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9.
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Alternative Health Product
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On November 12, 2014, the Company has signed an agreement with Poppy’s Teas LLC. (“ViPova”) to acquire
51% of ViPova with an initial consideration of US$50,000. Lexaria acquired a
51% Ownership Interest in the Business by satisfying the requirements set out in the agreement:
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Pay to Operations bank account US$50,000
as an initial amount to upgrade the Business as may be required to advance the Business (paid)
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Agree to Spend $75,000
over one year following the execution date of this agreement as a product marketing and operations budget
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Agree to Extend to the founders of ViPova (“Founders”) $25,000
worth of Lexaria common shares subject to a share lockup of six months as required by the Securities and Exchange Commission (paid)
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Agree to Pay one of the Founders $2000
a month for production consulting for a period of
12
months out of revenues, the operating account, or against the marketing budget
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Agree to Pay one of the Founders $2000
a month for marketing consulting for a period of
12
months out of revenues, the operating account, or against the marketing budget
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Agree to Provide the Founders a cash bonus in the amount of $50,000
should the company generate $300,000
in sales within
8
months of the execution of this agreement
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Agree to grant to ViPova a Right of First Refusal to produce under “white-label,” additional cannabinoid (“CBD”) -based products on behalf of Lexaria, but Lexaria reserves the right to engage other producers should Lexaria, in its reasonable discretion, believe ViPova to be uncompetitive to supply the products requested by Lexaria.
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As part of this Agreement, and once the terms of this Agreement have expired, the Founders will be automatically granted a lifetime license to personally produce products covered by patent numbers # 62010621 and 62037706. This personal license does not extend to any third party corporation, joint venture or partnership that would compete against PoViva Tea, LLC or Lexaria Corporation.
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ViPova will reduce to a
25% Ownership Interest in the Business and Lexaria will acquire an additional
24% (total
75%) Ownership Interest in the Business by satisfying the following requirements:
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Spend an additional US$100,000
on sales and marketing “ViPova by Lexaria” brand beginning within
60
days of executing this Agreement and completing spending within
24
months of executing this Agreement.
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Lexaria to pay to ViPova or to its principals
2.5
times trailing
12
months ViPova revenue (pro- rata) calculated from that date that this option is exercised. ViPova can receive up to
50% of this payment in the Company’s common stock at ViPova’s discretion.
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This Section is valid beginning November 15th, 2015 and expires on November 15th, 2017.
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The acquisition of Vipova was treated as an acquisition of assets rather than a business combination because Vipova did not constitute a business. $48,039
acquired In-Process Research and Development has been expensed at the acquisition date in accordance with ASC 730-10-25-1.
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