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SciSparc Enters Agreement To Acquire Wellution For $20 million

 SciSparc Ltd. (NASDAQ:SPRC) ("Company" or "SciSparc"), a specialty clinical-stage pharmaceutical company focusing on the development of therapies to treat disorders of the central nervous

Benzinga · 09/14/2022 07:36

 SciSparc Ltd. (NASDAQ:SPRC) ("Company" or "SciSparc"), a specialty clinical-stage pharmaceutical company focusing on the development of therapies to treat disorders of the central nervous system, today announced the signing of a definitive agreement with Merhavit M.R.M Holding and Management Ltd ("M.R.M"), to acquire its rights to purchase, Wellution™, a top- seller Amazon.com Marketplace ("Amazon") account, American food supplements and cosmetics brand and trademark (the "Brand"). The Company has established a new wholly owned subsidiary, SciSparc Nutraceuticals Inc., to hold the new assets.

Wellution™ sells dozens of hemp-based, top-ranked products, including hemp gummies, hemp oil capsules, hemp gel, hemp cream, detox pills, height pills, antibacterial creams, and anti-aging creams, among other beauty and hair treatment products that are all manufactured in the United States.

Wellution™ offers eight variations of natural hemp candy supplements under two parent ASINs ("Amazon Standard Identification Number") on Amazon that are differentiated by their hemp oil potency. The leading parent ASIN, that was launched in 2019, has received over 26,500 reviews and is consistently ranked as the #1 best seller in the category.

In total, the Brand has over 40,000 product reviews, most of which are 4 and 5-star reviews.

"We are excited about the execution of our decision to identify strategic transactions in lucrative growing markets. Wellution™ is a leader in the fast-growing global industrial Hemp market on Amazon and we believe in the high potential of expanding the Brand's reach beyond the American market," commented Oz Adler, SciSparc's Chief Executive Officer. "It is our intention to explore additional marketing channels, examine manufacturing and distribution opportunities in order to drive growth and provide value to our shareholders."

In addition to purchasing the Brand, SciSparc will enter a management agreement and received the option to expand the Brand to additional territories such as Europe, as well as a 12-month distribution agreement with a minimum initial order by the distributor of $100,000 of the Brand's products.

The management agreement includes the fulfillment of Amazon's conditions, manufacturing, inventory and advertising management, storage and shipment to the Amazon warehouse and maintaining a pre-determined profit level for the products. The management services would be provided by a company for which SciSparc's Chief Executive Officer and SciSparc's chairman of the board serve as directors. The distribution agreement would provide for the marketing and commercialization of the Brand's products, through offline channels in the United States.

Upon closing, which is subject to certain conditions and expected to be completed within the next 30 days, SciSparc will pay a base cash payment of $4.59 million and in 12 months pay an additional deferred cash payment of a multiple 3 times the amount by which the acquired Brand EBITDA* exceeds $1.12 million.

In addition, the Company will grant to M.R.M $15 million worth of warrants to purchase ordinary shares of SciSparc at an exercise price of $7.00 per share (with a cashless exercise mechanism) and with an exercise period of five years from the closing of the transaction (the "Warrants"). The Warrants will become exercisable upon the achievement of a milestone of $100 million of sales of the Brand in the aggregate or if the price of SciSparc's ordinary shares closes at $10.00 or above.

* Defined in the applicable agreement as SDE and includes certain adjustments such as Research & Development expense