RE:RE:Manipulation
n consideration for the continuing rights to distribute the test kits in the acquisition territories, the corporation is required to issue a total of 20 million common shares at a deemed price of five cents per share and 10 million share purchase warrants entitling the holder to acquire additional common shares of the corporation at a price of six cents per share for a period of 24 months. The corporation will also grant the vendor a continuing royalty equivalent to 9 per cent of the gross revenue generated from the sale of the test kits in the acquisition territories. The agreement contemplates that the consideration shares and the consideration warrants will be issued in two tranches. Initially, on closing of the transaction, the corporation will issue 6.5 million consideration shares and five million consideration warrants. The balance of the consideration shares and the consideration warrants will be issued upon the test kit being approved by Health Canada for importation and distribution in Canada. The agreement may be terminated, at the option of the vendor, in the event the corporation has not placed production orders with Innovita for at least 200,000 test kits within the initial 90 days. The corporation is at arm's length from the vendor and Innovita. The transaction neither constitutes a fundamental change or change of business for the corporation, nor will it result in a change of control of the corporation within the meaning of applicable securities laws and the policies of the Canadian Securities Exchange. All securities of the corporation issued in connection with the transaction will be subject to a four-month-and-one-day statutory hold period in accordance with applicable securities laws. Readers are cautioned that use of the test kit has not yet been approved in Canada, and there can be no guarantee that such approval will be granted in a timely fashion, or at all. Subject to receipt of any required approvals necessary in accordance with applicable medical regulations in the acquisition territories, it is anticipated that the corporation would place orders with Innovita for the manufacturing of the test kits in China. At this time, the corporation has not received any assurances as to the timeline for the manufacturing and distribution of test kits in the acquisition territories, or to the capacity of Innovita to produce a sufficient volume of test kits to make distribution in the acquisition territories economically feasible