US-based consumer packaged goods company Gabriella’s Kitchen (GABY) has signed a letter agreement with Lulu Sharpe, the founder and president of Raw Chocolate Alchemy, to acquire all its issued and outstanding securities of Lulu’s Chocolates.

The agreement also includes Lulu’s Chocolates wholly owned subsidiary, Lulu’s Medicinals.

As per the terms of the agreement, GABY will purchase Lulu’s for $1m, payable in common GABY shares. Shareholders will be eligible to receive additional performance-based equity compensation equal to 0.5 times the amount if 2019 revenue exceeds 2018 revenue and 0.25 times the amount if 2020 revenue exceeds the greater of 2018 or 2019 revenue.

GABY founder and CEO Margot Micallef said: “Lulu and her husband Zirque Bonner have built an impressive company, which like GABY has a dual channel sales strategy, selling traditional chocolates and CBD infused chocolates into the mainstream grocery channel and THC infused chocolates into the cannabis licensed or regulated channel.

“Lulu and Zirque share similar values to those that guide GABY, namely, a desire to empower consumers to take control over the quality of their health and in doing so change the world for the better. Lulu’s will form the foundation, upon which we will build our CBD and THC chocolate and confectionary business.”

Lulu’s Chocolate is engaged in producing 100% organic, raw, vegan chocolate using wild heirloom cacao from Ecuador and sweetened with low glycemic coconut sugar.

The CBD infused chocolates are sold across nearly 250 mainstream grocery stores and its traditional chocolates are sold in an additional 200 mainstream grocery stores across the US, including Whole Foods Market in Northern California and Arizona.

In addition to retail outlets, the chocolates are available for purchase in 35 dispensaries across California.

Lulu’s president Lulu Sharpe said: “My husband Zirque and I have always known that alone we could only take Lulu’s so far.

“We knew we needed the consumer-packaged goods experience that a company like GABY offers, as well as its access to capital and its deep experience in product innovation, growing brands and building consumer awareness to really launch Lulu’s into the stratosphere and make it a household name.”

Upon completion of the deal, GABY intends to appoint Lulu Sharpe as GABY’s Edibles and Confectionary Division development vice-president.