Related Party Transactions

6 Months Ended

Jun. 30, 2022

The Company has two related parties, A.S. Watson Group and Horizon Ventures, through common ownership of an enterprise that beneficially owns more than 10% of the common stock of the Company. The sale of consumer products and corresponding trade receivables to related parties during the periods indicated are as follows:


	Net Sales
	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
A.S. Watson Group - Related Party	$1.5	million	$2.9	million	$4.1	million	$4.5	million

Total Related Party Net Sales	$1.5	million	$2.9	million	$4.1	million	$4.5	million

During all periods indicated, sales to Horizon Ventures were insignificant.


	Trade Receivable as of
	Jun 30, 2022		Dec 31, 2021
A.S. Watson Group - Related Party	$1.3	million	$2.1	million

Total Related Party Trade Receivables	$1.3	million	$2.1	million

For the periods indicated, trade receivables to Horizon Ventures were insignificant.

Joint Venture Agreement

On May 19, 2022, the Company entered into an agreement to form a joint venture (the “JV”) to expand the Company’s market strategy to include opportunities in Mainland China and its territories, excluding Hong Kong, Macau and Taiwan (the “Territory”), subject to the terms and satisfaction of the conditions contained therein. The JV agreement is among Crystal Lake Developments Limited (Crystal Lake), Pioneer Idea Holdings Limited (Pioneer Idea), and Hong Kong (China) Taikuk Group Ltd (Taikuk). Crystal Lake is indirectly wholly-owned by Li Ka Shing, and Pioneer Idea is indirectly owned by Solina Chau, and each of Mr. Li and Ms. Chau own through affiliated entities more than 5% of the Company’s common stock. The business of the JV will be to market, sell and distribute Tru Niagen® and other products containing NR (the “Products”) developed by the Company in the Territory.

The JV agreement will have an initial term of 20 years, unless earlier terminated. Crystal Lake, Pioneer Idea and Taikuk have each agreed to contribute $1.8 million, $1.2 million and $1.0 million, respectively into the JV. In addition, the Company has agreed to pay $1.0 million to Taikuk, and Taikuk will receive an additional 5% non-voting equity interest in the JV for introducing the parties. Following the closing of the formation of the JV (the “Closing”), each of the parties will hold the following interest in the JV: the Company (71%), Crystal Lake (10.8%), Pioneer Idea (7.2%) and Taikuk (a 11% non-voting interest). The Company will have the right to elect three of the five directors in the JV, and Pioneer Idea will have the right to elect the other two directors, with each director having one vote. Certain material corporate actions will require unanimous approval of the board of the JV. The Closing is subject to certain customary closing conditions and is expected to occur by the end of the third quarter of 2022.

Prior to being able to commercialize the Products in the Territory, the JV will have to obtain all applicable regulatory approvals, including “Blue Hat” or health food registration with the PRC State Administration for Market Regulation for Products in the name of the Company or its designee (collectively, the “Blue Hat Registration”). Prior to the JV obtaining the Blue Hat Registration, we will supply the Products to the JV who will appoint a third party sub-distributor to sell the Products in the Territory. Once Blue Hat Registration is obtained, we will license to the JV certain intellectual property relating to the Products for the JV to manufacture and sell the Products in the Territory. If the Blue Hat Registration is not obtained within 24 months of Closing (which deadline for obtaining the Blue Hat Registration may be extended by an additional 12 months upon consent of the parties), the JV may repurchase the 11% non-voting interest owned by Taikuk for two dollars. As of the date of this report, the JV has not yet launched.