Limitless X Holdings Inc 8-K, filed May 26, 2022
Limitless X Holdings Inc. (LIMX)
About this 8-K
Limitless X Holdings Inc filed this 8-K on May 26, 2022, reporting on events of May 25, 2022.
Items reported
- Item 2.01: Completed an acquisition or sale of assets
- Item 3.02: Unregistered sale of equity
- Item 5.02: Director or officer change, or executive pay
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
(Exact name of Registrant as specified in its charter)
| (State or other jurisdiction | (Commission File Number) | (I.R.S. Employer |
| of incorporation) | Identification No.) |
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including
area code
__________________________________________________________
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None |
Indicate by check
mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of
this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
If an emerging growth
company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Cautionary Language Concerning Forward-Looking Statements
This Current Report on Form 8-K (this “Report”) contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of management, are not guarantees of performance and are subject to significant risks and uncertainty. These forward-looking statements should, therefore, be considered in light of various important factors, including those set forth in reports that Bio Lab Naturals, Inc. files from time to time with the Securities and Exchange Commission (“SEC”) and which you should review, including those statements under “Risk Factors” within the Annual Report on Form 10-K, as may be amended, supplemented or superseded from time to time within other reports that Bio Lab Naturals, Inc. files with the SEC.
These forward-looking statements should not be relied upon as predictions of future events, and Bio Lab Naturals, Inc cannot assure you that the events or circumstances discussed or reflected in these statements will be achieved or will occur. If such forward-looking statements prove to be inaccurate, the inaccuracy may be material. You should not regard these statements as a representation or warranty by Bio Lab Naturals, Inc or any other person that Bio Lab Naturals, Inc. will achieve its objectives and plans in any specified timeframe, or at all. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. Bio Lab Naturals, Inc. disclaims any obligation to publicly update or release any revisions to these forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Report or to reflect the occurrence of unanticipated events, except as required by law.
Item 2.01 Completion of Acquisition or Disposition of Assets
As previously reported on a Current Report on Form 8-K that was filed with the Securities and Exchange Commission on May 13, 2022, on May 11, 2022 Bio Lab Naturals, Inc., a Delaware corporation (the “Company”), entered into a Share Exchange Agreement (the “Agreement”) with Limitless X, Inc., a Nevada corporation (“LimitlessX”), and its 11 shareholders (the “LimitlessX Acquisition”).
The parties completed and closed the LimitlessX Acquisition on May 20, 2022 by issuing an aggregate of 97 million shares to the LimitlessX shareholders (the “Closing”). According to the terms of the Agreement, the Company is obligated to issue an additional nine million shares of common stock to the LimitlessX shareholders pro rata to their interests in approximately six months from Closing. Concurrently with the LimitlessX Acquisition, Jaspreet Mathur, the founder and principal shareholder of LimitlessX, also purchased from Helion Holdings LLC, 500,000 shares of the Company’s Class A Preferred Convertible Stock, which at all times have a number of votes equal to 60% of all the issued and outstanding shares of common stock of the Company.
Certain shareholders of the Company, owning 4,308,000 shares of common stock of the Company in the aggregate, agreed to enter into Lock-up/Leak Out Agreements whereby for a period of 180 days following Closing (the “Lock Up Period”) those shareholders agreed not to sell, pledge or transfer any of the lock-up shares. Upon expiration of the Lock-Up Period, these shareholders shall be permitted to sell, transfer, and convey up to 15% of the lock-up shares during each calendar month during the six-month period following termination of the Lock-up Period, following which the provisions of the Lock-Up/Leak Out Agreements shall terminate. The foregoing descriptions of the Lock-up/Leak Out Agreements do not purport to be complete and are qualified in their entirety by reference to the form of these agreements which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
Limitless X, Inc., a corporation incorporated under the laws of Nevada in September 2021, specializes in creating, and marketing leading direct-to-consumer products and services that include certain proprietary lifestyle brands and health and fitness products and accessories. The LimitlessX mission is to launch products and services which make people look good and feel great. In December 2021, LimitlessX entered into Manufacturing & Distributorship License Agreements (“MDLA Licenses”) with (i) Divatrim Inc. (“Divatrim”), (ii) Smilz Inc. (“Smilz”), (iii) Amarose Inc. (“Amarose”) and (iv) Limitless Performance, Inc (“LPI” and together with Divatrim, Smilz and Amarose, the “Affiliated Licensors”). Each of the Affiliated Licensors is substantially owned and controlled by Jaspreet Mathur, the founder of LimitlessX, who following the LimitlessX Acquisition is also the controlling shareholder and chief executive officer of the Company.
| 1 |
Divatrim has developed and owns the rights to weight management, weight loss supplements and related products which it has designed and has been manufacturing, marketing and selling under the Divatrim name and design logo, with established brand awareness and significant sales from its inception in 2020.
Smilz has developed and owns the rights to certain CBD and related lifestyle products which it has designed and has been manufacturing, marketing and selling under the Smilz name and design logo, with established brand awareness and significant sales from its inception in November 2020.
Amarose has developed and owns the rights to skincare, health and beauty products which it has designed and has been manufacturing, marketing and selling under the Amarose name and design logo, with established brand awareness and significant initial sales from its inception in 2020.
LPI has developed and owns the rights to certain nutraceutical, dietary supplement, and related lifestyle products which it has designed and has been manufacturing, marketing and selling under the LPI name and design logo, with established brand awareness and significant sales from its inception in 2016.
Under the MDLA Licenses each of the Affiliated Licensors granted to LimitlessX, on the terms and conditions of their respective agreements and under any respective exhibits attached and made a part of those agreements, the following rights exclusive of all other entities and persons:
a) To design or redesign the products of the respective Affiliated Licensors (the “Affiliated Licensor Products”):
b) To manufacture the respective Affiliated Licensor Products under such design Specifications as may be mutually agreed upon by the respective Affiliated Licensors and LimitlessX from time to time;
c) To promote, sell and distribute the Affiliated Licensor Products in the United States and its territories and possessions (the “Territory”);
d) To use the existing designs of the Affiliated Licensor Products and all intellectual property rights associated with or for such Affiliated Licensor Products, including all Trademarks and Patent rights, with the sale, promotion and distribution of the Affiliated Licensor Products in the Territory, including the display of any Trademarks, and all other designs or marks which could be or that are actually later registered with the United States Patent and Trademark Office (“USPTO”), on LimitlessX vehicles and other merchandising equipment, and on stationery, packaging and other advertising and promotional materials;
e) To use the existing domain names, web addresses, telephone lines, third-party vendors, and any other operational element currently in use by the Affiliated Licensors that can be transferred to LimitlessX, subject to LimitlessX entering its own contract with such vendors Each of the Affiliated Licensors retains the rights to continue its own use of these items under existing or new contracts per its discretion, and to develop new products or brands separate and apart from those included in under the MDLA Licenses as set forth in their respective exhibits. Should any of the Affiliated Licensors seek any help in marketing, manufacturing or distributing from any third party, LimitlessX was granted the right of first refusal to add the new products to the existing product line.
f) To manufacture, promote, sell and distribute new products designed or created by LimitlessX that LimitlessX deems preferable to sell under the name of any of the Affiliated Licensors; and in such case, the individual Affiliated Licensor and LimitlessX shall negotiate in good faith to agree on a royalty commission percentage or flat rate amount for the sale of new LimitlessX products which are to use the name of such Affiliated Licensor.
| 2 |
The foregoing descriptions of the MDLA Licenses do not purport to be complete and are qualified in its entirety by reference to these agreements which are attached hereto as Exhibits 10.3 through 10.6 respectively and are incorporated herein by reference.
Risk Factors
LimitlessX was formed as a Nevada corporation in September 2021 and is subject to all the risk factors of an early-stage company without its own historically proven track record. LimitlessX is subject to the same risks that all companies in its industry, and all companies in the economy, are exposed to. These include risks relating to competition, economic downturns, political and economic events and technological developments (such as hacking and the ability to prevent hacking). The market prices of our common stock could be subject to wide fluctuations in response to the risk factors described below or various other factors following the LimitlessX Acquisition. Additionally, early-stage companies are inherently more risky than more developed companies. The risk factors summarized below are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, reputation, financial condition and/or operating results.
Changes to federal or state laws pertaining to industrial hemp could slow the use of industrial hemp which would materially impact our revenues in future periods.
As of the date hereof, approximately 46 states authorized industrial hemp programs pursuant to the United States of the Agricultural Improvement Act of 2018, commonly known as the “Farm Bill.” Continued development of the industrial hemp industry will be dependent upon new legislative authorization of industrial hemp at the state level, and further amendment or supplementation of legislation at the federal level. Any number of events or occurrences could slow or halt progress all together in this space. While progress within the industrial hemp industry is currently encouraging, growth is not assured. While there appears to be ample public support for favorable legislative action, numerous factors may impact or negatively affect the legislative process(es) within the various states where we have business interests. Any one of these factors could slow or halt use of industrial hemp, which could negatively impact the business up to possibly causing us to discontinue operations as a whole. In addition, changes in federal or state laws could require us to alter the way we conduct our business in order to remain compliant with applicable state laws in ways we are presently unable to foresee. These possible changes, if necessary, could be costly and may adversely impact our results of operations in future periods.
Costs associated with compliance with numerous laws and regulations could impact our financial results. In addition, we could become subject to increased litigation risks associated with the CBD industry.
The manufacture, labeling and distribution by us of CBD products is regulated by various federal, state and local agencies. These governmental authorities may commence regulatory or legal proceedings, which could restrict the permissible scope of our product claims or the ability to sell products in the future. The U.S. Food and Drug Administration (‘FDA”) may regulate our products to ensure that the products are not adulterated or misbranded. We are subject to regulation by the federal government and other state and local agencies as a result of our CBD products. The shifting compliance environment and the need to build and maintain robust systems to comply with different compliance in multiple jurisdictions increases the possibility that we may violate one or more of the requirements. If our operations are found to be in violation of any of such laws or any other governmental regulations that apply to our company, we may be subject to penalties, including, without limitation, civil and criminal penalties, damages, fines, the curtailment or restructuring of our operations, any of which could adversely affect the ability to operate our business and our financial results. Failure to comply with FDA requirements may result in, among other things, injunctions, product withdrawals, recalls, product seizures, fines and criminal prosecutions. Our advertising is subject to regulation by the U.S. Federal Trade Commission, or FTC, under the Federal Trade Commission Act. Additionally, some states also permit advertising and labeling laws to be enforced by attorneys general who may seek relief for consumers, seek class-action certifications, seek class-wide damages and product recalls of products sold by us. Any actions against our company by governmental authorities or private litigants could be time consuming, costly to defend and could have a material adverse effect on our business, financial condition and results of operations.
| 3 |
We rely on third-parties for raw materials and to manufacture and compound some of our products. We have no control over these third parties and if these relationships are disrupted our results of operations in future periods will be adversely impacted.
We currently rely on unaffiliated third-party vendors for our critical raw materials. In addition, some of our products are manufactured or compounded by unaffiliated third parties and the use of these third-party co-packers changes from time to time due to customer demand and the composition of our product mix and product portfolio. We do not have any long-term contracts with any of these third parties, and we expect to compete with other companies for raw materials, production and imported packaging material capacity. If we experience significant increased demand, or need to replace an existing raw material supplier or third-party manufacturer, there can be no assurances that replacements for these third-party vendors will be available when required on terms that are acceptable to us, or at all, or that any manufacturer or compounder would allocate sufficient capacity to us in order to meet our requirements. In addition, even if we are able to expand existing or find new sources, we may encounter delays in production and added costs as a result of the time it takes to engage third parties. Any delays, interruption or increased costs in raw materials and/or the manufacturing or compounding of our products could have an adverse effect on our ability to meet retail customer and consumer demand for our products and result in lower revenues and net income both in the short and long-term.
Dependence on key personnel.
LimitlessX performance materially relies on continued contributions of its founder and chief executive officer, Jaspreet Mathur and should the Company lose the benefit of his services the business, operations and financial condition of the Company would be materially and adversely affected.
Our performance materially depends upon the continued contributions of Jaspreet Mathur, our founder, chief executive officer and principal shareholder. Should we lose the benefit of his full time services our sales, our operations and ability to manage growth and continue innovating our business would be materially and adversely affected. Our performance may also depend on our other executive officers and key employees, both individually and as a group, and our ability to retain and motivate them. Our officers and key personnel have experience with us and in our industry and it may be difficult to replace them. If we lose key personnel or are unable to recruit qualified personnel, our operations and ability to manage our business may be adversely affected.
Jaspreet Mathur, our Chairman of the Board and chief executive officer, has the ability to influence or control the outcome of matters submitted for stockholder approval, may limit your ability to influence outcomes of director elections and may have interests that differ from those of our other stockholders.
As of May 25, 2022 , Jaspreet Mathur, our Chairman of the Board and chief executive officer owns of record 72,265,000 shares of common stock, or about 67% of the outstanding shares of common stock and 500,000 shares of the Company’s Class A Preferred Convertible Stock, which at all times have a number of votes equal to 60% of all the issued and outstanding shares of common stock of the Company. As a result, Jaspreet Mathur is able to exercise controlling influence over all matters requiring stockholder approval, including:
| · | electing or defeating the election of our directors |
| · | amending or preventing amendment of our articles of incorporation or bylaws |
| · | effecting or preventing a merger, sale of assets or other corporate transaction; and |
| · | controlling the outcome of any other matter submitted to our stockholders for vote. |
Mr. Mathur may also have interests that differ from other stockholders and he may vote in a manner that is or could be deemed as adverse to interests of other stockholders. His controlling stock ownership could discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of our company, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price. This concentration of voting power may have the effect of deterring, delaying or impeding actions that could be beneficial to other stockholders.
| 4 |
We have obtained significant invested amounts from Mr. Mathur, our Chairman of the Board, and chief executive officer and if as we seek additional funding to support our business Mr. Mathur does not participate in our future offerings, we may not be able to raise needed amounts and our operations may be adversely affected.
We were formed as a Nevada corporation at the end of September 2021 and have a limited operating history. We obtained (i) proceeds of (a) approximately $1.8 million during the period ended December 31, 2022, primarily in the form of inventory recorded as additional paid in capital, along with (b) an unsecured loan in the amount of $50,000, (ii) an unsecured loan in the amount of $150,000 in February 2022 and (iii) unsecured loans totaling $2,100,000 in May 2022.
Except for loans evidenced by promissory notes dated May 16 and May 18 in amounts totalling $1,550,000 which are interest free if paid within 30 days from the date of issuance, following which the loans will accrue interest at a rate of 8.5% per annum until repaid, all other loans bear interest at 6% per year and have a term of 12 months. To the extent that we may need additional capital we expect that we will seek to fund our operations through public or private equity or debt financings, collaborations, strategic partnerships or other sources. No assurance can be given that Mr. Mathur or entities affiliated with him will continue to participate in any loans, offerings of our securities or that we will otherwise be able to obtain additional capital from him. If we are unable to obtain funding on a timely basis, our business and operations may be materially and adversely affected. The foregoing descriptions of the loan terms do not purport to be complete and are qualified in their entirety by reference to the forms of promissory notes which are attached hereto as Exhibits 10.7 through 10.11 and are incorporated herein by reference.
Future sales of common stock, or the perception of such future sales, by some of our existing stockholders could cause our stock price to decline.
The market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market or the perception that these sales may occur. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell shares in the future at a time and at a price that we deem appropriate.
Holders of our common stock may be diluted by the future issuance of additional common stock, preferred stock or securities convertible into shares of common stock or preferred stock in connection with incentive plans, acquisitions or otherwise; future sales of such shares in the public market or the expectation that such sales may occur may decrease the market price of our common stock.
We could issue a significant number of shares of common stock in the future in connection with investments or acquisitions. We plan to adopt one or more incentive plans which will provide for the issuance, pursuant to the terms and subject to the conditions set forth in any plan as adopted, of long-term incentive compensation which may take the form of options, restricted stock units or other securities. Any of these issuances could dilute our existing stockholders, and such dilution could be significant. Moreover, such dilution could have a material adverse effect on the market price for the shares of our common stock.
Our limited operating history makes it difficult to evaluate the success of our business plan and to forecast our future results, making any investment in us highly speculative.
LimitlessX was formed as a Nevada corporation in September 2021, has a limited operating history, and our historical financial and operating information may be of limited value in predicting our future operating results. We may not accurately forecast customer behaviors and recognize or respond to emerging trends, changing preferences or competitive factors facing us, and, therefore, we may fail to make accurate financial forecasts or achieve our targeted results. Our current and future expense levels are based largely on our investment plans and estimates of future revenue. As a result, we may be unable to adjust our spending in a timely manner to compensate for any unexpected revenue shortfall, which could then force us to curtail or cease certain of our marketing initiatives and business operations.
| 5 |
Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results.
U.S. GAAP and related pronouncements, implementation guidelines and interpretations with regard to a wide variety of matters that are relevant to our business, such as, but not limited to, revenue recognition, stock-based compensation, trade promotions, affiliated transactions, and income taxes, are highly complex and involve many subjective assumptions, estimates and judgments by our management. Changes to these rules or their interpretation or changes in underlying assumptions, as well as estimates or judgments by our management could significantly change our reported results.
As a result of the LimitlessX Acquisition, the business of LimitlessX will be the principal operating business of the Company which will be subject to significant increased costs as a result of operating as a public company, and our LimitlessX management will be required to devote substantial time to compliance activities and initiatives.
As a public company engaged in the LimitlessX operations and business, we will incur significant legal, accounting, and other expenses that LimitlessX did not incur as a private company.
Rules and regulations governing public companies will increase our legal and financial compliance costs and make some activities more time-consuming and costly. For example, these rules and regulations make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our Board of Directors, our Board committees or as executive officers.
The Sarbanes-Oxley Act of 2002 requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. While we anticipate maintaining the integrity of our internal control over financial reporting, we cannot be certain that a material weakness will not be identified when we test the effectiveness of our control systems in the future. If a material weakness is identified, we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources, costly litigation or a loss of public confidence in our internal control, which could have an adverse effect on the market price of our stock.
LimitlessX maintains a website at https://limitlessx.com. Information contained on that website or connected thereto does not constitute part of this report, nor is that content incorporated by reference herein, and should not be relied upon in determining whether to make an investment in our common stock.
The pro forma financial information included in this Current Report on Form 8-K has been presented for informational purposes only and is not necessarily indicative of the combined financial position or results of operations that would have been realized had the acquisition of LimitlessX occurred as of the dates indicated, nor is it meant to be indicative of any anticipated combined financial position or future results of operations that the Company will achieve after the acquisition.
Item 3.02 Unregistered Sales of Equity Securities
In May 2022 the Company entered into four consulting agreements with four consultants, each having a term of six months, pursuant
to which each consultant agreed to provide services including, but not limited to, general business
advice, capital structuring, potential acquisitions, board member recruitment, and advice and assistance with Company regulatory
reporting and disclosure requirements. The Company agreed to issue a total of one million shares of restricted stock to these consultants.
This description of the consulting agreements does not purport to be complete and are qualified in their entirety by the Form of
Consulting Agreement attached hereto as Exhibit 10.2 and incorporated by this reference.
As described in Section 2.01, the Company became obligated to issue an aggregate of 106 million shares of common stock in connection with the share exchange with the LimitlessX shareholders, of which 97 million shares were issued to them effective May 20, 2022 and an additional nine million shares will be issued to them pro rata to the share interests of the LimitlessX shareholders within six months from May 20, 2022. The foregoing share issuances were or will be issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended since among other things the transactions did not involve a public offering.
| 6 |
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On the Closing and pursuant to the terms of the Agreement, W. Edward Nichols, Darrell Avey, Jeremy Ostler and Calvin D. Smiley, Sr. resigned as officers and directors of the Company.
On the Closing and pursuant to the provisions of the Agreement Jaspreet Mathur, Bharat Raj Mathur, Kenneth Haller, Amanda Saccomanno and Dov Konetz were appointed directors of the Company. Jaspreet Mathur was appointed as the Company’s Chairman and Chief Executive Officer, Kenneth Haller was appointed as President, Danielle Young was appointed as Chief Operating Officer and Benjamin Chung was appointed as Chief Financial Officer.
Jaspreet Mathur, age 37, on May 20, 2022 became the Chairman, Chief Executive Officer and a member of the Board of Directors of the Company. In January 2011, he launched Kore Fit Living, a chain of retail stores across Canada specializing in sales of vitamins and supplements, sports nutrition, athletic apparel and fitness/MMA training equipment. In 2013 he launched a web agency, Emblaze One, as a full-service interactive agency with global offices to accommodate a consumer market shift from brick and mortar to e-commerce. In November 2018, he launched the Limitless brand, which manufactures and distributes health and wellness products and offers B2B services for brand development and digital marketing. In January 2022, he teamed up with Dr. Mehmet Oz, and a nonprofit organization called HealthCorps to jumpstart health and wellness programs that are targeted at teens and young adults.
Kenneth Haller, age 36 , became the President of the Company on May 20, 2022. From January 2021 until April 2022 he was Vice President Payments at Greenbox, a software company that designs and develops mobile applications for cash-free e-wallet payments. From May 2013 until May 2022 he was Managing Partner of SKY MIDS a strategic merchant services company that focuses on high risk & international credit card processing. During this same period until 2021 he was chief executive officer of ChargeSavvy, LLC a table-side checkout POS system that streamlines information gathering and payment processing.
Danielle Young, 35, has been in public accounting for 10 years. In 2015 she was hired by Benjamin & Young, LLP, a mid-size CPA firm in Orange County, CA as part of their tax department. In 2019, she left Benjamin & Young and joined Benjamin & Ko, spearheading their operations as well as the Director of Internal Audit, working with major Public corporations such as The Habit Burger, Aerovironment and Ducommun Aerospace. After leaving Benjamin & Ko, she started her own consulting firm, Irvine Advisory Services in July 2021, focusing on IPO readiness preparation, Internal Audit and corporation management. She was also recently elected as a board member for The Miss America Foundation.
Benjamin Chung, 46, has been in public accounting for over 15 years. From 1999-2004 Mr. Chung was an Audit Manager at PricewaterhouseCoopers, from 2004-2007 Mr. Chung was an audit manager at Ernst & Young and he then went on to become the Director of Internal Audit for Big 5 Sporting Goods. In 2012 Mr. Chung was the founder and managing partner at Benjamin & Ko, a public accounting and consulting firm. Over the last five years, Mr. Chung has also served on the board for multiple public companies, the most recent being Franklin Wireless, which trades on Nasdaq. Mr. Chung resigned from that board in December 2019.
Bharat Raj Mathur, age 67, became a director of the Company on May 20, 2022. From July 2016 he has been a Columnist and featured Contributor at www.bizcatalyst360.com. From March 2014 to April 2016 he was chief operating officer at KORE Fit Living and from August 2004 to April 2016 he was Vice President, Distribution Channel Management at Incredible Entertainment.
Amanda Saccomanno, age 31, became a director of the Company on May 20, 2022. Ms. Saccomanno is an American professional wrestler, television personality, and fitness and figure competitor. In 2015 Ms. Saccomanno gained major attention from World Wrestling Entertainment after scoring second place in its Tough Enough reality show – a competition of contenders vying for a WWE wrestling contract. In 2015 she signed with the WWE as a Sports Entertainer and starring in their E! Hit Reality Series, Total Divas. Since 2017, Ms. Saccomanno has developed multiple health platforms and
| 7 |
launched an iOS application called “Fit with Mandy.” In 2020 Ms. Saccomanno co-founded and continues to help market and develop a skin care line, with Jaspreet Mathur, called Amarose.
Dov Konetz, age 40, for more than the past five years has been the Managing Director of DMK Capital, a company engaged in providing valuations in commercial real estate, intangibles, and movable assets. Since 2008, Dov has served as a Director of Mount Sinai Hospital in Miami, Florida. Dov also served on the Miami Beach Police Relations Committee from 2010-2012. Dov is also a valued supporter of The Dream Catcher Foundation, a non-profit that is dedicated to combating human trafficking.
Except for Bharat Raj Mathur who is the father of Jaspreet Mathur, there are no family relationships with any of the executive officers or directors of the Company and the above referenced individuals. Other than as may be contemplated by the share exchange agreement there are no arrangements or understandings between the above referenced individuals and any other persons pursuant to which he or she was selected as a director.
Item 7.01 Regulation FD Disclosure
On May 23, 2022, the Company issued a press release announcing the completion of the LimitlessX Acquisition. A copy of the press release is attached as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
| (a) | Financial Statements of Businesses Acquired |
The audited financial statements and related notes thereto of LimitlessX, Inc. for the period from September 27, 2021 (Date of Formation) through December 31, 2021, including the related audit report of the Company’s independent registered public accounting firm, BF Borgers CPA PC, and the unaudited interim financial statements and related notes thereto of LimitlessX, Inc., for the three months ended March 31, 2022, are filed herewith.
| (b) | Pro Forma Financial Information |
The unaudited pro forma combined financial information of the Company, after giving effect to the acquisition of Limitless X, Inc., effective May 20, 2022, which includes the unaudited pro forma combined balance sheet as of March 31, 2022, and the unaudited pro forma combined statements of operations for the three months ended March 31, 2022 and for the period from September 27, 2021 (Date of Formation) through December 31, 2021, including the required explanatory notes thereto, are filed herewith.
| 8 |
| (c) | Exhibits |
| Exhibit No. | Description | |||
| 2.1 | Share Exchange Agreement among Registrant, Limitless X, Inc. dated May 11, 2022(1) | |||
| 3.1 | Amended Certificate of Designation of Series A Preferred Stock of Registrant | |||
| 10.1 | Form of Lock-Up/Leak-Out Agreement | |||
| 10.2 | Form of Consulting Agreement | |||
| 10.3 | Manufacturing and Distributorship License Agreement between Registrant and Divatrim, Inc., dated as of December 1, 2021 | |||
| 10.4 | Manufacturing and Distributorship License Agreement between Registrant and Smilz Inc., dated as of December 1, 2021 | |||
| 10.5 | Manufacturing and Distributorship License Agreement between Registrant and Limitless Performance Inc., dated as of December 1, 2021 | |||
| 10.6 | Manufacturing and Distributorship License Agreement between Registrant and Amarose Inc., dated as of December 1, 2021 | |||
| 10.7 | Limitless X Inc. Promissory Note in amount of $50,000, dated December 6, 2021 | |||
| 10.8 | Limitless X Inc. Promissory Note in amount of $150,000, dated February 11, 2022 | |||
| 10.9 | Limitless X Inc. Promissory Note in amount of $550,000, dated May 8, 2022 | |||
| 10.10 | Limitless X Inc. Promissory Note in amount of $1,100,000, dated as of May 16, 2022 | |||
| 10.11 | Limitless X Inc. Promissory Note in amount of $450,000, dated as of May 18, 2022 | |||
| 99.1 | Press Release, dated May 23, 2022 | |||
___________
(1) Incorporated by reference to the Company’s Current Report on Form 8-K, previously filed on May 13, 2022.
| 9 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: May 26, 2022
| BIO LAB NATURALS, INC. | |
| /s/ Jaspreet Mathur | |
| Jaspreet Mathur | |
| Chief Executive Officer | |
| 10 |
Limitless x INC. |
|
|
|
Financial Statements As of December 31, 2021 and for the period from September 27, 2021 (Date of formation) through December 31, 2021 with Report of Independent Registered Public Accounting Firm
|
| F-1 |
Table of Contents
| Page | ||
| Report of Independent Registered Public Accounting Firm | F-3 | |
| Financial Statements | ||
| Balance Sheet | F-4 | |
| Statement of Operations | F-5 | |
| Statement of Shareholders’ Equity | F-6 | |
| Statement of Cash Flows | F-7 | |
| Notes to Financial Statements | F-8 |
| F-2 |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
of Limitless X Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of Limitless X Inc. (the “Company”) as of December 31, 2021, the related statements of operations, stockholders’ equity, and cash flows, and the related notes and schedules (referred to as the “financial statements”) for the period from September 27, 2021 (Date of formation) through December 31, 2021. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for the period from September 27, 2021 (Date of formation) through December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ BF Borgers CPA PC
We have served as the Company’s auditor since 2022.
Lakewood, Colorado
May 26, 2022
| F-3 |
Limitless X Inc.
Balance Sheet
| December 31, 2021 | ||||
| ASSETS | ||||
| Current Assets: | ||||
| Cash | $ | 78,856 | ||
| Accounts receivables, net of allowance for doubtful accounts of $0 | 322,499 | |||
| Holdback receivables | 162,226 | |||
| Inventories, net | 1,875,146 | |||
| Total current assets | 2,438,727 | |||
| Non-Current Assets: | ||||
| Operating lease right-of-use asset, net | 224,202 | |||
| Other assets | 10,985 | |||
| Total non-current assets | 235,187 | |||
| Total assets | $ | 2,673,914 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
| Current Liabilities: | ||||
| Accounts payable and accrued expenses | $ | 215,176 | ||
| Current portion of operating lease liabilities | 132,200 | |||
| Refunds payable | 207,599 | |||
| Chargebacks payable | 100,350 | |||
| Current portion of loan payable to shareholder | 28,802 | |||
| Income tax payable | 22,906 | |||
| Total current liabilities | 707,033 | |||
| Loan payable to shareholder, less current portion | 21,198 | |||
| Operating lease liabilities, less current portion | 92,195 | |||
| Total liabilities | 820,426 | |||
| Commitments and contingencies | ||||
| Stockholders' Equity | ||||
| Preferred Stock - $0.001 par value; 10,000,000 authorized shares; no shares issued and outstanding at December 31, 2021 | — | |||
| Common Stock - $0.001 par value; 50,000,000 authorized shares; 48,500,000 shares issued and outstanding and 1,500,000 shares issuable at December 31, 2021 | 50,000 | |||
| Additional paid-in-capital | 1,798,824 | |||
| Retained earnings | 4,664 | |||
| Total stockholders' equity | 1,853,488 | |||
| Total liabilities and stockholders' equity | $ | 2,673,914 | ||
See Notes to the Financial Statements
| F-4 |
Limitless X Inc.
Statement of Operations
| For the period from | ||||
| September 27, 2021 | ||||
| (Date of formation) | ||||
| through | ||||
| December 31, 2021 | ||||
| Net sales | $ | 516,267 | ||
| Cost of sales | 238,662 | |||
| Gross profit | 277,605 | |||
| Operating expenses: | ||||
| Advertising and marketing | 194,679 | |||
| General and administrative | 26,054 | |||
| Payroll and payroll taxes | 17,794 | |||
| Rent | 11,508 | |||
| Total operating expenses | 250,035 | |||
| Income from operations | 27,570 | |||
| Income tax provision | 22,906 | |||
| Net income | $ | 4,664 | ||
| Income per share: | ||||
| Basic and diluted | $ | 0.00 | ||
| Weighted average number of common shares outstanding: | ||||
| Basic and diluted | 46,479,167 | |||
See Notes to the Financial Statements
| F-5 |
Limitless X Inc.
Statement of Stockholders’ Equity
| Preferred Stocks | Common Stock | Common Stock Issuable | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Additional Pain-In Capital | Retained Earnings | Total Stockholder’s Equity | ||||||||||||||||||||||||||||||||||||
| Balance at September 27, 2021 (Date of formation) | — | $ | — | — | $ | — | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||
| Common stocks issued to Founders | — | — | 48,500,000 | 48,500 | — | — | — | — | (48,500 | ) | — | — | ||||||||||||||||||||||||||||||||
| Common stocks issuable to Founders | — | — | — | — | — | 1,500,000 | 1,500 | — | (1,500 | ) | — | — | ||||||||||||||||||||||||||||||||
| Contributions | — | — | — | — | — | — | — | — | 1,848,824 | — | 1,848,824 | |||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | 4,664 | 4,664 | |||||||||||||||||||||||||||||||||||
| Balance at December 31, 2021 | — | $ | — | 48,500,000 | $ | 48,500 | 1,500,000 | $ | 1,500 | $ | 1,798,824 | $ | 4,664 | $ | 1,853,488 | |||||||||||||||||||||||||||||
See Notes to the Financial Statements
| F-6 |
Limitless X Inc.
Statement of Cash Flows
| For the period from | ||||
| September 27, 2021 | ||||
| (Date of formation) | ||||
| through | ||||
| December 31, 2021 | ||||
| Cash flows from operating activities: | ||||
| Net income | $ | 4,664 | ||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||
| Changes in assets and liabilities: | ||||
| Accounts receivables, net | (322,499 | ) | ||
| Holdback receivables | (162,226 | ) | ||
| Inventories, net | (1,875,146 | ) | ||
| Other assets | (10,985 | ) | ||
| Accounts payable and accrued expenses | 215,369 | |||
| Refunds payable | 207,599 | |||
| Chargebacks payable | 100,350 | |||
| Income tax payable | 22,906 | |||
| Net cash used in operating activities | (1,819,968 | ) | ||
| Cash flows from financing activities: | ||||
| Shareholders' contributions | 1,848,824 | |||
| Proceeds from borrowings from shareholder | 50,000 | |||
| Net cash provided by financing activities | 1,898,824 | |||
| Net increase in cash | 78,856 | |||
| Cash – beginning of period | — | |||
| Cash – end of period | $ | 78,856 | ||
| Supplemental disclosures of cash flow information | ||||
| Cash paid during the periods for: | ||||
| Interest | $ | — | ||
| Income taxes | $ | — | ||
See Notes to the Financial Statements
| F-7 |
Limitless X Inc.
Notes to Financial Statements
1. NATURE OF OPERATIONS
Limitless X Inc. (“Limitless”) was incorporated in the State of Nevada on September 27, 2021.
Limitless is a lifestyle brand. Hyper focused in the health and wellness industry, Limitless strives to make you the best version of yourself through nutritional supplements, cutting edge wellness studies and interactive training videos. Limitless truly believes in its motto that "No food tastes as good as you feel when you're in shape." Your life is better when your mind and body are running optimally, and the Limitless will help you achieve your full potential.
The mission of Limitless is to provide businesses within its industry a turnkey solution to sell products both online and in retail stores. Limitless also provides its own groundbreaking products and wellness videos that fit nearly every person regardless of age or current health conditions.
Limitless’s leadership model is based on the group level. Through teamwork, communication, networking and strategizing, the managers lead the teams. Our team includes sales, marketing, UI/UX, fulfillment, customer support, labeling, product manufacturing, consulting, retailing, payment processing and more.
Competitively, the Limitless shines because services and products are offered at prices tailored to be affordable. Our clients' businesses will flourish through the efficiencies provided by Limitless. Businesses can focus on their core strategy while Limitless becomes their backbone by opening its full suite of service and product offerings to its clients.
Basis of Presentation
The financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The Company maintains its accounting records on a fiscal year ending on December 31, 2021.
The financial information presented within the Company’s financial statements has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The accompanying financial statements include balance sheet for the period ended December 31, 2021. The remaining financial statements include the period from September 27, 2021 (Date of formation) through December 31, 2021.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates and Assumptions
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Accounts receivables, net
Accounts receivable, net consists primarily of trade receivables, net of allowances for doubtful accounts. The Company sells its products for cash or on credit terms, which are established in accordance with local and industry practices and typically require payment within 30 days of delivery. The Company estimates its allowance for doubtful accounts and the related expected credit loss based upon the Company’s historical credit loss experience, adjusted for asset-specific risk characteristics, current economic conditions, and reasonable forecasts. Accounts receivables are written off when determined to be uncollectible. The Company did not require and did not have an allowance for doubtful accounts.
| F-8 |
Limitless X Inc.
Notes to Financial Statements
Holdback Receivables
The Company uses a third-party payment processor for its customers. When such customers make a purchase, payments are delivered directly to the third-party payment processor and the net amount is distributed to the Company.
Distributions from the third-party payment processor are based on several criteria, such as return and chargeback history, associated risk for the specific business vertical, average transaction amount and so on. In order to mitigate processing risks, these policies determine reserve requirements and payment in arrear strategy.
The total holdback receivables balance reflects the 10% reserve on gross sales according to the agreement and additional reserves by the third-party processor for additional returns and chargebacks.
Inventories, net
Inventories are valued at the lower of cost or net realizable value on a first-in, first-out basis, adjusted for the value of inventory that is determined to be excess, obsolete, expired or unsaleable. Inventories primarily consisted of finished goods.
Advertising and marketing
Advertising and marketing costs are charged to expense as incurred. Advertising and marketing costs were approximately $194,679 for the period from September 27, 2021 (Date of formation) through December 31, 2021 and is included in operating expenses in the accompanying statement of income.
Revenue Recognition
Company recognizes revenue when performance obligations under the terms of a contract with its customer are satisfied. The Company has determined that fulfilling and delivering products is a single performance obligation. Revenue is recognized at the point in time when the Company has satisfied its performance obligation and the customer has obtained control of the products. This generally occurs when the product is delivered to or picked up by the customer based on applicable shipping terms, which is typically within 15 days. Revenue is measured as the amount of consideration expected to be received in exchange for fulfilled product orders,
While customers generally have a right to return defective or non-conforming products, past experience has demonstrated that product returns have been immaterial. Customer remedies for defective or non-conforming products may include a refund or exchange. As a result, the right of return is estimated and recorded as a reduction in revenue at the time of sale, if necessary.
The Company’s customer contracts identify product quantity, price and payment terms. Payment terms are granted consistent with industry standards. Although some payment terms may be more extended, the majority of the Company’s payment terms are less than 30 days. As a result, revenue is not adjusted for the effects of a significant financing component. Amounts billed and due from customers are classified as Accounts receivables on the Balance Sheet.
The Company utilizes third-party contract manufacturers for the manufacture of its products. The Company has evaluated whether it is the principal or agent in these relationships. The Company has determined that it is the principal in all cases, as it retains the responsibility for fulfillment and risk of loss, as well as establishes the price.
| F-9 |
Limitless X Inc.
Notes to Financial Statements
In accordance with ASC Topic 606, Revenue from Contracts with Customers, the Company has elected the practical expedient to expense the incremental costs to obtain a contract, because the amortization period would be less than one year, and the practical expedient for shipping and handling costs. Shipping and handling costs incurred to deliver products to customers are accounted for as fulfillment activities, rather than a promised service, and as such are included in Cost of goods sold in the Statements of Operations.
Cost of goods sold
Cost of goods sold includes the cost of inventory sold during the period net of allowances, as well as, distribution, and, shipping and handling costs. The amount shown is net of various rebates from third-party vendors in the form of payments.
Refunds Payable
If the customers are not satisfied for any reason, the customers may request a full refund, processed to the original form of payment, within 30 days from the order date. If the order has already been shipped, the Company charges a 20% restocking fee.
As of December 31, 2021, refunds payable is the amount of $207,599.
Chargebacks Payable
Once customers successfully dispute chargebacks with the payment processor, the Company returns such funds to the to the payment processor to return to the customer.
As of December 31, 2021, chargebacks payable is the amount of $100,350.
Income Taxes
The accounting standard on accounting for uncertainty in income taxes addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under that guidance, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.
As of December 31, 2021, the Company had an income tax liability of $22,906 at an effective tax rate of 21.0% as of December 31, 2021.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk are accounts receivable and other receivables arising from its normal business activities. The Company has a diversified customer base. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for un-collectible accounts and, as a consequence, believes that its accounts receivable related credit risk exposure beyond such allowance is limited.
| F-10 |
Limitless X Inc.
Notes to Financial Statements
Fair Value of Financial Instruments
The Company utilizes ASC 820-10, Fair Value Measurement and Disclosure, for valuing financial assets and liabilities measured on a recurring basis. Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value:
Level 1. Observable inputs such as quoted prices in active markets;
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The Company’s financial instruments consisted of cash, operating lease right-of-use assets, net, accounts payable and accrued expenses, notes payables, and operating lease liabilities. The estimated fair value of cash, operating lease rightof-use assets, net, and operating lease liabilities approximate its carrying amount due to the short maturity of these instruments.
Operating Lease
In accordance with ASC 842, Leases, the Company determines whether an arrangement contains a lease at inception. A lease is a contract that provides the right to control an identified asset for a period of time in exchange for consideration. For identified leases, the Company determines whether it should be classified as an operating or finance lease. Operating leases are recorded in the balance sheet as: right-of-use asset (“ROU asset”) and operating lease liability. ROU asset represents the Company’s right to use an underlying asset for the lease term and lease liability represents the Company’s obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at the commencement date of the lease and measured based on the present value of lease payments over the lease term. The ROU asset also includes deferred rent liabilities. The Company’s lease arrangement generally do not provide an implicit interest rate. As a result, in such situations the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option in the measurement of its ROU asset and liability. Lease expense for the operating lease is recognized on a straight-line basis over the lease term. The Company has a lease agreement with lease and non-lease components, which are accounted for as a single lease component.
Recent Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which amends existing guidance related to the accounting for income taxes. This ASU is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles of accounting for income taxes and to improve the consistent application of GAAP for other areas of accounting for income taxes by clarifying and amending existing guidance. This ASU is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the effects adoption of this guidance will have on the financial statements and does not expect that the adoption of this ASU will be material to its financial statements.
| F-11 |
Limitless X Inc.
Notes to Financial Statements
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited period of time to ease the potential burden in accounting for reference rate reform on financial reporting. The amendments in this ASU are effective for all entities and can be applied to contract modifications due to rate reform and eligible existing and new hedging relationships entered into between March 12, 2020 and December 31, 2022. The amendments of this ASU should be applied on a prospective basis. The Company will continue to monitor the effects of rate reform, if any, on any new or amended contracts through December 31, 2022. The Company does not anticipate the amendments in this ASU will be material to its financial statements.
In October 2020, the FASB issued ASU 2020-10, Codification Improvements, which provides updates for technical corrections, clarifications to guidance, simplifications to wording or structure of guidance, and other minor improvements across various areas of accounting within GAAP. This ASU is effective for all entities for fiscal years beginning after December 15, 2020, with early adoption permitted. The amendments of this ASU should be applied retrospectively. The Company does not anticipate the adoption of this ASU will be material to its financial statements.
No other new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material effect on the Company’s financial statements.
COVID-19 Impact on Concentration of Risk
The novel coronavirus (“COVID-19”) pandemic has significantly impacted health and economic conditions throughout the United States and globally, as public concern about becoming ill with the virus has led to the issuance of recommendations and/or mandates from federal, state and local authorities to practice social distancing or self-quarantine. The Company is continually monitoring the outbreak of COVID-19 and the related business and travel restrictions and changes to behavior intended to reduce its spread, and its impact on operations, financial position, cash flows, inventory, supply chains, purchasing trends, customer payments, and the industry in general, in addition to the impact on its employees. We have experienced significant disruptions to our business due to the COVID-19 pandemic and related suggested and mandated social distancing and shelter-in-place orders.
2. COMMITMENTS AND CONTINGENCIES
| Commitments |
Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives. Our variable lease payments primarily consist of maintenance and other operating expenses from our real estate leases. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.
| F-12 |
Limitless X Inc.
Notes to Financial Statements
The Company has lease agreements with lease and non-lease components. The Company has elected to account for these lease and non-lease components as a single lease component.
| In accordance with ASC 842, the components of lease expense were as follows: | ||||
| For the period from September 27, 2021 (inception) through December 31, 2021 | ||||
| Operating lease expense | $ | 11,509 | ||
| Total lease expense | $ | 11,509 | ||
| In accordance with ASC 842, other information related to leases was as follows: | ||||
| For the period from September 27, 2021 (inception) through December 31, 2021 | ||||
| Operating cash flows from operating leases | $ | 11,315 | ||
| Cash paid for amounts included in the measurement of lease liabilities | $ | 11,315 | ||
| Weighted-average remaining lease term—operating leases | 1.7 Years | |||
| Weighted-average discount rate—operating leases | 3 | % | ||
In accordance with ASC 842, maturities of operating lease liabilities as of December 31, 2021 were as follows:
| Operating | ||||
| Year ending: | Lease | |||
| 2022 | $ | 137,138 | ||
| 2023 | 93,236 | |||
| 2024 | — | |||
| 2025 | — | |||
| 2026 | — | |||
| Total undiscounted cash flows | $ | 230,374 | ||
| Reconciliation of lease liabilities: | ||||
| Weighted-average remaing lease terms | 1.7 Years | |||
| Weighted-average discount rate | 3 | % | ||
| Present values | $ | 224,395 | ||
| Lease liabilities—current | 132,200 | |||
| Lease liabilities—long-term | 92,195 | |||
| Lease liabilities—total | $ | 224,395 | ||
| Difference between undiscounted and discounted cash flows | $ | 5,979 |
| F-13 |
Limitless X Inc.
Notes to Financial Statements
| Contingencies |
From time to time, the Company may be involved in certain legal actions and claims arising in the normal course of business. Management is of the opinion that such matters will be resolved without material effect on the Company’s financial condition or results of operations.
3. STOCKHOLDERS’ EQUITY
Common Stock
The Company has authorization to issue and have outstanding at any one time 50,000,000 shares of common stock with a par value of $0.001 per share. In all matters that may become before the Corporation’s shareholders, each share of Common Stock shall entitle its holder to one vote.
As of December 31, 2021, 48,500,000 shares of common stock are issued and outstanding and 1,500,000 shares are issuable.
Preferred Stock
The Company has authorization to issue and have outstanding at any one time 10,000,000 shares of preferred stock with a par value of $0.001 per share. The Board of Directors is expressly authorized, without the need for stockholder approval, to provide for the issuance of all or any of authorized, but unissued shares of preferred stock in one or more series, designate each such series or additional series, fix the number of shares authorized for issuance in each such series, decrease or increase the number of authorized shares of any such series subsequent to the issue of shares of that series, provided that any decrease is not below the number of shares of such series then outstanding, and to fix for any designated but wholly unissued series such voting powers, full or limited, or no voting powers, and such distinctive designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such series and as may be permitted by the State of Nevada, including, without limitation, the authority to provide that any such series may be (i) subject to redemption at such time or times and at such price or prices; (ii) entitled to receive dividends (which may be cumulative or non-cumulative) at such rates, on such conditions, and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or any other series; (iii) entitled to such rights upon the dissolution of, or upon any distribution of the assets of, the Corporation; or (iv) convertible into, or exchangeable for, shares of any other class or classes of stock, or of any other series of the same or any other class or classes of stock, of the Corporation at such price or prices or at such rates of exchange and with such adjustments; all as may be stated in such resolution or resolutions.
As of December 31, 2021, no shares of preferred stock are issued and outstanding.
4. EARNINGS PER SHARE
The Company calculates earnings per share in accordance with FASB ASC 260, Earnings Per Share, which requires a dual presentation of basic and diluted earnings per share. Basic earnings per share are computed using the weighted average number of shares outstanding during the fiscal year. The Company did not have any dilutive common shares for the period from September 27, 2021 (Date of formation) through December 31, 2021.
| F-14 |
Limitless X Inc.
Notes to Financial Statements
5. RELATED PARTY TRANSACTIONS
Royalty Payables
Limitless Performance Inc. (“LPI”), SMILZ INC. (“Smiles”), DIVATRIM INC. (“Divatrim”), and AMAROSE INC. (“Amarose”) are all companies owned by a shareholder of the Company.
| · | On December 1, 2021, the Company entered into a manufacturing and distributorship license agreement with Limitless Performance Inc. (“LPI”) for the Company to distribute LPI products and for payments to LPI for its product designs and distributions rights. Limitless shall pay to LPI from time to time royalty payments equal to 4.00% of gross sales, excluding returns, chargebacks and other such allowances. |
| · | On December 1, 2021, the Company entered into a manufacturing and distributorship license agreement with SMILZ INC. (“Smiles”) for the Company to distribute Smiles products and for payments to Smiles for its product designs and distributions rights. Limitless shall pay to Smiles from time to time royalty payments equal to 4.00% of gross sales, excluding returns, chargebacks and other such allowances. |
| · | On December 1, 2021, the Company entered into a manufacturing and distributorship license agreement with DIVATRIM INC. (“Divatrim”) for the Company to distribute Divatrim products and for payments to Smiles for its product designs and distributions rights. Limitless shall pay to Divatrim from time to time royalty payments equal to 4.00% of gross sales, excluding returns, chargebacks and other such allowances. |
| · | On December 1, 2021, the Company entered into a manufacturing and distributorship license agreement with AMAROSE INC. (“Amarose”) for the Company to distribute Amarose products and for payments to Smiles for its product designs and distributions rights. Limitless shall pay to Amarose from time to time royalty payments equal to 4.00% of gross sales, excluding returns, chargebacks and other such allowances. |
Effective on April 1, 2022, the Company shall pay all earned royalties to LPI, Smiles, Divatrim, and Amarose beginning on the June 15, 2022.
Loan payable to shareholder
| December 31, 2021 | ||||
| December 6, 2021 ($50,000) | $ | 50,000 | ||
| Total loan payable to shareholder | 50,000 | |||
| Less – current portion | (28,802 | ) | ||
| Total loan payable to shareholder, less current portion | $ | 21,198 | ||
The following table provide future minimum payments as of December 31, 2021:
| For the years ended | ||||||
| 2022 | $ | 28,802 | ||||
| 2023 | 21,198 | |||||
| 2024 | — | |||||
| 2025 | — | |||||
| 2026 | — | |||||
| Thereafter | — | |||||
| Total | $ | 50,000 | ||||
| F-15 |
Limitless X Inc.
Notes to Financial Statements
December 6, 2021 – $50,000
On December 6, 2021, Limitless X Inc. (the “Limitless”) executed the standard loan documents required for securing a loan of $50,000 from a shareholder. As of December 31, 2021, the balance is $50,000.
Pursuant to that certain Loan Authorization and Agreement, Limitless borrowed an aggregate principal amount of $50,000, with proceeds to be used for working capital purposes. Beginning on June 1, 2022, the loan requires a payment of $4,303 per month which includes principal and interest with an interest rate of 6%. The total balance of principal and interest of $51,640 is due on May 1, 2023.
6. SUBSEQUENT EVENTS
The Company evaluated all events or transactions that occurred after December 31, 2021. During this period, the Company did not have any material recognizable subsequent events required to be disclosed other than the following:
| • | On February 11, 2022, Limitless X Inc. (“Limitless”) executed the standard loan documents required for securing a loan of $150,000 from a shareholder. |
Pursuant to that certain Loan Authorization and Agreement, Limitless borrowed an aggregate principal amount of $150,000, with proceeds to be used for working capital purposes. Beginning on June 1, 2022, the loan requires a payment of $12,910 per month which includes principal and interest with an interest rate of 6%. The total balance of principal and interest of $154,920 is due on May 1, 2023.
| • | On March 24, 2022, the Company issued 1,500,00 shares of Common Stock. As of March 24, 2022, there are 50,000,000 shares of Common Stock issued and outstanding. |
| • | On May 8, 2022, Limitless X Inc. (“Limitless”) executed the standard loan documents required for securing a loan of $550,000 from a shareholder. |
Pursuant to that certain Loan Authorization and Agreement, Limitless borrowed an aggregate principal amount of $550,000, with proceeds to be used for working capital purposes. Beginning on June 1, 2022, the loan requires a payment of $47,337 per month which includes principal and interest with an interest rate of 6%. The total balance of principal and interest of $568,038 is due on May 1, 2023.
| • | On May 18, 2022, the Company entered into a $450,000 promissory note with the Chief Executive Officer, also a major shareholder, of the Company. The promissory note is due in thirty (30) days with interest rate at 8.5% per annum starting June 19, 2022 if the promissory note is not paid by the due date. |
| • | On May 16, 2022, the Company entered into a $1,100,000 promissory note with the Chief Executive Officer, also a major shareholder, of the Company. The promissory note is due in thirty (30) days with interest rate at 8.5% per annum starting June 17, 2022 if the promissory note is not paid by the due date. |
| F-16 |
Limitless x INC. |
|
|
|
Financial Statements As of and for the three months ended March 31, 2022
|
| F-17 |
Table of Contents
| Page | ||
| Financial Statements | ||
| Balance Sheets | F-19 | |
| Statement of Operations | F-20 | |
| Statement of Shareholders’ Equity | F-21 | |
| Statement of Cash Flows | F-22 | |
| Notes to Financial Statements | F-23 |
| F-18 |
Limitless X Inc.
Balance Sheets
| March 31, 2022 | December 31, 2021 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 345,679 | $ | 78,856 | ||||
| Accounts receivables, net of allowance for doubtful accounts of $0 and $0, respectively | 1,589,849 | 322,499 | ||||||
| Holdback receivables | 711,573 | 162,226 | ||||||
| Inventories, net | 1,747,906 | 1,875,146 | ||||||
| Total current assets | 4,395,007 | 2,438,727 | ||||||
| Non-Current Assets: | ||||||||
| Operating lease right-of-use asset, net | 191,277 | 224,202 | ||||||
| Other assets | 10,985 | 10,985 | ||||||
| Total non-current assets | 202,262 | 235,187 | ||||||
| Total assets | $ | 4,597,269 | $ | 2,673,914 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 1,074,015 | $ | 215,176 | ||||
| Current portion of operating lease liabilities | 134,215 | 132,200 | ||||||
| Refunds payable | 788,734 | 207,599 | ||||||
| Chargebacks payable | 75,815 | 100,350 | ||||||
| Current portion of loan payables to shareholder | 165,830 | 28,802 | ||||||
| Income tax payable | 104,860 | 22,906 | ||||||
| Total current liabilities | 2,343,469 | 707,033 | ||||||
| Loan payables to shareholder, less current portion | 34,170 | 21,198 | ||||||
| Operating lease liabilities, less current portion | 57,838 | 92,195 | ||||||
| Total liabilities | 2,435,477 | 820,426 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' Equity | ||||||||
| Preferred
Stock - $0.001 par value; 10,000,000 authorized shares; no shares issued and outstanding at March 31, 2022 and December 31, 2021 | — | — | ||||||
| Common
Stock - $0.001 par value; 50,000,000 authorized shares; 50,000,000 shares issued and outstanding and 48,500,000 shares issued and outstanding and 1,500,000 shares issuable at March 31, 2022 and December 31, 2021, respectively | 50,000 | 50,000 | ||||||
| Additional paid-in-capital | 1,798,824 | 1,798,824 | ||||||
| Retained earnings | 312,968 | 4,664 | ||||||
| Total stockholders' equity | 2,161,792 | 1,853,488 | ||||||
| Total liabilities and stockholders' equity | $ | 4,597,269 | $ | 2,673,914 | ||||
Notes to the unaudited financial statements
| F-19 |
Limitless X Inc.
Statement of Operations
| For the three | ||||
| months ended | ||||
| March 31, 2022 | ||||
| Net sales | $ | 8,320,056 | ||
| Cost of sales | 2,177,953 | |||
| Gross profit | 6,142,103 | |||
| Operating expenses: | ||||
| Advertising and marketing | 5,243,678 | |||
| General and administrative | 394,488 | |||
| Payroll and payroll taxes | 70,422 | |||
| Rent | 43,257 | |||
| Total operating expenses | 5,751,845 | |||
| Income from operations | 390,258 | |||
| Income tax provision | 81,954 | |||
| Net income | $ | 308,304 | ||
| Income per share: | ||||
| Basic and diluted | $ | 0.01 | ||
| Weighted average number of common shares outstanding: | ||||
| Basic and diluted | 48,633,333 | |||
See notes to the unaudited financial statements
| F-20 |
Limitless X Inc.
Statement of Stockholders’ Equity
| Preferred Stocks | Common Stock | Common Stock Issuable | Additional | Retained | Total Stockholder's | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Pain-In Capital | Earnings | Equity | ||||||||||||||||||||||||||||
| Balance at December 31, 2021 | — | $ | — | 48,500,000 | $ | 48,500 | 1,500,000 | $ | 1,500 | $ | 1,798,824 | $ | 4,664 | $ | 1,853,488 | |||||||||||||||||||||
| Common stocks issued to Founders | — | — | 1,500,000 | 1,500 | (1,500,000 | ) | (1,500 | ) | — | — | — | |||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | 308,304 | 308,304 | |||||||||||||||||||||||||||
| Balance at March 31, 2022 (unaudited) | — | $ | — | 50,000,000 | $ | 50,000 | — | $ | — | $ | 1,798,824 | $ | 312,968 | $ | 2,161,792 | |||||||||||||||||||||
See notes to the unaudited financial statements
| F-21 |
Limitless X Inc.
Statement of Cash Flows
| For the three | ||||
| months ended | ||||
| March 31, 2022 | ||||
| Cash flows from operating activities: | ||||
| Net income | $ | 308,304 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||
| Changes in assets and liabilities: | ||||
| Accounts receivables, net | (1,267,350 | ) | ||
| Holdback receivables | (549,347 | ) | ||
| Inventories, net | 127,240 | |||
| Accounts payable and accrued expenses | 859,422 | |||
| Refunds payable | 581,135 | |||
| Chargebacks payable | (24,535 | ) | ||
| Income tax payable | 81,954 | |||
| Net cash provided by operating activities | 116,823 | |||
| Cash flows from financing activities: | ||||
| Proceeds from borrowings from shareholder | 150,000 | |||
| Net cash provided by financing activities | 150,000 | |||
| Net increase in cash | 266,823 | |||
| Cash – beginning of period | 78,856 | |||
| Cash – end of period | $ | 345,679 | ||
| Supplemental disclosures of cash flow information | ||||
| Cash paid during the periods for: | ||||
| Interest | $ | — | ||
| Income taxes | $ | — | ||
See notes to the unaudited financial statements
| F-22 |
Limitless X Inc.
Notes to Unaudited Financial Statements
| 1. | NATURE OF OPERATIONS |
Limitless X Inc. (“Limitless”) was incorporated in the State of Nevada on September 27, 2021.
Limitless is a lifestyle brand. Hyper focused in the health and wellness industry, Limitless strives to make you the best version of yourself through nutritional supplements, cutting edge wellness studies and interactive training videos. Limitless truly believes in its motto that "No food tastes as good as you feel when you're in shape." Your life is better when your mind and body are running optimally, and the Limitless will help you achieve your full potential.
The mission of Limitless is to provide businesses within its industry a turnkey solution to sell products both online and in retail stores. Limitless also provides its own groundbreaking products and wellness videos that fit nearly every person regardless of age or current health conditions.
Limitless 's leadership model is based on the group level. Through teamwork, communication, networking and strategizing, the managers lead the teams. Our team includes sales, marketing, UI/UX, fulfillment, customer support, labeling, product manufacturing, consulting, retailing, payment processing and more.
Competitively, the Limitless shines because services and products are offered at prices tailored to be affordable. Our clients' businesses will flourish through the efficiencies provided by Limitless. Businesses can focus on their core strategy while Limitless becomes their backbone by opening its full suite of service and product offerings to its clients.
Basis of Presentation
The financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The Company maintains its accounting records on a fiscal year ending on December 31, 2022.
The financial information presented within the Company’s financial statements has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The accompanying financial statements include balance sheets for the period ended March 31, 2022 and December 31, 2021. The remaining financial statements include the three months ended March 31, 2022.
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Use of Estimates and Assumptions
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Accounts receivables, net
Accounts receivable, net consists primarily of trade receivables, net of allowances for doubtful accounts. The Company sells its products for cash or on credit terms, which are established in accordance with local and industry practices and typically require payment within 30 days of delivery. The Company estimates its allowance for doubtful accounts and the related expected credit loss based upon the Company’s historical credit loss experience, adjusted for asset-specific risk characteristics, current economic conditions, and reasonable forecasts. Accounts receivables are written off when determined to be uncollectible. The Company did not require and did not have an allowance for doubtful accounts.
| F-23 |
Limitless X Inc.
Notes to Unaudited Financial Statements
Holdback Receivables
The Company uses a third-party payment processor for its customers. When such customers make a purchase, payments are delivered directly to the third-party payment processor and the net amount is distributed to the Company.
Distributions from the third-party payment processor are based on several criteria, such as return and chargeback history, associated risk for the specific business vertical, average transaction amount and so on. In order to mitigate processing risks, these policies determine reserve requirements and payment in arrear strategy.
The total holdback receivables balance reflects the 10% reserve on gross sales according to the agreement and additional reserves by the third-party processor for additional returns and chargebacks.
Inventories, net
Inventories are valued at the lower of cost or net realizable value on a first-in, first-out basis, adjusted for the value of inventory that is determined to be excess, obsolete, expired or unsaleable. Inventories primarily consisted of finished goods.
Advertising and marketing
Advertising and marketing costs are charged to expense as incurred. Advertising and marketing costs were approximately $5,243,678 for the three months ended March 31, 2022 and is included in operating expenses in the accompanying statement of income.
Revenue Recognition
Company recognizes revenue when performance obligations under the terms of a contract with its customer are satisfied. The Company has determined that fulfilling and delivering products is a single performance obligation. Revenue is recognized at the point in time when the Company has satisfied its performance obligation and the customer has obtained control of the products. This generally occurs when the product is delivered to or picked up by the customer based on applicable shipping terms, which is typically within 15 days. Revenue is measured as the amount of consideration expected to be received in exchange for fulfilled product orders,
While customers generally have a right to return defective or non-conforming products, past experience has demonstrated that product returns have been immaterial. Customer remedies for defective or non-conforming products may include a refund or exchange. As a result, the right of return is estimated and recorded as a reduction in revenue at the time of sale, if necessary.
The Company’s customer contracts identify product quantity, price and payment terms. Payment terms are granted consistent with industry standards. Although some payment terms may be more extended, the majority of the Company’s payment terms are less than 30 days. As a result, revenue is not adjusted for the effects of a significant financing component. Amounts billed and due from customers are classified as Accounts receivables on the Balance Sheet.
The Company utilizes third-party contract manufacturers for the manufacture of its products. The Company has evaluated whether it is the principal or agent in these relationships. The Company has determined that it is the principal in all cases, as it retains the responsibility for fulfillment and risk of loss, as well as establishes the price.
| F-24 |
Limitless X Inc.
Notes to Unaudited Financial Statements
In accordance with ASC Topic 606, Revenue from Contracts with Customers, the Company has elected the practical expedient to expense the incremental costs to obtain a contract, because the amortization period would be less than one year, and the practical expedient for shipping and handling costs. Shipping and handling costs incurred to deliver products to customers are accounted for as fulfillment activities, rather than a promised service, and as such are included in Cost of goods sold in the Statements of Operations.
Cost of goods sold
Cost of goods sold includes the cost of inventory sold during the period net of allowances, as well as, distribution, and, shipping and handling costs. The amount shown is net of various rebates from third-party vendors in the form of payments.
Refunds Payable
If the customers are not satisfied for any reason, the customers may request a full refund, processed to the original form of payment, within 30 days from the order date. If the order has already been shipped, the Company charges a 20% restocking fee.
As of December 31, 2021 and March 31, 2022, refunds payable is the amount of $207,599 and $788,734, respectively.
Chargebacks Payable
Once customers successfully dispute chargebacks with the payment processor, the Company returns such funds to the to the payment processor to return to the customer.
As of December 31, 2021 and March 31, 2022, chargebacks payable is the amount of $100,350 and $75,815, respectively.
Income Taxes
The accounting standard on accounting for uncertainty in income taxes addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under that guidance, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.
For the three months ended March 31, 2022, the Company recorded an income tax liability of $81,954 at an effective tax rate of 21.0%.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk are accounts receivable and other receivables arising from its normal business activities. The Company has a diversified customer base. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for un-collectible accounts and, as a consequence, believes that its accounts receivable related credit risk exposure beyond such allowance is limited.
| F-25 |
Limitless X Inc.
Notes to Unaudited Financial Statements
Fair Value of Financial Instruments
The Company utilizes ASC 820-10, Fair Value Measurement and Disclosure, for valuing financial assets and liabilities measured on a recurring basis. Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value:
Level 1. Observable inputs such as quoted prices in active markets;
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The Company’s financial instruments consisted of cash, operating lease right-of-use assets, net, accounts payable and accrued expenses, notes payables, and operating lease liabilities. The estimated fair value of cash, operating lease right-of-use assets, net, and operating lease liabilities approximate its carrying amount due to the short maturity of these instruments.
Operating Lease
In accordance with ASC 842, Leases, the Company determines whether an arrangement contains a lease at inception. A lease is a contract that provides the right to control an identified asset for a period of time in exchange for consideration. For identified leases, the Company determines whether it should be classified as an operating or finance lease. Operating leases are recorded in the balance sheet as: right-of-use asset (“ROU asset”) and operating lease liability. ROU asset represents the Company’s right to use an underlying asset for the lease term and lease liability represents the Company’s obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at the commencement date of the lease and measured based on the present value of lease payments over the lease term. The ROU asset also includes deferred rent liabilities. The Company’s lease arrangement generally do not provide an implicit interest rate. As a result, in such situations the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option in the measurement of its ROU asset and liability. Lease expense for the operating lease is recognized on a straight-line basis over the lease term. The Company has a lease agreement with lease and non-lease components, which are accounted for as a single lease component.
Recent Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which amends existing guidance related to the accounting for income taxes. This ASU is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles of accounting for income taxes and to improve the consistent application of GAAP for other areas of accounting for income taxes by clarifying and amending existing guidance. This ASU is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the effects adoption of this guidance will have on the financial statements and does not expect that the adoption of this ASU will be material to its financial statements.
| F-26 |
Limitless X Inc.
Notes to Unaudited Financial Statements
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited period of time to ease the potential burden in accounting for reference rate reform on financial reporting. The amendments in this ASU are effective for all entities and can be applied to contract modifications due to rate reform and eligible existing and new hedging relationships entered into between March 12, 2020 and December 31, 2022. The amendments of this ASU should be applied on a prospective basis. The Company will continue to monitor the effects of rate reform, if any, on any new or amended contracts through March 31, 2022. The Company does not anticipate the amendments in this ASU will be material to its financial statements.
In October 2020, the FASB issued ASU 2020-10, Codification Improvements, which provides updates for technical corrections, clarifications to guidance, simplifications to wording or structure of guidance, and other minor improvements across various areas of accounting within GAAP. This ASU is effective for all entities for fiscal years beginning after December 15, 2020, with early adoption permitted. The amendments of this ASU should be applied retrospectively. The Company does not anticipate the adoption of this ASU will be material to its financial statements.
No other new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material effect on the Company’s financial statements.
COVID-19 Impact on Concentration of Risk
The novel coronavirus (“COVID-19”) pandemic has significantly impacted health and economic conditions throughout the United States and globally, as public concern about becoming ill with the virus has led to the issuance of recommendations and/or mandates from federal, state and local authorities to practice social distancing or self-quarantine. The Company is continually monitoring the outbreak of COVID-19 and the related business and travel restrictions and changes to behavior intended to reduce its spread, and its impact on operations, financial position, cash flows, inventory, supply chains, purchasing trends, customer payments, and the industry in general, in addition to the impact on its employees. We have experienced significant disruptions to our business due to the COVID-19 pandemic and related suggested and mandated social distancing and shelter-in-place orders.
2. COMMITMENTS AND CONTINGENCIES
Commitments
Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives. Our variable lease payments primarily consist of maintenance and other operating expenses from our real estate leases. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.
| F-27 |
Limitless X Inc.
Notes to Unaudited Financial Statements
The Company has lease agreements with lease and non-lease components. The Company has elected to account for these lease and non-lease components as a single lease component.
| In accordance with ASC 842, the components of lease expense were as follows: | ||||
| For the thee months ended March 31, | 2022 | |||
| Operating lease expense | $ | 34,527 | ||
| Total lease expense | $ | 34,527 | ||
| In accordance with ASC 842, other information related to leases was as follows: | ||||
| For the thee months ended March 31, | 2022 | |||
| Operating cash flows from operating leases | $ | 33,945 | ||
| Cash paid for amounts included in the measurement of lease liabilities | $ | 33,945 | ||
| Weighted-average remaining lease term—operating leases | 1.7 Years | |||
| Weighted-average discount rate—operating leases | 3 | % | ||
| In accordance with ASC 842, maturities of operating lease liabilities as of March 31, 2022 were as follows: | ||||
| Operating | ||||
| Year ending: | Lease | |||
| 2022 (remaining nine months) | $ | 103,193 | ||
| 2023 | 93,236 | |||
| 2024 | — | |||
| 2025 | — | |||
| 2026 | — | |||
| Total undiscounted cash flows | $ | 196,429 | ||
| Reconciliation of lease liabilities: | ||||
| Weighted-average remaing lease terms | 1.7 Years | |||
| Weighted-average discount rate | 3 | % | ||
| Present values | $ | 192,053 | ||
| Lease liabilities—current | 134,215 | |||
| Lease liabilities—long-term | 57,838 | |||
| Lease liabilities—total | $ | 192,053 | ||
| Difference between undiscounted and discounted cash flows | $ | 4,376 | ||
| F-28 |
Limitless X Inc.
Notes to Unaudited Financial Statements
Contingencies
From time to time, the Company may be involved in certain legal actions and claims arising in the normal course of business. Management is of the opinion that such matters will be resolved without material effect on the Company’s financial condition or results of operations.
| 3. | STOCKHOLDERS’ EQUITY |
Common Stock
The Company has authorization to issue and have outstanding at any one time 50,000,000 shares of common stock with a par value of $0.001 per share. In all matters that may become before the Corporation’s shareholders, each share of Common Stock shall entitle its holder to one vote.
As of December 31, 2021, 48,500,000 shares of common stock are issued and outstanding and 1,500,000 shares are issuable.
As of March 31, 2022, 50,000,000 shares of common stock are issued and outstanding.
Preferred Stock
The Company has authorization to issue and have outstanding at any one time 10,000,000 shares of preferred stock with a par value of $0.001 per share. The Board of Directors is expressly authorized, without the need for stockholder approval, to provide for the issuance of all or any of authorized, but unissued shares of preferred stock in one or more series, designate each such series or additional series, fix the number of shares authorized for issuance in each such series, decrease or increase the number of authorized shares of any such series subsequent to the issue of shares of that series, provided that any decrease is not below the number of shares of such series then outstanding, and to fix for any designated but wholly unissued series such voting powers, full or limited, or no voting powers, and such distinctive designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such series and as may be permitted by the State of Nevada, including, without limitation, the authority to provide that any such series may be (i) subject to redemption at such time or times and at such price or prices; (ii) entitled to receive dividends (which may be cumulative or non-cumulative) at such rates, on such conditions, and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or any other series; (iii) entitled to such rights upon the dissolution of, or upon any distribution of the assets of, the Corporation; or (iv) convertible into, or exchangeable for, shares of any other class or classes of stock, or of any other series of the same or any other class or classes of stock, of the Corporation at such price or prices or at such rates of exchange and with such adjustments; all as may be stated in such resolution or resolutions.
As of March 31, 2022, no shares of preferred stock are issued and outstanding.
| 4. | EARNINGS PER SHARE |
The Company calculates earnings per share in accordance with FASB ASC 260, Earnings Per Share, which requires a dual presentation of basic and diluted earnings per share. Basic earnings per share are computed using the weighted average number of shares outstanding during the fiscal year. The Company did not have any dilutive common shares for the three months ended March 31, 2022.
| F-29 |
Limitless X Inc.
Notes to Unaudited Financial Statements
| 5. | RELATED PARTY TRANSACTIONS |
Royalty Payables
Limitless Performance Inc. (“LPI”), SMILZ INC. (“Smiles”), DIVATRIM INC. (“Divatrim”), and AMAROSE INC. (“Amarose”) are all companies owned by a shareholder of the Company.
§ On December 1, 2021, the Company entered into a manufacturing and distributorship license agreement with Limitless Performance Inc. (“LPI”) for the Company to distribute LPI products and for payments to LPI for its product designs and distributions rights. Limitless shall pay to LPI from time to time royalty payments equal to 4.00% of gross sales, excluding returns, chargebacks and other such allowances.
§ On December 1, 2021, the Company entered into a manufacturing and distributorship license agreement with SMILZ INC. (“Smiles”) for the Company to distribute Smiles products and for payments to Smiles for its product designs and distributions rights. Limitless shall pay to Smiles from time to time royalty payments equal to 4.00% of gross sales, excluding returns, chargebacks and other such allowances.
§ On December 1, 2021, the Company entered into a manufacturing and distributorship license agreement with DIVATRIM INC. (“Divatrim”) for the Company to distribute Divatrim products and for payments to Smiles for its product designs and distributions rights. Limitless shall pay to Divatrim from time to time royalty payments equal to 4.00% of gross sales, excluding returns, chargebacks and other such allowances.
§ On December 1, 2021, the Company entered into a manufacturing and distributorship license agreement with AMAROSE INC. (“Amarose”) for the Company to distribute Amarose products and for payments to Smiles for its product designs and distributions rights. Limitless shall pay to Amarose from time to time royalty payments equal to 4.00% of gross sales, excluding returns, chargebacks and other such allowances.
Effective on April 1, 2022, the Company shall pay all earned royalties to LPI, Smiles, Divatrim, and Amarose beginning on the June 15, 2022.
Loan payables to shareholder
| March 31, 2022 | December 31, 2021 | |||||||
| December 6, 2021 ($50,000) | $ | 50,000 | $ | 50,000 | ||||
| February 11, 2022 ($150,000) | 150,000 | — | ||||||
| Total loan payable to shareholder | 200,000 | 50,000 | ||||||
| Less – current portion | (165,830 | ) | (28,802 | ) | ||||
| Total loan payable to shareholder, less current portion | 34,170 | $ | 21,198 | |||||
The following table provides future minimum payments as of March 31, 2022:
| For the years ended | ||||||
| 2022 (remaining nine months) | $ | 115,210 | ||||
| 2023 | 84,790 | |||||
| 2024 | — | |||||
| 2025 | — | |||||
| 2026 | — | |||||
| Thereafter | — | |||||
| Total | $ | 200,000 | ||||
| F-30 |
Limitless X Inc.
Notes to Unaudited Financial Statements
December 6, 2021 – $50,000
On December 6, 2021, Limitless X Inc. (the “Limitless”) executed the standard loan documents required for securing a loan of $50,000 from a shareholder. As of March 31, 2022 and December 31, 2021, the balance is $50,000 and $50,000, respectively.
Pursuant to that certain Loan Authorization and Agreement, Limitless borrowed an aggregate principal amount of $50,000, with proceeds to be used for working capital purposes. Beginning on June 1, 2022, the loan requires a payment of $4,303 per month which includes principal and interest with an interest rate of 6%. The total balance of principal and interest of $51,640 is due on May 1, 2023.
February 11, 2022 – $150,000
On February 11, 2022, Limitless X Inc. (“Limitless”) executed the standard loan documents required for securing a loan of $150,000 from a shareholder. As of March 31, 2022, the balance is $150,000.
Pursuant to that certain Loan Authorization and Agreement, Limitless borrowed an aggregate principal amount of $150,000, with proceeds to be used for working capital purposes. Beginning on June 1, 2022, the loan requires a payment of $12,910 per month which includes principal and interest with an interest rate of 6%. The total balance of principal and interest of $154,920 is due on May 1, 2023.
6. SUBSEQUENT EVENTS
The Company evaluated all events or transactions that occurred after March 31, 2022. During this period, the Company did not have any material recognizable subsequent events required to be disclosed other than the following:
| · | On May 8, 2022, Limitless X Inc. (“Limitless”) executed the standard loan documents required for securing a loan of $550,000 from a shareholder. |
Pursuant to that certain Loan Authorization and Agreement, Limitless borrowed an aggregate principal amount of $550,000, with proceeds to be used for working capital purposes. Beginning on June 1, 2022, the loan requires a payment of $47,337 per month which includes principal and interest with an interest rate of 6%. The total balance of principal and interest of $568,038 is due on May 1, 2023.
| • | On May 18, 2022, the Company entered into a $450,000 promissory note with the Chief Executive Officer, also a major shareholder, of the Company. The promissory note is due in thirty (30) days with interest rate at 8.5% per annum starting June 19, 2022 if the promissory note is not paid by the due date. |
| • | On May 16, 2022, the Company entered into a $1,100,000 promissory note with the Chief Executive Officer, also a major shareholder, of the Company. The promissory note is due in thirty (30) days with interest rate at 8.5% per annum starting June 17, 2022 if the promissory note is not paid by the due date. |
| F-31 |
Bio Lab Naturals, Inc. and Subsidiary and Limitless X Inc.
Pro Forma Combined Financial Statements
(unaudited)
| Description |
Page (s) | |
| Notes to Unaudited Pro Forma Combined Financial Statements | F-33 | |
| Unaudited Pro Forma Combined Balance Sheet as of March 31, 2022 | F-34 | |
| Unaudited Pro Forma Combined Statement of Operations for the three months ended March 31, 2022 | F- 35 | |
| Unaudited Pro Forma Combined Balance Sheet as of December 31, 2021 | F-36 | |
| Unaudited Pro Forma Combined Statement of Operations for the year ended December 31, 2021 | F-37 |
| F-32 |
Bio Lab Naturals, Inc. and Subsidiary and Limitless X Inc.
Notes to Pro Forma Combined Financial Statements
(unaudited)
Note 1 - Basis of Presentation
The following unaudited pro forma combined financial statements give effect to the Agreement and Plan of Share Exchange (“Share Exchange Agreement”) between Bio Lab Naturals, Inc. and Subsidiary (the “Company”) and Limitless X Inc. (“Limitless X”). Under the terms and conditions of the Share Exchange Agreement, the Company will issue 97,000,000 shares of common stock constituting approximately 89.9% of the common stock of the Company in exchange for all the shares of common stock of Limitless X at a ratio of 8.97857 shares of the Company’s common stock for 1 share of the Limitless X common stock. Upon closing, Limitless X will become a wholly-owned subsidiary of the Company.
Limitless X Inc. (“Limitless”) was incorporated in the State of Nevada on September 27, 2021. Limitless is a lifestyle brand. Hyper focused in the health and wellness industry, Limitless strives to make you the best version of yourself through nutritional supplements, cutting edge wellness studies and interactive training videos. Limitless truly believes in its motto that "No food tastes as good as you feel when you're in shape." Your life is better when your mind and body are running optimally, and the Limitless will help you achieve your full potential. The businesses of Limitless X will become the Company’s principal business.
The Merger will be accounted for as a "reverse merger" immediately following the completion of the transaction. For accounting purposes, Limitless X will be deemed to be the accounting acquirer in the transaction and, consequently, the transaction will be treated as a recapitalization of the Company. Accordingly, Limitless X’s assets, liabilities and results of operations will become the historical financial statements of the registrant. No step-up in basis or intangible assets or goodwill will be recorded in this transaction.
The unaudited pro forma balance sheet as of March 31, 2022 and December 31, 2021, and the unaudited combined statement of operations for the year ended December 31, 2021 and three months ended March 31, 2022, presented herein give effect to the reverse merger as if the transaction had occurred at the beginning of such period and includes certain adjustments that are directly attributable to the transaction, which are expected to have a continuing impact on the Company and are factually supportable, as summarized in the accompanying notes.
The unaudited pro forma combined financial information is provided for illustrative purposes only. The unaudited pro forma combined financial information presented herein is based on management’s estimate of the effects of the reverse merger, had such transaction occurred on the dates indicated herein, based on currently available information and certain assumptions and estimates that the Company believes are reasonable under the circumstances. The unaudited pro forma combined financial information is not necessarily indicative of the results of operations or financial position that actually would have been achieved had the reverse merger been consummated on the dates indicated, or that may be achieved in the future.
The unaudited pro forma combined financial information presented herein should be read in conjunction with the financial statements contained elsewhere in this Form 8-K, as filed with the Securities and Exchange Commission.
The unaudited pro forma combined financial statements are presented for informational purposes only. The pro forma information is not necessarily indicative of what the financial position or results of operations actually would have been had the Transactions been completed at the dates indicated. In addition, the unaudited pro forma combined financial statements do not purport to project the future financial position or operating results of the combined company.
| F-33 |
Bio Lab Naturals, Inc. and Subsidiary and Limitless X Inc.
Pro Forma Combined Balance Sheet
As of March 31, 2022
(unaudited)
| Bio Lab Naturals, Inc. | Limitless X Inc. | Combined | Pro Forma Adjustments | Prof Forma Combined | ||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Current Assets: | ||||||||||||||||||||
| Cash and cash equivalents | $ | 32,100 | $ | 345,679 | $ | 377,779 | $ | — | $ | 377,779 | ||||||||||
| Prepaid | 8,167 | — | 8,167 | — | 8,167 | |||||||||||||||
| Accounts receivables, net | — | 1,589,849 | 1,589,849 | — | 1,589,849 | |||||||||||||||
| Holdback receivables | — | 711,573 | 711,573 | — | 711,573 | |||||||||||||||
| Inventories, net | — | 1,747,906 | 1,747,906 | — | 1,747,906 | |||||||||||||||
| Total current assets | 40,267 | 4,395,007 | 4,435,274 | — | 4,435,274 | |||||||||||||||
| Non-Current Assets: | ||||||||||||||||||||
| Operating lease right-of-use asset, net | — | 191,277 | 191,277 | — | 191,277 | |||||||||||||||
| Other assets | — | 10,985 | 10,985 | — | 10,985 | |||||||||||||||
| Equipment, net | 51,627 | — | 51,627 | — | 51,627 | |||||||||||||||
| Total non-current assets | 51,627 | 202,262 | 253,889 | — | 253,889 | |||||||||||||||
| Total assets | $ | 91,894 | $ | 4,597,269 | $ | 4,689,163 | $ | — | $ | 4,689,163 | ||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
| Current Liabilities: | ||||||||||||||||||||
| Accounts payable and accrued liabilities | $ | 22,866 | $ | 1,062,700 | $ | 1,085,566 | $ | — | $ | 1,085,566 | ||||||||||
| Note payable | 35,000 | — | 35,000 | — | 35,000 | |||||||||||||||
| Current portion of operating lease liabilities | — | 134,215 | 134,215 | — | 134,215 | |||||||||||||||
| Refunds payable | — | 788,734 | 788,734 | — | 788,734 | |||||||||||||||
| Chargebacks payable | — | 75,815 | 75,815 | — | 75,815 | |||||||||||||||
| Current portion of loan payables to shareholder | — | 165,830 | 165,830 | — | 165,830 | |||||||||||||||
| Income tax payable | — | 107,236 | 107,236 | — | 107,236 | |||||||||||||||
| Total current liabilities | 57,866 | 2,334,530 | 2,392,396 | — | 2,392,396 | |||||||||||||||
| Current portion of loan payables to shareholder | — | 34,170 | 34,170 | — | 34,170 | |||||||||||||||
| Operating lease liabilities, less current portion | — | 57,838 | 57,838 | — | 57,838 | |||||||||||||||
| Total liabilities | 57,866 | 2,426,538 | 2,484,404 | — | 2,484,404 | |||||||||||||||
| Stockholders' Equity | ||||||||||||||||||||
| Preferred shares | 50 | — | 50 | — | 50 | |||||||||||||||
| Common shares | 1,080 | 50,000 | 51,080 | (40,300 | )(A) | 10,780 | ||||||||||||||
| Additional paid in capital | 35,749,833 | 1,798,824 | 37,548,657 | (35,676,635 | )(B) | 1,872,022 | ||||||||||||||
| Retained earnings (deficit) | (35,716,935 | ) | 321,907 | (35,395,028 | ) | 35,716,935 | (B) | 321,907 | ||||||||||||
| Total stockholders' equity | 34,028 | 2,170,731 | 2,204,759 | — | 2,204,759 | |||||||||||||||
| Total liabilities and stockholders' equity | $ | 91,894 | $ | 4,597,269 | $ | 4,689,163 | $ | — | $ | 4,689,163 | ||||||||||
____________________
| (A) | Reflects shares issued and outstanding at par value of $0.0001 as follows: |
| Initial shares issued and outstanding: | 10,803,504 |
| Issuances of shares to Limitless X shareholders: | 97,000,000 |
| Total shares issued and outstanding | 107,803,504 |
| (B) | Reflects recapitalization adjustment under reverse merger eliminating retained earnings of Bio Lab Naturals, Inc. |
See accompanying notes to unaudited pro forma combined financial statement
| F-34 |
Bio Lab Naturals, Inc. and Subsidiary and Limitless X Inc.
Pro Forma Combined Statement of Operations
Thee Months Ended March 31, 2022
(unaudited)
| Bio Lab Naturals, Inc. | Limitless X Inc. | Combined | Pro Forma Adjustments | Prof Forma Combined | ||||||||||||||||
| Net sales | $ | — | $ | 8,320,056 | $ | 8,320,056 | $ | — | $ | 8,320,056 | ||||||||||
| Cost of sales | ||||||||||||||||||||
| Cost of sales | — | 2,177,953 | 2,177,953 | — | 2,177,953 | |||||||||||||||
| Cost of sales - other | 358 | — | 358 | — | 358 | |||||||||||||||
| Depreciation | 2,810 | — | 2,810 | — | 2,810 | |||||||||||||||
| Total cost of sales | 3,168 | 2,177,953 | 2,181,121 | — | 2,181,121 | |||||||||||||||
| Gross profit | (3,168 | ) | 6,142,103 | 6,138,935 | — | 6,138,935 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Consulting fees, related party | 17,500 | — | 17,500 | — | 17,500 | |||||||||||||||
| General and administrative expenses - other | 6,059 | — | 6,059 | — | 6,059 | |||||||||||||||
| General and administrative | — | 394,488 | 394,488 | — | 394,488 | |||||||||||||||
| Professional fees | 41,020 | — | 41,020 | — | 41,020 | |||||||||||||||
| Advertising and marketing | — | 5,243,678 | 5,243,678 | — | 5,243,678 | |||||||||||||||
| Payroll and payroll taxes | — | 70,422 | 70,422 | — | 70,422 | |||||||||||||||
| Rent | — | 31,942 | 31,942 | — | 31,942 | |||||||||||||||
| Total operating expenses | 64,579 | 5,740,530 | 5,805,109 | — | 5,805,109 | |||||||||||||||
| Income (loss) from operations | (67,747 | ) | 401,573 | 333,826 | — | 333,826 | ||||||||||||||
| Other (expense) | ||||||||||||||||||||
| Interest expense | (875 | ) | — | (875 | ) | — | (875 | ) | ||||||||||||
| Gain (loss) on disposal of assets | 44,894 | — | 44,894 | — | 44,894 | |||||||||||||||
| Total other (expense) | 44,019 | — | 44,019 | — | 44,019 | |||||||||||||||
| Income (loss) before income taxes | (23,728 | ) | 401,573 | 377,845 | — | 377,845 | ||||||||||||||
| Income tax provision | — | 84,330 | 84,330 | — | 84,330 | |||||||||||||||
| Net loss (income) | $ | (23,728 | ) | $ | 317,243 | $ | 293,515 | $ | — | $ | 293,515 | |||||||||
| Net loss (income) per common share - basic and diluted | $ | 0.00 | ||||||||||||||||||
| Weighted average number of common shares | 107,803,504 | |||||||||||||||||||
See accompanying notes to unaudited pro forma combined financial statements
| F-35 |
Bio Lab Naturals, Inc. and Subsidiary and Limitless X Inc.
Pro Forma Combined Balance Sheet
As of December 31, 2021
(unaudited)
| Bio Lab Naturals, Inc. | Limitless X Inc. | Combined | Pro Forma Adjustments | Prof Forma Combined | ||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Current Assets: | ||||||||||||||||||||
| Cash and cash equivalents | $ | 4,377 | $ | 78,856 | $ | 83,233 | $ | — | $ | 83,233 | ||||||||||
| Due from other | 2,425 | — | 2,425 | — | 2,425 | |||||||||||||||
| Prepaid | 11,667 | — | 11,667 | — | 11,667 | |||||||||||||||
| Net property on operating lease | 107,106 | 107,106 | — | 107,106 | ||||||||||||||||
| Accounts receivables, net | — | 322,499 | 322,499 | — | 322,499 | |||||||||||||||
| Holdback receivables | — | 162,226 | 162,226 | — | 162,226 | |||||||||||||||
| Inventories, net | — | 1,875,146 | 1,875,146 | — | 1,875,146 | |||||||||||||||
| Total current assets | 125,575 | 2,438,727 | 2,564,302 | — | 2,564,302 | |||||||||||||||
| Non-Current Assets: | ||||||||||||||||||||
| Operating lease right-of-use asset, net | — | 224,202 | 224,202 | — | 224,202 | |||||||||||||||
| Other assets | — | 10,985 | 10,985 | — | 10,985 | |||||||||||||||
| Equipment, net | 54,438 | — | 54,438 | — | 54,438 | |||||||||||||||
| Total non-current assets | ||||||||||||||||||||
| Total assets | $ | 180,013 | $ | 2,673,914 | $ | 2,853,927 | $ | — | $ | 2,853,927 | ||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
| Current Liabilities: | ||||||||||||||||||||
| Accounts payable and accrued liabilities | $ | 57,257 | $ | 215,176 | $ | 272,433 | $ | — | $ | 272,433 | ||||||||||
| Note payable | 35,000 | — | 35,000 | — | 35,000 | |||||||||||||||
| Note payable, related party | 30,000 | — | 30,000 | — | 30,000 | |||||||||||||||
| Current portion of operating lease liabilities | — | 132,200 | 132,200 | — | 132,200 | |||||||||||||||
| Refunds payable | — | 207,599 | 207,599 | — | 207,599 | |||||||||||||||
| Chargebacks payable | — | 100,350 | 100,350 | — | 100,350 | |||||||||||||||
| Current portion of loan payables to shareholder | — | 28,802 | 28,802 | — | 28,802 | |||||||||||||||
| Income tax payable | — | 22,906 | 22,906 | — | 22,906 | |||||||||||||||
| Total current liabilities | 122,257 | 707,033 | 829,290 | — | 829,290 | |||||||||||||||
| Loan payables to shareholder, less current portion | — | 21,198 | 21,198 | — | 21,198 | |||||||||||||||
| Operating lease liabilities, less current portion | — | 92,195 | 92,195 | — | 92,195 | |||||||||||||||
| Total liabilities | 122,257 | 820,426 | 942,683 | — | 942,683 | |||||||||||||||
| Stockholders' Equity | ||||||||||||||||||||
| Preferred shares | 50 | — | 50 | — | 50 | |||||||||||||||
| Common shares | 1,080 | 50,000 | 51,080 | (40,300 | )(A) | 10,780 | ||||||||||||||
| Additional paid in capital | 35,749,833 | 1,798,824 | 37,548,657 | (35,652,907 | )(B) | 1,895,750 | ||||||||||||||
| Retained earnings (deficit) | (35,693,207 | ) | 4,664 | (35,688,543 | ) | 35,693,207 | (B) | 4,664 | ||||||||||||
| Total stockholders' equity | 57,756 | 1,853,488 | 1,911,244 | — | 1,911,244 | |||||||||||||||
| Total liabilities and stockholders' equity | $ | 180,013 | $ | 2,673,914 | $ | 2,853,927 | $ | — | $ | 2,853,927 | ||||||||||
_________________
| (A) | Reflects shares issued and outstanding at par value of $0.0001 as follows: |
| Initial shares issued and outstanding: | 10,803,504 |
| Issuances of shares to Limitless X shareholders: | 97,000,000 |
| Total shares issued and outstanding | 107,803,504 |
| (B) | Reflects recapitalization adjustment under reverse merger eliminating retained earnings of Bio Lab Naturals, Inc. |
See accompanying notes to unaudited pro forma combined financial statements
| F-36 |
Bio Lab Naturals, Inc. and Subsidiary and Limitless X Inc.
Pro Forma Combined Statement of Operations
Year Ended December 31, 2021
(unaudited)
| Bio Lab Naturals, Inc. | Limitless X Inc. | Combined | Pro Forma Adjustments | Prof Forma Combined | ||||||||||||||||
| Sales | ||||||||||||||||||||
| Net sales | $ | 256,180 | $ | 516,267 | $ | 772,447 | $ | — | $ | 772,447 | ||||||||||
| Rentals | 83,000 | — | 83,000 | — | 83,000 | |||||||||||||||
| Total net sales | 339,180 | 516,267 | 855,447 | — | 855,447 | |||||||||||||||
| Cost of sales | ||||||||||||||||||||
| Cost of sales | — | 238,662 | 238,662 | — | 238,662 | |||||||||||||||
| Purchases | 235,645 | — | 235,645 | — | 235,645 | |||||||||||||||
| Cost of sales - other | 15,983 | — | 15,983 | — | 15,983 | |||||||||||||||
| Depreciation - rental | 8,684 | — | 8,684 | — | 8,684 | |||||||||||||||
| Depreciation | 14,091 | — | 14,091 | — | 14,091 | |||||||||||||||
| Total cost of sales | 274,403 | 238,662 | 513,065 | — | 513,065 | |||||||||||||||
| Gross profit | 64,777 | 277,605 | 342,382 | — | 342,382 | |||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Consulting fees, related party | 117,500 | — | 117,500 | — | 117,500 | |||||||||||||||
| General and administrative expenses - other | 25,924 | — | 25,924 | — | 25,924 | |||||||||||||||
| General and administrative | — | 26,054 | 26,054 | — | 26,054 | |||||||||||||||
| Professional fees | 95,248 | — | 95,248 | — | 95,248 | |||||||||||||||
| Advertising and marketing | — | 194,679 | 194,679 | — | 194,679 | |||||||||||||||
| Payroll and payroll taxes | — | 17,794 | 17,794 | — | 17,794 | |||||||||||||||
| Rent | — | 11,508 | 11,508 | — | 11,508 | |||||||||||||||
| Total operating expenses | 238,672 | 250,035 | 488,707 | — | 488,707 | |||||||||||||||
| Income (loss) from operations | (173,895 | ) | 27,570 | (146,325 | ) | — | (146,325 | ) | ||||||||||||
| Other (expense) | ||||||||||||||||||||
| Interest expense, related party | (3,100 | ) | — | (3,100 | ) | — | (3,100 | ) | ||||||||||||
| Interest expense | (2,917 | ) | — | (2,917 | ) | — | (2,917 | ) | ||||||||||||
| Gain (loss) on disposal of assets | (69,443 | ) | — | (69,443 | ) | — | (69,443 | ) | ||||||||||||
| Total other (expense) | (75,460 | ) | — | (75,460 | ) | — | (75,460 | ) | ||||||||||||
| Income (loss) before income taxes | (249,355 | ) | 27,570 | (221,785 | ) | — | (221,785 | ) | ||||||||||||
| Income tax provision | — | 22,906 | 22,906 | — | 84,330 | |||||||||||||||
| Net loss (income) | $ | (249,355 | ) | $ | 4,664 | $ | (244,691 | ) | $ | — | $ | (306,115 | ) | |||||||
| Net loss (income) per common share - basic and diluted | $ | (0.00 | ) | |||||||||||||||||
| Weighted average number of common shares | 107,803,504 | |||||||||||||||||||
See accompanying notes to unaudited pro forma combined financial statements
| F-37 |
EXHIBIT 3.1
AMENDED CERTIFICATE OF DESIGNATION OF
SERIES A PREFERRED CONVERTIBLE STOCK OF
BIO LAB NATURALS, INC.
A Delaware Corporation
It is hereby certified that:
1. The name of the Company (hereinafter called the "Company") is Bio Lab Naturals, Inc., a Delaware corporation.
2. Pursuant to Section 151 of the Delaware General Corporation Law, the Certificate of Incorporation of the Company authorizes the issuance of Up to Five Million (5,000,000) shares of Preferred Stock, (herein, "Preferred Stock" or "Preferred Shares"), and expressly vests in the Board of Directors of the Company the authority provided therein to issue any or all of the Preferred Shares in one (1) or more Classes or series and by resolution or resolutions to establish the designation and number and to fix the relative rights and preferences of each Classes of Preferred Stock to be issued.
3. The Board of Directors of the Company, pursuant to the authority expressly vested in it as aforesaid, created a class of Series A Preferred Convertible Stock, the Certificate of Designation for which was filed with the state of Delaware on February 5, 2020.
4. The Board of Directors of the Company desire now to amend the rights and preferences of the Series A Preferred Convertible Stock, and pursuant to the authority expressly vested in it as aforesaid, adopted a resolution in order to amend the rights and preferences of the Series A Preferred Convertible Preferred Stock.
RESOLVED, that five hundred thousand (500,000) of the Five Million (5,000,000) authorized shares of Preferred Stock of the Company shall be designated Class A Preferred Convertible Stock, $0.0001 par value per share, and shall possess the rights and preferences set forth below:
Section 1. Designation and Amount. The shares of the Class of Preferred Convertible Stock hereby and herein created shall have a par value of $0.0001 per share and shall be designated as Class A Preferred Convertible Stock (the "Class A Preferred Convertible Stock") and the number of· shares constituting the Class A Preferred Convertible Stock shall be five hundred thousand (500,000). The Class A Preferred Convertible Stock shall have a deemed purchase price and value of $0.004 U.S. per share.
Section 2. Rank. The Class A Preferred Convertible Stock shall rank: (i) senior to any other class or series of outstanding Preferred Shares or Classes of capital stock of the Company; (ii) prior to all of the Company's Common Stock, ("Common Stock"); and (iii) prior to any other class or series of capital stock of the Company hereafter created "Junior Securities"); and in each case as to distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary (all such distributions being referred to collectively as “Distributions”).
Section 3. Dividends. The Class A Preferred Convertible Stock shall bear no dividends, except that in the event dividends are declared for common stock, the same rate of dividend per share shall be due and payable to the Class A Preferred shareholders on the same terms.
Section 4. Liquidation/Merger Preference.
(a) So long as a majority of the shares of Class A Preferred Convertible Stock are outstanding, the Company will not, without the written consent of the holders of at least 51% of the Company's outstanding Class A Preferred Convertible Stock, either directly or by amendment, merger, consolidation, or otherwise:
| 1 |
(i) liquidate, dissolve or wind-up the affairs of the Company, or effect any Liquidation Event; (ii) amend, alter, or repeal any provision of the Certificate of Incorporation or Bylaws in a manner adverse to the Class A Preferred Convertible Stock (iii) create or authorize the creation of, or issue any other security convertible into or exercisable for, any equity security, having rights, preferences or privileges senior to the Class A Preferred Convertible Stock, or (iv) purchase or redeem or pay any dividend on any capital stock prior to the Class A Preferred Convertible Stock, other than stock repurchased from former employees or consultants in connection with the cessation of their employment/services.
(b) In the event of any liquidation, merger, dissolution or winding up of the Company, either voluntary or involuntary, the holders of shares of Class A Preferred Convertible Stock (each a "Holder" and collectively the "Holders") shall be entitled to receive, prior in preference to any distribution to other Junior Securities, an amount per share equal to $1.00 plus any allocable and due dividends per share.
(c) Upon the completion of the distribution required by subsection 4(b), above, if assets remain in the Company, they shall be distributed to holders of Junior Securities in accordance with the Company's Certificate of Incorporation including any duly adopted Certificate(s) of Designation.
(d) In the event of any liquidation, dissolution or winding up of the Company, the proceeds shall be paid after the payments to any outstanding junior classes of preferred shareholders. The balance of any proceeds shall be distributed to holders of Common Stock and to the Class A Preferred Convertible Stock shareholders on an as converted basis.
(e) A merger or consolidation (other than one in which stockholders of the Company own a majority power of the outstanding shares of the surviving or acquiring corporation) and a sale, lease, transfer or other disposition of all or substantially all of the assets of the Company will be treated as a liquidation event thereby triggering payment of the liquidation preferences described in subsection 4(b).
Section 5. Conversion of Preferred Shares to Common. The record Holders of the Class A Preferred Convertible Stock may convert, or be converted, to common shares as follows:
(a) Conversion Option. Subject to the qualification by application to either NASDAQ or NYSE Emerging Markets, upon any change of control event which can be either a change of control by purchase, merger, reorganization, vote for an entirely new director slate, sale, disposition of, or transfer of assets of assets, or a general license, or at the option of the holder, in his sole discretion, any record Holder of Class A Preferred Convertible Stock shall be entitled at the office of the Company or any transfer agent for the Class A Preferred Convertible Stock designated by the Company to the Holders in writing (the "Transfer Agent"), to convert the shares of Class A Preferred Convertible Stock into Common Stock by electing, in writing, to convert the shares of Class A Preferred Stock then outstanding and held by the holder into shares of Common Stock of the Company, on a one preferred share for two common shares basis subject to adjustment set forth in (e) hereafter upon tender of the Notice of Conversion. In lieu of this conversion, the Company may redeem or repurchase the shares for $1.00 per share.
(b) Mechanics of Conversion. In order to convert Class A Preferred Convertible Stock into shares of Common Stock under the Optional conversion, specified in 5(a) the Holder shall (i) fax or deliver via electronic mail on the date of conversion (the "Conversion Date"), a copy of a fully executed notice of conversion ("Notice of Conversion") to the Company at the office of the Company or the Transfer Agent stating that the Holder elects to convert Class A Preferred Convertible Stock into Common Stock, which
| 2 |
Notice of Conversion shall specify the date of conversion, the number of shares of Class A Preferred Convertible Stock to be converted to shares of Common Stock issuable upon such conversion (together with a copy of the front page of each certificate to be converted) and (ii) once converted (but not otherwise unless specifically requested by the Company from time to time), surrender to a common courier for delivery to the office of the Company or the Transfer Agent, the original certificate(s) representing the Class A Preferred Convertible Stock being converted (the "Preferred Stock Certificates"), duly endorsed for transfer; unless the Holder notifies the Company or its Transfer Agent that such certificates have been lost, stolen or destroyed (subject to the requirements of subparagraph (i) below). Upon receipt by the Company of a facsimile copy of a Notice of Conversion, Company shall immediately send, via facsimile or email, a confirmation of receipt of the Notice of Conversion, which shall specify that the Notice of Conversion has been received and the name and telephone number of a contact person at the Company whom the Holder should contact regarding information related to the Conversion.
(c) Administration.
(i) Lost or Stolen Certificates. Upon receipt by the Company of evidence of the loss, theft, destruction or mutilation of any Preferred Stock Certificates representing shares of Class A Preferred Convertible Stock, and (in the case of loss, theft or destruction) of indemnity or security reasonably satisfactory to the Company, and upon surrender and cancellation of the Preferred Stock Certificate(s), if mutilated, the Company shall execute and deliver new Preferred Stock Certificate(s) of like tenor and date. However, the Company shall not be obligated to re-issue such lost or stolen Preferred Stock Certificates if Holder contemporaneously requests the Company to convert such Class A Preferred Convertible Stock into Common Stock.
(ii) Delivery of Common Stock Upon Conversion. The Transfer Agent or the Company (as applicable) hall, no later than the close of business on the third (3rd) business day (the "Deadline") after receipt by the Company or the Transfer Agent of a facsimile copy of a Notice of Conversion or upon Automatic Conversion and receipt by Company or the Transfer Agent from the Holder of all necessary documentation duly executed and in proper form required for conversion as stated in this Section 5, issue and surrender to a common courier for either overnight or (if delivery is outside the United States) two (2) day delivery to the Holder at the address of the Holder as shown on the stock records of the Company a certificate for the number of shares of Common Stock to which the Holder shall be entitled as aforesaid. In any event, delivery to each Holder of Common Stock upon a properly submitted conversion of Class A Preferred Convertible Stock shall be made within three (3) business days after the Conversion Date. Without limiting a Holder's other rights at law or in equity, should delivery be later than three (3) business days after the Conversion Date, the Holder shall have the right to either (1) rescind the conversion by facsimile notice to the Company; (2) by giving a new Notice of Conversion, adjust the conversion price and the amount of dividends accrued and unpaid, .in which case the Company shall process the conversion as if the latter notice were the original notice; or (3) accept the late delivery. The Holders shall also be entitled to the equitable remedy of specific performance to enforce the delivery requirements upon conversion of Class A Preferred Convertible Stock.
(iii) No Fractional Shares. If any conversion of the Class A Preferred Convertible Stock would create a fractional share of Common Stock or a right to acquire a fractional share of Common Stock, such fractional share shall be disregarded and the number of shares of Common Stock issuable upon conversion, in the aggregate, shall be rounded to the nearest whole share.
(iv) Date of Conversion. The date on which conversion occurs (the "Conversion Date") shall be deemed to be the date set forth in such Notice of Conversion, provided that the advance copy of the Notice of Conversion is faxed to the Company before 11:59 p.m., MST, on the Conversion Date. The person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be
| 3 |
treated for all purposes as the record Holder or Holders of such shares of Common Stock on the Conversion.
(d) Reservation of Stock Issuable Upon Conversion. The Company shall at all times reserve and keep available or make provision to increase, reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Class A Preferred Convertible Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all then outstanding Class A Preferred Convertible Stock into Common Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Class A Preferred Convertible Stock, the Company will take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.
(e) Adjustment to Conversion Rate.
(i) The conversion price will be subject to adjustments for stock dividends, splits, combinations and similar events and to a Performance Adjustment as specified below.
(ii) Adjustment Due to Merger, Consolidation, Etc. If prior to the conversion of all Class A Preferred Convertible Stock, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which shares of Common Stock of the Company shall be changed into the same or a different number of shares of the same or another class or classes of stock or securities of the Company or another entity or there is a sale of all or substantially all the Company's assets, then the Holders of Class A Preferred Convertible Stock shall thereafter have the right to receive upon conversion of Class A Preferred Convertible Stock, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion, such stock, securities and/or other assets ("New Assets'') which the Holder would have been entitled to receive in such transaction bad the Class A Preferred Convertible Stock been convertible into New Assets from the date hereof, at the market price of such New Assets on the date of conversion, and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holders of the Class A Preferred Convertible Stock to the end that the provisions hereof (including, without limitation, provisions for the adjustment of the conversion price and of the number of shares of Common Stock issuable or New Assets· deliverable upon conversion of the Class A Preferred Convertible Stock) shall thereafter be applicable, as nearly as may be practicable in relation to any securities thereafter deliverable upon the exercise here
.
(iii) In the event of any liquidation, dissolution or winding up of the Company, the proceeds shall be paid after the payments to any outstanding junior classes of preferred shareholders. The balance of any proceeds shall be distributed to holders of Common Stock and to the Class A Preferred shareholders on an as converted basis.
(iv) No Fractional Shares. If any adjustment under this Section 5(e) would create a fractional share of Common Stock or a right to acquire a fractional share of Common Stock, such fractional share shall be disregarded and the number of shares of Common Stock issuable upon conversion, in the aggregate, shall be rounded to the nearest whole share.
Section 6. Voting Rights.
(a) The record holders of the Class A Preferred Convertible Stock shall have the right to vote on any matter with holders of Common Stock and may vote as required on any action, which Delaware law provides may or must be approved by vote or consent of the holders of the specific classes of voting
| 4 |
preferred shares and the holders of common shares. The Record Holders of the Class A Preferred Convertible Stock shall have the right to vote on any matter with holders of common stock voting together as one (1) class. The Record Holders of the Class A Preferred Convertible Stock shall have a number of votes equal to sixty percent (60%) of all of the issued and outstanding shares of Common Stock of the Company.
(b) The Record Holders of the Class A Preferred Shares shall be entitled to the same notice of any Regular or Special Meeting of the Shareholders as may or shall be given to holders of any other classes of preferred shares and the holders of common shares entitled to vote at such meetings. No corporate actions requiring majority shareholder approval or consent may be submitted to a vote of preferred and common shareholders which in any way precludes the Class A Preferred Convertible Stock from exercising its voting or consent rights as though it is or was a common shareholders.
(c) For purposes of determining a quorum for any Regular or Special Meeting of the Shareholders, the Class A Preferred Shares shall be deemed as the equivalent of sixty percent (60%) of all issued and outstanding shares of the Company.
Section 7. Status of Converted Stock. In the event any shares of Class A Preferred Convertible Stock shall be converted pursuant to Section 5 hereof, the shares so converted shall be cancelled, and shall return to the status of authorized but unissued Preferred Stock of no designated class, and shall not be issuable by the Company as Class A Preferred Convertible Stock.
Signed on May 9, 2022
BIO LAB NATURALS, INC.
By: /s/ W. Edward Nichols
_________________________
W. Edward Nichols, CEO
| 5 |
EXHIBIT 10.1
Lock-Up/Leak Out Agreement
May 11 , 2022
Bio Lab Naturals, Inc.
7400 East Crestline Circle
Suite 130
Greenwood Village Colorado 80111
Attention Chief Executive Officer
Limitless X Inc.
9454 Wilshire Boulevard
Suite 300
Beverly Hills, California 90212
Attention Jas Mathur, Chief Executive Officer
Ladies and Gentlemen:
In connection with that certain Share Exchange Agreement by and among Bio Lab Naturals, Inc., a Delaware corporation (“BLAB”) , Limitless X, Inc., a Nevada corporation, Jaspreet Mathur and the other Exchanging Shareholders named in that agreement dated as of this date (the “Share Exchange Agreement” and the acquisition transaction which is the subject of the Share Exchange Agreement, the “Acquisition”)”) the undersigned, a shareholder of BLAB, acknowledges, accepts and hereby executes this lockup/leak out agreement having the terms set forth below as a condition to the Closing of the Acquisition.
Accordingly, the undersigned hereby agrees that the undersigned will not, during the period commencing on the Closing Date (as defined in Section 1.2 of the Share Exchange Agreement), and ending 180 days thereafter (the “Lock-Up Period”), (1) offer, pledge, sell, contract to sell, grant, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of common stock of BLAB, or any securities convertible into or exercisable or exchangeable for shares of common stock of BLAB, whether now owned or hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power of disposition (collectively, the “Lock-Up Securities”); (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Lock-Up Securities, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Lock-Up Securities, in cash or otherwise; (3) make any demand for or exercise any right with respect to the registration of any Lock-Up Securities; or (4) publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement relating to any Lock-Up Securities. Upon expiration of the Lock-Up Period, the undersigned shall be permitted to sell, transfer, and convey up to 15% of the Lock-up Securities during each calendar month of the six month period following termination of the Lock-up Period, following which the provisions of this lock-up/leak out agreement shall terminate
Notwithstanding the foregoing, and subject to the conditions below, the undersigned may transfer Lock-Up Securities without the prior written consent of BLAB in connection with (a) transfers of Lock-Up Securities as a bona fide gift, by will or intestacy or to a family member or trust for the benefit of a family member (for purposes of this lock-up/leak out agreement, “family member” means any relationship by blood, marriage or adoption, not more remote than first cousin); or (b) if the undersigned, directly or indirectly, controls a corporation, partnership, limited liability company or other business entity, any transfers of Lock-Up Securities to any shareholder, partner or member of, or owner of similar equity interests in, the undersigned, as the case may be; provided that in the case of any transfer pursuant to the foregoing clauses (i) any such transfer shall not involve a disposition for value, (ii) each transferee shall sign and deliver to BLAB a lock-up/leak out agreement substantially in the form of this lock-up/leak out agreement and (iii) no filing under Section 16(a) of the Exchange Act, as amended (“Exchange Act”), shall be voluntarily made. Should the undersigned be required to file a report under Section 16(a) of the Exchange Act, reporting a reduction in beneficial ownership of Merger Shares or any securities convertible into or exercisable or exchangeable for Merger Shares by the undersigned during the Lock-Up Period, the undersigned shall include a statement in such report to the effect that such transfer or distribution is not a transfer for value and that such transfer is being made as a gift or by will or intestacy, as the case may be.
1
The undersigned also agrees and consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar against the transfer of the undersigned’s Lock-Up Securities except in compliance with this lock-up/leak out agreement.
The undersigned agrees that, prior to engaging in any transaction or taking any other action that is subject to the terms of this lock-up/leak out agreement during the period from the date hereof to and including the 180th day following the expiration of the initial Lock-Up Period, the undersigned will give notice thereof to the Company and will not consummate any such transaction or take any such action unless it has received written confirmation from the Company that the Lock-Up Period (as may have been extended pursuant to the previous paragraph) has expired.
No provision in this lock-up/leak out agreement shall be deemed to restrict or prohibit the exercise, exchange or conversion by the undersigned of any securities exercisable or exchangeable for or convertible into Merger Shares, as applicable; provided that the undersigned does not transfer the Merger Shares acquired on such exercise, exchange or conversion during the Lock-Up Period, unless otherwise permitted pursuant to the terms of this lock-up/leak out agreement.
The undersigned understands that each of BLAB and Limitless X is relying upon this lock-up/leak out agreement in proceeding toward consummation of the Acquisition. The undersigned further understands that this lock-up agreement is irrevocable and shall be binding upon the undersigned’s heirs, legal representatives, successors and assigns.
Very truly yours,
__________________________________
(Name - Please Print)
__________________________________
(Signature)
__________________________________
(Name of Signatory, in the case of entities - Please Print)
__________________________________
(Title of Signatory, in the case of entities - Please Print)
Address: ______________________________
______________________________________
______________________________________
2
EXHIBIT 10.2
FORM OF
CONSULTING AGREEMENT
This Consulting Agreement (the “Agreement”), effective as of May ___, 2022 (the “Effective Date”) is by and between Bio Lab Naturals, Inc., a Delaware corporation (the “Company”) and (the “Consultant”).
WHEREAS, the Company desires to engage Consultant, as an independent contractor, to perform certain services for the Company and Consultant desires to perform such services for the Company in accordance with the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement, the Parties hereto hereby agree as follows:
1. Consulting Services. Consultant shall act as a consultant to the Company during the term of this agreement (as hereinafter defined), and shall render the services set forth on Exhibit A (the “Consulting Services”) to the Company, and the Company (and any successor company) agrees to pay Consultant the compensation described in Exhibit A, which shall be incorporated as part of this Agreement.
2. Term. The term of this Agreement shall be for a period of six months (the "Term"), unless terminated prior to the end of the Term pursuant to Section 10 of this Agreement. Consultant’s obligations set forth in Sections 5 through 12, inclusive, shall survive termination of this Agreement.
3. Reimbursement of Expenses. As soon as practicable following submission of statements of expenses incurred accompanied by appropriate supporting documentation, the Company will reimburse Consultant for reasonable and customary out-of-pocket business expenses incurred by Consultant in the ordinary course of performing the Consulting Services and in compliance with the Company’s policies covering such expenses. Anticipated expenses in excess of $100 will require the prior written or oral approval of the Company.
4. Proprietary Information. This Agreement creates a relationship of confidence and trust between the Company and Consultant with respect to any information: (a) applicable to the business of the Company or (b) applicable to the business of any client or customer of the Company, which may be made known to Consultant by the Company or by any client or customer of the Company, or learned by Consultant in such context during the term of this Agreement. All such information, whether provided prior to, on or after the Effective Date, has commercial value in the business in which the Company is engaged and is hereinafter called “Proprietary Information.” By way of illustration, but not limitation, Proprietary Information includes any and all technical and nontechnical information including patent, copyright, trade secret, and proprietary information, techniques, sketches, drawings, models, inventions, knowhow, processes, apparatus, equipment, algorithms, software programs, software source documents, and formulae related to the current, future and proposed products and services of the Company and includes, without limitation, information concerning research, experimental work, development, design details and specifications, engineering, financial information, procurement requirements, purchasing, manufacturing, customer lists, business forecasts, sales and merchandising and marketing plans and information. “Proprietary Information” also includes proprietary or confidential information of any third party who may disclose such information to the Company or to Consultant in the course of the Company’s business. “Proprietary Information” shall not include information that (i) is or becomes known to the general public under circumstances involving no breach by the Consultant or others of the terms of this Agreement, (ii) is generally disclosed to third parties by the Company without restriction on such third parties, or (iii) is approved in writing for release by the Company.
| 1 |
5. Ownership and Nondisclosure of Proprietary Information. All Proprietary Information is the sole property of the Company and the Company’s assigns and the Company and the Company’s assigns shall be the sole and exclusive owner of all patents, copyrights, mask works, trade secrets and other rights in the Proprietary Information. At all times, both during the term of this Agreement and after termination of this Agreement, Consultant shall keep in confidence and trust all Proprietary Information and will not disclose any Proprietary Information to any person or entity other than the Company or use any Proprietary Information other than in connection with Consultant’s performance of the Consulting Services for the benefit of the Company.
6. Ownership and Return of Materials. All materials (including, without limitation, documents, drawings, models, apparatus, sketches, designs, lists, and all other tangible media of expression) furnished to Consultant by the Company shall remain the property of the Company. Upon termination of this Agreement, or at any time on the request of the Company before termination, Consultant agrees to promptly (but no later than five (5) days after the earlier of the termination of this Agreement or the Company’s request) destroy or deliver to the Company, at the Company’s option, all materials furnished to Consultant by the Company and all tangible media of expression which are in Consultant’s possession and which incorporate any Proprietary Information or otherwise relate to the Company’s business. At the Company’s request, the Consultant shall provide the Company with written certification of Consultant’s compliance with Consultant’s obligations under this Section 6.
7. Independent Contractor.
(a) Consultant shall act in the capacity of an independent contractor with respect to the Company, and not as an employee of the Company, but shall have such authority on behalf of the Company as is customary for Consultant's position as a consultant to the Company.
(b) Consultant agrees, acknowledges and understands that Consultant shall not have the status of an employee of the Company and shall not participate in any employee benefit plans or group insurance plans or programs (including, but not limited to, salary, bonus plans, or plans pertaining to retirement, deferred savings, disability, medical or dental) even if Consultant is considered eligible to participate pursuant to the terms of such plans, unless otherwise agreed to by the parties. In addition, Consultant understands and agrees that consistent with Consultant’s independent contractor status, Consultant will not apply for any government-sponsored benefits intended only for employees, including, but not limited to, unemployment benefits.
(c) The Company shall issue Form 1099 records for its payments to Consultant made pursuant to this Agreement. Because Consultant is an independent contractor, Consultant is solely responsible for all taxes, withholdings, and other similar statutory obligations; and Consultant agrees to defend, indemnify and hold the Company harmless from any and all claims made by any taxing authority on account of an alleged failure by Consultant to satisfy any such tax or withholding obligations related to Consultant’s independent contractor status. Consultant warrants that Consultant has had the opportunity to obtain independent advice regarding the tax consequences of the payments made pursuant to this Agreement.
| 2 |
8. Consultant’s Representations. Consultant agrees, represents and warrants that:
(a) All action necessary for the authorization, execution, delivery and performance of all obligations under this Agreement has been taken and this Agreement constitutes a valid and legally binding obligation of Consultant that is enforceable against Consultant in accordance with its terms. To the Consultant’s knowledge, the authorization, execution and delivery by Consultant of this Agreement and the performance of Consultant’s obligations under this Agreement will not, with or without the passage of time or giving of notice (i) conflict with, or result in any violation of or default or loss of any benefit under, any permit, law, rule or regulation, or any judgment, decree or order of any court or other governmental agency or instrumentality to which Consultant is a party or to which any of Consultant’s property is subject or (ii) conflict with, or result in a breach or violation of or default or loss of any benefit under, the terms of any agreement, contract, indenture or other instrument to which Consultant is a party or to which any of Consultant’s property is subject, or constitute a default or loss of any right thereunder or an event that, with the lapse of time or notice or both, might result in a default or loss of any right thereunder. Consultant’s performance of Consultant’s obligations under this Agreement will not infringe upon or violate any right of any person or entity.
(b) During the term of this Agreement, Consultant shall not be bound by any agreement, nor assume any obligation, which would in any way be inconsistent with the Consulting Services to be performed by Consultant under this Agreement. This Section 8(b) shall not restrict Consultant from entering into employment or consulting arrangements with third parties, so long as Consultant does not divulge or use the Company’s Proprietary Information while performing services for such third parties.
(c) In performing the Consulting Services, Consultant will not use any confidential or proprietary information of any other person or entity or infringe the intellectual property rights (including, without limitation, patent, copyright, trademark or trade secret rights) of any other person or entity nor will Consultant disclose to the Company, or bring onto the Company’s premises, or induce the Company to use any confidential information of any other person or entity.
(d) Consultant will abide by all applicable federal, state, and local laws and the Company’s safety rules in the course of performing the Consulting Services. Consultant has, and shall maintain, all licenses and permits necessary to perform the Consulting Services under this Agreement and all of such licenses are, and shall remain, in full force and effect. Consulting shall at all times possess the necessary skill and training to perform the Consulting Services, and Consultant shall perform the Consulting Services in a prompt and responsible manner.
(e) Consultant will not subcontract any of Consultant’s obligations under this Agreement without the prior written consent of the Company.
(f) Consultant hereby expressly agrees and covenants that the amounts received by Consultant as described in Exhibit A shall satisfy and discharge in full all of Consultant's claims against Company for payment for the performance of the Consulting Services rendered by Consultant or by any agent of Consultant as described in this Agreement. Consultant acknowledges that, except as otherwise expressly provided in this Agreement, Consultant's provision of the Consulting Services pursuant to the terms hereof shall not confer upon Consultant any ownership interest in or personal claim upon any fees charged by Company to any customer or any third party, whether such fees are collected during the term of this Agreement or after the termination thereof, and Consultant hereby disclaims and renounces any such right, interest, or claim.
| 3 |
9. Indemnification. Consultant will defend, indemnify and hold the Company and its affiliates harmless against any and all losses, liabilities, damages, claims, demands, suits, costs and expenses (including, without limitation, reasonable attorneys’ fees and court costs) arising or resulting, directly or indirectly, from any act or omission of Consultant or Consultant’s breach of any term or condition of this Agreement. Company will defend, indemnify and hold Consultant and its affiliates harmless against any and all losses, liabilities, damages, claims, demands, suits, costs and expenses (including, without limitation, reasonable attorneys’ fees and court costs) arising or resulting, directly or indirectly, from any act or omission of the Company or the Company’s breach of any term or condition of this Agreement. Each Party shall have a duty to mitigate the Losses for which another is responsible hereunder. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN NO EVENT SHALL ANY PARTY OR ANY OF THEIR RESPECTIVE AFFILIATES BE LIABLE FOR ANY SPECIAL, INCIDENTAL, INDIRECT, CONSEQUENTIAL (INCLUDING LOSS OF REVENUES OR PROFITS, LOSS OF DATA, LOSS OF GOODWILL AND LOSS OF CAPITAL, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES), EXEMPLARY OR PUNITIVE DAMAGES OR THE LIKE (EXCEPT TO THE EXTENT THAT SUCH DAMAGES ARE PAID TO A THIRD PARTY AS A RESULT OF A THIRD PARTY CLAIM) ARISING UNDER ANY LEGAL OR EQUITABLE THEORY OR ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT (OR THE PROVISION OF SERVICES HEREUNDER), ALL OF WHICH ARE HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES REGARDLESS OF WHETHER OR NOT ANY PARTY TO THIS AGREEMENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
10. Termination. This Agreement may be terminated by the Company or the Consultant upon at least fifteen (15) days prior written notice to the other party, with or without cause, for any reason, or for no reason. Any such termination shall not result in forfeiture by the Consultant of any compensation paid, payable, or owed, prior to the date of termination.
11. Non-Solicitation.
(a) The Consultant acknowledges that, in the course of its engagement with the Company, it has become familiar, or will become familiar, with trade secrets and with other confidential information concerning the Company and that his services have been and will be of special, unique and extraordinary value to the Company. The Consultant further understands that the provisions of this Agreement are reasonable and necessary to preserve the business of the Company.
(b) In light of Section 11(a), while the Consultant is engaged by the Company and for twelve months thereafter, the Consultant shall not directly or indirectly through another person or entity: (i) induce or attempt to induce any employee or independent contractor of the Company to leave the employ of or engagement with the Company, or in any way interfere with the relationship between the Company, on the one hand, and any employee or independent contractor thereof, on the other hand; (ii) hire or engage any person who was an employee or independent contractor of the Company until twelve months after such individual’s relationship with the Company has been terminated; or (iii) induce or attempt to induce any customer, supplier, independent contractor, licensee or other business relation of the Company to cease doing business with the Company, or in any way interfere with the relationship between any such customer, supplier, independent contractor, licensee or business relation, on the one hand, and the Company, on the other hand.
(c) This Section 11 shall not restrict Consultant from seeking or entering into other employment or consulting relationships with third parties, so long as Consultant does not divulge or use any of the Company’s Proprietary Information while performing services for such third parties.
| 4 |
(d) If, at the time of enforcement of this Section, a court holds that the restrictions stated herein are unreasonable under the circumstances then existing, the Consultant and the Company agree that the maximum period, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area so as to protect the Company to the greatest extent possible under applicable law from improper competition.
(e) In the event of any breach or violation by the Consultant of any of the restrictions contained in this Section, any time period specified herein shall abate during the time of any such breach or violation thereof and that portion remaining at the time of commencement of any such breach or violation shall not begin to run until such breach or violation has been cured in all respects.
12. Miscellaneous Provisions.
(a) THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF COLORADO WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER COLORADO OR ANY OTHER JURISDICTION), THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF COLORADO TO BE APPLIED.
(b) It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
(c) This Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective heirs, successors and permitted assigns; provided, however, that this Agreement and Consultant’s rights and obligations are not assignable by either Party without the other Party’s prior written consent, with the exception that a change of control of the Company, or a sale of all or substantially all of the assets, or a sale of greater than 50% of the outstanding common stock of the Company shall not be considered a violation of this Section 12(c). Any assignment made in violation hereof shall be null and void and of no force or effect.
(d) Any notice, demand, or communication required or permitted to be given by any provision of this Agreement shall be deemed to have been sufficiently given or served if sent by electronic mail transmission, hand-delivered, delivered by overnight courier with guaranteed overnight delivery, or mailed, certified first class mail, postage prepaid, return receipt requested, and addressed or sent to the applicable Party as follows. Such notice shall be effective, (i) if delivered by hand-delivery, upon actual delivery (which must be evidenced by a receipt from the Party to whom such notice was directed), (ii) if sent by overnight courier, one (1) business day after deposit, properly addressed as set out below with such overnight courier service, guaranteed overnight delivery, (iii) if sent by electronic mail transmission to the email address set out below, upon electronic confirmation of receipt (or if the date of such electronic confirmation of receipt is not a business day, upon the next business day); or (iv) if mailed, upon the earlier of (A) three (3) business days after deposit in the mail, certified first class mail, postage prepaid, return receipt requested, and (B) the delivery as shown by return receipt therefor. Any Party may
| 5 |
change its address or email address by giving notice in writing to the other Parties of the new address or email address.
If to Company:
Attn: Bio Lab Naturals, Inc.
7400 E. Crestline Circle
Greenwood Village, CO 80111
Attn: W. Edward Nichols
If to Consultant:
___________________
___________________
Email:__________________
(e) Each Exhibit attached hereto is incorporated herein by this reference and shall be deemed an integral part of this Agreement. This Agreement, including any and all Exhibits, contains the entire understanding of the parties regarding its subject matter and supersedes all prior understandings or agreements between the parties with regard to its subject matter. This Agreement can only be modified by a subsequent written agreement executed by both parties hereto.
(f) Consultant agrees that in the event of breach by the Consultant of any provisions of this Agreement, the Company shall be entitled to equitable relief in the form of an order to specifically perform or an injunction to prevent irreparable injury, without being required to provide security or post bond. Nothing herein shall be construed as prohibiting any party hereto from pursuing, solely or in addition, any other remedies, including monetary damages, for breach or threatened breach of this Agreement.
(g) This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. This Agreement and any signed agreement or instrument entered into in connection with this Agreement or other transactions contemplated herein, and any amendments or waivers hereto or thereto, to the extent signed and delivered by means of a facsimile machine or by electronic mail delivery of a “.pdf” format data file, shall be treated in all manner and respects as an original agreement or instrument and shall, to the full extent permitted by applicable law, be considered to have the same binding legal effect and be enforceable and admissible to the same extent as original handwritten signatures delivered in person. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine or electronic mail delivery of a “.pdf” format data file to deliver a signature to this Agreement or any amendment or waiver hereto or any agreement or instrument entered into in connection with this Agreement, or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or electronic mail delivery of a “.pdf” format data file, as a defense to the formation of a contract and each party hereto forever waives any such defense.
(h) No failure on the part of any person or entity to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of any person or entity in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver of such power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy. No person or entity shall be deemed to have waived any claim arising out of this Agreement, or any power, right, privilege or remedy under this Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written instrument duly executed and delivered on behalf of such person or entity; and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given.
| 6 |
(i) In the event of any controversy, claim or dispute between the parties arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation, conscionability or validity thereof, including any determination of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration in the State of Colorado, County of Denver, in accordance with the Laws of the State of Colorado. The parties agree that the arbitration shall be administered by the American Arbitration Association ("AAA") pursuant to its rules and procedures and an arbitrator shall be selected by the AAA. The arbitrator shall be neutral and independent and shall comply with the AAA code of ethics. The award rendered by the arbitrator shall be final and shall not be subject to vacation or modification. Judgment on the award made by the arbitrator may be entered in any court having jurisdiction over the parties. If either party fails to comply with the arbitrator's award, the injured party may petition the circuit court for enforcement. The parties agree that either party may bring claims against the other only in his/her or its individual capacity and not as a plaintiff or class member in any purported class or representative proceeding. Further, the parties agree that the arbitrator may not consolidate proceedings of more than one person's claims and may not otherwise preside over any form of representative or class proceeding. The arbitrator shall award to the prevailing party on any claim, as determined by the arbitrator, all of the prevailing party’s reasonable expenses relating to that claim, including all fees of the arbitrators, arbitration fees, travel expenses, out-of-pocket expenses such as attorneys’ fees, expert fees and disbursements relating to that claim. Binding Arbitration means that both parties give up the right to a trial by a jury. It also means that both parties give up the right to appeal from the arbitrator’s ruling except for a narrow range of issues that can or may be appealed. It also means that discovery may be severely limited by the arbitrator. This section and the arbitration requirement shall survive any termination. Should any dispute arise from this, or prior agreement(s), a notice of said dispute or default shall be provided through U.S. Postal Service, notice shall grant a reasonable opportunity to cure said default, not to exceed 30 days. The prevailing party shall receive reasonable attorney’s fees and expenses from the non-prevailing party.
(j) The Parties hereto shall execute, acknowledge, and deliver such further instruments as the Parties may deem expedient or necessary in the operation of the Company, and the achievement of its purpose, as well as the purpose of this Agreement. The Parties shall perform such further acts and things as may be required or appropriate to carry out the intent and purposes of this Agreement.
Signature Page to Follow
| 7 |
IN WITNESS WHEREOF, this Consulting Agreement is entered into as of the Effective Date.
| “COMPANY” | “CONSULTANT” | |
| Bio Lab Naturals, Inc. | ||
| By: __________________ | Signed: _________________ | |
| Name: W. Edward Nichols | ||
| Title: President | ||
| 8 |
EXHIBIT A
CONSULTING SERVICES AND COMPENSATION
Consulting Services.
Consultant shall serve as a consultant to the Company, and shall provide services including, but not limited to, general business advice, capital structuring, potential acquisitions, board member recruitment, and advice and assistance with Company regulatory reporting and disclosure requirements. The Company understands and acknowledges that Consultant is not in the business of stock brokerage, investment advice, or activities which require registration under the Securities Act of 1933 or the Securities and Exchange Act of 1934, and the Company further acknowledges and understands that Consultant shall not provide any services related to underwriting, banking, or any financial advice or other services that would require registration and licensure as a broker/dealer.
Consultant will, at all times, faithfully, industriously, and to the best of Consultant’s ability, experience and talents, perform all of the duties that may be required of and from Consultant pursuant to the terms of this Agreement. During the term of this Agreement, Consultant shall (i) devote commercially reasonable business time to the discharge of the Consulting Services on a timely basis, (ii) use his best efforts to diligently serve the business and affairs of the Company and (iii) endeavor in all respects to promote the Company’s interests in all matters.
Compensation. The Company shall pay to Consultant the following:
Cash Compensation: There shall be no cash compensation.
Equity Compensation: Upon execution of this Agreement, Company shall instruct its transfer agent, Mountain Share Transfer, LLC, to issue to Consultant [000,000] shares of the Company’s restricted common stock, which shall be considered earned in full and beneficially owned as of the date of this Agreement, shall not be considered a payment for future services, and shall be non-refundable in every respect, even in the event of early termination of the Agreement pursuant to Section 10. Consultant understands that the shares will be considered restricted securities and have not been registered under any federal or state securities laws.
| 9 |
EXHIBIT 10.3
MANUFACTURING & DISTRIBUTORSHIP LICENSE AGREEMENT
This AGREEMENT is entered into as of December 1, 2021, between DIVATRIM INC. (hereinafter referred to as “Divatrim”), a Florida corporation located at 515 E Las Olas Blvd., Ste 120 Fort Lauderdale, Florida 33301, and LIMITLESS X INC. (“LimitlessX”), a Nevada Corporation located at 9454 Wilshire Blvd., Suite 300, Beverly Hills, California.
A. Divatrim has developed and owns the rights to weight management, weight loss supplements and related products it has designed and has been manufacturing, marketing and selling under the Divatrim name and design logo, with established brand awareness and significant sales from its inception in 2020;
B. LimitlessX designs, manufactures, markets and sells certain lifestyle brands and health and fitness products and accessories;
C. Divatrim desires to expand the market for its products by having LimitlessX provide services to improve the Divatrim products and by permitting LimitlessX to provide manufacturing and distribution of the Divatrim products;
D. LimitlessX desires to provide design services and to obtain the non-exclusive rights to manufacture, market and distribute the Divatrim products; and
E. The parties have agreed on the terms for LimitlessX to design, manufacture, market and distribute the Divatrim products and for the payments to Divatrim for its product designs and distribution rights.
NOW. THEREFORE, the parties agree:
1. Grant of Non-Exclusive License. Divatrim grants to LimitlessX on the terms and conditions in this Agreement, and under any Exhibits attached and made a part of this agreement, the following rights exclusive of all other entities and persons (including Divatrim):
a) To design or redesign the Divatrim weight loss supplements and related products described in the attached Exhibit “A” to this Agreement (“the Products”):
b) To manufacture the Products under such design Specifications as may be mutually agreed upon by Divatrim and LimitlessX from time to time;
c) To promote, sell and distribute the Products in the United States and its territories and possessions (the “Territory”);
d) To use the existing designs of the Products and all intellectual property rights associated with or for such Products, including all Trademarks and Patent rights, with the sale, promotion and distribution of the Products in the Territory, including the display of any Trademarks, and all other designs or marks which could be or that are actually later registered with the Federal Patent and Trademark Office, on LimitlessX vehicles and other merchandising equipment, and on stationery, packaging and other advertising and promotional materials;
| 1 |
e) To use the existing domain names, web addresses, telephone lines, third-party vendors, and any other operational element currently in use by Divatrim that can be transferred to LimitlessX, subject to LimitlessX entering its own contract with such vendors upon execution of this Agreement or thereafter per its discretion. Divatrim retains the rights to continue its own use of these items under existing or new contracts per its discretion, and to develop new products or brands separate and apart from those included in this Agreement as set forth in Exhibit A. Should Divatrim seek any help in marketing, manufacturing or distributing from any third party, LimitlessX hereby has the right of first refusal to add the new products to the existing product line.
f) To manufacture, promote, sell and distribute new products designed or created by LimitlessX that LimitlessX deems preferable to sell under the Divatrim name; and in such case, Divatrim and LimitlessX shall negotiate in good faith to agree on a royalty commission percentage or flat rate amount for the sale of new LimitlessX products using the Divatrim the name.
2. Term: Initial. This agreement and the license granted under the agreement shall be for a term of five (5) years commencing on the Effective Date, subject to earlier termination as provided below and subject to the provisions of the following paragraph providing for successive renewal terms for this Agreement.
3. Renewal Term. This agreement shall automatically renew for consecutive five- year terms unless either party provides notice of termination to the other party no later than six months prior to the end of the current term.
4. Termination Rights. Notwithstanding any other provision, LimitlessX may terminate this Agreement for any reason without notice upon the end of the initial term and LimitlessX may terminate this agreement upon providing a six-month notice to Divatrim. Divatrim can only terminate prior to the end of the Term if such termination is “for cause” as further outlined hereinbelow.
5 Intellectual Property Rights. This Agreement shall not be construed to give LimitlessX any vested right, title, or interest in any of the Trademarks or copyrighted material of Divatrim or Divatrim’s licenses or assignments except to the extent and in the manner, time, and places LimitlessX is authorized and permitted to use the Trademarks as provided in this Agreement.
6. Sublicense by LimitlessX. If agreed upon by Divatrim, which agreement shallnot be unreasonably withheld, LimitlessX may authorize Sublicensees to perform any of LimitlessX’s manufacturing, packing and distribution obligations under this Agreement and grant to such Sublicensees such rights regarding the use of any trademarks or logos or the Divatrim name or other Divatrim intellectual property rights associated with the Products as LimitlessX has been granted by this Agreement. In such case, all Sublicensees shall be bound by this agreement concerning limitations on such Trademarks and other rights.
7. Manufacturing of Products. Divatrim shall provide to LimitlessX all current design specifications for the Products. Divatrim grants to LimitlessX the right to enhance or redesign the Products using LimitlessX’s own knowledge and expertise in the industry, and LimitlessX may manufacture, label, package and distribute the Products under the initial
| 2 |
specifications and within the enhanced or redesigned specifications completed by LimitlessX. LimitlessX will maintain such raw materials and finished products inventories as it deems reasonably necessary to supply products for anticipated sales. Divatrim may approve any such enhancements or redesigned specifications, which approval shall not be unreasonably withheld from LimitlessX. Current inventory will be transferred to LimitlessX as a contribution by Divatrim in further consideration for the terms herein.
8. Quality Control. Divatrim and its representative may during regular business hours enter upon and examine the plants and other facilities where the Products are produced, packaged and stored, and to make any further examination reasonably necessary to properly ascertain whether the Products comply with the initial specifications or such redesigned specifications as approved by Divatrim. Divatrim may observe and examine all operating methods, quality control procedures, and production and inventory records, relevant to the business conducted under this Agreement within regular business hours without interruption of normal business functions.
9. Compliance with Laws. The Products produced by LimitlessX shall be produced in compliance with all federal, state and local laws, regulations and ordinances pertaining to their production.
10. Sale & Distribution of Products. LimitlessX shall use diligent efforts to promote the sale and distribution of the Products in the markets to which LimitlessX sells and distributes its LimitlessX products and such other market territories as it may deem appropriate. To achieve increased sales of the Product, for the performance of the distribution obligations, LimitlessX may employ persons or engage independent contractors or Sublicensees to warehouse, sell and deliver the Products as LimitlessX may determine in its sole discretion.
11. Royalty Commission.
a) Effective beginning April 1, 2022, in order to give LimitlessX a trial period and complete quality control, LimitlessX shall pay to Divatrim from time to time royalty payments equal to 4.00% of the top line gross of List Sales Price, excluding returns, chargebacks and other such allowances. List Sales Price shall mean the List Price set by LimitlessX for the Products sold directly to end users or through a dealer, broker, affiliate, etc.
b) All royalties shall be earned by Divatrim when the purchase price for such products is received by LimitlessX. The royalties earned by Divatrim under this Agreement shall be based on this paragraph for all sales of products whether sold by a Dealer or LimitlessX directly to the end customer by Divatrim's promotional efforts.
c) LimitlessX shall pay all earned royalties to Divatrim on a monthly basis of each calendar year during the term of this Agreement, however, no payment shall be due for 2 months following the April 1 effective date. The first royalty fee shall therefore be due on June 15, 2022 for all back due royalties received for the months of April, 2022, and May 2022, if any, minus chargebacks and returns, with each fee payable on the 15th day of each month moving forward, with June receivables being due July 15, July receivables due August 15, and so on. Credit will be given the following month for any returns, chargebacks or refunds which come in after the last day of the month and unaccounted for by the 15th. Each royalty payment to Divatrim shall be accompanied by sales records during the time covered by each such royalty payment.
| 3 |
12. Advertising and Promotion.
a) LimitlessX shall be responsible for all advertising, sales and promotional materials for the Products; provided, however, that Divatrim agrees that Divatrim will continue to promote the sale of the Divatrim Products during trade shows and clinic demonstrations.
b) Divatrim agrees to use its best efforts to promote the sale of products at such shows and clinics with such minimum time and effort as agreed upon between the parties from time to time with each party responsible for its advertising and promotion expenses.
c) Divatrim agrees that it will use its best efforts to retain the current athlete/celebrity endorsements and will encourage and, at its discretion solicit additional endorsements of the Products. LimitlessX and Divatrim shall negotiate in good faith during the term of this agreement regarding promotional support of the Products by Divatrim
d) In addition to the licensing rights stated above, Divatrim agrees to provide a web page link from the Divatrim home page to the LimitlessX home page upon request by LimitlessX; and if requested by LimitlessX, Amarose will consent to a web page link from the LimitlessX home page to the Divatrim home page for promotion of the Products. Divatrim agrees to maintain its web site for the promotion of the Products and to provide current and relevant sales and marketing information for the Products.
13. First Right of Refusal and Independent Valuation.
a) LimitlessX shall have a first right of refusal with respect to the acquisition of any ownership interest of Divatrim e, including but not limited to corporate stock, products, assets, intellectual property, etc. (“Divatrim Interest”). In the event that Divatrim receives an offer to purchase the Divatrim Interest of Divatrim and Divatrim in its sole discretion determines to accept such offer, Divatrim will notify LimitlessX of such offer and the terms of such offer in writing within five (5) days of receipt of such offer and determination to accept such offer. LimitlessX shall then have thirty (30) days to exercise its right of first refusal to purchase the Divatrim Interest at the same price and on the same terms as contained in such offer (the “Offer Terms”). In the event that LimitlessX elects not to exercise its rights to purchase the Divatrim Interests, Divatrim may sell the Divatrim Interests to the offering party on the offer.
b) LimitlessX and Divatrim agree to perform a third-party independent valuation of Divatrim in a reasonable time per the Parties’ discretion. The evaluation will be utilized to establish the current valuation of the company to establish a set purchase price in the event LimitlessX wishes to make an offer to acquire Divatrim. It is agreed that the independent valuation will be relied upon to distribute any dividends or remuneration above and beyond any already existing valuation. Should Divatrim create new products or establish new relationships which materially effect its valuation, a new updated independent valuation will be performed prior to any potential acquisition.
14. Public Company Disclosure. In the event LimitlessX enters the public markets, Divatrim hereby agrees and consents to the disclosure of this Agreement as a “material contract” per SEC regulations. LimitlessX will use best efforts to keep any vendor or third-party relationships
| 4 |
confidential but Divatrim consents to such contracts or relationships being disclosed if necessary to achieve LimitlessX’s goal of going public. In the event Divatrim is deemed to be a related party to LimitlessX, specifically as to Jaspreet Mathur’s relationship with both entities, Divatrim agrees and consents to cooperating with the SEC or any other agency in the public market process. Mathur has abstained from any negotiation, review, or execution of this Agreement on behalf of LimitlessX due to his status as officer/director of Divatrim, delegating that duty to the undersigned.
15. Business Records. LimitlessX shall maintain accurate and complete business records regarding its production, sale and distribution of the Products. Such records shall be kept in such form as is customary in the health and wellness nutritional industries. LimitlessX shall make the originals of such records (not including financial statements and records) available to Divatrim or its agents during regular business hours and shall send to Divatrim, at Divatrim’s expense, copies of any such records as Divatrim may from time to time reasonably request.
16. Divatrim Representations. The undersigned on behalf of Divatrim and to bind himself individually and represents and warrants he is the sole owner of Divatrim and that Divatrim is the exclusive owner and/or legal licensee of the design and other intellectual property rights of the Divatrim Products, including all Trademarks if any, and all goodwill associated therewith, free and clear of all liens, encumbrances, security interests or rights of any other party subject to licensing agreements. There is no litigation, claim or assessment pending or threatened against Divatrim contesting their exclusive ownership/licensee status of all such design and intellectual property rights and Trademarks. Divatrim’s use of the Trademarks does not, and LimitlessX’s use of the Trademarks as contemplated will not, infringe upon any other person's trademarks or proprietary rights of any nature. The execution of this Agreement by Divatrim and consummating the transactions contemplated does not conflict with or result in a default under or breach of (i) any agreement, indenture, mortgage, contract or instrument to which the undersigned, as the owners of Divatrim, are bound or by which any of its properties or assets is subject; (ii) any order, writ, injunction, decree or judgment of any court or governmental agency applicable to Divatrim or to which any of its assets is bound; or (iii) any law or regulation applicable to Divatrim or by which any of its assets is bound.
17. Insurance. LimitlessX shall maintain in full force and effect, for the benefit of itself and Divatrim, general liability insurance coverage on its operations, including broad form vendor's coverage and product liability insurance. The insurance shall be in an amount of not less than $500,000.00 for each accident or occurrence and which shall be satisfactory to Divatrim. Upon written request of Divatrim, LimitlessX shall furnish Divatrim with a certificate of insurance evidencing that it has such insurance coverage in force.
18. Mutual Indemnification.
a) LimitlessX. LimitlessX shall defend and hold Divatrim harmless against and from all claims made against Divatrim based upon, arising out of, or related to, (1) the operation or condition of any part of any of the LimitlessX’s manufacturing plants, (2) the redesign, manufacture, storage, warehousing, distribution or sale of the Products or any other products manufactured or sold by LimitlessX including LimitlessX's other nutritional or wellness products or accessories, (3) LimitlessX’s conduct of its business, (4) LimitlessX’s ownership or possession of property, and (5) any negligent act, misfeasance or nonfeasance by LimitlessX or any of its agents, contractors, servants or employees, (6) including attorney fees and costs of suit in
| 5 |
connection therewith; provided, however, that upon LimitlessX's notice to Divatrim I that LimitlessX has assumed the defense of any legal action or proceeding, LimitlessX shall not be liable to Divatrim for any legal or other expense subsequently incurred by Divatrim for the defense thereof. Divatrim shall provide LimitlessX with prompt written notice upon receipt of any such claim and Divatrim shall not settle any such claim without LimitlessX’s prior knowledge and consent.
b) Divatrim. Divatrim shall indemnify and hold LimitlessX harmless against and from all claims made against LimitlessX based upon, arising out of, or related to, (1) defects in the existing design of the Products furnished by Divatrim to LimitlessX, (2) the conduct of Divatrim’s business, (3) Divatrim 's ownership or possession of property, (4) any negligent act, misfeasance or nonfeasance by Divatrim or any of its agents, servants, or employees, (5) Divatrim’s breach of any of its representations, warranties or covenants made, and (6) all fees, costs and expenses, including without limitation, attorneys' fees incurred by or on behalf of LimitlessX in the investigation of or defense against all the foregoing claims. However, upon notice to LimitlessX that Divatrim has assumed the defense of any legal action or proceeding, Divatrim shall not be liable to LimitlessX for any legal or other expense subsequently incurred by LimitlessX for the defense thereof. LimitlessX shall provide Divatrim prompt notice of receipt of any such claim and LimitlessX shall not settle any such claim without Divatrim’s prior knowledge and consent.
19. Assignment. This Agreement and LimitlessX’s rights and obligations hereunder shall not be transferred, assigned, encumbered, pledged or hypothecated in full or in part, either voluntarily or by operation of law or otherwise, without Divatrim’s prior written consent unless otherwise provided for in this Agreement. Any attempted transfer, assignment, encumbrance, pledge or hypothecation by LimitlessX without Divatrim 's prior written consent shall be null and void and shall have the effect of immediately terminating this Agreement.
20. No Agency. Nothing in this Agreement shall be construed to create an agency relationship between LimitlessX and Divatrim. LimitlessX is an independent contractor. Neither party shall be liable for any debts, accounts, obligations or other liabilities or torts of the other party, or its agents or employees, except as this Agreement may otherwise expressly provide.
21. Default. If LimitlessX determines that Divatrim has failed to perform any of its substantial obligations, LimitlessX may notify Divatrim in writing, specifying such failure and the section of this Agreement imposing the obligation, whereupon Divatrim shall have sixty (60) days within which to remedy the failure. If Divatrim fails to remedy the failure, LimitlessX may give further notice to Divatrim terminating this Agreement effective as of the date stated in such further notice.
22. Termination of Agreement - General Provisions. This Agreement shall terminate at the option of and upon written notice by either party (who shall not be the party regarding whom the event has occurred) effective as of the occurrence of any of the following events:
a) The insolvency of either party; the voluntary filing by or, if not dismissed within sixty (60) days, the filing against either party of a petition in bankruptcy or a petition for reorganization; any assignment by either party for the benefit of creditors; the appointment of a
| 6 |
receiver or a trustee for either party; or placing either party's assets in the hands of a trustee or receiver; or
b) The permanent discontinuance of all of either party's business for any Reason.
23. Termination of Agreement - Rights of Parties. The following shall occur upon the expiration or termination by either party of this Agreement:
a) All rights, licenses and privileges granted to LimitlessX under this Agreement shall immediately cease and terminate, except as specifically preserved, extended or imposed by a provision of this Agreement;
b) LimitlessX shall discontinue the use of such trademarks or marks as it used under this Agreement, and any items bearing such trademarks, except that LimitlessX may sell its remaining finished product inventory of the Products for sixty (60) days.
c) Any indebtedness of either party to the other not already due shall become immediately due as of the effective date of termination of this Agreement for any reason. In no event shall either party be liable for any debts of the other party to its customers or its other creditors, except as otherwise provided in this Agreement.
24. Default; Definitions. Failure of either party to perform any of this Agreement by any of the following shall not constitute an event of default or breach of this Agreement: strikes, picket lines, boycott efforts, fires, floods, freezes, accidents, war (whether or not declared), revolution, riots, insurrections, acts of God, acts of government (including without limitation any agency or department of the United States of America), acts of the public enemy, scarcity or rationing of gasoline or other fuel or vital products, inability to obtain materials or labor, or other causes reasonably beyond the control of the defaulting party.
25. Notices. Any demand, notice, or request provided for by this Agreement shall be in writing, addressed to the party to whom notice is to be given or to whom a demand or request is to be made, and shall be made by delivery by means of which the sender obtains a receipt of delivery from the carrier.
26. Entire Agreement. This Agreement represents the entire agreement between Divatrim and LimitlessX and supersedes all their prior oral and written arrangements and agreements. This Agreement may not be modified or amended, except by a further written instrument or by an amendment to this Agreement signed by each of the parties hereto.
27. Non-Waiver. Any failure by either party hereto to exercise any of its rights shall not be construed as a waiver of such rights, nor shall any such failure preclude exercise of such rights at any later time.
28. Taxes. All taxes, excises, assessments, levies, imports, duties, costs, charges, and penalties, which may be assessed, levied, demanded, or imposed by any governmental agency for this Agreement, shall be paid by the party upon which they are imposed and shall be the sole obligation of such party.
| 7 |
29. Heading References. Section headings are for convenience only and are not to be construed as part of this Agreement.
30. Applicable Law. This Agreement shall be governed by and construed under the laws of the State of California.
The individuals signing this document represent that they have the authority to do so and to bind each Party to the terms of this Agreement as of the date first referenced above.
LIMITLESS X INC.
By: /s/ Ken Haller
_________________________________
Ken Haller, President
DIVATRIM INC.
By: /s/ Jas Mathur
_________________________________
Jas Mathur, CEO
| 8 |
PRICING ATTACHMENT A
List Price Per SKU at time of Agreement, subject to changes in pricing to be reflected on monthly reports:
| SKU | Product Description | Unit Cost | Retail Price | |||||
| 888-DTKETO | Divatrim KETO 1 Month Supply - 60 Capsules | |||||||
| 888-DTSWVBBB30 | Divatrim Super Woman Blend Berry Blast | |||||||
| 888-DTSWVBDC30 | Divatrim Super Woman Blend Double Chocolate | |||||||
| 888-DTSWVBVG30 | Divatrim Super Woman Blend Vanilla Gelato | |||||||
| 888-DTSIP | Divatrim Super Immune 40 Servings | |||||||
| 888-DTFUEL | DivaTrim Fuel Paradise Punch | |||||||
| 888-DTIPHMB30 | Divatrim Intra/Post Hydration - Mixed Berry | |||||||
| 888-DTILWIPVAN30 | Divatrim Iso:Lean 100% Whey Isolate Protein - Vanilla | |||||||
| 888-DTILWIPCHO30 | Divatrim Iso:Lean 100% Whey Isolate Protein - Chocolate | |||||||
| 888-DTCLALC90 | Divatrim CLA + L-Carnitine | |||||||
| 888-DTSLMR | Divatrim Slimmer | |||||||
| 888-DTCEMV90 | Divatrim CORE Essentials | |||||||
EXHIBIT 10.4
MANUFACTURING & DISTRIBUTORSHIP LICENSE AGREEMENT
This AGREEMENT is entered into as of December 1, 2021, between SMILZ INC. (“Smilz”), a California corporation located at 4935 Mcconnell Ave., Suite 3, Los Angeles, California, and LIMITLESS X INC. (“LimitlessX” or “Manufacturer”), a Nevada Corporation located at 9454 Wilshire Blvd., Suite 300, Beverly Hills, California.
A. Smilz has developed and owns the rights to certain CBD and related lifestyle products it has designed and has been manufacturing, marketing and selling under the Smilz name and design logo, with established brand awareness selling approximately $50 million in sales from its inception on November 20, 2020;
B. LimitlessX designs, manufactures, markets and sells certain lifestyle brands and nutritional products and accessories;
C. Smilz desires to expand the market for its products by having LimitlessX provide services to improve the Smilz products and by permitting LimitlessX to provide manufacturing and distribution of the Smilz products;
D. LimitlessX desires to provide design services and to obtain the non-exclusive rights to manufacture, market and distribute the Smilz products; and
E. The parties have agreed on the terms for LimitlessX to design, manufacture, market and distribute the Smilz products and for the payments to Smilz for its product designs and distribution rights.
NOW. THEREFORE, the parties agree:
1. Grant of Non-Exclusive License. Smilz grants to LimitlessX on the terms and conditions in this Agreement, and under any Exhibits attached and made a part of this agreement, the following rights exclusive of all other entities and persons (including Smilz):
a) To design or redesign the Smilz CBD gummy and related products described in the attached Exhibit “A” to this Agreement (“the Products”):
b) To manufacture the Products under such design Specifications as may be mutually agreed upon by Smilz and LimitlessX from time to time;
c) To promote, sell and distribute the Products in the United States and its territories and possessions (the “Territory”);
d) To use the existing designs of the Products and all intellectual property rights associated with or for such Products, including all Trademarks and Patent rights, with the sale, promotion and distribution of the Products in the Territory, including the display of any Trademarks, and all other designs or marks which could be or that are actually later registered with the Federal Patent and Trademark Office, on LimitlessX vehicles and other merchandising equipment, and on stationery, packaging and other advertising and promotional materials;
| 1 |
e) To use the existing domain names, web addresses, telephone lines, third-party vendors, and any other operational element currently in use by Smilz that can be transferred to LimitlessX, subject to LimitlessX entering its own contract with such vendors upon execution of this Agreement or thereafter per its discretion. Smilz retains the rights to continue its own use of these items under existing or new contracts per its discretion, and to develop new products or brands separate and apart from those included in this Agreement as set forth in Exhibit A. Should Smilz seek any help in marketing, manufacturing or distributing from any third party, LimitlessX hereby has the right of first refusal to add the new products to the existing product line.
f) To manufacture, promote, sell and distribute new products designed or created by LimitlessX that LimitlessX deems preferable to sell under the Smilz name; and in such case, Smilz and LimitlessX shall negotiate in good faith to agree on a royalty commission percentage or flat rate amount for the sale of new LimitlessX products using the Smilz the name.
2. Term: Initial. This agreement and the license granted under the agreement shall be for a term of five (5) years commencing on the Effective Date, subject to earlier termination as provided below and subject to the provisions of the following paragraph providing for successive renewal terms for this Agreement.
3. Renewal Term. This agreement shall automatically renew for consecutive five- year terms unless either party provides notice of termination to the other party no later than six months prior to the end of the current term.
4. Termination Rights. Notwithstanding any other provision, LimitlessX may terminate this Agreement for any reason without notice upon the end of the initial term and LimitlessX may terminate this agreement upon providing a six-month notice to Smilz. Smilz can only terminate prior to the end of the Term if such termination is “for cause” as further outlined hereinbelow.
5. Intellectual Property Rights. This Agreement shall not be construed to give LimitlessX any vested right, title, or interest in any of the Trademarks or copyrighted material of Smilz or Smilz’s licenses or assignments except to the extent and in the manner, time, and places LimitlessX is authorized and permitted to use the Trademarks as provided in this Agreement.
6. Sublicense by LimitlessX. If agreed upon by Smilz, which agreement shall not be unreasonably withheld, LimitlessX may authorize Sublicensees to perform any of LimitlessX’s manufacturing, packing and distribution obligations under this Agreement and grant to such Sublicensees such rights regarding the use of any trademarks or logos or the Smilz name or other Smilz intellectual property rights associated with the Products as LimitlessX has been granted by this Agreement. In such case, all Sublicensees shall be bound by this agreement concerning limitations on such Trademarks and other rights.
7. Manufacturing of Products. Smilz shall provide to LimitlessX all current design specifications for the Products. Smilz grants to LimitlessX the right to enhance or redesign the Products using LimitlessX’s own knowledge and expertise in the industry, and LimitlessX may manufacture, label, package and distribute the Products under the initial specifications and within the enhanced or redesigned specifications completed by LimitlessX.
| 2 |
LimitlessX will maintain such raw materials and finished products inventories as it deems reasonably necessary to supply products for anticipated sales. Smilz may approve any such enhancements or redesigned specifications, which approval shall not be unreasonably withheld from LimitlessX. Current inventory will be transferred to LimitlessX as a contribution by Smilz in further consideration for the terms herein.
8. Quality Control. Smilz and its representative may during regular business hours enter upon and examine the plants and other facilities where the Products are produced, packaged and stored, and to make any further examination reasonably necessary to properly ascertain whether the Products comply with the initial specifications or such redesigned specifications as approved by Smilz. Smilz may observe and examine all operating methods, quality control procedures, and production and inventory records, relevant to the business conducted under this Agreement within regular business hours without interruption of normal business functions.
9. Compliance with Laws. The Products produced by LimitlessX shall be produced in compliance with all federal, state and local laws, regulations and ordinances pertaining to their production.
10. Sale & Distribution of Products. LimitlessX shall use diligent efforts to promote the sale and distribution of the Products in the markets to which LimitlessX sells and distributes its LimitlessX products and such other market territories as it may deem appropriate. To achieve increased sales of the Product, for the performance of the distribution obligations, LimitlessX may employ persons or engage independent contractors or Sublicensees to warehouse, sell and deliver the Products as LimitlessX may determine in its sole discretion.
11. Royalty Commission.
a) Effective beginning April 1, 2022, in order to give LimitlessX a trial period and complete quality control, LimitlessX shall pay to Smilz from time to time royalty payments equal to 4.00% of the top line gross of List Sales Price, excluding returns, chargebacks and other such allowances. List Sales Price shall mean the List Price set by LimitlessX for the Products sold directly to end users or through a dealer, broker, affiliate, etc.
b) All royalties shall be earned by Smilz when the purchase price for such products is received by LimitlessX. The royalties earned by Smilz under this Agreement shall be based on this paragraph for all sales of products whether sold by a Dealer or LimitlessX directly to the end customer by Smilz's promotional efforts.
c) LimitlessX shall pay all earned royalties to Smilz on a monthly basis of each calendar year during the term of this Agreement, however, no payment shall be due for 2 months following the April 1 effective date. The first royalty fee shall therefore be due on June 15, 2022 for all back due royalties received for the months of April, 2022, and May 2022, if any, minus chargebacks and returns, with each fee payable on the 15th day of each month moving forward, with June receivables being due July 15, July receivables due August 15, and so on. Credit will be given the following month for any returns, chargebacks or refunds which come in after the last day of the month and unaccounted for by the 15th. Each royalty payment to Smilz shall be accompanied by sales records during the time covered by each such royalty payment.
| 3 |
12. Advertising and Promotion.
a) LimitlessX shall be responsible for all advertising, sales and promotional materials for the Products; provided, however, that Smilz agrees that Smilz will continue to promote the sale of the Smilz Products during trade shows and clinic demonstrations.
b) Smilz agrees to use its best efforts to promote the sale of products at such shows and clinics with such minimum time and effort as agreed upon between the parties from time to time with each party responsible for its advertising and promotion expenses.
c) Smilz agrees that it will use its best efforts to retain the current athlete/celebrity endorsements and will encourage and, at its discretion solicit additional endorsements of the Products. LimitlessX and Smilz shall negotiate in good faith during the term of this agreement regarding promotional support of the Products by Smilz.
d) In addition to the licensing rights stated above, Smilz agrees to provide a web page link from the Smilz home page to the LimitlessX home page upon request by LimitlessX; and if requested by LimitlessX, Smilz will consent to a web page link from the LimitlessX home page to the Smilz home page for promotion of the Products. Smilz agrees to maintain its web site for the promotion of the Products and to provide current and relevant sales and marketing information for the Products.
13. First Right of Refusal and Independent Valuation.
a) LimitlessX shall have a first right of refusal with respect to the acquisition of any ownership interest of Smilz, including but not limited to corporate stock, products, assets, intellectual property, etc. (“Smilz Interest). In the event that Smilz receives an offer to purchase the Smilz Interest of Smilz and Smilz in its sole discretion determines to accept such offer, Smilz will notify LimitlessX of such offer and the terms of such offer in writing within five (5) days of receipt of such offer and determination to accept such offer. LimitlessX shall then have thirty (30) days to exercise its right of first refusal to purchase the Smilz Interest at the same price and on the same terms as contained in such offer (the “Offer Terms”). In the event that LimitlessX elects not to exercise its rights to purchase the Smilz Interests, Smilz may sell the Smilz Interests to the offering party on the offer.
b) LimitlessX and Smilz agree to perform a third-party independent valuation of Smilz in a reasonable time per the Parties’ discretion. The evaluation will be utilized to establish the current valuation of the company to establish a set purchase price in the event LimitlessX wishes to make an offer to acquire Smilz. It is agreed that the independent valuation will be relied upon to distribute any dividends or remuneration above and beyond any already existing valuation. Should Smilz create new products or establish new relationships which materially effect its valuation, a new updated independent valuation will be performed prior to any potential acquisition.
14. Public Company Disclosure. In the event LimitlessX enters the public markets, Smilz hereby agrees and consents to the disclosure of this Agreement as a “material contract” per SEC regulations. LimitlessX will use best efforts to keep any vendor or third-party relationships confidential but Smilz consents to such contracts or relationships being disclosed if necessary to
| 4 |
achieve LimitlessX’s goal of going public. In the event Smilz is deemed to be a related party to LimitlessX, specifically as to Jaspreet Mathur’s relationship with both entities, Smilz agrees and consents to cooperating with the SEC or any other agency in the public market process. Mathur has abstained from any negotiation, review, or execution of this Agreement on behalf of LimitlessX due to his status as officer/director of Smilz, delegating that duty to the undersigned.
15. Business Records. LimitlessX shall maintain accurate and complete business records regarding its production, sale and distribution of the Products. Such records shall be kept in such form as is customary in the health and wellness nutritional industries. LimitlessX shall make the originals of such records (not including financial statements and records) available to Smilz or its agents during regular business hours and shall send to Smilz, at Smilz’s expense, copies of any such records as Smilz may from time to time reasonably request.
16. Smilz Representations. The undersigned on behalf of Smilz and to bind himself individually and represents and warrants he is the sole owner of Smilz and that Smilz is the exclusive owner and/or legal licensee of the design and other intellectual property rights of the Smilz Products, including all Trademarks if any, and all goodwill associated therewith, free and clear of all liens, encumbrances, security interests or rights of any other party subject to licensing agreements. There is no litigation, claim or assessment pending or threatened against Smilz contesting their exclusive ownership/licensee status of all such design and intellectual property rights and Trademarks. Smilz’s use of the Trademarks does not, and LimitlessX’s use of the Trademarks as contemplated will not, infringe upon any other person's trademarks or proprietary rights of any nature. The execution of this Agreement by Smilz and consummating the transactions contemplated does not conflict with or result in a default under or breach of (i) any agreement, indenture, mortgage, contract or instrument to which the undersigned, as the owners of Smilz, are bound or by which any of its properties or assets is subject; (ii) any order, writ, injunction, decree or judgment of any court or governmental agency applicable to Smilz or to which any of its assets is bound; or (iii) any law or regulation applicable to Smilz or by which any of its assets is bound.
17. Insurance. LimitlessX shall maintain in full force and effect, for the benefit of itself and Smilz, general liability insurance coverage on its operations, including broad form vendor's coverage and product liability insurance. The insurance shall be in an amount of not less than $500,000.00 for each accident or occurrence and which shall be satisfactory to Smilz. Upon written request of Smilz, LimitlessX shall furnish Smilz with a certificate of insurance evidencing that it has such insurance coverage in force.
18. Mutual Indemnification.
a) LimitlessX. LimitlessX shall defend and hold Smilz harmless against and from all claims made against Smilz based upon, arising out of, or related to, (1) the operation or condition of any part of any of the LimitlessX’s manufacturing plants, (2) the redesign, manufacture, storage, warehousing, distribution or sale of the Products or any other products manufactured or sold by LimitlessX including LimitlessX's other nutritional or wellness products or accessories, (3) LimitlessX’s conduct of its business, (4) LimitlessX’s ownership or possession of property, and (5) any negligent act, misfeasance or nonfeasance by LimitlessX or any of its agents, contractors, servants or employees, (6) including attorney fees and costs of suit in connection therewith; provided, however, that upon LimitlessX's notice to Smilz that LimitlessX has assumed the defense of any legal action or proceeding, LimitlessX shall not be liable to Smilz for any legal or other
| 5 |
expense subsequently incurred by Smilz for the defense thereof. Smilz shall provide LimitlessX with prompt written notice upon receipt of any such claim and Smilz shall not settle any such claim without LimitlessX’s prior knowledge and consent.
b) Smilz. Smilz shall indemnify and hold LimitlessX harmless against and from all claims made against LimitlessX based upon, arising out of, or related to, (1) defects in the existing design of the Products furnished by Smilz to LimitlessX, (2) the conduct of Smilz’s business, (3) Smilz's ownership or possession of property, (4) any negligent act, misfeasance or nonfeasance by Smilz or any of its agents, servants, or employees, (5) Smilz’s breach of any of its representations, warranties or covenants made, and (6) all fees, costs and expenses, including without limitation, attorneys' fees incurred by or on behalf of LimitlessX in the investigation of or defense against all the foregoing claims. However, upon notice to LimitlessX that Smilz has assumed the defense of any legal action or proceeding, Smilz shall not be liable to LimitlessX for any legal or other expense subsequently incurred by LimitlessX for the defense thereof. LimitlessX shall provide Smilz prompt notice of receipt of any such claim and LimitlessX shall not settle any such claim without Smilz’s prior knowledge and consent.
19. Assignment. This Agreement and LimitlessX’s rights and obligations hereunder shall not be transferred, assigned, encumbered, pledged or hypothecated in full or in part, either voluntarily or by operation of law or otherwise, without Smilz’s prior written consent unless otherwise provided for in this Agreement. Any attempted transfer, assignment, encumbrance, pledge or hypothecation by LimitlessX without Smilz's prior written consent shall be null
and void and shall have the effect of immediately terminating this Agreement.
20. No Agency. Nothing in this Agreement shall be construed to create an agency relationship between LimitlessX and Smilz. LimitlessX is an independent contractor.
Neither party shall be liable for any debts, accounts, obligations or other liabilities or torts of the other party, or its agents or employees, except as this Agreement may otherwise expressly provide.
21. Default. If LimitlessX determines that Smilz has failed to perform any of its substantial obligations, LimitlessX may notify Smilz in writing, specifying such failure and the section of this Agreement imposing the obligation, whereupon Smilz shall have sixty (60) days within which to remedy the failure. If Smilz fails to remedy the failure, LimitlessX may give further notice to Smilz terminating this Agreement effective as of the date stated in such further notice.
22. Termination of Agreement - General Provisions. This Agreement shall terminate at the option of and upon written notice by either party (who shall not be the party regarding whom the event has occurred) effective as of the occurrence of any of the following events:
a) The insolvency of either party; the voluntary filing by or, if not dismissed within sixty (60) days, the filing against either party of a petition in bankruptcy or a petition for reorganization; any assignment by either party for the benefit of creditors; the appointment of a receiver or a trustee for either party; or placing either party's assets in the hands of a trustee or receiver; or
b) The permanent discontinuance of all of either party's business for any Reason.
| 6 |
23. Termination of Agreement - Rights of Parties. The following shall occur upon the expiration or termination by either party of this Agreement:
a) All rights, licenses and privileges granted to LimitlessX under this Agreement shall immediately cease and terminate, except as specifically preserved, extended or imposed by a provision of this Agreement;
b) LimitlessX shall discontinue the use of such trademarks or marks as it used under this Agreement, and any items bearing such trademarks, except that LimitlessX may sell its remaining finished product inventory of the Products for sixty (60) days.
c) Any indebtedness of either party to the other not already due shall become immediately due as of the effective date of termination of this Agreement for any reason. In no event shall either party be liable for any debts of the other party to its customers or its other creditors, except as otherwise provided in this Agreement.
24. Default; Definitions. Failure of either party to perform any of this Agreement by any of the following shall not constitute an event of default or breach of this Agreement: strikes, picket lines, boycott efforts, fires, floods, freezes, accidents, war (whether or not declared), revolution, riots, insurrections, acts of God, acts of government (including without limitation any agency or department of the United States of America), acts of the public enemy, scarcity or rationing of gasoline or other fuel or vital products, inability to obtain materials or labor, or other causes reasonably beyond the control of the defaulting party.
25. Notices. Any demand, notice, or request provided for by this Agreement shall be in writing, addressed to the party to whom notice is to be given or to whom a demand or request is to be made, and shall be made by delivery by means of which the sender obtains a receipt of delivery from the carrier.
26. Entire Agreement. This Agreement represents the entire agreement between Smilz and LimitlessX and supersedes all their prior oral and written arrangements and agreements. This Agreement may not be modified or amended, except by a further written instrument or by an amendment to this Agreement signed by each of the parties hereto.
27. Non-Waiver. Any failure by either party hereto to exercise any of its rights shall not be construed as a waiver of such rights, nor shall any such failure preclude exercise of such rights at any later time.
28. Taxes. All taxes, excises, assessments, levies, imports, duties, costs, charges, and penalties, which may be assessed, levied, demanded, or imposed by any governmental agency for this Agreement, shall be paid by the party upon which they are imposed and shall be the sole obligation of such party.
29. Heading References. Section headings are for convenience only and are not to be construed as part of this Agreement.
30. Applicable Law. This Agreement shall be governed by and construed under the laws of the State of California.
| 7 |
The individuals signing this document represent that they have the authority to do so and to bind each Party to the terms of this Agreement as of the date first referenced above.
LIMITLESS X INC.
By: /s/ Ken Haller
_______________________________________
Ken Haller, President
SMILZ INC.
By: /s/ Jas Mathur
______________________________________
Jas Mathur, CEO
| 8 |
PRICING ATTACHMENT A
List Price Per SKU at time of Agreement, subject to changes in pricing to be reflected on monthly reports:
GS1 Company Prefix | GTIN | GTIN-12 (U.P.C.) | Product Description | SKU | Retail Pricing | |||||||||||||
| 0850011597 | 00850011597347 | 850011597347 | SMILZ Broad Spectrum CBD Gummies - 300MG |
888-SMBS300GB30 | ||||||||||||||
| 0850011597 | 00850011597354 | 850011597354 | SMILZ Full Spectrum CBD Softgels 750MG - 30 Caps |
888-SMFSSG750-30 | ||||||||||||||
| 0850011597 | 00850011597361 | 850011597361 | SMILZ Sour Worms CBD Isolate Gummies - 750MG |
888-SMSWISO750 | ||||||||||||||
| 0850011597 | 00850011597378 | 850011597378 | SMILZ Sour Bears CBD Isolate Gummies - 750MG |
888-SMSBISO750 | ||||||||||||||
| 0850011597 | 00850011597385 | 850011597385 | SMILZ Neon Cubes CBD Isolate Gummies - 750MG |
888-SMNCISO750 | ||||||||||||||
| 0850011597 | 00850011597392 | 850011597392 | SMILZ Clear Worms CBD Isolate Gummies - 750MG |
888-SMCWISO750 | ||||||||||||||
| 0850011597 | 00850011597408 | 850011597408 | SMILZ Delta 8 Gummies - Cherry Cube - 400MG |
888-SMD8CC400 | ||||||||||||||
| 0850011597 | 00850011597415 | 850011597415 | SMILZ Delta 8 Gummies - Blueberry Cubes - 400MG |
888-SMD8BC400 | ||||||||||||||
| 0850011597 | 00850011597422 | 850011597422 | SMILZ Delta 8 Gummies - Apple Cubes - 400MG |
888-SMD8AC400 | ||||||||||||||
| 0850011597 | 00850011597439 | 850011597439 | SMILZ CBD Colombian Ground Coffee 600MG - 25 Servings |
888-SMISOCGC600-25 | ||||||||||||||
| 0850011597 | 00850011597446 | 850011597446 | SMILZ CBD Full Spectrum Oil - 1000MG |
888-SMFSOIL1000 | ||||||||||||||
EXHIBIT 10.5
MANUFACTURING & DISTRIBUTORSHIP LICENSE AGREEMENT
This AGREEMENT is entered into as of December 1, 2021, between Limitless Performance Inc. (hereinafter referred to as “LPI”), a California corporation located at 1801 Century Park East, 24th Floor, Los Angeles, CA 90067, and LIMITLESS X INC. (“LimitlessX” or “Manufacturer”), a Nevada Corporation located at 9454 Wilshire Blvd., Suite 300, Beverly Hills, California.
A. LPI has developed and owns the rights to certain nutraceutical, dietary supplement, and related lifestyle products it has designed and has been manufacturing, marketing and selling under the LPI name and design logo, with established brand awareness and millions in sales from its inception in 2016;
B. LimitlessX designs, manufactures, markets and sells certain lifestyle brands and nutritional products and accessories;
C. LPI desires to expand the market for its products by having LimitlessX provide services to improve the LPI products and by permitting LimitlessX to provide manufacturing and distribution of the LPI products;
D. LimitlessX desires to provide design services and to obtain the non-exclusive rights to manufacture, market and distribute the LPI products; and
E. The parties have agreed on the terms for LimitlessX to design, manufacture, market and distribute the LPI products and for the payments to LPI for its product designs and distribution rights.
NOW. THEREFORE, the parties agree:
1. Grant of Non-Exclusive License. LPI grants to LimitlessX on the terms and conditions in this Agreement, and under any Exhibits attached and made a part of this agreement, the following rights exclusive of all other entities and persons (including LPI):
a) To design or redesign the LPI nutraceutical, supplement and related products described in the attached Exhibit “A” to this Agreement (“the Products”):
b) To manufacture the Products under such design Specifications as may be mutually agreed upon by LPI and LimitlessX from time to time;
c) To promote, sell and distribute the Products in the United States and its territories and possessions (the “Territory”);
d) To use the existing designs of the Products and all intellectual property rights associated with or for such Products, including all Trademarks and Patent rights, with the sale, promotion and distribution of the Products in the Territory, including the display of any Trademarks, and all other designs or marks which could be or that are actually later registered with
| 1 |
the Federal Patent and Trademark Office, on LimitlessX vehicles and other merchandising equipment, and on stationery, packaging and other advertising and promotional materials;
e) To use the existing domain names, web addresses, telephone lines, third-party vendors, and any other operational element currently in use by LPI that can be transferred to LimitlessX, subject to LimitlessX entering its own contract with such vendors upon execution of this Agreement or thereafter per its discretion. LPI retains the rights to continue its own use of these items under existing or new contracts per its discretion, and to develop new products or brands separate and apart from those included in this Agreement as set forth in Exhibit A. Should LPI seek any help in marketing, manufacturing or distributing from any third party, LimitlessX hereby has the right of first refusal to add the new products to the existing product line.
f) To manufacture, promote, sell and distribute new products designed or created by LimitlessX that LimitlessX deems preferable to sell under the LPI name; and in such case, LPI and LimitlessX shall negotiate in good faith to agree on a royalty commission percentage or flat rate amount for the sale of new LimitlessX products using the LPI the name.
2. Term: Initial. This agreement and the license granted under the agreement shall be for a term of five (5) years commencing on the Effective Date, subject to earlier termination as provided below and subject to the provisions of the following paragraph providing for successive renewal terms for this Agreement.
3. Renewal Term. This agreement shall automatically renew for consecutive five- year terms unless either party provides notice of termination to the other party no later than six months prior to the end of the current term.
4. Termination Rights. Notwithstanding any other provision, LimitlessX may terminate this Agreement for any reason without notice upon the end of the initial term and LimitlessX may terminate this agreement upon providing a six-month notice to LPI. LPI can only terminate prior to the end of the Term if such termination is “for cause” as further outlined hereinbelow.
5 Intellectual Property Rights. This Agreement shall not be construed to give LimitlessX any vested right, title, or interest in any of the Trademarks or copyrighted material of LPI or LPI’s licenses or assignments except to the extent and in the manner, time, and places LimitlessX is authorized and permitted to use the Trademarks as provided in this Agreement.
6. Sublicense by LimitlessX. If agreed upon by LPI, which agreement shall not be unreasonably withheld, LimitlessX may authorize Sublicensees to perform any of LimitlessX’s manufacturing, packing and distribution obligations under this Agreement and grant to such Sublicensees such rights regarding the use of any trademarks or logos or the LPI name or other LPI intellectual property rights associated with the Products as LimitlessX has been granted by this Agreement. In such case, all Sublicensees shall be bound by this agreement concerning limitations on such Trademarks and other rights.
7. Manufacturing of Products. LPI shall provide to LimitlessX all current design specifications for the Products. LPI grants to LimitlessX the right to enhance or redesign the Products using LimitlessX’s own knowledge and expertise in the industry, and
| 2 |
LimitlessX may manufacture, label, package and distribute the Products under the initial specifications and within the enhanced or redesigned specifications completed by LimitlessX. LimitlessX will maintain such raw materials and finished products inventories as it deems reasonably necessary to supply products for anticipated sales. LPI may approve any such enhancements or redesigned specifications, which approval shall not be unreasonably withheld from LimitlessX. Current inventory will be transferred to LimitlessX as a contribution by LPI in further consideration for the terms herein.
8. Quality Control. LPI and its representative may during regular business hours enter upon and examine the plants and other facilities where the Products are produced, packaged and stored, and to make any further examination reasonably necessary to properly ascertain whether the Products comply with the initial specifications or such redesigned specifications as approved by LPI. LPI may observe and examine all operating methods, quality control procedures, and production and inventory records, relevant to the business conducted under this Agreement within regular business hours without interruption of normal business functions.
9. Compliance with Laws. The Products produced by LimitlessX shall be produced in compliance with all federal, state and local laws, regulations and ordinances pertaining to their production.
10. Sale & Distribution of Products. LimitlessX shall use diligent efforts to promote the sale and distribution of the Products in the markets to which LimitlessX sells and distributes its LimitlessX products and such other market territories as it may deem appropriate. To achieve increased sales of the Product, for the performance of the distribution obligations, LimitlessX may employ persons or engage independent contractors or Sublicensees to warehouse, sell and deliver the Products as LimitlessX may determine in its sole discretion.
11. Royalty Commission.
a) Effective beginning April 1, 2022, in order to give LimitlessX a trial period and complete quality control, LimitlessX shall pay to LPI from time to time royalty payments equal to 4.00% of the top line gross of List Sales Price, excluding returns, chargebacks and other such allowances. List Sales Price shall mean the List Price set by LimitlessX for the Products sold directly to end users or through a dealer, broker, affiliate, etc.
b) All royalties shall be earned by LPI when the purchase price for such products is received by LimitlessX. The royalties earned by LPI under this Agreement shall be based on this paragraph for all sales of products whether sold by a Dealer or LimitlessX directly to the end customer by LPI's promotional efforts.
c) LimitlessX shall pay all earned royalties to LPI on a monthly basis of each calendar year during the term of this Agreement, however, no payment shall be due for 2 months following the April 1 effective date. The first royalty fee shall therefore be due on June 15, 2022 for all back due royalties received for the months of April, 2022, and May 2022, if any, minus chargebacks and returns, with each fee payable on the 15th day of each month moving forward, with June receivables being due July 15, July receivables due August 15, and so on. Credit will be given the following month for any returns, chargebacks or refunds which come in after the last day of the month and unaccounted for by the 15th. Each royalty payment to LPI shall be accompanied by sales records during the time covered by each such royalty payment.
| 3 |
12. Advertising and Promotion.
a) LimitlessX shall be responsible for all advertising, sales and promotional materials for the Products; provided, however, that LPI agrees that LPI will continue to promote the sale of the LPI Products during trade shows and clinic demonstrations.
b) LPI agrees to use its best efforts to promote the sale of products at such shows and clinics with such minimum time and effort as agreed upon between the parties from time to time with each party responsible for its advertising and promotion expenses.
c) LPI agrees that it will use its best efforts to retain the current athlete/celebrity endorsements and will encourage and, at its discretion solicit additional endorsements of the Products. LimitlessX and LPI shall negotiate in good faith during the term of this agreement regarding promotional support of the Products by LPI.
d) In addition to the licensing rights stated above, LPI agrees to provide a web page link from the LPI home page to the LimitlessX home page upon request by LimitlessX; and if requested by LimitlessX, LPI will consent to a web page link from the LimitlessX home page to the LPI home page for promotion of the Products. LPI agrees to maintain its web site for the promotion of the Products and to provide current and relevant sales and marketing information for the Products.
13. First Right of Refusal and Independent Valuation.
a) LimitlessX shall have a first right of refusal with respect to the acquisition of any ownership interest of LPI, including but not limited to corporate stock, products, assets, intellectual property, etc. (“LPI Interest). In the event that LPI receives an offer to purchase the LPI Interest of LPI and LPI in its sole discretion determines to accept such offer, LPI will notify LimitlessX of such offer and the terms of such offer in writing within five (5) days of receipt of such offer and determination to accept such offer. LimitlessX shall then have thirty (30) days to exercise its right of first refusal to purchase the LPI Interest at the same price and on the same terms as contained in such offer (the “Offer Terms”). In the event that LimitlessX elects not to exercise its rights to purchase the LPI Interests, LPI may sell the LPI Interests to the offering party on the offer.
b) LimitlessX and LPI agree to perform a third-party independent valuation of LPI in a reasonable time per the Parties’ discretion. The evaluation will be utilized to establish the current valuation of the company to establish a set purchase price in the event LimitlessX wishes to make an offer to acquire LPI. It is agreed that the independent valuation will be relied upon to distribute any dividends or remuneration above and beyond any already existing valuation. Should LPI create new products or establish new relationships which materially effect its valuation, a new updated independent valuation will be performed prior to any potential acquisition.
14. Public Company Disclosure. In the event LimitlessX enters the public markets, LPI hereby agrees and consents to the disclosure of this Agreement as a “material contract” per SEC regulations. LimitlessX will use best efforts to keep any vendor or third-party relationships
| 4 |
confidential but LPI consents to such contracts or relationships being disclosed if necessary to achieve LimitlessX’s goal of going public. In the event LPI is deemed to be a related party to LimitlessX, specifically as to Jaspreet Mathur’s relationship with both entities, LPI agrees and consents to cooperating with the SEC or any other agency in the public market process. Mathur has abstained from any negotiation, review, or execution of this Agreement on behalf of LimitlessX due to his status as officer/director of LPI, delegating that duty to the undersigned.
15. Business Records. LimitlessX shall maintain accurate and complete business records regarding its production, sale and distribution of the Products. Such records shall be kept in such form as is customary in the health and wellness nutritional industries. LimitlessX shall make the originals of such records (not including financial statements and records) available to LPI or its agents during regular business hours and shall send to LPI, at LPI’s expense, copies of any such records as LPI may from time to time reasonably request.
16. LPI Representations. The undersigned on behalf of LPI and to bind himself individually and represents and warrants he is the sole owner of LPI and that LPI is the exclusive owner and/or legal licensee of the design and other intellectual property rights of the LPI Products, including all Trademarks if any, and all goodwill associated therewith, free and clear of all liens, encumbrances, security interests or rights of any other party subject to licensing agreements. There is no litigation, claim or assessment pending or threatened against LPI contesting their exclusive ownership/licensee status of all such design and intellectual property rights and Trademarks. LPI’s use of the Trademarks does not, and LimitlessX’s use of the Trademarks as contemplated will not, infringe upon any other person's trademarks or proprietary rights of any nature. The execution of this Agreement by LPI and consummating the transactions contemplated does not conflict with or result in a default under or breach of (i) any agreement, indenture, mortgage, contract or instrument to which the undersigned, as the owners of LPI, are bound or by which any of its properties or assets is subject; (ii) any order, writ, injunction, decree or judgment of any court or governmental agency applicable to LPI or to which any of its assets is bound; or (iii) any law or regulation applicable to LPI or by which any of its assets is bound.
17. Insurance. LimitlessX shall maintain in full force and effect, for the benefit of itself and LPI, general liability insurance coverage on its operations, including broad form vendor's coverage and product liability insurance. The insurance shall be in an amount of not less than $500,000.00 for each accident or occurrence and which shall be satisfactory to LPI. Upon written request of LPI, LimitlessX shall furnish LPI with a certificate of insurance evidencing that it has such insurance coverage in force.
18. Mutual Indemnification.
a) LimitlessX. LimitlessX shall defend and hold LPI harmless against and from all claims made against LPI based upon, arising out of, or related to, (1) the operation or condition of any part of any of the LimitlessX’s manufacturing plants, (2) the redesign, manufacture, storage, warehousing, distribution or sale of the Products or any other products manufactured or sold by LimitlessX including LimitlessX's other nutritional or wellness products or accessories, (3) LimitlessX’s conduct of its business, (4) LimitlessX’s ownership or possession of property, and (5) any negligent act, misfeasance or nonfeasance by LimitlessX or any of its agents, contractors, servants or employees, (6) including attorney fees and costs of suit in connection therewith;
| 5 |
provided, however, that upon LimitlessX's notice to LPI that LimitlessX has assumed the defense of any legal action or proceeding, LimitlessX shall not be liable to LPI for any legal or other expense subsequently incurred by LPI for the defense thereof. LPI shall provide LimitlessX with prompt written notice upon receipt of any such claim and LPI shall not settle any such claim without LimitlessX’s prior knowledge and consent.
b) LPI. LPI shall indemnify and hold LimitlessX harmless against and from all claims made against LimitlessX based upon, arising out of, or related to, (1) defects in the existing design of the Products furnished by LPI to LimitlessX, (2) the conduct of LPI’s business, (3) LPI's ownership or possession of property, (4) any negligent act, misfeasance or nonfeasance by LPI or any of its agents, servants, or employees, (5) LPI’s breach of any of its representations, warranties or covenants made, and (6) all fees, costs and expenses, including without limitation, attorneys' fees incurred by or on behalf of LimitlessX in the investigation of or defense against all the foregoing claims. However, upon notice to LimitlessX that LPI has assumed the defense of any legal action or proceeding, LPI shall not be liable to LimitlessX for any legal or other expense subsequently incurred by LimitlessX for the defense thereof. LimitlessX shall provide LPI prompt notice of receipt of any such claim and LimitlessX shall not settle any such claim without LPI’s prior knowledge and consent.
19. Assignment. This Agreement and LimitlessX’s rights and obligations hereunder shall not be transferred, assigned, encumbered, pledged or hypothecated in full or in part, either voluntarily or by operation of law or otherwise, without LPI’s prior written consent unless otherwise provided for in this Agreement. Any attempted transfer, assignment, encumbrance, pledge or hypothecation by LimitlessX without LPI's prior written consent shall be null and void and shall have the effect of immediately terminating this Agreement.
20. No Agency. Nothing in this Agreement shall be construed to create an agency relationship between LimitlessX and LPI. LimitlessX is an independent contractor. Neither party shall be liable for any debts, accounts, obligations or other liabilities or torts of the other party, or its agents or employees, except as this Agreement may otherwise expressly provide.
21. Default. If LimitlessX determines that LPI has failed to perform any of its substantial obligations, LimitlessX may notify LPI in writing, specifying such failure and the section of this Agreement imposing the obligation, whereupon LPI shall have sixty (60) days within which to remedy the failure. If LPI fails to remedy the failure, LimitlessX may give further notice to LPI terminating this Agreement effective as of the date stated in such further notice.
22. Termination of Agreement - General Provisions. This Agreement shall terminate at the option of and upon written notice by either party (who shall not be the party regarding whom the event has occurred) effective as of the occurrence of any of the following events:
a) The insolvency of either party; the voluntary filing by or, if not dismissed within sixty (60) days, the filing against either party of a petition in bankruptcy or a petition for reorganization; any assignment by either party for the benefit of creditors; the appointment of a receiver or a trustee for either party; or placing either party's assets in the hands of a trustee or receiver; or
| 6 |
b) The permanent discontinuance of all of either party's business for any Reason.
23. Termination of Agreement - Rights of Parties. The following shall occur upon the expiration or termination by either party of this Agreement:
a) All rights, licenses and privileges granted to LimitlessX under this Agreement shall immediately cease and terminate, except as specifically preserved, extended or imposed by a provision of this Agreement;
b) LimitlessX shall discontinue the use of such trademarks or marks as it used under this Agreement, and any items bearing such trademarks, except that LimitlessX may sell its remaining finished product inventory of the Products for sixty (60) days.
c) Any indebtedness of either party to the other not already due shall become immediately due as of the effective date of termination of this Agreement for any reason. In no event shall either party be liable for any debts of the other party to its customers or its other creditors, except as otherwise provided in this Agreement.
24. Default; Definitions. Failure of either party to perform any of this Agreement by any of the following shall not constitute an event of default or breach of this Agreement: strikes, picket lines, boycott efforts, fires, floods, freezes, accidents, war (whether or not declared), revolution, riots, insurrections, acts of God, acts of government (including without limitation any agency or department of the United States of America), acts of the public enemy, scarcity or rationing of gasoline or other fuel or vital products, inability to obtain materials or labor, or other causes reasonably beyond the control of the defaulting party.
25. Notices. Any demand, notice, or request provided for by this Agreement shall be in writing, addressed to the party to whom notice is to be given or to whom a demand or request is to be made, and shall be made by delivery by means of which the sender obtains a receipt of delivery from the carrier.
26. Entire Agreement. This Agreement represents the entire agreement between LPI and LimitlessX and supersedes all their prior oral and written arrangements and agreements. This Agreement may not be modified or amended, except by a further written instrument or by an amendment to this Agreement signed by each of the parties hereto.
27. Non-Waiver. Any failure by either party hereto to exercise any of its rights shall not be construed as a waiver of such rights, nor shall any such failure preclude exercise of such rights at any later time.
28. Taxes. All taxes, excises, assessments, levies, imports, duties, costs, charges, and penalties, which may be assessed, levied, demanded, or imposed by any governmental agency for this Agreement, shall be paid by the party upon which they are imposed and shall be the sole obligation of such party.
29. Heading References. Section headings are for convenience only and are not to be construed as part of this Agreement.
| 7 |
30. Applicable Law. This Agreement shall be governed by and construed under the laws of the State of California.
The individuals signing this document represent that they have the authority to do so and to bind each Party to the terms of this Agreement as of the date first referenced above.
LIMITLESS X INC.
By: /s/ Ken Haller
___________________________________
Ken Haller, President
LPI INC.
By: /s/ Jas Mathur
___________________________________
Jas Mathur, CEO
| 8 |
PRICING ATTACHMENT A
List Price Per SKU at time of Agreement, subject to changes in pricing to be reflected on monthly reports:
| SKU | Product Description | Unit Cost | Retail Price | |||||
| 888-NZT4830 | Limitless NZT-48 | |||||||
| 888-SUPRGRNG-60 | Limitless SuperGreens Gummies 60 Pcs - 1 Mont | |||||||
| 888-ACTCHRCLG-60 | Limitless Activated Charcoal Gummies - 1 Mont | |||||||
EXHIBIT 10.6
MANUFACTURING & DISTRIBUTORSHIP LICENSE AGREEMENT
This AGREEMENT is entered into as of December 1, 2021, between AMAROSE INC.. (hereinafter referred to as “Amarose”), a Florida corporation located at 515 E Las Olas Blvd., Ste Fort Lauderdale, Florida 33301, and LIMITLESS X INC. (“LimitlessX”), a Nevada Corporation located at 9454 Wilshire Blvd., Suite 300, Beverly Hills, California.
A. Amarose has developed and owns the rights to skincare, health and beauty products it has designed and has been manufacturing, marketing and selling under the Amarose name and design logo, with established brand awareness and significant initial sales from its inception in 2020;
B. LimitlessX designs, manufactures, markets and sells certain lifestyle brands and health and fitness products and accessories;
C. Amarose desires to expand the market for its products by having LimitlessX provide services to improve the Amarose products and by permitting LimitlessX to provide manufacturing and distribution of the Amarose products;
D. LimitlessX desires to provide design services and to obtain the non-exclusive rights to manufacture, market and distribute the Amarose products; and
E. The parties have agreed on the terms for LimitlessX to design, manufacture, market and distribute the Amarose products and for the payments to Amarose for its product designs and distribution rights.
NOW. THEREFORE, the parties agree:
1. Grant of Non-Exclusive License. Amarose grants to LimitlessX on the terms and conditions in this Agreement, and under any Exhibits attached and made a part of this agreement, the following rights exclusive of all other entities and persons (including Amarose):
a) To design or redesign the Amarose skin care, health and beauty, and related products described in the attached Exhibit “A” to this Agreement (“the Products”):
b) To manufacture the Products under such design Specifications as may be mutually agreed upon by Amarose and LimitlessX from time to time;
c) To promote, sell and distribute the Products in the United States and its territories and possessions (the “Territory”);
d) To use the existing designs of the Products and all intellectual property rights associated with or for such Products, including all Trademarks and Patent rights, with the sale, promotion and distribution of the Products in the Territory, including the display of any Trademarks, and all other designs or marks which could be or that are actually later registered with the Federal Patent and Trademark Office, on LimitlessX vehicles and other merchandising equipment, and on stationery, packaging and other advertising and promotional materials;
| 1 |
e) To use the existing domain names, web addresses, telephone lines, third-party vendors, and any other operational element currently in use by Amarose that can be transferred to LimitlessX, subject to LimitlessX entering its own contract with such vendors upon execution of this Agreement or thereafter per its discretion. Amarose retains the rights to continue its own use of these items under existing or new contracts per its discretion, and to develop new products or brands separate and apart from those included in this Agreement as set forth in Exhibit A. Should Amarose seek any help in marketing, manufacturing or distributing from any third party, LimitlessX hereby has the right of first refusal to add the new products to the existing product line.
f) To manufacture, promote, sell and distribute new products designed or created by LimitlessX that LimitlessX deems preferable to sell under the Amarose name; and in such case, Amarose and LimitlessX shall negotiate in good faith to agree on a royalty commission percentage or flat rate amount for the sale of new LimitlessX products using the Amarose name.
2. Term: Initial. This agreement and the license granted under the agreement shall be for a term of five (5) years commencing on the Effective Date, subject to earlier termination as provided below and subject to the provisions of the following paragraph providing for successive renewal terms for this Agreement.
3. Renewal Term. This agreement shall automatically renew for consecutive five- year terms unless either party provides notice of termination to the other party no later than six months prior to the end of the current term.
4. Termination Rights. Notwithstanding any other provision, LimitlessX may terminate this Agreement for any reason without notice upon the end of the initial term and LimitlessX may terminate this agreement upon providing a six-month notice to Amarose. Amarose can only terminate prior to the end of the Term if such termination is “for cause” as further outlined hereinbelow.
5 Intellectual Property Rights. This Agreement shall not be construed to give LimitlessX any vested right, title, or interest in any of the Trademarks or copyrighted material of Amarose or Amarose’s licenses or assignments except to the extent and in the manner, time, and places LimitlessX is authorized and permitted to use the Trademarks as provided in this Agreement.
6. Sublicense by LimitlessX. If agreed upon by Amarose, which agreement shall not be unreasonably withheld, LimitlessX may authorize Sublicensees to perform any of LimitlessX’s manufacturing, packing and distribution obligations under this Agreement and grant to such Sublicensees such rights regarding the use of any trademarks or logos or the Amarose name or other Amarose intellectual property rights associated with the Products as LimitlessX has been granted by this Agreement. In such case, all Sublicensees shall be bound by this agreement concerning limitations on such Trademarks and other rights.
7. Manufacturing of Products. Amarose shall provide to LimitlessX all current design specifications for the Products. Amarose grants to LimitlessX the right to enhance or redesign the Products using LimitlessX’s own knowledge and expertise in the industry, and LimitlessX may manufacture, label, package and distribute the Products under the initial
| 2 |
specifications and within the enhanced or redesigned specifications completed by LimitlessX. LimitlessX will maintain such raw materials and finished products inventories as it deems reasonably necessary to supply products for anticipated sales. Amarose may approve any such enhancements or redesigned specifications, which approval shall not be unreasonably withheld from LimitlessX. Current inventory will be transferred to LimitlessX as a contribution by Amarose in further consideration for the terms herein.
8. Quality Control. Amarose and its representative may during regular business hours enter upon and examine the plants and other facilities where the Products are produced, packaged and stored, and to make any further examination reasonably necessary to properly ascertain whether the Products comply with the initial specifications or such redesigned specifications as approved by Amarose. Amarose may observe and examine all operating methods, quality control procedures, and production and inventory records, relevant to the business conducted under this Agreement within regular business hours without interruption of normal business functions.
9. Compliance with Laws. The Products produced by LimitlessX shall be produced in compliance with all federal, state and local laws, regulations and ordinances pertaining to their production.
10. Sale & Distribution of Products. LimitlessX shall use diligent efforts to promote the sale and distribution of the Products in the markets to which LimitlessX sells and distributes its LimitlessX products and such other market territories as it may deem appropriate. To achieve increased sales of the Product, for the performance of the distribution obligations, LimitlessX may employ persons or engage independent contractors or Sublicensees to warehouse, sell and deliver the Products as LimitlessX may determine in its sole discretion.
11. Royalty Commission.
a) Effective beginning April 1, 2022, in order to give LimitlessX a trial period and complete quality control, LimitlessX shall pay to Amarose from time to time royalty payments equal to 4.00% of the top line gross of List Sales Price, excluding returns, chargebacks and other such allowances. List Sales Price shall mean the List Price set by LimitlessX for the Products sold directly to end users or through a dealer, broker, affiliate, etc.
b) All royalties shall be earned by Amarose when the purchase price for such products is received by LimitlessX. The royalties earned by Amarose under this Agreement shall be based on this paragraph for all sales of products whether sold by a Dealer or LimitlessX directly to the end customer by Amarose's promotional efforts.
c) LimitlessX shall pay all earned royalties to Amarose on a monthly basis of each calendar year during the term of this Agreement, however, no payment shall be due for 2 months following the April 1 effective date. The first royalty fee shall therefore be due on June 15, 2022 for all back due royalties received for the months of April, 2022, and May 2022, if any, minus chargebacks and returns, with each fee payable on the 15th day of each month moving forward, with June receivables being due July 15, July receivables due August 15, and so on. Credit will be given the following month for any returns, chargebacks or refunds which come in after the last day of the month and unaccounted for by the 15th. Each royalty payment to Amarose shall be accompanied by sales records during the time covered by each such royalty payment.
| 3 |
12. Advertising and Promotion.
a) LimitlessX shall be responsible for all advertising, sales and promotional materials for the Products; provided, however, that Amarose agrees that Amarose will continue to promote the sale of the Amarose Products during trade shows and clinic demonstrations.
b) Amarose agrees to use its best efforts to promote the sale of products at such shows and clinics with such minimum time and effort as agreed upon between the parties from time to time with each party responsible for its advertising and promotion expenses.
c) Amarose agrees that it will use its best efforts to retain the current athlete/celebrity endorsements and will encourage and, at its discretion solicit additional endorsements of the Products. LimitlessX and Amarose shall negotiate in good faith during the term of this agreement regarding promotional support of the Products by Amarose.
d) In addition to the licensing rights stated above, Amarose agrees to provide a web page link from the Amarose home page to the LimitlessX home page upon request by LimitlessX; and if requested by LimitlessX, Amarose will consent to a web page link from the LimitlessX home page to the Amarose home page for promotion of the Products. Amarose agrees to maintain its web site for the promotion of the Products and to provide current and relevant sales and marketing information for the Products.
13. First Right of Refusal and Independent Valuation.
a) LimitlessX shall have a first right of refusal with respect to the acquisition of any ownership interest of Amarose, including but not limited to corporate stock, products, assets, intellectual property, etc. (“Amarose Interest”). In the event that Amarose receives an offer to purchase the Amarose Interest of Amarose and Amarose in its sole discretion determines to accept such offer, Amarose will notify LimitlessX of such offer and the terms of such offer in writing within five (5) days of receipt of such offer and determination to accept such offer. LimitlessX shall then have thirty (30) days to exercise its right of first refusal to purchase the Amarose Interest at the same price and on the same terms as contained in such offer (the “Offer Terms”). In the event that LimitlessX elects not to exercise its rights to purchase the Amarose Interests, Amarose may sell the Amarose Interests to the offering party on the offer.
b) LimitlessX and Amarose agree to perform a third-party independent valuation of Amarose in a reasonable time per the Parties’ discretion. The evaluation will be utilized to establish the current valuation of the company to establish a set purchase price in the event LimitlessX wishes to make an offer to acquire Amarose. It is agreed that the independent valuation will be relied upon to distribute any dividends or remuneration above and beyond any already existing valuation. Should Amarose create new products or establish new relationships which materially effect its valuation, a new updated independent valuation will be performed prior to any potential acquisition.
14. Public Company Disclosure. In the event LimitlessX enters the public markets, Amarose hereby agrees and consents to the disclosure of this Agreement as a “material contract” per SEC regulations. LimitlessX will use best efforts to keep any vendor or third-party relationships confidential but Amarose consents to such contracts or relationships being disclosed if necessary
| 4 |
to achieve LimitlessX’s goal of going public. In the event Amarose is deemed to be a related party to LimitlessX, specifically as to Jaspreet Mathur’s relationship with both entities, Amarose agrees and consents to cooperating with the SEC or any other agency in the public market process. Mathur has abstained from any negotiation, review, or execution of this Agreement on behalf of LimitlessX due to his status as officer/director of Amarose, delegating that duty to the undersigned.
15. Business Records. LimitlessX shall maintain accurate and complete business records regarding its production, sale and distribution of the Products. Such records shall be kept in such form as is customary in the health and wellness nutritional industries. LimitlessX shall make the originals of such records (not including financial statements and records) available to Amarose or its agents during regular business hours and shall send to Amarose, at Amarose’s expense, copies of any such records as Amarose may from time to time reasonably request.
16. Amarose Representations. The undersigned on behalf of Amarose and to bind himself individually and represents and warrants he is the sole owner of Amarose and that Amarose is the exclusive owner and/or legal licensee of the design and other intellectual property rights of the Amarose Products, including all Trademarks if any, and all goodwill associated therewith, free and clear of all liens, encumbrances, security interests or rights of any other party subject to licensing agreements. There is no litigation, claim or assessment pending or threatened against Amarose I contesting their exclusive ownership/licensee status of all such design and intellectual property rights and Trademarks. Amarose’s use of the Trademarks does not, and LimitlessX’s use of the Trademarks as contemplated will not, infringe upon any other person's trademarks or proprietary rights of any nature. The execution of this Agreement by Amarose and consummating the transactions contemplated does not conflict with or result in a default under or breach of (i) any agreement, indenture, mortgage, contract or instrument to which the undersigned, as the owners of Amarose, are bound or by which any of its properties or assets is subject; (ii) any order, writ, injunction, decree or judgment of any court or governmental agency applicable to Amarose or to which any of its assets is bound; or (iii) any law or regulation applicable to Amarose or by which any of its assets is bound.
17. Insurance. LimitlessX shall maintain in full force and effect, for the benefit of itself and Amarose, general liability insurance coverage on its operations, including broad form vendor's coverage and product liability insurance. The insurance shall be in an amount of not less than $500,000.00 for each accident or occurrence and which shall be satisfactory to Amarose. Upon written request of Amarose, LimitlessX shall furnish Amarose with a certificate of insurance evidencing that it has such insurance coverage in force.
18. Mutual Indemnification.
a) LimitlessX. LimitlessX shall defend and hold Amarose harmless against and from all claims made against Amarose based upon, arising out of, or related to, (1) the operation or condition of any part of any of the LimitlessX’s manufacturing plants, (2) the redesign, manufacture, storage, warehousing, distribution or sale of the Products or any other products manufactured or sold by LimitlessX including LimitlessX's other nutritional or wellness products or accessories, (3) LimitlessX’s conduct of its business, (4) LimitlessX’s ownership or possession of property, and (5) any negligent act, misfeasance or nonfeasance by LimitlessX or any of its agents, contractors, servants or employees, (6) including attorney fees and costs of suit in connection therewith;
| 5 |
provided, however, that upon LimitlessX's notice to Amarose I that LimitlessX has assumed the defense of any legal action or proceeding, LimitlessX shall not be liable to Amarose for any legal or other expense subsequently incurred by Amarose for the defense thereof. Amarose shall provide LimitlessX with prompt written notice upon receipt of any such claim and Amarose shall not settle any such claim without LimitlessX’s prior knowledge and consent.
b) Amarose. Amarose shall indemnify and hold LimitlessX harmless against and from all claims made against LimitlessX based upon, arising out of, or related to, (1) defects in the existing design of the Products furnished by Amarose to LimitlessX, (2) the conduct of Amarose’s business, (3) Amarose 's ownership or possession of property, (4) any negligent act, misfeasance or nonfeasance by Amarose or any of its agents, servants, or employees, (5) Amarose’s breach of any of its representations, warranties or covenants made, and (6) all fees, costs and expenses, including without limitation, attorneys' fees incurred by or on behalf of LimitlessX in the investigation of or defense against all the foregoing claims. However, upon notice to LimitlessX that Amarose has assumed the defense of any legal action or proceeding, Amarose shall not be liable to LimitlessX for any legal or other expense subsequently incurred by LimitlessX for the defense thereof. LimitlessX shall provide Amarose prompt notice of receipt of any such claim and LimitlessX shall not settle any such claim without Amarose’s prior knowledge and consent.
19. Assignment. This Agreement and LimitlessX’s rights and obligations hereunder shall not be transferred, assigned, encumbered, pledged or hypothecated in full or in part, either voluntarily or by operation of law or otherwise, without Amarose’s prior written consent unless otherwise provided for in this Agreement. Any attempted transfer, assignment, encumbrance, pledge or hypothecation by LimitlessX without Amarose 's prior written consent shall be null and void and shall have the effect of immediately terminating this Agreement.
20. No Agency. Nothing in this Agreement shall be construed to create an agency relationship between LimitlessX and Amarose. LimitlessX is an independent contractor. Neither party shall be liable for any debts, accounts, obligations or other liabilities or torts of the other party, or its agents or employees, except as this Agreement may otherwise expressly provide.
21. Default. If LimitlessX determines that Amarose has failed to perform any of its substantial obligations, LimitlessX may notify Amarose in writing, specifying such failure and the section of this Agreement imposing the obligation, whereupon Amarose shall have sixty (60) days within which to remedy the failure. If Amarose fails to remedy the failure, LimitlessX may give further notice to Amarose terminating this Agreement effective as of the date stated in such further notice.
22. Termination of Agreement - General Provisions. This Agreement shall terminate at the option of and upon written notice by either party (who shall not be the party regarding whom the event has occurred) effective as of the occurrence of any of the following events:
a) The insolvency of either party; the voluntary filing by or, if not dismissed within sixty (60) days, the filing against either party of a petition in bankruptcy or a petition for reorganization; any assignment by either party for the benefit of creditors; the appointment of a receiver or a trustee for either party; or placing either party's assets in the hands of a trustee or receiver; or
| 6 |
b) The permanent discontinuance of all of either party's business for any Reason.
23. Termination of Agreement - Rights of Parties. The following shall occur upon the expiration or termination by either party of this Agreement:
a) All rights, licenses and privileges granted to LimitlessX under this Agreement shall immediately cease and terminate, except as specifically preserved, extended or imposed by a provision of this Agreement;
b) LimitlessX shall discontinue the use of such trademarks or marks as it used under this Agreement, and any items bearing such trademarks, except that LimitlessX may sell its remaining finished product inventory of the Products for sixty (60) days.
c) Any indebtedness of either party to the other not already due shall become immediately due as of the effective date of termination of this Agreement for any reason. In no event shall either party be liable for any debts of the other party to its customers or its other creditors, except as otherwise provided in this Agreement.
24. Default; Definitions. Failure of either party to perform any of this Agreement by any of the following shall not constitute an event of default or breach of this Agreement: strikes, picket lines, boycott efforts, fires, floods, freezes, accidents, war (whether or not declared), revolution, riots, insurrections, acts of God, acts of government (including without limitation any agency or department of the United States of America), acts of the public enemy, scarcity or rationing of gasoline or other fuel or vital products, inability to obtain materials or labor, or other causes reasonably beyond the control of the defaulting party.
25. Notices. Any demand, notice, or request provided for by this Agreement shall be in writing, addressed to the party to whom notice is to be given or to whom a demand or request is to be made, and shall be made by delivery by means of which the sender obtains a receipt of delivery from the carrier.
26. Entire Agreement. This Agreement represents the entire agreement between Amarose and LimitlessX and supersedes all their prior oral and written arrangements and agreements. This Agreement may not be modified or amended, except by a further written instrument or by an amendment to this Agreement signed by each of the parties hereto.
27. Non-Waiver. Any failure by either party hereto to exercise any of its rights shall not be construed as a waiver of such rights, nor shall any such failure preclude exercise of such rights at any later time.
28. Taxes. All taxes, excises, assessments, levies, imports, duties, costs, charges, and penalties, which may be assessed, levied, demanded, or imposed by any governmental agency for this Agreement, shall be paid by the party upon which they are imposed and shall be the sole obligation of such party.
29. Heading References. Section headings are for convenience only and are not to be construed as part of this Agreement.
| 7 |
30. Applicable Law. This Agreement shall be governed by and construed under the laws of the State of California.
The individuals signing this document represent that they have the authority to do so and to bind each Party to the terms of this Agreement as of the date first referenced above.
LIMITLESS X INC.
By: /s/ Ken Haller
_________________________________________
Ken Haller, President
AMAROSE INC..
By: /s/ Jas Mathur
________________________________________
Jas Mathur, CEO
| 8 |
PRICING ATTACHMENT A
List Price Per SKU at time of Agreement, subject to changes in pricing to be reflected on monthly reports:
| SKU | Product Description | Unit Cost | Retail Price | |||||
| 888-ARAEG-05FL | Amarose Awakening Eye Gel - 0.5 Fl. Oz | |||||||
| 888-ARBBC-4FL | Amarose Beauty Boost Cleanser - 4 Fl. Oz | |||||||
| 888-ARBM-2FL | Amarose Boosting Moisturizer - 1 Month Supply | |||||||
| 888-ARLS-2FL | Amarose Lifting Serum - 2 Fl. Oz | |||||||
| 888-ARRT-4FL | Amarose Rose Water Toner - 4 Fl. Oz | |||||||
| 888-ARSKT | Amarose Skin Tag Remover | |||||||
EXHIBIT 10.7
PROMISSORY NOTE
| $50,000.00 | Los Angeles, California | |
| 12-Month Note | Effective Date: December 6, 2021 |
1. MAKER'S PROMISE TO PAY
For value received, specifically a loan for initial start-up costs, to pay for Sunset marketing events, Limitless X Inc. (referred to as “Maker”), promises to pay to the order of “Jaspreet Mathur”, including his agents, officers, successors, and assigns (collectively referred to as the “Holder”), at 9454 Wilshire Blvd., Suite 300, Beverly Hills, CA 90212, or at such other address as the Holder hereof may from time to time in writing designate, at the times specified below, in lawful money of the United States of America, the principal sum of Fifty Thousand Dollars ($50,000) together with interest at the rate of six percent (6.0%) per annum thereon for a term of 12 months.
2. PAYMENTS
Maker will pay to Holder monthly installments of principal and interest payments, beginning on June 1, 2022, and will continue on the first date of each consecutive month, until the Note is paid in full (and unless modified by Holder at his discretion), as follows:
|
$4,303.32 Monthly Payment |
$51,640.00 Total of 12 Payments |
|
$1,640.00 Total Interest Paid – 12 months |
May, 2023 Pay-off Date |
3. DEFAULT
Upon the occurrence of any of the following “Events of Default”, at the option of the Holder, all sums of principal and interest on this Note shall be immediately due and payable, without presentment, protest, notice of protest, notice of nonpayment or dishonor, or other notices or demands of any kind whatsoever, all of which are hereby expressly waived by Maker:
(a) failure of Maker to pay any installment when due under this Note, which failure is not cured within five (5) business days from receipt by Maker of a written or verbal notice from Holder, including via email; (b) filing by or against the Maker of a petition in bankruptcy or for relief under any bankruptcy or similar laws or for a receiver for Maker or any property thereof; or (c) attachment, seizure, foreclosure or sequestration of or with respect to any property of the Maker.
Upon any demand or Event of Default, Maker shall pay to Holder all costs and expenses of collection, including, without limitation, reasonable attorneys’ fees and legal costs incurred or paid by Holder on account of such collection, whether or not suit is instituted. Failure by the Holder hereof to declare a default shall not constitute a waiver of any subsequent default. Acceptance of payment in arrears shall not waive or affect the right to accelerate this Note.
| 1 |
After acceleration of the indebtedness evidenced by this Note, such indebtedness shall continue to bear interest at the rate set forth herein. All remedies of Holder under this Note are cumulative and in addition to any other remedies provided for by law or in equity, and may otherwise to the extent permitted by law, be exercised separately and the exercise of any one remedy shall not be deemed to be an election of such remedy only, to the exclusion of all others.
| 4. | NOTICE |
Any notice, demand or other communication under this Note shall be in writing and shall be deemed to have been given on the date of service, if served personally on the party to whom notice is to be given, or upon receipt if mailed to the party to whom notice is to be given, by first class mail, registered, return receipt requested, postage prepaid and addressed to 9454 Wilshire Blvd., Suite 300, Beverly Hills, CA 90212, with a copy emailed to Limitless X Inc. legal counsel Rob Cucher at cucherlaw@msn.com.
Holder or Maker may change its address for purposes of this paragraph by giving the other party written notice of the new address in the manner set forth in this paragraph.
| 5. | MISCELLANEOUS PROVISIONS |
Time is of the essence of all of the obligations of Maker under this Note.
This Note will be considered to have been executed and delivered, and to be performed in Los Angeles County, California for all purposes including jurisdiction and venue of any proceedings to enforce the Agreement. Each Party waives any argument based on forum non conveniens or similar provisions of law relating to the place of trial. This Note shall be interpreted under California law, without regard to California law regarding choice of law or conflicts of laws.
The undersigned expressly agrees that this Note or any payment under this Note may be extended by the Holder from time to time without in any way affecting the liability of the undersigned hereunder.
If any provision or any word, term, clause, or part of any provision of this Note shall be invalid for any reason, the same shall be ineffective, but the remainder of this Note and of the provision shall not be affected and shall remain in full force and effect. To the extent that any term of this Note conflicts with any law, the conflicting term shall be limited only to the extent necessary to comply with said law.
Any of the terms or conditions of this Note may be waived by the Holder in writing, but no such waiver shall affect or impair the rights of the Holder to require observance, performance, or satisfaction, either of that term or condition as it applies on a subsequent occasion or of any other term or condition of this Note.
This Note shall be binding upon and inure to the benefit of the respective heirs, executors, administrators, and successors in interest of the parties hereto. Maker may not assign the obligations created herein. Holder may assign this Note.
| 2 |
No modification, amendment, or waiver of any provisions of this Note shall be binding upon any party unless made in writing and signed by that party or by a duly authorized officer or agent that that party. Each party has had the opportunity to consult and/or has consulted with legal counsel prior to executing this Note.
Maker may prepay principal at any time, and from time to time, without penalty.
| Holder: | Maker: | |
| By: /s/ Jaspreet Mathur | /s/ Ken Haller | |
| Jaspreet Mathur |
Limitless X Inc. By: Ken Haller, President |
| 3 |
EXHIBIT 10.8
PROMISSORY NOTE
| $150,000.00 | Los Angeles, California | |
| 12-Month Note | Effective Date: February 11, 2022 |
1. MAKER'S PROMISE TO PAY
For value received, specifically a loan to pay for Sunset marketing events, Limitless X Inc. (referred to as “Maker”), promises to pay to the order of “Jaspreet Mathur”, including his agents, officers, successors, and assigns (collectively referred to as the “Holder”), at 9454 Wilshire Blvd., Suite 300, Beverly Hills, CA 90212, or at such other address as the Holder hereof may from time to time in writing designate, at the times specified below, in lawful money of the United States of America, the principal sum of One Hundred Fifty Thousand Dollars ($150,000) together with interest at the rate of six percent (6.0%) per annum thereon for a term of 12 months.
2. PAYMENTS
Maker will pay to Holder monthly installments of principal and interest payments, beginning on June 1, 2022, and will continue on the first date of each consecutive month, until the Note is paid in full (and unless modified by Holder at his discretion), as follows:
|
$12,909.96 Monthly Payment |
$154,920.00 Total of 12 Payments |
|
$4,920.00 Total Interest Paid – 12 months |
May, 2023 Pay-off Date |
3. DEFAULT
Upon the occurrence of any of the following “Events of Default”, at the option of the Holder, all sums of principal and interest on this Note shall be immediately due and payable, without presentment, protest, notice of protest, notice of nonpayment or dishonor, or other notices or demands of any kind whatsoever, all of which are hereby expressly waived by Maker:
(a) failure of Maker to pay any installment when due under this Note, which failure is not cured within five (5) business days from receipt by Maker of a written or verbal notice from Holder, including via email; (b) filing by or against the Maker of a petition in bankruptcy or for relief under any bankruptcy or similar laws or for a receiver for Maker or any property thereof; or (c) attachment, seizure, foreclosure or sequestration of or with respect to any property of the Maker.
Upon any demand or Event of Default, Maker shall pay to Holder all costs and expenses of collection, including, without limitation, reasonable attorneys’ fees and legal costs incurred or paid by Holder on account of such collection, whether or not suit is instituted. Failure by the Holder hereof to declare a default shall not constitute a waiver of any subsequent default. Acceptance of payment in arrears shall not waive or affect the right to accelerate this Note.
| 1 |
After acceleration of the indebtedness evidenced by this Note, such indebtedness shall continue to bear interest at the rate set forth herein. All remedies of Holder under this Note are cumulative and in addition to any other remedies provided for by law or in equity, and may otherwise to the extent permitted by law, be exercised separately and the exercise of any one remedy shall not be deemed to be an election of such remedy only, to the exclusion of all others.
| 4. | NOTICE |
Any notice, demand or other communication under this Note shall be in writing and shall be deemed to have been given on the date of service, if served personally on the party to whom notice is to be given, or upon receipt if mailed to the party to whom notice is to be given, by first class mail, registered, return receipt requested, postage prepaid and addressed to 9454 Wilshire Blvd., Suite 300, Beverly Hills, CA 90212, with a copy emailed to Limitless X Inc. legal counsel Rob Cucher at cucherlaw@msn.com.
Holder or Maker may change its address for purposes of this paragraph by giving the other party written notice of the new address in the manner set forth in this paragraph.
| 5. | MISCELLANEOUS PROVISIONS |
Time is of the essence of all of the obligations of Maker under this Note.
This Note will be considered to have been executed and delivered, and to be performed in Los Angeles County, California for all purposes including jurisdiction and venue of any proceedings to enforce the Agreement. Each Party waives any argument based on forum non conveniens or similar provisions of law relating to the place of trial. This Note shall be interpreted under California law, without regard to California law regarding choice of law or conflicts of laws.
The undersigned expressly agrees that this Note or any payment under this Note may be extended by the Holder from time to time without in any way affecting the liability of the undersigned hereunder.
If any provision or any word, term, clause, or part of any provision of this Note shall be invalid for any reason, the same shall be ineffective, but the remainder of this Note and of the provision shall not be affected and shall remain in full force and effect. To the extent that any term of this Note conflicts with any law, the conflicting term shall be limited only to the extent necessary to comply with said law.
Any of the terms or conditions of this Note may be waived by the Holder in writing, but no such waiver shall affect or impair the rights of the Holder to require observance, performance, or satisfaction, either of that term or condition as it applies on a subsequent occasion or of any other term or condition of this Note.
This Note shall be binding upon and inure to the benefit of the respective heirs, executors, administrators, and successors in interest of the parties hereto. Maker may not assign the obligations created herein. Holder may assign this Note.
| 2 |
No modification, amendment, or waiver of any provisions of this Note shall be binding upon any party unless made in writing and signed by that party or by a duly authorized officer or agent that that party. Each party has had the opportunity to consult and/or has consulted with legal counsel prior to executing this Note.
Maker may prepay principal at any time, and from time to time, without penalty.
| Holder: | Maker: | |
| By: /s/ Jaspreet Mathur | /s/ Ken Haller | |
| Jaspreet Mathur |
Limitless X Inc. By: Ken Haller, President |
| 3 |
EXHIBIT 10.9
PROMISSORY NOTE
| $550,000.00 | Los Angeles, California | |
| 12-Month Note | Effective Date: May 8, 2022 |
1. MAKER'S PROMISE TO PAY
For value received, specifically a loan to cover multiple invoices, Limitless X Inc. (referred to as “Maker”), promises to pay to the order of “Jaspreet Mathur”, including his agents, officers, successors, and assigns (collectively referred to as the “Holder”), at 9454 Wilshire Blvd., Suite 300, Beverly Hills, CA 90212, or at such other address as the Holder hereof may from time to time in writing designate, at the times specified below, in lawful money of the United States of America, the principal sum of Five Hundred Fifty Thousand Dollars ($550,000) together with interest at the rate of six percent (6.0%) per annum thereon for a term of 12 months.
2. PAYMENTS
Maker will pay to Holder monthly installments of principal and interest payments, beginning on June 1, 2022, and will continue on the first date of each consecutive month, until the Note is paid in full (and unless modified by Holder at his discretion), as follows:
|
$47,336.54 Monthly Payment |
$568,038.00 Total of 12 Payments |
|
$18,038.00 Total Interest Paid – 12 months |
May, 2023 Pay-off Date |
3. DEFAULT
Upon the occurrence of any of the following “Events of Default”, at the option of the Holder, all sums of principal and interest on this Note shall be immediately due and payable, without presentment, protest, notice of protest, notice of nonpayment or dishonor, or other notices or demands of any kind whatsoever, all of which are hereby expressly waived by Maker:
(a) failure of Maker to pay any installment when due under this Note, which failure is not cured within five (5) business days from receipt by Maker of a written or verbal notice from Holder, including via email; (b) filing by or against the Maker of a petition in bankruptcy or for relief under any bankruptcy or similar laws or for a receiver for Maker or any property thereof; or (c) attachment, seizure, foreclosure or sequestration of or with respect to any property of the Maker.
Upon any demand or Event of Default, Maker shall pay to Holder all costs and expenses of collection, including, without limitation, reasonable attorneys’ fees and legal costs incurred or paid by Holder on account of such collection, whether or not suit is instituted. Failure by the Holder hereof to declare a default shall not constitute a waiver of any subsequent default. Acceptance of payment in arrears shall not waive or affect the right to accelerate this Note.
| 1 |
After acceleration of the indebtedness evidenced by this Note, such indebtedness shall continue to bear interest at the rate set forth herein. All remedies of Holder under this Note are cumulative and in addition to any other remedies provided for by law or in equity, and may otherwise to the extent permitted by law, be exercised separately and the exercise of any one remedy shall not be deemed to be an election of such remedy only, to the exclusion of all others.
| 4. | NOTICE |
Any notice, demand or other communication under this Note shall be in writing and shall be deemed to have been given on the date of service, if served personally on the party to whom notice is to be given, or upon receipt if mailed to the party to whom notice is to be given, by first class mail, registered, return receipt requested, postage prepaid and addressed to 9454 Wilshire Blvd., Suite 300, Beverly Hills, CA 90212, with a copy emailed to Limitless X Inc. legal counsel Rob Cucher at cucherlaw@msn.com.
Holder or Maker may change its address for purposes of this paragraph by giving the other party written notice of the new address in the manner set forth in this paragraph.
| 5. | MISCELLANEOUS PROVISIONS |
Time is of the essence of all of the obligations of Maker under this Note.
This Note will be considered to have been executed and delivered, and to be performed in Los Angeles County, California for all purposes including jurisdiction and venue of any proceedings to enforce the Agreement. Each Party waives any argument based on forum non conveniens or similar provisions of law relating to the place of trial. This Note shall be interpreted under California law, without regard to California law regarding choice of law or conflicts of laws.
The undersigned expressly agrees that this Note or any payment under this Note may be extended by the Holder from time to time without in any way affecting the liability of the undersigned hereunder.
If any provision or any word, term, clause, or part of any provision of this Note shall be invalid for any reason, the same shall be ineffective, but the remainder of this Note and of the provision shall not be affected and shall remain in full force and effect. To the extent that any term of this Note conflicts with any law, the conflicting term shall be limited only to the extent necessary to comply with said law.
Any of the terms or conditions of this Note may be waived by the Holder in writing, but no such waiver shall affect or impair the rights of the Holder to require observance, performance, or satisfaction, either of that term or condition as it applies on a subsequent occasion or of any other term or condition of this Note.
This Note shall be binding upon and inure to the benefit of the respective heirs, executors, administrators, and successors in interest of the parties hereto. Maker may not assign the obligations created herein. Holder may assign this Note.
| 2 |
No modification, amendment, or waiver of any provisions of this Note shall be binding upon any party unless made in writing and signed by that party or by a duly authorized officer or agent that that party. Each party has had the opportunity to consult and/or has consulted with legal counsel prior to executing this Note.
Maker may prepay principal at any time, and from time to time, without penalty.
| Holder: | Maker: | |
| By: /s/ Jaspreet Mathur | /s/ Ken Haller | |
| Jaspreet Mathur |
Limitless X Inc. By: Ken Haller, President |
| 3 |
EXHIBIT 10.10
PROMISSORY NOTE
| $1,100,000.00 | Los Angeles, California | |
| 30-Day Repayment | Effective Date: May 16, 2022 |
1. MAKER'S PROMISE TO PAY
For value received, specifically a loan to pay invoices from third party advertiser network company, Limitless X Inc. (referred to as “Maker”), promises to pay to the order of “Jaspreet Mathur”, including his agents, officers, successors, and assigns (collectively referred to as the “Holder”), at 9454 Wilshire Blvd., Suite 300, Beverly Hills, CA 90212, or at such other address as the Holder hereof may from time to time in writing designate, at the times specified below, in lawful money of the United States of America, the principal sum of One Million One Hundred Thousand Dollars ($1,100,000) together with interest at the rate of 8.5% per annum to begin accruing 30 days from the Effective Date if the principal is not fully paid at that time.
2. PAYMENTS
Maker will pay to Holder the full balance of $1,100,000 in thirty (30) days from the Effective Date of this note, or at a later time that may be specified, in writing, by Holder at his discretion. Interest at the rate of 8.5% per annum will begin accruing on June 17, 2022 should the principal not be paid at that time unless otherwise waived in writing by Holder, subject to the waiver provisions hereinbelow.
3. DEFAULT
Upon the occurrence of any of the following “Events of Default”, at the option of the Holder, all sums of principal, and legal interest in the event of default, on this Note shall be immediately due and payable, without presentment, protest, notice of protest, notice of nonpayment or dishonor, or other notices or demands of any kind whatsoever, all of which are hereby expressly waived by Maker: (a) failure of Maker to pay any installment when due under this Note, which failure is not cured within five (5) business days from receipt by Maker of a written or verbal notice from Holder, including via email; (b) filing by or against the Maker of a petition in bankruptcy or for relief under any bankruptcy or similar laws or for a receiver for Maker or any property thereof; or (c) attachment, seizure, foreclosure or sequestration of or with respect to any property of the Maker.
Upon any demand or Event of Default, Maker shall pay to Holder all costs and expenses of collection, including, without limitation, reasonable attorneys’ fees and legal costs incurred or paid by Holder on account of such collection, whether or not suit is instituted. Failure by the Holder hereof to declare a default shall not constitute a waiver of any subsequent default. Acceptance of payment in arrears shall not waive or affect the right to accelerate this Note.
After acceleration of the indebtedness evidenced by this Note, such indebtedness shall continue to bear interest at the legal rate in the State of California. All remedies of Holder under this Note are cumulative and in addition to any other remedies provided for by law or in equity, and may otherwise to the extent permitted by law, be exercised separately and the exercise of any one remedy shall not be deemed to be an election of such remedy only, to the exclusion of all others.
| 1 |
| 4. | NOTICE |
Any notice, demand or other communication under this Note shall be in writing and shall be deemed to have been given on the date of service, if served personally on the party to whom notice is to be given, or upon receipt if mailed to the party to whom notice is to be given, by first class mail, registered, return receipt requested, postage prepaid and addressed to:
Name of Party
9454 Wilshire Blvd., Suite 300
Beverly Hills, CA 90212
with a copy emailed to Limitless X Inc. legal counsel Rob Cucher at cucherlaw@msn.com.
Holder or Maker may change its address for purposes of this paragraph by giving the other party written notice of the new address in the manner set forth in this paragraph.
| 5. | MISCELLANEOUS PROVISIONS |
Time is of the essence of all of the obligations of Maker under this Note.
This Note will be considered to have been executed and delivered, and to be performed in Los Angeles County, California for all purposes including jurisdiction and venue of any proceedings to enforce the Agreement. Each Party waives any argument based on forum non conveniens or similar provisions of law relating to the place of trial. This Note shall be interpreted under California law, without regard to California law regarding choice of law or conflicts of laws.
The undersigned expressly agrees that this Note or any payment under this Note may be extended by the Holder from time to time without in any way affecting the liability of the undersigned hereunder.
If any provision or any word, term, clause, or part of any provision of this Note shall be invalid for any reason, the same shall be ineffective, but the remainder of this Note and of the provision shall not be affected and shall remain in full force and effect. To the extent that any term of this Note conflicts with any law, the conflicting term shall be limited only to the extent necessary to comply with said law.
Any of the terms or conditions of this Note may be waived by the Holder in writing, but no such waiver shall affect or impair the rights of the Holder to require observance, performance, or satisfaction, either of that term or condition as it applies on a subsequent occasion or of any other term or condition of this Note.
| 2 |
This Note shall be binding upon and inure to the benefit of the respective heirs, executors, administrators, and successors in interest of the parties hereto. Maker may not assign the obligations created herein. Holder may assign this Note.
No modification, amendment, or waiver of any provisions of this Note shall be binding upon any party unless made in writing and signed by that party or by a duly authorized officer or agent that that party. Each party has had the opportunity to consult and/or has consulted with legal counsel prior to executing this Note.
Maker may prepay principal at any time, and from time to time, without penalty.
| Holder: | Maker: | |
| By: /s/ Jaspreet Mathur | /s/ Ken Haller | |
| Jaspreet Mathur |
Limitless X Inc. By: Ken Haller, President |
| 3 |
PROMISSORY NOTE
| $450,000.00 | Los Angeles, California | |
| 30-Day Repayment | Effective Date: May 18, 2022 |
1. MAKER'S PROMISE TO PAY
For value received, specifically a loan to pay invoices from third party advertiser network company, Limitless X Inc. (referred to as “Maker”), promises to pay to the order of “Jaspreet Mathur”, including his agents, officers, successors, and assigns (collectively referred to as the “Holder”), at 9454 Wilshire Blvd., Suite 300, Beverly Hills, CA 90212, or at such other address as the Holder hereof may from time to time in writing designate, at the times specified below, in lawful money of the United States of America, the principal sum of Four Hundred Fifty Thousand Dollars ($450,000) together with interest at the rate of 8.5% per annum to begin accruing 30 days from the Effective Date if the principal is not fully paid at that time.
2. PAYMENTS
Maker will pay to Holder the full balance of $450,000 in thirty (30) days from the Effective Date of this note, or at a later time that may be specified, in writing, by Holder at his discretion. Interest at the rate of 8.5% per annum will begin accruing on June 19, 2022 should the principal not be paid at that time unless otherwise waived in writing by Holder, subject to the waiver provisions hereinbelow.
3. DEFAULT
Upon the occurrence of any of the following “Events of Default”, at the option of the Holder, all sums of principal, and legal interest in the event of default, on this Note shall be immediately due and payable, without presentment, protest, notice of protest, notice of nonpayment or dishonor, or other notices or demands of any kind whatsoever, all of which are hereby expressly waived by Maker: (a) failure of Maker to pay any installment when due under this Note, which failure is not cured within five (5) business days from receipt by Maker of a written or verbal notice from Holder, including via email; (b) filing by or against the Maker of a petition in bankruptcy or for relief under any bankruptcy or similar laws or for a receiver for Maker or any property thereof; or (c) attachment, seizure, foreclosure or sequestration of or with respect to any property of the Maker.
Upon any demand or Event of Default, Maker shall pay to Holder all costs and expenses of collection, including, without limitation, reasonable attorneys’ fees and legal costs incurred or paid by Holder on account of such collection, whether or not suit is instituted. Failure by the Holder hereof to declare a default shall not constitute a waiver of any subsequent default. Acceptance of payment in arrears shall not waive or affect the right to accelerate this Note.
After acceleration of the indebtedness evidenced by this Note, such indebtedness shall continue to bear interest at the legal rate in the State of California. All remedies of Holder under this Note are cumulative and in addition to any other remedies provided for by law or in equity, and may otherwise to the extent permitted by law, be exercised separately and the exercise of any one remedy shall not be deemed to be an election of such remedy only, to the exclusion of all others.
| 1 |
| 4. | NOTICE |
Any notice, demand or other communication under this Note shall be in writing and shall be deemed to have been given on the date of service, if served personally on the party to whom notice is to be given, or upon receipt if mailed to the party to whom notice is to be given, by first class mail, registered, return receipt requested, postage prepaid and addressed to:
Name of Party
9454 Wilshire Blvd., Suite 300
Beverly Hills, CA 90212
with a copy emailed to Limitless X Inc. legal counsel Rob Cucher at cucherlaw@msn.com.
Holder or Maker may change its address for purposes of this paragraph by giving the other party written notice of the new address in the manner set forth in this paragraph.
| 5. | MISCELLANEOUS PROVISIONS |
Time is of the essence of all of the obligations of Maker under this Note.
This Note will be considered to have been executed and delivered, and to be performed in Los Angeles County, California for all purposes including jurisdiction and venue of any proceedings to enforce the Agreement. Each Party waives any argument based on forum non conveniens or similar provisions of law relating to the place of trial. This Note shall be interpreted under California law, without regard to California law regarding choice of law or conflicts of laws.
The undersigned expressly agrees that this Note or any payment under this Note may be extended by the Holder from time to time without in any way affecting the liability of the undersigned hereunder.
If any provision or any word, term, clause, or part of any provision of this Note shall be invalid for any reason, the same shall be ineffective, but the remainder of this Note and of the provision shall not be affected and shall remain in full force and effect. To the extent that any term of this Note conflicts with any law, the conflicting term shall be limited only to the extent necessary to comply with said law.
Any of the terms or conditions of this Note may be waived by the Holder in writing, but no such waiver shall affect or impair the rights of the Holder to require observance, performance, or satisfaction, either of that term or condition as it applies on a subsequent occasion or of any other term or condition of this Note.
| 2 |
This Note shall be binding upon and inure to the benefit of the respective heirs, executors, administrators, and successors in interest of the parties hereto. Maker may not assign the obligations created herein. Holder may assign this Note.
No modification, amendment, or waiver of any provisions of this Note shall be binding upon any party unless made in writing and signed by that party or by a duly authorized officer or agent that that party. Each party has had the opportunity to consult and/or has consulted with legal counsel prior to executing this Note.
Maker may prepay principal at any time, and from time to time, without penalty.
| Holder: | Maker: | |
| By: /s/ Jaspreet Mathur | /s/ Ken Haller | |
| Jaspreet Mathur |
Limitless X Inc. By: Ken Haller, President |
| 3 |
EXHIBIT 99.1
Limitless X Goes Public, Completes Previously Announced Share Exchange With Bio Lab Naturals, Inc
LOS ANGELES, May 23, 2022 /PRNewswire/ -- Bio Lab Naturals, (“the Company”) (OTCQB:BLAB) announced that the Company and the shareholders of Limitless X, a creative and empowering lifestyle agency that has launched numerous industry-leading products in the dietary and CBD supplement sectors, have completed their share exchange agreement effective May 20, 2022, resulting in Limitless X becoming a wholly owned and the principal operating subsidiary of the Company.
In connection with the share exchange the Company has issued to the equity holders of Limitless X common stock equaling approximately 90% of the Company on a fully diluted basis in exchange for all the shares of Limitless X. Concurrently with the share exchange Jas Mathur, the founder and principal shareholder of Limitless X, also purchased from Helion Holdings LLC 500,000 shares of the Company’s Class A Preferred Super Majority Voting Convertible Stock which at all times have a number of votes equal to 60% of all the issued the outstanding shares of common stock of the Company. Limitless X is a Nevada corporation formed in September 2021.
The Company intends to change its name and will be filing for a ticker symbol change in the coming weeks.
Limitless X will continue to carry on Bio Lab Naturals’ business and core operations, including Prime Time Live, Inc., a Denver, CO-based company that provides clients with high-resolution mobile LED screens for entertainment, corporate, civic, and sporting events.
“Today marks an important milestone for Limitless X,” said Jas Mathur, CEO of Limitless X, “Our mission is to launch products and services which make people look good and feel great. Operating as a public company, we are now able to increase our visibility and exposure within the capital markets, expand our brand recognition and provide our market opportunity to a wider investor audience. I look forward to this next step, of entering the public markets and turning Limitless X into a rapidly growing successful enterprise and a globally recognized household brand.”
Led by successful entrepreneur and venture capitalist Jas Mathur, Limitless X boasts an integrated direct-to-consumer model, memorable brands and superior products, and an ambassador network including A-list music stars, movie stars, athletes, and more. With this transaction, the Company anticipates expanding its global eco-system and continuing to provide unique product and service-oriented businesses within the Health & Wellness, Beauty & Skincare, and CBD industries.
About Jas Mathur
Jas Mathur is an investor, entrepreneur and venture capitalist who has developed multiple brands in the marketing, health and wellness spaces generating tens to hundreds of millions of dollars in revenue each year. The digital marketing and branding firm he founded, Limitless, has launched multiple industry leading products in the dietary and CBD supplement sectors. He is a trendsetter with more than seven million Instagram followers and frequently collaborates with leaders in the sports and entertainment industries.
About Limitless X
Limitless X is a creative and empowering lifestyle agency specializing in the full spectrum of digital advertising and marketing. The Company has a global eco-system with three verticals and a series of industry leading product and service-oriented businesses within each, focused on the Health & Wellness, Beauty & Skincare, and CBD Industry.
Forward-Looking Statement
This press release includes "forward-looking statements" within the meaning of U.S. federal securities laws. Words
such as "expect," "estimate," "project," "budget,"
"forecast," "anticipate," "intend," "plan," "may,"
"will," "could," "should," "believes," "predicts,"
"potential," "continue" and similar expressions are intended to
identify such forward-looking statements. These forward-looking statements involve significant risks and uncertainties that could
cause the actual results to differ materially from the expected
results and, consequently, you should not rely on these forward-looking statements
as predictions of future events. The Company cautions that these statements are based
on management’s current knowledge and expectations
and are subject to certain risks and uncertainties, many of which are outside of the control of the Company,
that could cause actual results and events to differ materially from the statements
made herein. Such risks and uncertainties include, but are not limited to, disruption in distribution or sales and/or decline in
sales due to the current market conditions caused by the
coronavirus pandemic. For a more detailed discussion of these and other risks that could affect
our operating results, see the Company’s
reports filed with the
Securities and
Exchange Commission.
The Company’s actual
results could differ
materially
from those contained
in the forward-looking
statements.
The Company assumes no obligation
to update any forward-looking
statements,
whether as
a result of new
information,
future events or otherwise.
Media Contact:
Jessica Starman
media@limitlessx.com
Investor Relations Contact:
investors@limitlessx.com
800-736-2030