You are here

BLVD Centers Announces Disposition of Outpatient Centers for Net Proceeds of $5,500,000; Executes Letters of Intent for Two Potential Cannabis Acquisitions With Revenues Totaling $2,700,000 Annually

Posts Third Quarter Financials; Reports Cash Increase of $665,000

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

LOS ANGELES, Jan. 28, 2019 (GLOBE NEWSWIRE) -- BLVD Centers (CSE:BLVD) today announced it has entered into agreements for the disposition of its intensive outpatient rehabilitation business unit as it focuses its resources on the detox business line and cannabis revenues. Additionally, the Company announced it had executed non-binding Letters of Intent (LOI) to acquire two cannabis companies, one in California and one in the Northwest of the U.S. Finally, the Company posted its interim third quarter financial statements showing a strong increase in cash on the balance sheet.

Fiscal Year Q3 2018 Financial Statements:

Financial Highlights:

  • Cash increased by $665,000 in the quarter to $7,926,000.
  • Payables decreased by $1,239,000 as a result of aggressive accounts receivable collections, reducing accounts receivable to $1,253,000.
  • Real estate and fixed asset holdings held above the $8,000,000 figure at $8,140,000.
  • $10,000,000 in annualized revenue ($2,500,000 in this reported quarter) in inpatient detox revenues were generated.

Full Financial Statements can be found on www.sedar.com

“We continue to bolster the cash on our balance sheet,” said Mr. Jacob Gamble, CEO of BLVD Centers. “We saw a six hundred and sixty-five thousand dollar increase in cash yet again this quarter, taking the total cash increase over the fiscal year to over two million dollars. We saw this increase in cash while decreasing payables by over a million dollars in just this quarter. Our strong cash balance gives us the firepower to invest in acquisitions as well as organic growth initiatives. Our continued cash flow gives me confidence that we will continue to improve our financial position.”

Letters of Intent with Cannabis Companies

BLVD Centers has executed detailed non-binding LOIs with two cannabis dispensaries and is working toward a binding purchase agreement for both companies (“Acquisition Targets”).

The first strategic Acquisition Target is in California in a favorable location with several special endorsements on its license. It has unaudited trailing 12-month (TTM) revenues in excess of $1,500,000 and strong margins, with positive annual net income and cash flow. The Acquisition Target comes with experienced local leadership that has agreed to stay on after the close.

Under the terms of the LOI, BLVD will acquire the Acquisition Target for a total cost of less than 2 times revenues, including all consideration and transactional costs. The consideration is an initial payment of US$1,000,000 in cash and an earn-out payment over 18 months of US$1,500,000.

The second, smaller strategic Acquisition Target is in the Pacific Northwest. It has unaudited trailing 12-month (TTM) revenues in excess of $750,000 and positive annual net income and cash flow. This Acquisition Target also comes with experienced local leadership that has agreed to stay on after the close.

Under the terms of this second LOI, BLVD will acquire the Acquisition Target for a total cost of less than 1 times revenues, including all consideration and transactional costs. The consideration is an initial payment of US$250,000 in cash, US$300,000 in BLVD common stock and an earn-out payment over 6 months of US$50,000 in cash.

The BLVD Centers legal, accounting and management teams are working to finalize both transactions and will update the market as the deals progress.

“I am pleased that our pipeline of potential acquisition targets continues to produce attractive opportunities for the company,” said Jacob Gamble, CEO of BLVD Centers. “These two LOIs are an important step toward finalizing the first wave of acquisitions in our plan. If these acquisitions close, they will increase our depth of knowledge and experience in the cannabis industry and are expected to add over two-point-seven million dollars in annual revenues to our enterprise. I ask shareholders to be patient as we develop our full plan for the future growth of BLVD. I recognize it has been a long while since shareholders received a detailed vision for the company. So, we will be holding a conference call soon to provide an update on the company’s plans.”

Disposition of Non-Core Outpatient Clinics is Expected to Generate $5,500,000 in Cash

As part of the new plan, BLVD has executed binding agreements to dispose of all the outpatient clinics in Orange County, California and Los Angeles, California. Further, BLVD has a non-binding Letter of Intent to sell the Portland, Oregon outpatient business which is expected to move to a binding agreement shortly. BLVD has decided to shutter the San Diego location rather than sell it, and to collect its receivables and liquidate its assets. Under these agreements, BLVD will trade several outpatient clinic subsidiaries, including lease obligations and other liabilities, generating about $12,000,000 in annualized revenues for a total of $6,500,000 in cash. After accounting for all liabilities left behind, including, but not limited to, the San Diego lease liability, other potential legal liabilities, the real estate option liability from 2016 to be paid in shares and other transaction and liquidation expenses, BLVD’s net cash from the disposition is expected to be $5,500,000 with $2,400,000 in cash paid within the first year of the agreement, with the remainder paid over the following 2 years. The cash raised from the sale of these non-core assets can be used for growth capital in the new plan.

“By disposing of these performing assets we raise cash to execute our plan,” said Mr. Gamble. “After accounting for our current cash, the cash needed for the closing of the acquisition targets under LOI, and finally the incoming cash from the sale of the outpatient businesses, we will still have a very strong cash balance of over eight million dollars after these acquisitions. We plan to use that cash for further acquisitions and organic growth. We also have the benefit of monthly cash flow and a strong asset base, including real estate assets. This gives us a strong platform for growth going forward and is another step closer to delivering value for shareholders. As a new and significant shareholder of BLVD, I look forward to sharing in the company’s success.”

Update on Cannabis for the Use of Treatment of Addiction

Medical marijuana can now be used to treat opioid addiction in New Jersey according to the according to New Jersey State Health Commissioner, Shereef Elnahal.

“We are pleased to announce that, as of today, opioid use disorder is a condition for which physicians can recommend medical marijuana to patients,” Elnahal said.

(https://www.nj.com/politics/2019/01/opioid-addiction-now-qualifies-patients-for-medical-marijuana-in-nj.html)

There have been several high-profile articles that link medical marijuana legalization with a reduction of opioid-related complications. These reports present an opportunity for BLVD to leverage its $10 million annualized revenue detox business.

These reports provide more detail on the opportunity

For more information contact:

BLVD Centers Corporation
Jacob Gamble
CEO and Executive Director
(424) 372-1123
investorinfo@BLVDcenters.com
www.BLVDir.com

Forward-Looking Statements

Certain statements contained in this press release constitute "forward-looking information" as such term is defined in applicable Canadian securities legislation. The words "may", "would", "could", "should", "potential", "will", "seek", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions as they relate to the Company, Such statements reflect the Company's current views and intentions with respect to future events, and current information available to the Company, and are subject to certain risks, uncertainties and assumptions. The forward-looking information included in this press release is made as of the date of this press release and the Company undertakes no obligation to publicly update or revise any forward-looking information, other than as required by applicable law. All figures are in Canadian dollars unless otherwise indicated.

Monday, January 28, 2019 - 08:00