Annual report pursuant to Section 13 and 15(d)

Alternative Health Product

Alternative Health Product
12 Months Ended
Aug. 31, 2015
Alternative Health Product [Text Block]

Alternative Health Product

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:


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)


Agree to Spend $75,000 over one year following the execution date of this agreement as a product marketing and operations budget


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)


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


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


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


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.


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.




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:




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.


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.


This Section is valid beginning November 15th, 2015 and expires on November 15th, 2017.

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.

In June 2015, the Company filed Lexaria simultaneous filing of a U.S. utility patent application and an International patent application under the Patent Cooperation Treaty (PCT) procedure, both at the U.S. Patent and Trademark Office. These applications follow the Company’s 2014 and 2015 family of provisional patent application filings in the U.S. and serve two additional broad purposes.

The first of these was to expand potential intellectual property protection outside of the USA. Filing under the PCT allows the Company to elect to pursue patent protection in up to 148 nations around the world. The second purpose was to broaden the number of molecules for which intellectual patent protection is sought. Under the original patents pending, only the THC and CBD molecules, infused within a unique lipid-formulation technology, were pursued. Under the new patent applications, the list of molecules for which a unique delivery system were broadened to include THC, CBC, Nicotine, Non Steriodal Anit Inflammatories, and certain Vitamins. As at August 31, 2015, the Company capitalized of $36,989 for patent application.

On August 11, 2015, Lexaria signed a licence agreement with PoViva Tea LLC for $10,000, granting Lexaria a 35 -year non exclusive worldwide license to unencumbered use of PoViva Tea LLC’s IP Rights, including rights of resale. This license agreement ensures Lexaria has full access to the underlying patent pending infusion technology. The Company has not paid such payment as at August 31, 2015.