Health Sciences Acquires Quality Botanical Ingredients 39362

Health Sciences Acquires Quality Botanical Ingredients

LOS ANGELES--Health Sciences Group Inc. (OTCBB:HESG) signed adefinitive agreement to acquire all assets and business of Quality BotanicalIngredients Inc. (QBI), located in South Plainfield, N.J. Health Sciences hadsigned a letter of intent back in March for the QBI acquisition. Health Sciencesacquired in a stock purchase the assets and liabilities of QBI, which isexpected 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 andnutritional ingredients--as a means to expand business to meet the growingdemand 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 botanicalcompany has working capital.

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

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

On a proforma basis, QBI's annualized consolidated revenues for 2002 areexpected 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.