TORONTO, May 27, 2019 (GLOBE NEWSWIRE) — Nutritional High International Inc. (“Nutritional High” or the “Company”) (CSE: EAT, OTCQB: SPLIF, FRANKFURT: 2NU) wishes to provide an update regarding the Company’s relationship with TKO Products LLC (the “Borrower”), as first disclosed on January 2, 2018.
On November 14, 2017, the Company entered into a non-binding letter of intent (“LOI”) with the Borrower to purchase certain assets of the Borrower, which, on December 28, 2017, was amended to provide for the following:
| (i) | the Company agreed to loan the Borrower up to US$1,500,000 in working capital for a term of one (1) year bearing interest at a rate of 10%, compounded monthly and secured by certain assets of the Borrower and a personal guarantee by management of the Borrower (the “Principal Amount”). All loans were to be offset against the purchase price due on closing. In the event the Borrower and Nutritional High did not enter into a definitive agreement for the transaction outlined in the LOI, the first payment on the Principal Amount was to be due nineteen months from the date of the advance and payments were to be made in equal amounts over a five (5) year repayment term; and |
| (ii) | on closing, the Company was to have an option to purchase up to 100% of the Borrower, upon the Borrower having received final confirmation of license approval in Long Beach, California and the Company waiving all customary contingencies, for US$3,025,000 and to pay earn-out payments, for a maximum of US$4,000,000 upon achieving certain revenue targets payable in a combination of cash and common shares. |
The Company received a notice from the Borrower in June 2018 terminating the LOI (the “Termination Date”). As of the Termination Date, the Borrower borrowed an aggregate principal amount of approximately US$585,000 of which US$307,221 is evidenced by promissory notes (“Promissory Notes Balance”). The Promissory Notes Balance is due one year after the funds were advanced. As of the date hereof, the US$307,221 is due, and the Company has taken the position that the entire Principal Amount is due except US$50,000, which will become due on June 5, 2019.
The Company has issued demand letters to the Borrower and commenced an action for repayment against the Borrower and its principals on February 27, 2019.
In a communication to the Company’s legal representatives in June 2018, the Borrower threatened to file a claim against the Company in the amount of US$1.5 million arising from, among other things, harm they allege had been caused to their business. Similar to the previous communication, on May 17, 2019, the Borrower threatened to launch a counter-claim against the Company in the amount of at least US$1.5 million. The Company has not received any evidence supporting the damages alleged. The Company will vigorously continue to pursue repayment of funds owing by the Borrower.