Mr. Michael Dalsin reports

CONVALO HEALTH INTERNATIONAL, CORP. OPENS SECOND LOCATION IN THE LOS ANGELES MARKET; EXPANDS M&A PLAN AND UPDATES PIPELINE

Convalo Health International Corp.'s board of directors has approved the execution of purchase agreements to acquire the stock of two companies with a focus on referral-based addiction-related services on the west side of Los Angeles.

Expanded M&A (merger and acquisitions) plan

Convalo announced it has expanded its M&A strategy since listing on Feb. 17, 2015, on the TSX Venture Exchange. Convalo is now concentrating on four types of acquisition targets in the market:

1. Medical detox centres;
2. Referral-based outpatient centres;
3. Residential treatment centres;
4. Criminal-justice-oriented treatment and education centres.

All acquisition targets are small, locally owned treatment, medical or education centres offering addiction-related services and specializing in a singular service or market. Convalo plans to increase revenues organically through offering a full suite of services in larger, luxury facilities upgraded to the highest level of licensing and certifications on a nationwide basis.

Convalo has hired a staff of four M&A professionals and analysts since listing and is actively working to contact and qualify over 1,000 identified targets fitting the target descriptions. There are over 16,000 licensed treatment centres in a highly fragmented market in the United States.

Pipeline

Since Feb. 17, 2015, the active pipeline of potential acquisition targets has grown to:

• Three companies in advanced discussions with trailing 12-month cash flow in between $1-million and $1.5-million;
• Seven additional companies under non-disclosure agreements (NDA).

All potential targets are local companies that range in geography across the United States, from New York to Florida to California. The companies offer services ranging from treatment services under contract with criminal justice systems to reduce prison overcrowding, to high-luxury treatment centres, to medical detox clinics strictly focused on medical services.

West Los Angeles market acquisitions and new centre opening

Convalo has an agreement to acquire two companies that have historically referred a combined 15 clients per month for outpatient addiction treatment, with potential revenues of up to $200,000 per month for the new facility. Concurrently, Convalo has executed a lease for a luxury 5,772-square-foot facility on the west side of Los Angeles near Venice Beach, Culver City and Santa Monica. The centre can also serve the large treatment population in Malibu, Calif.

This acquisition is similar to the Hollywood centre acquisition in 2014. The centre will also operate under the BLVD Treatment Centers brand name. In June, 2014, the Hollywood centre had revenues of less than $62,000 for the month. As part of the five-point postacquisition organic revenue growth plan, operational, facility and marketing improvements were made that resulted in combined unaudited revenues for January and February of over $675,000 with operational profit(1) in excess of $100,000. The centre was at 45-per-cent capacity for the months of January and February, 2015.

The new west Los Angeles facility is expected to be fully operational by summertime and is expected to generate revenue growth similar to the Hollywood operation, with a capacity of up to 100 clients per month.

Under the agreement, Convalo will issue 1.35 million shares to the owners of the companies, restricted for 24 months, and $250,000 in cash. The active shareholders of the companies will join BLVD Centers. The closing of the acquisitions is subject to exchange approval.

Audited financials on SEDAR

Convalo also released audited financial statements on SEDAR for the full year ended Nov. 30, 2014. As a result of the recent listing on the TSX Venture Exchange, the company was required to provide audited financial results for the full fiscal year ended Nov. 30, 2014. For the period of the audit, Convalo operated one centre in Hollywood under the BLVD Treatment Centers brand, launching the full 100-client-capacity centre on Nov. 1, 2014. Through the listing process, Convalo had already provided audited financial statements for the first three quarters of fiscal 2014 of limited, preacquisition operations.

"Since listing just a month ago, we have invested heavily in our M&A team and pipeline," said Michael Dalsin, chairman and chief executive officer of Convalo. "We have expanded our focus to three additional types of addiction-related service companies for acquisition. I believe this market is ripe for consolidation and we are in a very good position to be one of the most active players in the market.

"Launching the new outpatient treatment centre in west Los Angeles is a key part of our growth strategy," continued Mr. Dalsin. "I do expect we will acquire and launch more outpatient centres in other U.S. cities this year, along with acquisitions of other types of addiction-related businesses. As we make these acquisitions, I expect we will continue to see the tremendous organic revenue growth we have experienced at the Hollywood location."

Note:

1. Operational profits are a non-IFRS (international financial reporting standards) figure used by management. Operational profits excludes share-based payments, stock option expenses, public company expenses, and expenses associated with establishing and furnishing a new treatment centre.

We seek Safe Harbor.