CULT Food Science Corp said it entered into an agreement with Cella Food Systems Inc on April 27, 2022, to exchange $300,000 worth of shares of the respective companies.
In addition, the parties will enter into a license agreement under which Cella will grant CULT and its affiliates and portfolio companies a 15-year non-exclusive right to use Cella’s intellectual property (IP) upon closing of the share exchange transaction.
CULT said under the agreement, it will issue an aggregate of 1,672,862 common shares to Cella at a deemed price of $0.17933 as determined by the volume-weighted average price of the company's common shares over the 15-day period prior to the transaction, and Cella will issue an aggregate of 30,000 common shares of Cella to CULT.
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CULT said the company’s shares, when issued, will be subject to a statutory hold period of four months and a day from the date of issuance, and will also be subject to a contractual six month hold period, while the Cella shares will be subject to an indefinite statutory hold period because Cella is a private issuer.
As consideration for the license, CULT will pay to Cella a royalty equal to 1% of the gross revenues received by CULT or its affiliates or portfolio companies from the sale of products incorporating Cella’s IP, CULT said.
“Under the license agreement, Cella is required to use the license fee to further develop it's business and IP, including without limitation its registered or provisional patents,” the company added, noting that the parties will close the share exchange transaction on or about May 9, 2022.
The share exchange agreement follows a Letter of Intent announced on February 28, 2022, that will enable CULT to accelerate its proprietary, cell-based, product development capabilities via Cella’s patent portfolio, machine learning data and prototyping IP toolkits, all while crystalizing turnkey research collaborations and leveraging the methodologies of Cella’s accomplished inventors, the company said.
“CULT continues to build defendable moats around its leading cellular agriculture IP, patent and investment platform through the additive commercial arrangement,” it added.
The first-of-its-kind investment platform in North America, CULT aims to provide individual investors with unprecedented exposure to the most innovative start-up, private or early-stage cultivated meat, cell-based dairy and other cultured food companies around the world.
CULT sees the transaction accelerating its proprietary cell biology and bioprocess engineering capabilities, as well as complementing its existing cell-based investment platform holdings, while potentially allowing for cost savings, increased yields, faster times to market and decentralized cellular agriculture product development across its investment portfolio and IP platform.
Cella is the perfect OS platform for innovative cell-based food companies to advance technologies that can solve the world's biggest food supply challenges, which are being lost in commercialization bottlenecks today. Cella speeds up the development process that will enable solutions to be found in time to feed the growing population in the near decades.
Contact the author at jon.hopkins@proactiveinvestors.com