This morning, Naturally Splendid Enterprises Ltd. (TSXV:NSP)(OTC:NSPDF) announced that the company has entered into a letter of intent (LOI) to acquire a British Columbia-based natural foods company. The target company develops and produces nutritious meal replacement products.
The proposed target has accumulated sales of approximately $8 million over the past four years and its products are available in major retailers across Canada.
As part of the acquisition, Naturally Splendid will get approximately $320,000 CAD worth of automated manufacturing equipment, that the company will use to manufacture their own products and the legacy products of the target company. Naturally Splendid would also be taking on related lease obligations, ownership of all retail lines, trademarks, and other intellectual property as well as all inventory and other working capital.
Terms of the LOI (to acquire 100% of the target)
At the time of signing, Naturally Splendid will issue approximately 1,100,000 common shares of Naturally Splendid having a value of $200,000 CAD. These shares will be placed in escrow or be subject to a lock-up agreement where half will be released on January 1st, 2018 and the other half will be released on January 1, 2019.
On or before December 29th, 2017, Naturally Splendid will pay $200,000 CAD in cash.
Naturally Splendid will pay off the target's existing line of credit (anticipated to be ~250,000 CAD).
The vendors will also be entitled to performance based compensation equal to 25% of specified sales that exceed $3,250,000 CAD per year (adjusted annually), for the period 2018 to 2022. Total performance compensation will be capped at $1,209,00 CAD.
In connection with the acquisition, and to provide general working capital, Naturally Splendid is conducting a private placement. The company will offer up to 6,944,444 units at a price of $0.18 CAD per unit for gross proceeds of up to $1,250,000 CAD. Each unit consists of one common share of Naturally Splendid and one half of one warrant. Each whole warrant entitles the holder to purchase one common share at $0.27 CAD per share for two years after the issuance date. The warrants are subject to an accelerated expiration date if certain conditions are met.
Naturally Splendid's CEO, Mr. David Eto
"This proposed acquisition represents a significant advancement in our strategic plan. By acquiring the target company, we expect to add both to our product offerings and revenues while also accessing the target's existing distribution channels to introduce the NATERA retail lines both domestically and internationally. I am familiar with the history of the target company as well as its key executives, and I am confident the synergy between our organizations will benefit Naturally Splendid."
In early trading Wednesday, shares of Naturally Splendid Enterprises are down more than 2.5% on the TSX Venture. Shares haven't traded on the OTC Markets yet. Year-to-date, shares of Naturally Splendid Enterprises are down more than 44%.
Learn more about Naturally Splendid Enterprises by checking out the company's marijuana stock profile in The Daily Marijuana Observer's cannabis stock database.
Be sure to subscribe to one or more of The Daily Marijuana Observer's free e-mail newsletters so you never miss an important cannabis industry update. Also, don't forget to connect with The Daily Marijuana Observer on Facebook, Twitter, and Instagram.
Investing in nanocap, microcap, and small cap stocks is highly speculative. The publishers of DailyMarijuanaObserver.com are not registered as Investment Advisors or Broker-Dealers in any jurisdiction whatsoever. The information contained on DailyMarijuanaObserver.com (“this site”) has been prepared solely for informational purposes. Nothing on the site is an offer or solicitation to buy or sell securities. Investors should seek financial advice regarding the appropriateness of investing in any securities mentioned from their financial advisor.