOSCAN CANADA, INC. ANNOUNCES ACQUISITION OF PHYSIOMED KENNEDY INC.

Gemoscan Canada Inc. has completed its acquisition of a 100-per-cent interest in Physiomed Kennedy Inc. (PKI), which operates a paramedical clinic in Scarborough, Ont., previously announced on July 15, 2013. The purchase price was negotiated on the basis of four times PKI's normalized earnings before interest, tax, depreciation and amortization (EBITDA) as at April 30, 2013, and is subject to adjustment based on PKI's audited financial results for the 12 months ending April 30, 2014. In satisfaction of the purchase price, the vendors received $205,000 in cash, a secured debenture bearing interest at the rate of 3 per cent per year for a period of two years in the principal amount of $374,204, unsecured promissory notes bearing interest at 10.75 per cent per year for a period of two years in the principal amount totalling $268,602 and 797,309 Class A shares priced at 11 cents per share. Interest on the various debt instruments shall be paid monthly, but no principal payments are required until the due date. The secured debenture is secured against the assets of PKI.

Based on historical audited performance, PKI shall immediately provide the company with accretive annual revenue, expected to be approximately $1.47-million, with significant positive net income. PKI is the first of further intended acquisitions of paramedical clinics designed to drive incremental sales and profitability through a strong captive consumer base to which to sell the company's current offerings, and sustainable retail based health and wellness services currently sold by PKI and similar companies.

As announced earlier, Scott Wilson, a director of Gemoscan, owns 50 per cent of PKI through a related company. As a result, the acquisition is a related-party transaction, as such term is defined in Multilateral Instrument 61-101, protection of minority securityholders in special transactions. The acquisition is exempt from the valuation and minority shareholder approval requirements of MI 61-101 by reason of the exemptions contained in sections 5.5(a) and 5.7(1)(a) as the total consideration being received by Mr. Wilson does not exceed 25 per cent of Gemoscan's market capitalization. Mr. Wilson did not receive any shares of Gemoscan in consideration for his interest in PKI.

Financing

In order to complete the acquisition of PKI, Gemoscan has completed a convertible debenture financing of $250,000 with an existing arm's-length lender. This debenture financing was not completed with NorthStar Bancorp Ltd. under the term sheet previously announced on July 15, 2013. Instead, the company has issued a secured convertible debenture with a term of one year bearing interest at the rate of 10.75 per cent per year, secured against the assets of PKI, in the principal amount of $200,000. The company has also issued an unsecured convertible debenture with a term of six months bearing interest at the rate of 15 per cent per year in the principal amount of $50,000. Both debentures are convertible at the rate of one Class A share for each 11 cents in principal converted. Interest on the debentures shall be paid monthly, but no principal payments are required until the due date.

We seek Safe Harbor.