17:49:28 EDT Thu 30 Mar 2023
Enter Symbol
or Name

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Empower Clinics Inc
Symbol EPW
Shares Issued 395,358,658
Close 2023-02-07 C$ 0.025
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Empower signs LOI for Dallas SMO with Mocherla

2023-02-07 09:22 ET - News Release

Mr. Steven McAuley reports


Empower Clinics Inc. has entered into a letter of intent dated Feb. 3, 2023, with Dr. Bharat Mocherla -- a nuclear medicine specialist in Las Vegas, Nev., with more than 15 years of experience in the medical and clinical trials field -- to create and operate a Dallas-based site management organization (SMO) with plans to evolve into a contract research organization (CRO).

The CRO services market in terms of revenue was estimated to be worth $76.6-billion in 2023 and is poised to reach $127.3-billion by 2028, growing at a compound annual growth rate of 10.7 per cent from 2023 to 2028, according to a new report by MarketsandMarkets. Factors such as continuously growing pharmaceutical, biotechnology and medical device research and development pipelines and technological advancements in the clinical trials process are driving the growth of this market. In recent years, the costs associated with drug and product development have increased significantly, driving pharma, biotech and medical device companies to look for partnerships to drive modernizations and smarter ways of conducting business.

Pursuant to the terms of the LOI, the company and Dr. Mocherla intend to form a new joint venture entity, which will be owned 51 per cent by Empower (or an affiliate) and 49 per cent by Dr. Mocherla (or an affiliate) pursuant to a definitive agreement to be entered into by the parties. Empower and Dr. Mocherla each intend to provide $200,000 (U.S.) in seed capital for the JV. The definitive agreement is expected to include a right of first refusal, providing Empower first right to purchase Las Vegas Medical Research (controlled by Dr. Mocherla) and providing Dr. Mocherla first right to purchase the Empower Interest. In connection with the transactions contemplated by the Definitive Agreement, Empower intends to issue two million common shares in the capital of Empower to Dr. Mocherla. At such time as the JV achieves $5-million (U.S.) in revenue, and subject to Empower's stock option plan and the policies of the Canadian Securities Exchange (CSE), Empower intends to grant 750,000 incentive stock options to Dr. Mocherla with a five-year term.

The completion of the transactions contemplated in the LOI will be subject to various closing conditions, including satisfactory completion of financial and legal due diligence, entry into the definitive agreement on terms acceptable to the parties, and receipt of all necessary third party approvals, including the approval of the CSE, if required.

Following the creation of the JV, the proposed Dallas-based SMO is expected to work with industry, patients, community doctors and researchers in North America and globally to provide clinical trial management services for the pharmaceutical, biotechnology and medical device industries. Dallas is one of the largest hubs in the United States for health care services, research and talent. Empower's MediSure Labs serves as an ideal launch site for SMO services. The partnership expects to identify new cities to operate additional SMOs in 2023, with the goal of developing a diversified CRO.

"This is a transformational partnership for Empower Clinics," stated Steven McAuley, chairman and chief executive officer of Empower. "Despite the global economic headwinds, the pharmaceutical and biotech industries continue to see strong growth and investment in R&D. Our diagnostics laboratory in Dallas serves as the perfect hub to launch U.S. SMO services with the guidance of Dr. Mocherla. From there we can continue to launch additional SMO sites throughout U.S. and Canada by leveraging Empower's network of health professionals and our unique access to capital markets as a public company."

"This partnership is a dedicated research centre working with community doctors and researchers around the globe to provide advanced diagnostic tests and effective treatments for debilitating diseases," said Dr. Mocherla, CEO of Las Vegas Medical Research. "All of our studies and grants are multicentre trials conducted internationally with sites in U.S., Canada, EU, South America, Australia, Japan and Southeast Asia. We are proud to be part of this global network of research centres working on next-generation diagnostic tests and, most importantly, treatments which can either arrest or cure debilitating diseases. With my partnership with Empower, we can now add Dallas to our site list and work with the local medical community with the primary goal to provide exclusive high-profile studies to the global research community."

The company also announces that it today issued an aggregate of 3.75 million common shares in the capital of Empower at a price of five cents per share as discretionary special bonuses issued to two employees. The shares are subject to a four-month-and-one-day hold period under applicable securities laws.

The issuance of the shares is a related party transaction as defined under Multilateral Instrument 61-101. The transaction is exempt from the formal valuation and the minority shareholder approval requirement of MI 61-101 since neither the fair market value of the transaction nor the fair market value of the consideration for the transaction exceeds 25 per cent of the company's market capitalization.

The company did not file the material change report more than 21 days before the expected closing date of the transaction as the details of the transaction and the participation therein by each related party of the company were not settled until shortly prior to the closing of the transaction and the company wished to close the transaction on an expedited basis for sound business reasons.

About Empower Clinics Inc.

Empower is an integrated health care company with multidisciplinary clinics, an at-home medical testing device company and state-of-the-art medical diagnostics laboratories. With a growing presence in the U.S. and Canada, Empower is a leader in integrated health care and diagnostics solutions and is reshaping the model for patient-first wellness.

We seek Safe Harbor.

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