Nutritional High Acquires Controlling Interest in One of California’s Leading Edibles Company and Bolsters Product Offering
TORONTO, Nov. 22, 2018 (GLOBE NEWSWIRE) — Nutritional High International Inc. (“Nutritional High” or the “Company”) (CSE: EAT, OTCQB: SPLIF, FRANKFURT: 2NU) is pleased to announce that is has entered into formal agreements to purchase 51% interest in Bright Green Lights LLC, a California company d/b/a as JMEDS (the “Seller” or “JMEDS”) for gross proceeds of USD$714,000. The Company also secured worldwide licensing rights to the Seller’s intellectual property, and an option to acquire the Seller’s remaining 49% equity interest (the “Minority Interest”).
JMEDS produces high quality cannabis-infused strain specific lozenges and sugar-free mints distributed across California. The Company believes that the Company’s wholly owned distributor, Calyx Brands, Inc. (“Calyx”), can significantly ramp up sales of JMEDS products. Having commenced operations in 2005, JMEDS is a pioneer of “micro dosed” infused products and is one of California’s longest operating and most respected edible companies.
Asset Purchase Agreement
The Company will pay USD$600,000 for a 51% interest in the Seller, of which, USD$200,000 is payable in cash and USD$400,000 through the issuance of common shares of the Company (the “Consideration Shares”) at the time of closing. The Consideration Shares will be priced at the 30-day volume weighted average trading price (“VWAP”) of the Company’s common shares for the 30 trading days immediately preceding three (3) business days before closing. The remaining USD$114,000 of the purchase price will be paid in cash upon successful revenue generation of $250,000 per month for three (3) consecutive months (the “Earn Out”).
License and Option Agreement
The Company also entered into an exclusive patent license and option agreement granting the Company global rights to JMEDS Intellectual Property (further described below) and to purchase the Minority Interest of the Seller. In this regard, the Company can acquire the Minority Interest beginning on the 30th month from closing and ending 36 months from closing, for an amount equal to four (4) times the 12-month trailing EBITDA of the Seller multiplied by 49%. Half of the purchase price will be payable in cash, and half in common shares of the Company priced at the 30-day VWAP immediately preceding the exercise of the option.
Jeffrey Kolsky, Founder and Director of JMEDS, was awarded a patent in 2014 for medical cannabis lozenges and compositions thereof (US 2016/0158298 A1) (the “Intellectual Property”). The Intellectual Property will be transferred to JMEDS at closing. The patent provides “a method for optimizing the therapeutic effects provided by CBD on the one hand, and the psychotropic effects provided by THC on the other hand, in a sublingual medicament.” The patent specifically protects a propriety method to produce “a concentrated extract of cannabis in which the concentration of CBD is known and the concentration of THC is known … wherein the amount of CBD is as high as possible and where the amount of THC is precisely controlled, forming lozenges, and administering the medicament.”
Jim Frazier, CEO of Nutritional High, commented, “We are very pleased to be acquiring JMEDS and its innovative products and intellectual property. In making this acquisition, we are bringing yet another dynamic California brand into our product portfolio. With our manufacturing capacity at FLI NorCal, we will work to expand production to meet current and future demand. Going forward we will continue to seek to acquire high quality assets and further implement our California strategy to create additional value for our shareholders.”
The acquisition is scheduled to close on November 30, 2018. The parties had previously entered into a letter of intent, as had been announced by the Company on July 18, 2018.