Nextleaf Solutions Ltd. (“Nextleaf“, “OILS“, or the “Company“) (CSE: OILS) (OTCQB: OILFF) (FSE: L0MA), a Coquitlam-based company developing intellectual property for the extraction and purification of cannabinoids, is pleased to announce that it has entered into a strategic agreement (the “Agreement“) with a British Columbia-based cannabis processing equipment distribution company (the “Licensee“).
The Agreement permits the Licensee, on a non-exclusive basis, to commercialize and distribute certain intellectual property, specifically, three issued and pending patents related to post-extraction processing equipment (“IP“) developed by Nextleaf. OILS will provide the Licensee with initial working capital and strategic support during the indefinite term of the Agreement. OILS may terminate the Agreement if the Licensee does not meet certain minimum annual sales targets.
OILS will receive a royalty equal to 20% of the Licensee’s gross revenue from all sources (the “Royalty“) in exchange for, among other consideration, the licensed IP. Based on the Licensee’s current product backlog and 2020 projections, OILS estimates the Royalty could yield over $3,000,000 in royalty fees to Nextleaf in the 2020 calendar year, with initial revenue expected to commence in the immediate term.i
“We believe this is an ideal partnership with a company whose management has a proven track record of building one of the industry’s largest cannabis processing equipment distributors,” stated Charles Ackerman, Chief Financial Officer of Nextleaf. “This deal allows OILS to continue its work to efficiently monetize its patent portfolio globally. It also brings closer to its previously announced goal of $5,000,000–$10,000,000 in gross revenue from IP licensing alone in the next 12 months.ii We believe IP licensing has the potential to represent up to 10-20% of our gross annual revenue” continued Ackerman.i
In addition to the development and monetization of its IP portfolio, OILS continues to focus on assisting Nextleaf Labs Ltd., a Health Canada licensed standard processor, to reach full commercial production including the production and sale of bulk CBD and THC oils. Nextleaf expects to be in a position to announce additional commercial agreements during the first calendar quarter of 2020.