Arura Pharma Inc. announces completion of the acquisition of the Neolia(TM) Brands for USD$6,800,000, change to its Board of directors and trading resumption

    MONTREAL, Aug. 9 /CNW Telbec/ - Further to its preliminary news release
of July 16, 2007, Arura Pharma Inc. (TSXV: ARP) ("Arura") is pleased to
announce that it has completed the acquisition of the Neolia(TM) Brands for an
aggregate purchase price of $USD6,800,000.
    Arura has entered into definitive asset purchase agreements dated as of
August 1, 2007 with Primolio Sales Inc.("Primolio") and Valco Enterprises LLC
("Valco") (collectively the "Vendors") to acquire the world-wide rights to the
Neolia(TM) Brands family of trademarks which include Neolia(TM), L'éclatante
douceur de la nature(TM), Nature's Moisture for your Skin(TM) and Nature's
Moisture for your Hair(TM) (collectively the "Neolia(TM) Brands"). The
products distributed under the Neolia(TM) Brands include mainly hand and body
soaps, hair shampoos, hair conditioners and lotions and are manufactured by
sub-contractors located in Quebec and in Vermont. The products are distributed
on a world-wide basis through large chain stores, supermarkets, pharmacies and
membership warehouse clubs. The assets purchased by Arura also include all
intellectual property, customers' and suppliers' lists, outstanding and future
purchase orders made in relation to the Neolia(TM) Brands (collectively, with
the Neolia(TM) Brands, the "Purchased Assets") and some inventory relating
thereto (the inventory being financed through upcoming proceeds from the sale
of Neolia(TM) products).
    The Neolia(TM) Brands were developed by the Vendors in 2002, with initial
sales in 2003 and include olive oil as one of their distinctive components. As
a main business of the Vendors consists of the marketing of olive oil
products, a line of health and beauty products containing olive oil seemed
like a logical extension to the Vendors' product lines. After conducting
several market surveys, a bar soap made with Italian Extra Virgin Olive Oil
was launched in 2003. In January 2005, Neolia(TM) Moisturizing Olive Oil Body
Wash and Neolia(TM) Moisturizing Olive Oil Body Lotion were launched. New
products launched in 2006 included Neolia(TM) Moisture Replenishing Olive Oil
Shampoo for Colored/Dry/Damaged Hair, Neolia(TM) Moisture Replenishing Olive
Oil Conditioner for Colored/Dry/Damaged Hair, Neolia(TM) Nourishing Olive Oil
Shampoo for Normal Hair, and Neolia(TM) Nourishing Olive Oil Conditioner for
Normal Hair, Neolia(TM) Rejuvenating Olive Oil Night Cream and Neolia
Moisturizing Olive Oil Hand Wash. Neolia(TM) Soothing Care Olive Oil After-Sun
Lotion, Neolia(TM) Olive Oil and Shea Butter Soap and Neolia(TM) Olive Oil and
Shea Butter Body Wash were added in 2007 so now the Neolia(TM) Brands
currently include 12 different products.
    The Neolia(TM) Brands products, as per a due diligence report prepared by
PSB Management Consultants (based-on non-audited financial information),
generated USD$6,534,522 in sales for the year ended on December 31, 2006,
compared to $9,442,878 for the year ended on December 31, 2005 and $2,489,035
for the year ended on December 31, 2004. The apparent decrease in sales from
2005 to 2006 resulted from the delivery of a significant purchase order in
December of 2005 which was originally budgeted to be delivered in January
2006, switching revenues accordingly. Gross margins from these sales were
35.26% of sales in 2006, 43.1% in 2005 and 31.96% in 2004. Variations in the
gross margin are mainly attributable to variation in currency, introduction of
new products and use of various promotional strategies. The due diligence
report was prepared by PSB Management Consultants to verify the 2004, 2005 and
2006 reported sales and gross margins. As the Purchased Assets were operated
under a much larger operation, net profits from the Purchased Assets did not
form part of the due diligence report.
    The aggregate purchase price for the Purchased Assets is USD$6,800,000
(excluding inventory). The purchase price may be increased should the sales of
the Neolia(TM) Brands products exceed a certain targeted amount for 2007. The
purchase price is being paid for by Arura issuing to Primolio an aggregate of
23,747,160 common shares of Arura at a deemed issuance price of CDN$0.15 per
Arura common share for a total of USD$3,400,000 and by paying USD$3,400,000 in
cash to Valco. The cash portion of the purchase price is financed for
USD$3,000,000 by additional long term credit facilities granted to Arura by
the Bank of Montreal. Both Primolio and Valco are private companies,
respectively located in Canada and in the United States, ultimately controlled
by Mr. Claus Brueckner, residing and domiciled in Chicago, Illinois USA. As a
result of this transaction, Primolio will become a new substantial shareholder
of Arura, being the owner of approximately 24% of the issued and outstanding
common shares of Arura.
    Pierre Fortin, Chief Operations Officer of Arura and in charge of the
consumer products business unit, declared that "the acquisition of the
Neolia(TM) Brands constitutes a fundamental milestone in the growth strategy
of the consumer products business unit as it diversifies the offering of
products, widens the distribution channels and permits reaching the necessary
scale needed to build an international profitable manufacturing and
distribution capacity, opening the door to further acquisitions so that Arura
becomes a consolidation agent in the marketplace". Mr. Fortin also highlighted
the fact that "the Vendor's acceptance of the payment of 50% of the purchase
price in shares of Arura further evidenced the confidence of the Vendor in the
senior management of Arura to create added value for its shareholders from the
Purchased Assets". Ali Moghaddam, Chief Executive Officer of Arura, added that
"this acquisition of assets will also likely provide the Arura specialty
pharma business unit with further access to quality licensing opportunities as
it shall provide Arura with significant scale and increased visibility in the
US market".

    Change of directors

    As part of this transaction, Mr. Rudy Huber accepted to resign from the
Board of Directors of Arura so that Mr. Claus Brueckner be immediately
appointed as a director of Arura. Mr. Brueckner was awarded a bachelor of arts
degree in 1982 and a Master of Business Administration degree in 1983. Upon
completion of his studies, Mr. Brueckner held various positions in sales and
marketing with General Mills, Cargill and Schwan's. In 1995, Mr. Brueckner and
his partners formed several companies, collectively referred to as the AXIOM
Group of Companies, to market branded food products to membership warehouse
clubs and supermarkets. Mr. Brueckner purchased his partners' interest in the
AXIOM Group of Companies in 2001. Today, the AXIOM Group of Companies sells
primarily branded products in North America, Asia and Europe.
    Daniel Pharand, Chairman of the Board of directors of Arura, took the
opportunity to "thank Mr. Huber for his outstanding work as a director of
Arura" and stated that "the addition of Mr. Brueckner to the Board of
Directors of Arura brings not only close to 25 years of experience to its
consumer health business unit but may also considerably widens its
international network of distribution for its existing and newly acquired

    About Arura Pharma Inc.

    Arura is a specialty pharmaceutical company consisting of two business
units, namely an established consumer health business unit manufacturing and
distributing beauty and personal hygiene products in Canada and in the United
States and an emerging specialty pharmaceutical business unit geared at
acquiring and commercializing established prescription drugs and medical
devices in the oncology, wound care and neurology sectors, amongst others.

    Other Information

    The transaction described herein is not a "non-arm's length transaction"
within the meaning of Policy 2.4 of the TSX-Venture Exchange (the "Exchange")
as the shareholder, directors and officers of the Vendors had no ownership or
interest in Arura prior to the transaction.
    The transaction described herein has received final approval from the
Exchange, all other applicable regulatory approvals and the required written
approval from a majority of the shareholders of Arura as per the policies of
the Exchange. Accordingly, the common shares of Arura will resume trading
following the dissemination of this press release.

    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this press release.

    Cautionary Statement on Forward-Looking Information:

    This release contains certain "forward-looking statements" including,
without limitation, expectations, beliefs, plans and objectives regarding the
potential transactions and ventures discussed in this release. Among the
important factors that could cause actual results to differ materially from
those indicated by such forward-looking statements are the risks inherent in
pharmaceutical manufacturing and distribution, the need to obtain additional
financing, the availability of needed personnel and fluctuations in general
economic conditions.
    %SEDAR: 00022453EF

For further information:

For further information: Daniel Pharand, Chairman, Arura Pharma Inc.,
(514) 984-4431,; Ali Moghaddam, Chief Executive Officer, 
Arura Pharma Inc., (450) 442-2545 ext. 233,

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