Empower Clinics Announces Major Acquisition

Empower intends to acquire Sun Valley Clinics, a leading medical clinic group headquartered in Phoenix, AZ, for cash and stock

VANCOUVER BC: January 28, 2019 – EMPOWER CLINICS INC. (CSE: EPW) (Frankfurt

8EC) (“Empower” or the “Company”) today announces it has entered into a non-binding term  sheet to acquire  the  business of Sun  Valley  Certification  Clinics Holdings LLC  (“Sun Valley”),  including  its  interests  in  certain  affiliates  thereof,  by  way  of  a  share  or  asset acquisition, subject to due diligence and customary closing conditions.

Sun  Valley  operates  a  network  of  professional  medical  cannabis  and  pain  management practices,  with  five  clinics  in  Arizona,  one  clinic  in  Las  Vegas,  a  tele-medicine  platform serving California, and a fully developed franchise business model for the domestic cannabis industry, which is believed to be the first of its kind in the United States.

The  proposed  transaction  is  expected  to  create  one  of  the  largest  clinic  groups  in  the medical  cannabis  sector  in  the  United  States,  with  twelve  physical  locations  having  a combined  patient  count  of  165,000  patients  in  Washington,  Oregon,  Illinois,  Arizona, Nevada and California, and the potential to rapidly expand the clinic network via the Sun Valley franchise program. Empower intends to capitalize on high growth opportunities and leverage  the  acquisition  to  bring  more  awareness  to  its  brand  and  diversified  growth strategy.

Dustin and Andrea Klein have been the owners/operators of Sun Valley since launching their first  clinic  in  2013,  working  within  the  guidelines  of  the  Arizona  Department  of  Health Services  Medical  Marijuana  Program  to  assist  and  certify  more  than  20%  of  the  current Arizona  patient  population.  The  Kleins  also  launched  Sun  Valley  Science,  LLC  (“SVS“)  in order  to  expand  their  clinic  offerings  by  providing  patients  with  CBD  and  cannabidiol products to improve and support patients’ quality of life.

Over the past five years, Dustin and Andrea have built the most reputable and organized clinic network in Arizona, developing a patient list of more than 45,000 unique patients, and have performed over 61,000 certifications to date. Sun Valley supports its patients with a dynamic dedicated team consisting of 52 staff, including 30 physicians.

“The  acquisition  of  the  Sun  Valley  clinic  group  is  expected  to  change  the  direction  and growth prospects for Empower,” said Steven McAuley, Empower’s Chairman & CEO. “As we begin to reposition Empower as a vertically integrated global health and wellness company, helping  consumers  access  products  and  specialized  medical  care  for  serious  qualifying conditions,  having  Dustin  and  Andrea  Klein  join  me  in  leadership  to  rapidly  expand Empower’s clinic and distribution network across the United States is the first major step toward our ambitious objectives.”

The proposed acquisition will include the acquisition of six physical wellness clinics and the Sun Valley franchising business, and is expected to include a first right of refusal to acquire SVS,  which  is  Sun  Valley’s  product  development  and  distribution  affiliate.  Under  the proposed  terms,  Empower  will  pay  $625,000  USD  cash  at  closing  and  a  $150,000  USD performance  holdback,  for  an  aggregate  cash  payment  of  $775,000  USD.  In  addition,  at closing, Empower will issue the Kleins common shares in the capital of Empower (“Shares“) having an aggregate value of $1,000,000 USD, and, subject to the satisfaction of defined performance  metrics,  additional  Shares  having  an  aggregate  value  of  $2,000,000  USD, which  will  vest  in  quarterly  installments  over  36  months  following  the  closing.  All  Share consideration  is  expected  to  be  based  on  a  deemed  price  per  Share  equal to  the  10-day volume weighted average closing price per Share on the Canadian Securities Exchange (the “CSE”) for the period ending on the last business day prior to the closing.

Sun Valley co-founder Dustin Klein commented, “Sun Valley supports Empower’s new vision and strongly believes that our patients, our community, and our employees will benefit by joining the Empower team.”

Andrea Klein, Sun Valley co-founder, stated, “Empower brings significant new resources to Sun  Valley  that  we  believe  will  further  enhance  our  mission  to  provide  medical  cannabis patients the most ethical, professional, and reliable service with comprehensive holistic pain management modalities.”

TRANSACTION HIGHLIGHTS

  • Improved Capital   Markets   Profile   Empower   is   beginning   the   process   of diversifying  its  business  model  to  become  a  vertically  integrated  operator  in  the global  cannabis  sector  with  a  focus  on  patient  care,  CBD  product  distribution, research & development and CBD product extraction. The Company believes this will appeal to a broader base of shareholders and investors and provide greater access to capital and improved trading liquidity.
  • Increased Patient Access With a rapidly expanding company-owned clinic network and significant  expansion  opportunity  through  the  Sun  Valley  franchise  model, Empower anticipates it will grow its total patient list substantially in the years ahead. This is expected to provide greater opportunity for treatment analysis using artificial intelligence (AI), validating the Company as a leader in understanding the efficacy of cannabis-related therapies.
  • Focus on CBD Product Sales Empower’s patient base and customers are expected to benefit  from  access  to  high  margin  derivative  products,  including  CBD  lotion, tinctures,  spectrum  oils,  capsules,  lozenges,  patches,  e-drinks,  topical  lotions,  gel caps, hemp extract drops and pet elixir hemp extract drops. Patients and customers will be able to access Empower’s world-class customer service, home delivery and e- commerce platform.
  • Market Leading Technology Empower utilizes a market-leading patient electronic management and POS system that is HIPAA compliant and provides deep insight to patient care. The Company supports remote patients using its tele-medicine portal, enabling patients who do not live near one of its clinic locations, or are disabled or unable to come to a location, to still benefit from a doctor consultation.
  • The Sun Valley Clinic Locations

4218 W Dunlap Ave, Phoenix, AZ

12801 W Bell Rd #145, Surprise, AZ

4015 E Bell Rd #130, Phoenix, AZ

2011 E University Dr, Mesa, AZ

7074 E Speedway Blvd, Tucson, AZ

2550 S Rainbow Blvd, Las Vegas, NV

The   proposed   consideration   assumes   a   debt   free   transaction   and   will   be   adjusted accordingly  for  any  level  of  debt  assumed  by  the  Company,  directly  or  indirectly.  The transaction  is  expected  to  be  structured  on  a  tax  efficient  basis,  and  otherwise  in accordance with the requirements of requisite securities laws and the policies of the CSE.

Empower has agreed to enter into employment agreements with Dustin Klein and Andrea Klein,  each  having  an  initial  term  of  two  years.  Upon  completion  of  the  transaction,  it  is expected that Dustin Klein will be appointed to the board of directors of Empower.

Empower will enter into a distribution agreement with Sun Valley and SVS to enable the Sun Valley clinics to continue to sell SVS CBD products and Sollievo products, and SVS will be entitled to distribute Sollievo products as a distributor and via online stores.

Completion of the transaction will be subject to various conditions, including entry into a definitive agreement, completion of due diligence, and receipt of all required shareholder, manager, third party and regulatory approvals, including approval of the CSE. Closing will also  be  conditional  on  Empower  completing  a  debt  or  equity  financing  to  raise  minimum gross proceeds of $3,000,000 USD. Closing of the transaction is expected to occur on or about March 15, 2019.

None  of  the  Shares  to  be  issued  in  connection  with  the  transaction  are  expected  to  be registered under the United States Securities Act of 1933, as amended (the “1933 Act“), or applicable state securities laws, and may not be offered or sold to, or for the account or benefit  of,  persons  in  the  United  States  or  “U.S.  Persons”  (as  such  term  is  defined  in Regulation S under the 1933 Act), absent registration or an applicable exemption from such registration requirements.

ABOUT EMPOWER

Empower is a leading owner/operator of a network of physician-staffed clinics focused on helping  patients  improve  and  protect  their  health  through  innovative  uses  of  medical cannabis. Treatment solutions are focused on education, data and efficacy in combination with other modalities to support patients with serious qualifying conditions, such as chronic pain,  PTSD,  sleep  disorders,  opioid  dependency,  epilepsy  and  more.  It  is  expected  that Empower’s  proprietary  product  line  “Sollievo”  will  offer  patients  a  variety  of  delivery methods  of  doctor  recommended  cannabidiol  (CBD)  based  product  options  in  its  clinics, online and at major retailers. With over 120,000 patients, an expanding clinic footprint, a focus on new technologies, including tele-medicine and an expanded product development strategy,  Empower  is  undertaking  new  growth  initiatives  to  be  positioned  as  a  vertically integrated  diverse  market-leading  service  provider  for  complex  patient  requirements  in 2019 and beyond.

ON BEHALF OF THE BOARD OF DIRECTORS:

Steven McAuley

Chief Executive Officer

CONTACTS:

Investors:      Steve Low

Boom Capital Markets steve@boomcapitalmarkets.com

647-620-5101

Investors:      Steven McAuley CEO s.mcauley@empowerclinics.com

604-789-2146

DISCLAIMER FOR FORWARD-LOOKING STATEMENTS

This  news  release  contains  certain  “forward-looking  statements”  or  “forward-looking  information” (collectively “forward looking statements”) within the meaning of applicable Canadian securities laws. All statements, other than statements of historical fact, are forward-looking statements and are based on  expectations,  estimates  and  projections  as  at  the  date  of  this  news  release.  Forward-looking statements can frequently be identified by words such as “plans”, “continues”, “expects”, “projects”, “intends”,  “believes”,  “anticipates”,  “estimates”,  “may”,  “will”,  “potential”,  “proposed”  and  other similar words, or information that certain events or conditions “may” or “will” occur. Forward-looking statements in this news release include, but are not limited to, statements regarding: the expected benefits to the Company and its shareholders as a result of the proposed acquisition of Sun Valley; the proposed  transaction  terms;  the  expected  number  of  clinics  and  patients  following  the  closing;  the future  potential  success  of  Sun  Valley’s  franchise  model;  the  anticipated  date  of  closing  of  the acquisition  and  the  occurrence  thereof;  and  that  the  Company  will  be  positioned  to  be  a  market- leading service provider for complex patient requirements in 2019 and beyond. Such statements are only projections, are based on assumptions known to management at this time, and are subject to risks  and  uncertainties  that  may  cause  actual  results,  performance  or  developments  to  differ materially  from  those  contained  in  the  forward-looking  statements,  including:  that  the  Sun  Valley acquisition may not be completed on the terms expected or at all; that the Company’s products may not work as expected; that legislative changes may have an adverse affect on the Company’s business and product development; that the Company may not be able to obtain adequate financing to pursue its business plan; general business, economic, competitive, political and social uncertainties; failure to obtain any necessary approvals in connection with the proposed transaction; and other factors beyond the Company’s control. No assurance can be given that any of the events anticipated by the forward- looking statements will occur or, if they do occur, what benefits the Company will obtain from them. Readers are cautioned not to place undue reliance on the forward-looking statements in this release, which  are  qualified  in  their  entirety  by  these  cautionary  statements.  The  Company  is  under  no obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements in this release, whether as a result of new information, future events or otherwise, except as expressly required by applicable laws.