LOS ANGELES, March 21 /PRNewswire-FirstCall/ -- Health Sciences Group, Inc. (the "Company") (OTC Bulletin Board: HESG) announced today that it has signed a letter of intent to acquire the assets and operations of Quality Botanical Ingredients, Inc. ("QBI") for cash and stock in Health Sciences. Based in South Plainfield, New Jersey, QBI is a leading purchaser, manufacturer, and contract processor of bulk botanical materials and nutritional ingredients supplied to buyers in the pharmaceutical, nutraceutical, and cosmetic industries, among others. QBI uses patented pulverizing/grinding technology in its state-of-the-art sifting, milling, blending and densifying processes.
Fred E. Tannous, Chief Executive Officer of Health Sciences stated, "We are excited about the prospect of adding QBI to our growing family of companies. The integration of QBI's operations and experienced management team is expected to provide an added benefit, not only to our shareholder value, but also to the personnel, customers, and stakeholders of QBI. Upon providing QBI with expansion capital and operational support, we expect operations to realize a revenue growth rate in excess of 25% during the current year." During 2001, QBI generated over $12 million in revenues from product sales and toll work.
With this acquisition, Health Sciences moves closer to launching its new family of proprietary pharmaceutical/nutraceutical products. Bill Glaser, President of Health Sciences, commented, "QBI is expected to play a key role in the launch our new and innovative product line in integrative medicine." Slated to be marketed under the COCARE (R) brand name and distributed through alliances with major pharmaceutical companies, this breakthrough in integrative medicine addresses heart disease, cold & flu, arthritis, migraine, allergy and other conditions. "With QBI as a synergistic provider of the nutraceutical component of our products, we expect the vertical integration in the production process to translate to higher profit margins while maintaining competitive pricing," Mr. Glaser continued. According to estimates from the 2002 US Census Bureau, the worldwide market estimate for these Company-addressed ailments exceeds $54 billion.
Joseph R. Schortz, President & Chief Executive Officer of QBI, commented, "We at QBI have consistently strived to provide our customers with high quality products at the highest levels of service. Soon, as part of the Health Sciences family, not only will we continue to uphold our tradition of quality, but we also expect to maintain a technological edge over our competition through these revolutionary product introductions. In essence, we view Health Sciences as a strategic partner which will bolster our market position by enhancing our product offerings and expanding the scope of our distribution channels."
Under the terms of the letter of intent, the operations of QBI are expected to become an operating subsidiary of Health Sciences, with key members of the QBI management team entering into long-term employment contracts. The cash and stock contemplated for this acquisition includes certain performance milestones. Completion of the transaction is subject to final negotiation of an asset purchase agreement, completion of due diligence, and satisfaction of customary conditions to closing.
About Health Sciences Group, Inc
Health Sciences Group, Inc. is in the business of acquiring, integrating, and operating companies involved in health-related businesses. The Company seeks to establish a collaborative network of companies operating in the fields of pharmaceuticals, nutraceuticals, and biotechnology. Drawing on diverse experiences and extensive resources brought together by its seasoned management team and prestigious advisory board, the Company plans to expand internationally by acquiring and operating profitable, under-valued companies. Management expects to further enhance profitability through organic growth, cost reductions and synergistic efficiencies.
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934 that are based upon current expectations or beliefs, as well as a number of assumptions about future events. Although the Company believes that the expectations reflected in the forward-looking statements and the assumptions upon which they are based are reasonable, it can give no assurance that such expectations and assumptions will prove to have been correct. The reader is cautioned not to put undue reliance on these forward-looking statements, as these statements are subject to numerous factors and uncertainties, including without limitation, the independent authority of the special committee to act on the matters discussed, the successful negotiation of the potential acquisition and disposal of transactions described above, successful implementation of the company's business strategy and competition, any of which may cause actual results to differ materially from those described in the statements. In addition, other factors that could cause actual results to differ materially are discussed in the Company's most recent Form 10-QSB and Form 10-KSB filings with the Securities and Exchange Commission.