Naturally Splendid Closes Novation Agreement, Completes Financing

- February 25th, 2015

Naturally Splendid USA Ltd., wholly owned subsidiary of Naturally Splendid Enterprises (TSXV:NS,FWB:50N,OTCQB:NSPDF), has closed the Novation Agreement with Full Spectrum Laboratories Limited, Boreal Technologies, Inc. and Naturally Splendid. Under the Novation Agreement, Boreal has assigned, and Naturally Splendid USA has assumed, all rights, title and interest in and to a Restated and Amended License Agreement between Full Spectrum Laboratories and Boreal. Naturally Splendid USA is now the licensee under the License Agreement, which provides that Naturally Splendid USA has a worldwide license to manufacture, commercialize and sell products based on certain proprietary technology relating to both omega and cannabinoid extraction and formulations.

Naturally Splendid USA Ltd., wholly owned subsidiary of Naturally Splendid Enterprises (TSXV:NS,FWB:50N,OTCQB:NSPDF), has closed the Novation Agreement with Full Spectrum Laboratories Limited, Boreal Technologies, Inc. and Naturally Splendid. Under the Novation Agreement, Boreal has assigned, and Naturally Splendid USA has assumed, all rights, title and interest in and to a Restated and Amended License Agreement between Full Spectrum Laboratories and Boreal. Naturally Splendid USA is now the licensee under the License Agreement, which provides that Naturally Splendid USA has a worldwide license to manufacture, commercialize and sell products based on certain proprietary technology relating to both omega and cannabinoid extraction and formulations.

Naturally Splendid also reported the completion of its previously announced private placement financing of $1,847,132 by issuing a total of 7,388,528 units at $0.25 per Unit.

As quoted in the press release:

Under the terms of the Novation Agreement, Naturally Splendid USA paid $725,000 to Boreal and Naturally Splendid issued 2,928,571 common shares to Full Spectrum Partners, LLLP (an entity controlled by FSL).

Terms of the License Agreement

As a result of closing of the Novation Agreement, Naturally Splendid USA is now the licensee under the License Agreement. The License Agreement provides that the licensee has a worldwide license to manufacture, commercialize and sell products based on certain proprietary technology relating to (1) omega extraction and formulations (the “Omega Technology”) and (2) cannabinoid extraction and formulations (the “CBD Technology”)

In consideration of the License, the Naturally Splendid USA will be required to pay to FSL, on a quarterly basis, a 4.5% gross revenue royalty (the “Royalty”). For each year after the second anniversary of the License Agreement, Naturally Splendid USA will be required to pay a minimum Royalty of USD $1.6 million (the “Minimum Royalty”). The License Agreement provides that no Royalties will be payable to FSL on the first $1,750,000 of royalties payable under the License Agreement. Therefore, in the event that no revenues are earned under the License Agreement, the Minimum Royalty provision will not apply until November 17, 2018. Failure to pay the Minimum Royalty on November 17, 2018 may result in termination of the License Agreement.

The term of the License Agreement is for a period of 10 years and may, at the option of Naturally Splendid USA, be renewed for an additional 5 years.

FSL will have the right to terminate the License Agreement in the event that (i) Naturally Splendid USA fails to make a payment due under the License Agreement and remains in default of such nonpayment, (ii) Naturally Splendid USA is in breach of a material term of the License Agreement, (iii) Naturally Splendid USA becomes insolvent, or (iv) a change of “Control” in Naturally Splendid USA. “Control” is defined as the issuance of fifty percent (50%) of the issued and outstanding shares of Naturally Splendid USA.

… Private Placement Financing

In conjunction with closing the above noted transaction, Naturally Splendid completed its previously announced private placement financing by issuing a total of 7,388,528 units (“Units”) at $0.25 per Unit for gross proceeds of $1,847,132.

Each Unit is comprised of one common share of Naturally Splendid and one-half of one common share purchase warrant (“Warrant”), with each whole Warrant entitling the holder to purchase one additional common share at $0.40 per share for a period of two years from the date of the issue. Naturally Splendid will have the right to accelerate the expiry date of the Warrants if, at any time, the average closing price of Naturally Splendid’s common shares is equal to or greater than $0.50 for 10 consecutive trading days. In the event of acceleration, the expiry date will be accelerated to a date that is 30 days after Naturally Splendid issues a news release announcing that it has elected to exercise this acceleration right.

Charles R. Brink, directly and indirectly, purchased 3,417,043 Units under the private placement financing. Together with the 2,928,571 shares issued under Novation Agreement, Mr. Brink will control, directly and indirectly, 6,345,614 common shares of Naturally Splendid, which equals approximately 14.5% of the issued and outstanding shares of Naturally Splendid.

In connection with the proceeds raised under the financing, the Company paid finders cash commissions totaling $36,720 and issued finders 146,880 non-transferable warrants. Each finder’s warrant is exercisable on the same terms as the Warrants described above.

The securities issued under the financing will be subject to a hold period expiring on June 24, 2015 pursuant to applicable Canadian securities laws and the rules of the TSX Venture Exchange.

Proceeds of the private placement financing were used to satisfy the $725,000 payment under the Novation Agreement and the balance will be used for product development as well as for general working capital and corporate purposes.

New Insiders

In conjunction with closing of the transaction and the private placement financing, Charles R. Brink was appointed as a member of Naturally Splendid’s board of directors. In addition, Frank Siemens resigned as a director due to health reasons. Naturally Splendid wishes to thank Mr. Siemens for his services as a director of Naturally Splendid.

Mr. Brink will also be an insider of Naturally Splendid as a result of his acquisition, directly and indirectly, of 3,417,043 Units under the private placement financing and 2,928,571 shares under Novation Agreement. As such, Mr. Brink will own approximately 14.5% of the issued and outstanding shares of Naturally Splendid.

Mr. Brink was a Founder, Member of the Board, Chief Operating Officer and later General Counsel for Mona Vie, Inc. (“Mona Vie”), being a nutritional and energy drink company. Mr. Brink is a member of the Board and Managing Director of FSL as well as a controlling shareholding.

Resumption of Trading

Naturally Splendid’s common shares will resume trading under the symbol “NSP” on February 26, 2015.

Click here to read the Naturally Splendid Enterprises (TSXV:NS,FWB:50N,OTCQB:NSPDF) press release
Click here to see the Naturally Splendid Enterprises (TSXV:NS,FWB:50N,OTCQB:NSPDF) profile.

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