Health Sciences Acquires Quality Botanical Ingredients

LOS ANGELES--Health Sciences Group Inc. (OTCBB:HESG) signed a definitive agreement to acquire all assets and business of Quality Botanical Ingredients Inc. (QBI), located in South Plainfield, N.J. Health Sciences had signed a letter of intent back in March for the QBI acquisition. Health Sciences acquired in a stock purchase the assets and liabilities of QBI, which is expected to operate as a wholly owned subsidiary of Health Sciences.

Health Sciences sees the acquisition of QBI (www.4qbi.com)--a purchaser, manufacturer and contract processor of bulk botanical and nutritional ingredients--as a means to expand business to meet the growing demand for functional foods and beverages such as energy bars and sports drinks. Health Sciences is also paying down QBI's outstanding debt so that the botanical company has working capital.

Health Sciences (www.hsciences.com) currently employs a staff of 22 and operates two other wholly owned subsidiaries: XCEL Healthcare Inc. and BioSelect Innovations Inc. The company's workforce is expected to increase to more than 100 once the acquisition is complete, and the company expects to expand into South Plainfield. Joe Schortz, chief executive officer of QBI, is expected to sign a three-year employment agreement with QBI; he will continue to head QBI operations.

The companies reported earlier this year that they would launch a new product line under the COCARE® name and distribute it through pharmaceutical companies. Health Sciences President Bill Glaser reported that a patent is expected to be issued on one of the line's products by month's end.

On a proforma basis, QBI's annualized consolidated revenues for 2002 are expected to reach $20 million. As of Health Sciences' third quarter (3Q02), ended Sept. 30, the company had $4.2 million in total sales for the year.