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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 16, 2025
| PMGC Holdings Inc. |
| (Exact name of registrant as specified in its charter) |
| Nevada | 001-41875 | 33-2382547 | ||
| (State
or other jurisdiction of incorporation) |
(Commission File Number) | (I.R.S.
Employer Identification No.) |
|
c/o 120 Newport Center Drive, Ste. 250 Newport Beach, CA |
92660 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (866) 794-4940
N/A
(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:
| ☐ | 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 | ||
| Common Stock, $0.0001 par value | ELAB | The Nasdaq Stock Market LLC |
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).
Emerging growth company ☒
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. ☐
Item 2.01. Completion of Acquisition or Disposition of Assets.
On January 16, 2025, PMGC Holdings Inc. (the “Company”) and its wholly owned subsidiary, Elevai Skincare Inc. (the “Seller”), completed the previously announced disposition of substantially all of the assets (the “Disposed Assets”) and assignment of certain of the liabilities (the “Assumed Liabilities”) of the Seller, related to the Seller’s skincare and haircare business (the “Disposition”), pursuant to an Asset Purchase Agreement dated as of December 31, 2024 (the “Purchase Agreement”), by and among the Company, the Seller, Cutis Cura Corporation (the “Buyer”) and Carmell Corporation, a Nasdaq listed company (“CTCX”). The execution of the Purchase Agreement was previously disclosed on a Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission (the “SEC”) on January 7, 2025.
Upon the closing of the Disposition (the “Closing”), the total purchase price for the Disposed Assets was approximately $1.4 million, consisting of (i) 1,149,226 shares of common stock, par value $0.0001 per share, of CTCX (“CTCX Common Stock”), issued by CTCX to the Seller at the Closing, as well as 117,814 additional shares of CTCX Common Stock to be withheld by CTCX for 12 months after the Closing to secure the indemnification obligations of the Company and the Seller under the Purchase Agreement; (ii) the Buyer’s assumption of the Assumed Liabilities; and (iii) $56,525 in cash to be paid within 60 days following the sale by the Buyer of all 7,500 units of the Enfinity product and 20,000 tubes of the Empower product included in the Disposed Assets as of the Closing. Following the Closing, the Buyer will pay the following additional earnout consideration for the Disposed Assets, if and when payable: (A) the Buyer will pay to the Seller, for each year ending on the anniversary of the date of the Closing (the “Closing Date”) during the five-year period following the Closing, an amount, if any, equal to 5% of the Net Sales (as defined in the Purchase Agreement) of the Buyer generated during such year from the Seller’s existing products as of the Closing; and (B) the Buyer will pay to the Seller a one-time payment of $500,000 if the Buyer achieves $500,000 in net revenue from sales of the Seller’s existing hair and scalp products as of the Closing on or before the 24-month anniversary of the Closing Date.
The Seller agreed to change its name from Elevai Skincare Inc. to PMGC Impasse Corp. within a reasonable period of time after the Closing.
The foregoing description of the Purchase Agreement and the Disposition does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, which was filed as Exhibit 10.1 to the Current Report on Form 8-K filed by the Company with the SEC on January 7, 2025 and is incorporated herein by reference.
Item 8.01 Other Events.
On January 16, 2025, the Company issued a press release announcing the Closing. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(b) Pro forma financial information.
The pro forma financial information specified in Article 11 of Regulation S-X is filed as Exhibit 99.2 to this Current Report on Form 8-K.
(d) Exhibits.
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: January 16, 2025
| PMGC Holdings Inc. | ||
| By: | /s/ Graydon Bensler | |
| Name: | Graydon Bensler | |
| Title: | Chief Executive Officer and Chief Financial Officer |
|
2
Exhibit 99.1
PMGC Holdings Inc. Announces Closing of Elevai Skincare Divestiture
Subtitle 1: Strategic Divestment Reduces Cash Burn and Enhances Operational Efficiency
Newport Beach, CA, January 16, 2025 – PMGC Holdings Inc. (formerly Elevai Labs Inc.) (the “Company” or “PMGC”) (Nasdaq: ELAB) a diversified holding company today announced the closing of the previously announced divestiture of its 100% wholly owned subsidiary Elevai Skincare Inc. (“Elevai”) pursuant to a definitive purchase agreement with Carmell Corporation (“Carmell”) (the “Divestiture”) and reaffirms its commitment to accelerating shareholder value creation and market leadership following the sale of its skincare subsidiary, Elevai Skincare. This strategic Divestiture marks a significant milestone in PMGC’s journey as a diversified holding company.
At the closing of the Divestiture (the “Closing”), the purchase consideration paid to PMGC consisted of the following:
| ● | Approximately $1.1 million of Carmell common stock at a price of $0.8488 per share as follows: |
| ● | 1,149,226 shares of Carmell common stock at Closing, plus; |
| ● | 117,814 shares of Carmell common stock held back by Carmell to secure indemnification obligations of PMGC and Elevai for 12 months after Closing; |
| ● | Approximately $57,000 in cash to be paid by Carmell upon the sale of specified inventory existing as of the Closing; and |
| ● | Carmell’s assumption of contractual liabilities and trade payables of Elevai at the Closing. |
Additional post-Closing earnout consideration of:
| ● | 5% of net sales from Elevai’s existing products paid annually during the 5-year period following the Closing, and |
| ● | One-time milestone payment of $500,000 if Elevai’s hair and scalp products achieve $500,000 in net revenue within 24 months following the Closing. |
The sale was executed to maximize immediate financial benefit while securing future upside through structured royalties and milestone payments. It has notably strengthened PMGC’s balance sheet, reduced operational losses, and paved the way for new opportunities that align with the company's long-term vision.
Following the Closing, the total number of PMGC common stock outstanding was approximately 3.07 million.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy any of the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
About Elevai:
A wholly-owned subsidiary of PMGC, Elevai is developing and commercializing cutting-edge physician-dispensed skin and hair care applications that focus on science-backed applications for the physician-dispensed market, utilizing cutting-edge technologies to redefine skincare and hair care, including its stem cell exosome technology.
About PMGC Holdings Inc.
PMGC Holdings Inc. is a diversified holding company that manages and grows its portfolio through strategic acquisitions, investments, and development across various industries. Currently, our portfolio consists of three wholly owned subsidiaries: Northstrive Biosciences Inc., PMGC Research Inc., and PMGC Capital LLC. We are committed to exploring opportunities in multiple sectors to maximize growth and value. For more information, please visit https://www.pmgcholdings.com.
Forward-Looking Statements
Statements contained in this press release regarding matters that are not historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Words such as “believes,” “expects,” “plans,” “potential,” “would” and “future” or similar expressions such as “look forward” are intended to identify forward-looking statements. Forward-looking statements are made as of the date of this press release and are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, activities of regulators and future regulations and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results. Therefore, you should not rely on any of these forward-looking statements. These and other risks are described more fully in PMGC Holdings’ filings with the United States Securities and Exchange Commission (“SEC”), including the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 29, 2024, and its other documents subsequently filed with or furnished to the SEC. Investors and security holders are urged to read these documents free of charge on the SEC’s web site at www.sec.gov. All forward-looking statements contained in this press release speak only as of the date on which they were made. Except to the extent required by law, the Company undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made.
IR Contact:
IR@pmgcholdings.com
Exhibit 99.2
PMGC HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
On December 31, 2024, PMGC Holdings Inc. (“PMGC”, formerly known as Elevai Labs Inc.), and Elevai Skincare, Inc., a wholly owned subsidiary of PMGC (together, the “Seller”), entered into an Asset Purchase Agreement with Carmell Corporation (the “Buyer”), pursuant to which the Seller agreed to sell its skincare and healthcare business to the Buyer (the “Sale”), for (i) shares of common stock of the Buyer, having a market value of $1,075,463; (ii) Buyer’s assumption of certain liabilities of the Seller; and, (iii) $56,525 in cash.
Following the Closing, Buyer will pay additional earn-out consideration for the Sale, if and when payable: (a) Buyer will pay to Seller, for each year ending on the anniversary of the date of the Closing (the “Closing Date”) during the five-year period following the Closing, an amount, if any, equal to 5% of the Net Sales (as defined in the Asset Purchase Agreement) of Buyer generated during such year from Seller’s existing products as of the Closing; and (b) Buyer will pay to Seller a one-time payment of $500,000 if Buyer achieves $500,000 in net revenue from sales of the Seller’s existing hair and scalp products as of the Closing on or before the 24-month anniversary of the Closing Date.
The unaudited pro forma consolidated financial statements were derived from the Company’s historical consolidated financial statements for the respective periods. The unaudited pro forma consolidated balance sheet as of September 30, 2024 gives effect to the Sale as if it had occurred on September 30, 2024. The unaudited pro forma consolidated financial statements of operations for the years ended December 31, 2023, and 2022, and for the nine months ended September 30, 2024 give effect to the Sale as if it had occurred on January 1, 2022.
The unaudited pro forma adjustments are based on available information and certain assumptions that we believe are reasonable as of the date of this Current Report on Form 8-K. Assumptions underlying the pro forma adjustments related to the Sale are described in the accompanying notes. The pro forma adjustments reflected herein are based on management’s expectations regarding the Sale. The unaudited pro forma consolidated financial statements are presented for illustrative purposes only and do not purport to indicate the results of operations of future periods or the results of operations that actually would have been realized had the Sale been executed on the dates for the periods presented.
The unaudited pro forma consolidated financial statements should be read in conjunction with the audited December 31, 2023 consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K filed on March 29, 2024 and the unaudited September 30, 2024 consolidated financial statements contained in the Company’s Quarterly Report on Form 10-Q filed on November 14, 2024.
PMGC HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
As of September 30, 2024
| As of: | Historical | Transaction accounting adjustment – Sale |
Pro forma | |||||||||
| ASSETS | ||||||||||||
| Current Assets | ||||||||||||
| Cash | $ | 6,425,670 | $ | 56,525 | (a) | $ | 6,482,195 | |||||
| Receivables, net | 27,887 | (16,889 | )(b) | 10,998 | ||||||||
| Prepaids and deposits | 787,848 | (111,064 | )(b) | 676,784 | ||||||||
| Inventory, net | 986,421 | (986,421 | )(b) | - | ||||||||
| Investment in securities | - | 1,075,463 | (c) | 1,075,463 | ||||||||
| Total Current Assets | 8,227,826 | 17,614 | 8,245,440 | |||||||||
| Deposit | - | - | - | |||||||||
| Property and equipment, net | 52,528 | (51,235 | )(b) | 1,293 | ||||||||
| Intangibles, net | 2,823,530 | - | 2,823,530 | |||||||||
| Operating lease right-of-use asset | 101,471 | (101,471 | )(b) | - | ||||||||
| TOTAL ASSETS | $ | 11,205,355 | $ | (135,092 | ) | $ | 11,070,263 | |||||
| LIABILITIES | ||||||||||||
| Current Liabilities | ||||||||||||
| Accounts payable and accrued liabilities | $ | 1,216,191 | $ | (771,693 | )(b) | $ | 444,498 | |||||
| Customer deposits | 39,583 | (39,583 | )(b) | - | ||||||||
| Due to related parties | 419,457 | - | 419,457 | |||||||||
| Current portion of consideration payable | 350,000 | - | 350,000 | |||||||||
| Current portion of lease liability | 103,309 | (103,309 | )(b) | - | ||||||||
| Derivative liabilities | 1,882 | - | 1,882 | |||||||||
| Total Current Liabilities | 2,130,422 | (914,585 | ) | 1,215,837 | ||||||||
| Consideration payable | 519,711 | - | 519,711 | |||||||||
| Operating lease liability | - | - | - | |||||||||
| TOTAL LIABILIITES | $ | 2,650,133 | $ | (914,585 | ) | $ | 1,735,548 | |||||
| Commitments and Contingencies | ||||||||||||
| EQUITY | ||||||||||||
| Common stock, $0.0001 par value, 300,000,000 shares authorized; 246,880 and 86,648 shares issued and outstanding as of September 30, 2024, and December 31, 2023, respectively | 4,938 | - | 4,938 | |||||||||
| Additional paid-in capital | 19,884,944 | - | 19,884,944 | |||||||||
| Accumulated other comprehensive income | 228 | - | 228 | |||||||||
| Accumulated deficit | (11,334,888 | ) | 779,493 | (d) | (10,555,395 | ) | ||||||
| TOTAL EQUITY | 8,555,222 | 779,493 | 9,334,715 | |||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 11,205,355 | $ | (135,092 | ) | $ | 11,070,263 | |||||
PMGC HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Nine Months Ended September 30, 2024
| Historical | Transaction accounting adjustments – Sale |
Pro forma | ||||||||||||||
| (i) | (ii) | |||||||||||||||
| Revenue | $ | 1,747,570 | $ | (1,747,570 | ) | $ | 87,379 | $ | 87,379 | |||||||
| Cost of sales | 468,763 | (468,763 | ) | - | - | |||||||||||
| Gross profit | $ | 1,278,807 | $ | (1,278,807 | ) | $ | 87,379 | $ | 87,379 | |||||||
| Expenses | ||||||||||||||||
| Depreciation and amortization | 7,779 | (7,367 | ) | - | 412 | |||||||||||
| Marketing and promotion | 1,209,041 | (932,671 | ) | - | 276,370 | |||||||||||
| Consulting fees | 817,030 | (32,610 | ) | - | 784,420 | |||||||||||
| Office and administrative | 2,096,372 | (1,716,437 | ) | - | 379,935 | |||||||||||
| Professional fees | 587,954 | (321,522 | ) | - | 266,432 | |||||||||||
| Investor relations | 141,484 | (7,056 | ) | - | 134,428 | |||||||||||
| Research and development | 268,786 | (209,136 | ) | - | 59,650 | |||||||||||
| Foreign exchange (gain) loss | 1,660 | (673 | ) | - | 987 | |||||||||||
| Travel and entertainment | 160,612 | (149,359 | ) | - | 11,253 | |||||||||||
| Total Expenses | $ | 5,290,718 | $ | (3,376,831 | ) | $ | - | $ | 1,913,887 | |||||||
| Net loss before other income (expense) | $ | (4,011,911 | ) | $ | 2,098,024 | 87,379 | $ | (1,826,508 | ) | |||||||
| Other income (expense) | ||||||||||||||||
| Change in fair value of derivative liabilities | 367,277 | - | - | 367,277 | ||||||||||||
| Interest expense | (702,675 | ) | 18,099 | - | (684,576 | ) | ||||||||||
| Interest income | 245 | - | - | 245 | ||||||||||||
| Other income | 36,066 | (36,066 | ) | - | - | |||||||||||
| Net loss | $ | (4,310,998 | ) | $ | 2,080,057 | $ | 87,379 | $ | (2,143,562 | ) | ||||||
| Other comprehensive income (loss) | ||||||||||||||||
| Currency translation adjustment | 26 | - | - | 26 | ||||||||||||
| Total comprehensive loss | $ | (4,310,972 | ) | $ | 2,080,057 | $ | 87,379 | $ | (2,143,536 | ) | ||||||
| Basic and diluted loss per share | $ | (45.13 | ) | $ | (22.44 | ) | ||||||||||
| Weighted average shares outstanding | 95,526 | 95,526 | ||||||||||||||
PMGC HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2023
| Historical | Transaction accounting adjustments – Sale | Pro forma | ||||||||||||||
| (i) | (ii) | |||||||||||||||
| Revenue | $ | 1,712,595 | $ | (1,712,595 | ) | $ | 85,630 | $ | 85,630 | |||||||
| Cost of sales | 578,015 | (578,015 | ) | - | - | |||||||||||
| Gross profit | $ | 1,134,580 | $ | (1,134,580 | ) | $ | 85,630 | $ | 85,630 | |||||||
| Expenses | ||||||||||||||||
| Depreciation and amortization | 10,295 | (9,741 | ) | - | 554 | |||||||||||
| Marketing and promotion | 660,291 | (403,841 | ) | - | 256,450 | |||||||||||
| Consulting fees | 459,498 | (179,731 | ) | - | 279,767 | |||||||||||
| Office and administrative | 2,329,067 | (2,231,481 | ) | - | 97,586 | |||||||||||
| Professional fees | 579,111 | (446,511 | ) | - | 132,600 | |||||||||||
| Investor relations | 91,009 | - | - | 91,009 | ||||||||||||
| Research and development | 426,243 | (418,833 | ) | - | 7,410 | |||||||||||
| Foreign exchange (gain) loss | 6,130 | (2 | ) | - | 6,128 | |||||||||||
| Travel and entertainment | 339,147 | (319,762 | ) | - | 19,385 | |||||||||||
| Total Expenses | $ | 4,900,791 | $ | (4,009,902 | ) | $ | - | $ | 890,889 | |||||||
| Net loss before other income (expense) | $ | (3,766,211 | ) | $ | 2,875,322 | $ | 85,630 | $ | (805,259 | ) | ||||||
| Other income (expense) | ||||||||||||||||
| Listing expense | (450,079 | ) | - | - | (450,079 | ) | ||||||||||
| Change in fair value of derivative liabilities | (71,266 | ) | - | - | (71,266 | ) | ||||||||||
| Interest income | 5,564 | - | - | 5,564 | ||||||||||||
| Interest expense | (19,525 | ) | 19,525 | - | - | |||||||||||
| Loss on sale of equipment | - | - | - | - | ||||||||||||
| Net loss | $ | (4,301,517 | ) | $ | 2,894,847 | $ | 85,630 | $ | (1,321,040 | ) | ||||||
| Other comprehensive income (loss) | ||||||||||||||||
| Currency translation adjustment | 91 | - | - | 91 | ||||||||||||
| Total comprehensive loss | $ | (4,301,426 | ) | $ | 2,894,847 | $ | 85,630 | $ | (1,320,949 | ) | ||||||
| Basic and diluted loss per share | $ | (80.06 | ) | $ | (24.59 | ) | ||||||||||
| Weighted average shares outstanding | 53,730 | 53,730 | ||||||||||||||
PMGC HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2022
| Historical | Transaction accounting adjustments – Sale |
Pro forma | ||||||||||||||
| (i) | (ii) | |||||||||||||||
| Revenue | $ | 766,277 | $ | (766,277 | ) | $ | 38,314 | $ | 38,314 | |||||||
| Cost of sales | 318,968 | (318,968 | ) | - | - | |||||||||||
| Gross profit | $ | 447,309 | $ | (447,309 | ) | $ | 38,314 | $ | 38,314 | |||||||
| Expenses | ||||||||||||||||
| Depreciation and amortization | 5,034 | (4,507 | ) | - | 527 | |||||||||||
| Marketing and promotion | 192,863 | (190,845 | ) | - | 2,018 | |||||||||||
| Consulting fees | 324,395 | (109,317 | ) | - | 215,078 | |||||||||||
| Office and administrative | 1,019,708 | (1,007,083 | ) | - | 12,625 | |||||||||||
| Professional fees | 192,409 | (159,684 | ) | - | 32,725 | |||||||||||
| Investor relations | 74,003 | - | - | 74,003 | ||||||||||||
| Research and development | 228,747 | (194,582 | ) | - | 34,165 | |||||||||||
| Foreign exchange (gain) loss | 2,749 | - | - | 2,749 | ||||||||||||
| Travel and entertainment | 198,442 | (178,921 | ) | - | 19,521 | |||||||||||
| Total Expenses | $ | 2,238,350 | $ | (1,844,939 | ) | - | $ | 393,411 | ||||||||
| Net loss before other income (expense) | $ | (1,791,041 | ) | $ | 1,397,630 | $ | 38,314 | $ | (355,097 | ) | ||||||
| Other income (expense) | ||||||||||||||||
| Listing expense | - | - | - | - | ||||||||||||
| Change in fair value of derivative liabilities | (12,754 | ) | - | - | (12,754 | ) | ||||||||||
| Interest income | 7,702 | - | - | 7,702 | ||||||||||||
| Interest expense | (2,629 | ) | - | - | (2,629 | ) | ||||||||||
| Loss on sale of equipment | (1,546 | ) | 1,546 | - | - | |||||||||||
| Net loss | $ | (1,800,268 | ) | $ | 1,399,176 | $ | 38,314 | $ | (362,778 | ) | ||||||
| Other comprehensive income (loss) | ||||||||||||||||
| Currency translation adjustment | (91 | ) | - | - | (91 | ) | ||||||||||
| Total comprehensive loss | $ | (1,800,359 | ) | $ | 1,399,176 | $ | 38,314 | $ | (362,869 | ) | ||||||
| Basic and diluted loss per share | $ | (37.79 | ) | $ | (7.61 | ) | ||||||||||
| Weighted average shares outstanding | 47,644 | 47,644 | ||||||||||||||
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
| 1. | Basis of Pro Forma Presentation |
The accompanying unaudited pro forma financial statements of PMGC Holdings Inc. (the “Company”) were prepared in accordance with Article 11 of Regulation S-X and are based on the historical consolidated financial information of the Company. The consolidated financial information has been adjusted in the accompanying pro forma financial statements to give effect to the disposition of the Company’s skincare and healthcare business.
The unaudited pro forma consolidated balance sheet as of September 30, 2024 gives effect to the Sale as if it had occurred on September 30, 2024. The Sale gross proceeds do not reflect all settlement statement adjustments contemplated by the Asset Purchase Agreement, or any additional earn-out considerations.
The unaudited pro forma consolidated financial statements of operations for the years ended December 31, 2023, and 2022, and the nine months ended September 30, 2024 give effect to the Sale as if it had occurred on January 1, 2022.
On November 27, 2024, the Company consolidated its common shares on a ratio of two hundred old common shares for every one new post-consolidated common share. All current and comparative references to the number of common shares, weighted average number of common shares, and loss per share have been restated to give effect to this share consolidation.
| 2. | Adjustments to the Pro Forma Consolidated Balance Sheet |
Explanations of the adjustments to the pro forma consolidated balance sheet are as follows:
| a. | The cash portion of the Sale consideration, amounting to $56,525. |
| b. | Divesture of the skincare and healthcare business, and certain transferred liabilities. |
| c. | The portion of the Sale consideration related to the common stock of the Buyer, having a market value of $1,075,463. |
| d. | Estimated gain on the Sale transaction. The gain on sale does not include any additional earn out consideration (“Contingent Consideration”) that may become receivable under the Asset Purchase Agreement. The Company will record Contingent Consideration at the time when the contingency is resolved. |
| 3. | Adjustments to the Pro Forma Consolidated Statements of Operations |
Explanations of the adjustments to the pro forma consolidated statements of operations are as follows:
| (i) | To remove the direct historical results of operations of the Company’s skincare and healthcare business. |
| (ii) | To include 5% of Net Sales of the skincare and healthcare business as earn-out royalty consideration within the terms of the Sale, to give effect to the Sale as if it had occurred on January 1, 2022. |
The gain on Sale is not included as pro forma adjustments in the pro forma consolidated statements of operations as it is a nonrecurring item. Such amounts are only presented as adjustments to accumulated deficit in the pro forma consolidated balance sheet (see Note 2(d)).