8-K
PMGC Holdings Inc. (ELAB)
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):February 2, 2026
| PMGC Holdings Inc. | ||
|---|---|---|
| (Exact name of registrant as specified in its charter) | ||
| Nevada | 001-41875 | 33-2382547 |
| --- | --- | --- |
| (State or other jurisdiction<br><br>of incorporation) | (Commission File Number) | (I.R.S. Employer<br><br>Identification No.) |
| 675 West Hastings Street, Suite 805 Vancouver, BC | V6B1N2 | |
| --- | --- | |
| (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<br>to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to<br>Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications<br>pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications<br>pursuant to Rule 13e-4© under the Exchange Act (17 CFR 240.13e-4©) |
| --- | --- |
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 Dispositionof Assets.
On February 2, 2026, PMGC Holdings Inc. (the “Company”) completed the acquisition (the “Acquisition”) of 100% of the issued and outstanding shares (the “Shares”) of SVM Machining, Inc., a California Subchapter S corporation (the “Target”), pursuant to a Stock Purchase Agreement dated February 2, 2026 (the “Agreement”), by and between the Buyer, Target, and the sole stockholder of the Target (such stockholder, “Seller”).
The Acquisition was consummated on February 2, 2026 (the “Closing”). The aggregate purchase price for the Shares was 2,449,148.08 (the “Purchase Price”) consisting of: 1) $2,250,000.00 in cash, of which $2,000,000.00 is payable to the Seller at Closing (the “Closing Purchase Price”), and $250,000.00 constituting a holdback amount (“Holdback Amount”), which Holdback Amount shall be retained by Buyer at Closing to satisfy any indemnification claims under Section 7.01 of the Agreement; plus (2) cash balance of $130,000.00; plus 3) $69,148.00, the amount, by which Estimated Closing Net Working Capital exceeded the target net working capital of $281,638.00 (“Net Working Capital Target”),. The working capital payment is subject to a post-closing final accounting and true-up.
As additional consideration, Seller may be entitled to receive an earnout payment as follows:
(i) A Tier 1 earnout payment of up to $750,000.00 (“Tier 1 Earnout Payment") shall be payable to the Seller during the 12-month period ending December 31, 2026 in an amount equal to $1.00 for each $1.00 of revenue achieved by the Company above $2,500,000.00 and up to a maximum of $3,250,000.00;
(ii) In addition to the Tier 1 Earnout Payment, a Tier 2 earnout payment of up to $500,000.00 (“Tier 2 Earnout Payment”) shall be payable to the Seller if, during the 12-month period ending December 31, 2027, in an amount equal to $.50 for each $1.00 of revenue achieved by the Company above $3,500,000 and up to a maximum of $4,500,000. Buyer shall pay the Tier 1 Earnout Payment and Tier 2 Earnout Payment to the Seller within ten (10) calendar days following Buyer’s filing of its Annual Report on Form 10-K, including the audited financial statements contained therein, for the fiscal year that includes the applicable Earnout Period.
Concurrent with the Closing, Seller and the Company entered into a Lease Agreement for certain real property. The Company also entered into a Transition Services Agreement with an entity affiliated with the Seller (such entity, “Consultant”), and such agreement, the “Transition Services Agreement”). The Transition Services Agreement provides for the Company’s receipt of certain transitional support services from Consultant to facilitate the orderly transfer and continued operations of the business and operations of the Target following the Closing. The term of the Transition Services Agreement is four (4) weeks, commencing from February 2, 2026. As consideration for the services provided from the Consultant to the Company under the Transition Services Agreement, the Company will pay Consultant a consulting fee of $19,200.00, payable in installments under the terms of the Transition Services Agreement.
The Seller agreed to a non-competition provision in the Agreement for a period lasting three (3) years, such period commencing on the date of Closing. The non-competition provision restricts the Seller and any of its respective affiliates from directly or indirectly: engage in or assist others in engaging in the precision machining and custom component manufacturing business (the “Restricted Business”) in the State of California (the “Territory”); (ii) have an interest in any Person that engages, directly or indirectly, in the Restricted Business in the Territory in any capacity, including as a partner, stockholder, director, officer, member, manager, employee, contractor, principal, agent, volunteer, intern, advisor, or consultant; or (iii) intentionally interfere in any material respect with the business relationships (whether formed prior to or after the date of the Agreement) between the Target and customers or suppliers of the Target. Notwithstanding the foregoing, Seller may own, directly or indirectly, solely as an investment, securities of any Person traded on any national securities exchange if Seller is not a controlling Person of, or a member of a group which controls, such Person and does not, directly or indirectly, own two percent (2)% or more of any class of securities of such Person.
The Seller also agreed to a non-solicitation provision in the Agreement for a period lasting three (3) years, such period commencing on the date of Closing. The non-solicitation provision restricts the Seller from, directly or indirectly, hire or solicit any current or former employee of the Target or encourage any employee to leave the Target’s employment, except pursuant to a general solicitation which is not directed specifically to any such employees*; provided, however*, that such non-solicitation provision does not prevent Seller or any of its affiliates from hiring: (i) any employee terminated by the Target; or (ii) after one hundred eighty (180) days from the date of resignation, any employee that has resigned from the Target.
The parties agreed to customary representations, warranties and other covenants for transactions of this type.
1
The foregoing description of the Acquisition does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K (this “Form 8-K”) and incorporated by reference herein. Capitalized terms used herein but not otherwise defined have the meanings set forth in the Agreement.
Item 8.01 Other Events
On February 3, 2026, the Company issued a press release announcing the Closing. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.
The information set forth under this Item 8.01, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Combined financial statements of SVM Machining, Inc. for the years ended December 31, 2024 and December 31, 2023, and the notes related thereto, and unaudited combined financial statements of SVM Machining, Inc. for the nine month period ended September 30, 2025, are attached hereto as Exhibit 99.2 and incorporated herein by reference into this Item 9.01(a).
(b) Pro Forma Financial Information.
The Unaudited Pro Forma Condensed Combined Balance Sheet of PMGC Holdings Inc. as of September 30, 2025, Unaudited Pro Forma Condensed Combined Statements of Operations of PMGC Holdings Inc. for the year ended December 31, 2024 and Unaudited Pro Forma Condensed Combined Statements of Operations for the nine months ended September 30, 2025 are attached hereto as Exhibit 99.3 and incorporated herein by reference into this Item 9.01(b).
(d) Exhibits.
The following exhibits are being filed herewith:
2
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: February 6, 2026
| PMGC Holdings, Inc. | |
|---|---|
| By: | /s/ Graydon Bensler |
| Name: | Graydon Bensler |
| Title: | Chief Executive Officer |
3
Exhibit 10.1
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTEDBECAUSE IT IS NOT MATERIAL AND OF A TYPE THAT PMGC HOLDINGS INC. TREATS AS PRIVATE OR CONFIDENTIAL. SUCH REDACTED PORTIONS ARE INDICATEDWITH “[***].”
STOCK PURCHASE AGREEMENT
between
[***], SVM MACHINING, INC.
and
PMGC HOLDINGS INC.
dated as of
February 2, 2026
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this “Agreement”), dated as of February 2, 2026, is entered into by and among SVM Machining, Inc., a California Subchapter S corporation (the “Company”), and [***], constituting all of the stockholders of the Company (collectively, “Seller”), and PMGC Holdings Inc., a Nevada corporation (“Buyer”). Capitalized terms used in this Agreement have the meanings given to such terms herein, including those set forth in Exhibit A attached hereto.
RECITALS
WHEREAS, Seller owns 100% of the issued and outstanding shares of common stock, no par value (the “Shares”), of the Company; and
WHEREAS, Seller wishes to sell to Buyer, and Buyer wishes to purchase from Seller, the Shares, subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE
Section 1.01Purchase and Sale. Subject to the terms and conditions set forth herein, at the Closing, Seller shall sell to Buyer, and Buyer shall purchase from Seller, the Shares, free and clear of any mortgage, pledge, lien, charge, security interest, claim, community property interest, option, equitable interest, restriction of any kind (including any restriction on use, voting, transfer, receipt of income, or exercise of any other ownership attribute), or other encumbrance) (each, an “Encumbrance”), except for those items set forth in Section 1.01 of the Disclosure Schedules, on a cash-free debt-free basis.
Section 1.02 Purchase Price.
(a) The aggregate purchase price for the Shares (the “Purchase Price”) shall be an amount equal to: 1) $2,250,000.00 in cash, of which $2,000,000.00 is payable to the Seller at Closing (the “Closing Purchase Price”), and $250,000.00 shall constitute the Holdback Amount (the “Indemnification Holdback”), which shall be retained by Buyer at Closing; plus (2) the Final Cash Balance (“Final Cash Balance” shall mean a fixed amount of $130,000.00, representing one (1) month of operating capital of the Company as of the Closing, without regard to the actual cash and cash equivalents of the Company at Closing); plus 3) the amount, if any, by which Estimated Closing Net Working Capital is greater than the Net Working Capital Target less (4) the amount, if any, by which the Estimated Closing Net Working Capital is less than the Net Working Capital Target as described in Section 1.04 (the “Closing Payment”). The “Net Working Capital Target” means an amount equal to $281,638.00. Buyer shall pay the Closing Purchase Price to Seller at the Closing by wire transfer of immediately available funds in accordance with the wire transfer instructions set forth in Section 1.02 of the Disclosure Schedules. The term “Disclosure Schedules” means the disclosure schedules attached hereto and made a part of this Agreement, delivered by Seller concurrently with the execution, closing, and delivery of this Agreement.
1
(b) The Buyer shall not pay the Indemnification Holdback to the Seller at Closing. Instead, Buyer shall retain the Indemnification Holdback to satisfy any indemnification claims under Section 7.01
(c) As additional Purchase Price, Seller may be entitled to receive an Earnout Payment for the twelve (12) month period ending December 31, 2026 (the “Earnout Period”) as follows:
(i) A Tier 1 Earnout Payment of $750,000.00 shall be payable to the Seller if, during the Earnout Period, the Company achieves Revenue as follows:
(A) If Revenue is less than $2,500,000.00, no portion of the Tier 1 Earnout payment shall be payable.
(B) If Revenue is equal to or greater than $3,250,000.00, one hundred percent (100%) of the Tier 1 Earnout Payment ($750,000.00) shall be payable.
(C) (C) If revenue is between $2,500,000.00 and $3,250,000.00, the payable Tier 1 Earnout amount shall be determined according to the following:
(ii) In addition to the Tier 1 Earnout Payment , a Tier 2 Earnout Payment of $500,000.00 shall be payable to the Seller if, during the Earnout Period, the Company achieves Revenue as follows:
(A) If Revenue is less than $3,500,000.00, no portion of the Tier 2 Earnout Payment shall be payable.
(B) If Revenue is equal to or greater than $4,500,000.00, one hundred percent (100%) of the Tier 2 Earnout Payment ($500,000.00) shall be payable.
(C) If revenue is between $3,500,000.00 and $4,500,000.00, the payable Tier 2 Earnout amount shall be determined according to the following:
2
Buyer shall pay the Tier 1 Earnout Payment and Tier 2 Earnout Payment to the Seller within ten (10) calendar days following Buyer’s filing of its Annual Report on Form 10-K, including the audited financial statements contained therein, for the fiscal year that includes the applicable Earnout Period. “Revenue” shall mean the gross amounts invoiced or otherwise recognized by the Company from the sale of its products and/or services in the ordinary course of business during the applicable Earn-Out Period, determined in accordance with U.S. GAAP, less, to the extent included in such gross amounts: (a) trade, volume, and promotional discounts; (b) returns, refunds, and chargebacks; (c) rebates, credits, and other price concessions; (d) sales allowances; and (e) sales, use, value-added, excise, and similar transaction-based taxes. Revenue shall exclude intercompany sales, non-operating income, interest income, financing proceeds, and shall be calculated net of bad debt write-offs.
Section 1.03Withholding Taxes. Buyer is entitled to deduct and withhold from the Purchase Price all Taxes that Buyer may be required to deduct and withhold under any provision of Tax Law. All such withheld amounts shall be treated as delivered to Seller hereunder.
Section 1.04 Closing Adjustment.
(a) No later than three (3) Business Days prior to the date hereof, Buyer shall deliver to Seller a statement (the “Estimated Closing Statement”) setting forth a reasonable good faith calculation of an estimate of (i) a balance sheet of the Company as of the Closing prepared on a basis consistent with the Balance Sheet (the “Estimated Closing Balance Sheet”) and (ii) a calculation of the Net Working Capital based on the Estimated Closing Balance Sheet (the “Estimated Net Working Capital”). The Estimated Net Working Capital will be calculated as at the Closing Date, and applied on a basis consistent with the accounting, policies, principles, practices, procedures, methodologies, and estimation techniques used in the preparation of the Balance Sheet, and shall include accounts receivable, works in progress, booked but unfulfilled orders, , less accounts payable two payrolls of the Company as of the Closing Date, and (iii) a calculation of the Cash of the Company (the “Estimated Closing Cash Balance”). The Parties acknowledge that the Estimated Closing Statement shall be used for purposes of calculating the Closing Payment.
(b) Within ninety (90) days after the Closing, Buyer shall prepare and deliver to Seller Representative a calculation of the Net Working Capital of the Company as of the Closing (the “Closing Net Working Capital”), and a calculation of the Cash of the Company as of the Closing (the “Final Closing Cash Balance”), collectively, the “Closing Statement”). After delivery of the Closing Statement, Buyer shall permit Seller and its accountants reasonable access to the accounting records, work papers and computations used by Buyer in the preparation of the Closing Statement.
3
(c) If Seller dispute any amounts reflected on the Closing Statement as delivered by Buyer, Seller shall so notify Buyer in writing (a “Notice of Dispute”) not more than forty-five (45) days after the date Seller receive the Closing Statement, specifying in reasonable detail all points of disagreement and setting forth Seller’s own calculations of the amounts it claims are proper for each such item in the Closing Statement it disagrees with (any such disagreement hereinafter, a “Disagreement”). If Seller fail to deliver a Notice of Dispute within such forty-five (45)-day period, Seller shall be deemed to have accepted the Closing Statement (and all amounts and calculations set forth thereon) and the Closing Statement as originally delivered by Buyer (and all such amounts and calculations) shall be final, binding, and non-appealable by the Parties. If a Notice of Dispute is timely delivered, Seller and Buyer shall negotiate in good faith to resolve any Disagreement (as evidenced by a written agreement between them). Only those items and calculations specifically included in the Notice of Dispute as required herein shall be eligible for inclusion in the Disagreement. If the Disagreement is not resolved by Buyer and Seller in writing within thirty (30) days after Buyer receives the Notice of Dispute, they shall refer the Disagreement to an independent nationally recognized accounting firm that is mutually agreed to by Buyer and Seller in writing (the “Accountant”) for resolution of such Disagreement in accordance with the terms of this Agreement. Buyer and Seller shall instruct the Accountant that the determinations of such firm with respect to any Disagreement shall be rendered within fifteen (15) days after the referral of the Disagreement or as soon thereafter as reasonably possible. The scope of the Accountant’s authority to act shall be strictly limited to determining whether the unresolved items that remain in dispute in the Disagreement were prepared in accordance with this Agreement, including the Accounting Principles, and the Accountant shall determine, on such basis, whether and to what extent the Closing Statement requires adjustment. The Accountant’s decision shall be based solely on written submissions and presentations by Seller and Buyer and their respective representatives and not based on any independent review by the Accountant. The Accountant shall act as an expert, not an arbitrator, and shall have authority only to address and calculate values for only those items that remain in dispute in the Disagreement and may not assign a value greater than the greatest value claimed for such item by either Party or smaller than the smallest value for such item claimed by either Party. The determination of the Accountant pursuant to this Section 1.04(c) shall be final and binding on the Parties. The fees, costs and expenses of the Accountant shall be allocated between the Seller, jointly and severally, on the one hand, and Buyer, on the other hand, in the same proportion that the aggregate amount of the disputed items submitted to the Accountant that is unsuccessfully disputed by each such Party (as finally determined by the Accountant) bears to the total amount of disputed items so submitted; provided, that such fees, costs and expenses shall not include, so long as a Party complies with the procedures of this Section 1.04(c), the other Party’s outside counsel or accounting fees. The Closing Net Working Capital, Closing Cash Balance and Closing Indebtedness Amount, each as set forth on the Closing Statement as finally determined in accordance with the terms of this Section 1.04(c), shall be referred to as the “Final Net Working Capital” and the “Final Cash Balance” respectively.
4
(d) Adjustment Amount.
(i) The “Closing Cash Balance,” which may be positive or negative, means the Estimated Closing Cash Balance less the Final Closing Cash Balance.
(ii) The “Net Working Capital Adjustment Amount,” which may be positive or negative, means the Final Net Working Capital minus the Net Working Capital Target.
(iii) The “Final Adjustment Amount”, which may be positive or negative, means the Closing Cash Balance plus the Net Working Capital Adjustment Amount.
(e) If the Final Adjustment Amount is a positive number, Seller shall be entitled to receive from Buyer an amount in cash. If the Final Adjustment Amount is a negative number, Buyer shall be entitled to receive from the Seller an amount in cash equal to the absolute value of the Final Adjustment Amount.
(f) If the Seller is entitled to receive payment pursuant to Section 1.04(e), Buyer shall, not more than five (5) Business Days after determination of the Final Adjustment Amount, make payment of the absolute value of the Final Adjustment Amount by wire transfer in immediately available funds (or other alternative delivery arrangement permitted in the Escrow Agreement and/or mutually agreed by Seller and Buyer) to, or as directed in writing by, Seller.
ARTICLE II
CLOSING
Section 2.01Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place simultaneously with the execution of this Agreement on the date of this Agreement (the “Closing Date”) remotely by exchange of documents and signatures (or their electronic counterparts).
Section 2.02Seller Closing Deliverables. At the Closing, Seller shall deliver to Buyer the following:
(a) Share certificates evidencing the Shares, free and clear of all Encumbrances, duly endorsed in blank or accompanied by stock powers or other instruments of transfer duly executed in blank;
(b) A certificate of the Secretary (or other officer acting in such capacity) of the Seller certifying: (i) that attached thereto are true and complete copies of all resolutions of the board of directors of the Company and its stockholders authorizing the execution, delivery, and performance of this Agreement, and any other agreement, document or instrument entered into or delivered in connection with the transactions contemplated in this Agreement (collectively, the “Transaction Documents”) to which the Seller or the Company is a party, and that such resolutions are in full force and effect; (ii) the names, titles, and signatures of the officers of the Seller and the Company authorized to execute any of the Transaction Documents; and (iii) that attached thereto are true and complete copies of the governing documents of the Seller and the Company, including any amendments or restatements thereof, and that such governing documents are in full force and effect;
5
(c) Copies of all required consents or approvals;
(d) Resignations of the directors and officers of the Company, effective as of the Closing Date
(e) A good standing certificate (or its equivalent) for the Company from the secretary of state or similar Governmental Authority of the jurisdiction in which the Company is organized and each jurisdiction where the Company is required to be qualified, registered, or authorized to do business. The term “Governmental Authority” means any federal, state, local, or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any arbitrator, court, or tribunal of competent jurisdiction; and
(f) A certificate pursuant to Treasury Regulations Section 1.1445-2(b) that Seller is not a foreign person within the meaning of Section 1445 of the Internal Revenue Code of 1986 (as amended, the “Code”).
(g) A duly executed commercial Lease Agreement between the Company and Buyer (or its Affiliate) for the real property located at [***], to be delivered at Closing; and
(h) The duly executed Transition Services Agreement for MKS Holdings, LLC.
Section2.03 Buyer’s Deliveries. At the Closing, Buyer shall deliver the following to Seller:
(a) The Closing Purchase Price;
(b) A certificate of the Secretary (or other officer) of Buyer certifying: (i) that attached thereto are true and complete copies of all resolutions of the board of directors of Buyer authorizing the execution, delivery, and performance of this Agreement and the Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby, and that such resolutions are in full force and effect; and
(ii) the names, titles, and signatures of the officers of Buyer authorized to sign this Agreement and the other Transaction Documents to which it is a party;
(c) A duly executed commercial Lease Agreement between the Company and Buyer (or its Affiliate) for the real property located at [***], to be delivered at Closing; and
(d) The duly executed Transition Services Agreement for MKS Holdings, LLC.
6
Section 2.04Conditions to Closing. The obligations of each party to consummate the transactions contemplated by this Agreement are subject to the satisfaction or waiver by such party, at or prior to Closing, of the following conditions:
(a) The board of directors (and, if applicable, shareholders) of each party shall have approved the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.
(b) Each party shall have executed and delivered all Transaction Documents to which it is a party.
(c) All consents, approvals, and authorizations of any third party or Governmental Authority required in connection with the execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated hereby shall have been obtained on terms reasonably satisfactory to the parties.
(d) The Company and Buyer (or its affiliate) shall have entered into a commercial lease agreement as outlined in Section 2.03(c).
(e) The representations and warranties of the other party set forth in this Agreement shall be true and correct in all material respects as of the Closing Date.
(f) The other party shall have performed and complied in all material respects with all covenants and agreements required to be performed or complied with by it under this Agreement at or prior to the Closing.
(g) No law or order shall have been enacted, issued, or enforced by any Governmental Authority that restrains, enjoins, or otherwise prohibits the consummation of the transactions contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OFTHE SELLER AND THE COMPANY
Each Seller, jointly and severally, represents and warrants to Buyer that the statements contained in this ARTICLE III are true and correct as of the date hereof. For purposes of this ARTICLE III, “Seller’s knowledge,” “knowledge ofSeller,” and any similar phrases shall mean the actual or constructive knowledge of [***], after due inquiry.
Section3.01 Organization and Authority of the Company. The Company is a corporation duly organized, validly existing, and in good standing under the Laws (as defined in Section 3.05) of California. The Company and each Seller, respectively, has full power and authority to enter into this Agreement and the other Transaction Documents to which Company and such Seller is a party, to carry out its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. The execution and delivery by the Company and by each Seller of this Agreement and any other Transaction Document to which the Company and such Seller is a party, the performance by the Company and each Seller of its respective obligations hereunder and thereunder, and the consummation by the Company and each Seller of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of the Company and each Seller as applicable. This Agreement and each Transaction Document to which Company and each Seller is a party constitute the legal, valid, and binding obligations of the Company and each Seller, respectively, enforceable against Company and each Seller, respectively, in accordance with their respective terms.
7
Section 3.02Title to Shares. All of the Shares are owned of record and beneficially by Seller as set forth on Schedule 3.02, free and clear of all Encumbrances. Upon the transfer, assignment, and delivery of the Shares and payment therefore in accordance with the terms of this Agreement, Buyer shall own all of the Shares, free and clear of all Encumbrances.
Section 3.03 Capitalization.
(a) The authorized shares of the Company consist of 1,000,000 shares of common stock, no par value per share, of which 1,000 shares are issued and outstanding and constitute the Shares. All of the Shares have been duly authorized, are validly issued, fully paid, and nonassessable.
(b) To Seller’s knowledge all of the Shares were issued in compliance with applicable Laws. To Seller’s knowledge none of the Shares were issued in violation of any agreement or commitment to which Seller or the Company is a party or is subject to or in violation of any preemptive or similar rights of any individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association, or other entity (each, a “Person”).
(c) There are no outstanding or authorized options, warrants, convertible securities, stock appreciation, phantom stock, profit participation, or other rights, agreements, or commitments relating to the shares of the Company or obligating Seller or the Company to issue or sell any shares of, or any other interest in, the Company. There are no voting trusts, stockholder agreements, proxies, or other agreements in effect with respect to the voting or transfer of any of the Shares.
Section 3.04No Subsidiaries. The Company does not have, or have the right to acquire, an ownership interest in any other Person.
Section3.05 No Conflicts or Consents. The execution, delivery, and performance by the Company and each Seller of this Agreement and the other Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not, to Seller’s knowledge: (a) violate or conflict with any provision of the certificate of incorporation, by-laws, or other governing documents of any Seller or the Company; (b) violate or conflict with any provision of any statute, law, ordinance, regulation, rule, code, treaty, or other requirement of any Governmental Authority (collectively, “Law”) or any order, writ, judgment, injunction, decree, determination, penalty, or award entered by or with any Governmental Authority (“Governmental Order”) applicable to any Seller or the Company; (c) require the consent, notice, or filing with or other action by any Person or require any Permit, license, or Governmental Order; (d) violate or conflict with, result in the acceleration of, or create in any party the right to accelerate, terminate, or modify any contract, lease, deed, mortgage, license, instrument, note, indenture, joint venture, or any other agreement, commitment, or legally binding arrangement, whether written or oral (collectively, “Contracts”), to which any Seller or the Company is a party or by which any Seller or the Company is bound or to which any of their respective properties and assets are subject; or (e) result in the creation or imposition of any Encumbrance on any properties or assets of the Company.
8
Section3.06 Financial Statements. Complete copies of: (i) the Company’s unaudited financial statements consisting of the balance sheet of the Company as at December 31, 2024 and December 31, 2023, and the related statements of income and retained earnings, stockholders’ equity, and cash flow for the years then ended; and (ii) unaudited financial statements for each fiscal quarter of 2025 of the Company prior to the Closing Date (the financial statements in clauses (i) and (ii) of this Section 3.06, collectively, the “Financial Statements”) have been or will be delivered to Buyer prior to the Closing Date, to the satisfaction of Buyer. The Financial Statements and any financial information delivered by Seller prior to Closing have been prepared using accounting practices and methodologies that are reasonable, consistently applied, and appropriate for the Company’s business. The Financial Statements are based on the books and records of the Company and fairly present the financial condition of the Company as of the respective dates they were prepared and the results of the operations of the Company for the periods indicated. The balance sheet of the Company as of December 31, 2024 is referred to herein as the “BalanceSheet” and the date thereof as the “Balance Sheet Date.”
Section 3.07Undisclosed Liabilities. The Company has no liabilities, obligations, or commitments of any nature whatsoever, whether asserted, known, absolute, accrued, matured, or otherwise (collectively, “Liabilities”), except: (a) those which are adequately reflected or reserved against in the Balance Sheet as of the Balance Sheet Date; and (b) those which have been incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date and which are not, individually or in the aggregate, material in amount. As of the Closing, the Company has no Liabilities for any Indebtedness.
Section 3.08Absence of Certain Changes, Events, and Conditions. Since the Balance Sheet Date, to Seller’s knowledge, the Company has been operating in the ordinary course of business consistent with past practice and there has not been, with respect to the Company, any change, event, condition, or development that is, or could reasonably be expected to be, individually or in the aggregate, to have a material adverse effect on the business, results of operations, condition (financial or otherwise), or assets of the Company.
Section 3.09 Material Contracts.
(a) Section 3.09 of the Disclosure Schedules lists each Contract that is material to the Company (such Contracts, together with all Contracts concerning the occupancy, management, or operation of any Real Property (as defined in Section 3.10(a)), being “MaterialContracts”), including the following:
(i) each Contract of the Company involving aggregate consideration in excess of $70,000.00 entered into in the last twelve (12) months and which, in each case, cannot be cancelled by the Company without penalty or without more than sixty (60) days’ notice;
9
(ii) except for Contracts relating to trade payables, all Contracts relating to indebtedness (including, without limitation, guarantees) of the Company; and
(iii) all Contracts that limit or purport to limit the ability of the Company to compete in any line of business or with any Person or in any geographic area or during any period of time.
(b) Each Material Contract is valid and binding on the Company in accordance with its terms and is in full force and effect. None of the Company or, to Seller’s knowledge, any other party thereto is in breach of or default under (or is alleged to be in breach of or default under), or has provided or received any notice of any intention to terminate, any Material Contract. Complete and correct copies of each Material Contract (including all modifications, amendments, and supplements thereto and waivers thereunder) have been made available to Buyer.
Section 3.10 Real Property; Title to Assets.
(a) Section 3.10(a) of the Disclosure Schedules lists all real property in which the Company has an ownership or leasehold (or sub-leasehold) interest (together with all buildings, structures, and improvements located thereon, the “RealProperty”), including: (i) the street address of each parcel of Real Property; (ii) for Real Property that is leased or subleased by the Company, the landlord under the lease, the rental amount currently being paid, and the expiration of the term of such lease or sublease, and any termination or renewal rights of any party to the lease; and (iii) the current use of each parcel of Real Property. Seller has delivered or made available to Buyer true, correct, and complete copies of all Contracts, title insurance policies, and surveys relating to the Real Property.
(b) To Seller’s knowledge, the Company has good and valid (and, in the case of owned Real Property, good and indefeasible fee simple) title to, or a valid leasehold interest in, all Real Property and personal property and other assets reflected in the Financial Statements or acquired after the Balance Sheet Date (other than properties and assets sold or otherwise disposed of in the ordinary course of business consistent with past practice since the Balance Sheet Date). All Real Property and such personal property and other assets (including leasehold interests) are free and clear of Encumbrances except for those items set forth in Section 3.10(b) of the Disclosure Schedules.
(c) The Company is not a sublessor or grantor under any sublease or other instrument granting to any other Person any right to possess, lease, occupy, or use any leased Real Property. The use of the Real Property in the conduct of the Company’s business does not violate in any material respect any Law, covenant, condition, restriction, easement, license, permit, or Contract and no material improvements constituting a part of the Real Property encroach on real property owned or leased by a Person other than the Company.
10
Section 3.11 Intellectual Property.
(a) The term “Intellectual Property” means any and all of the following in any jurisdiction throughout the world: (i) issued patents and patent applications; (ii) trademarks, service marks, trade names, and other similar indicia of source or origin, together with the goodwill connected with the use of and symbolized by, and all registrations, applications for registration, and renewals of, any of the foregoing; (iii) copyrights, including all applications and registrations; (iv) trade secrets, know-how, inventions (whether or not patentable), technology, and other confidential and proprietary information and all rights therein; (v) internet domain names and social media accounts and pages; and (vi) other intellectual or industrial property and related proprietary rights, interests, and protections.
(b) Section 3.11 of the Disclosure Schedules lists all issued patents, registered trademarks, domain names and copyrights, and pending applications for any of the foregoing and all material unregistered Intellectual Property that are owned by the Company (the “Company IP Registrations”). The Company owns or has the valid and enforceable right to use all Intellectual Property used in or necessary for the conduct of the Company’s business as currently conducted (the “Company Intellectual Property”), free and clear of all Encumbrances. To Seller’s knowledge, all of the Company Intellectual Property is valid and enforceable, and all Company IP Registrations are subsisting and in full force and effect. To Seller’s knowledge, the Company has taken all necessary steps to maintain and enforce the Company Intellectual Property.
(c) To Seller’s knowledge, the conduct of the Company’s business, as currently and formerly conducted, has not infringed, misappropriated, or otherwise violated the Intellectual Property or other rights of any Person. To Seller’s knowledge, no Person has infringed, misappropriated, or otherwise violated any Company Intellectual Property.
Section 3.12 Material Customers and Suppliers.
(a) Section 3.12(a) of the Disclosure Schedules sets forth each customer who has paid aggregate consideration to the Company for goods or services rendered in an amount greater than or equal to $25,000.00 for each of the two (2) most recent fiscal years (collectively, the “MaterialCustomers”). To Seller’s knowledge, the Company has not received any notice, and has no reason to believe, that any of its Material Customers has ceased, or intends to cease after the Closing, to purchase or use its goods or services or to otherwise terminate or materially reduce its relationship with the Company.
(b) Section 3.12(b) of the Disclosure Schedules sets forth each supplier to whom the Company has paid consideration for goods or services rendered in an amount greater than or equal to $25,000.00 for each of the two (2) most recent fiscal years (collectively, the “Material Suppliers”). To Seller’s knowledge, the Company has not received any notice, and has no reason to believe, that any of its Material Suppliers has ceased, or intends to cease, to supply goods or services to the Company or to otherwise terminate or materially reduce its relationship with the Company.
11
Section 3.13Insurance. Section 3.13 of the Disclosure Schedules sets forth a true and complete list of all current policies or binders of insurance maintained by Seller or its Affiliates (including the Company) and relating to the assets, business, operations, employees, officers, and directors of the Company (collectively, the “Insurance Policies”). To Seller’s knowledge, such Insurance Policies: (a) are in full force and effect; (b) are valid and binding in accordance with their terms; (c) are provided by carriers who are financially solvent; and (d) have not been subject to any lapse in coverage. Neither Seller nor any of its Affiliates (including the Company) has received any written notice of cancellation of, premium increase with respect to, or alteration of coverage under, any of such Insurance Policies. All premiums due on such Insurance Policies have been paid. To Seller’s knowledge, none of Seller or any of its Affiliates (including the Company) is in default under, or has otherwise failed to comply with, in any material respect, any provision contained in any Insurance Policy. To Seller’s knowledge, the Insurance Policies are of the type and in the amounts customarily carried by Persons conducting a business similar to the Company and are sufficient for compliance with all applicable Laws and Contracts to which the Company is a party or by which it is bound. For purposes of this Agreement: (x) “Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person; and (y) the term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities or other ownership interests, by contract, or otherwise.
Section 3.14 Legal Proceedings; Governmental Orders.
(a) Except as set forth on Section 3.14 of the Disclosure Schedules, and to Seller’s knowledge, there are no claims, actions, causes of action, demands, lawsuits, arbitrations, inquiries, audits, notices of violation, proceedings, litigation, citations, summons, subpoenas, or investigations of any nature, whether at law or in equity (collectively, “Actions”) pending or, to Seller’s knowledge, threatened against or by the Company, Seller, or any Affiliate of Seller: (i) relating to or affecting the Company or any of the Company’s properties or assets; or (ii) that challenge or seek to prevent, enjoin, or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.
(b) To Seller’s knowledge, there are no outstanding, and the Company is in compliance with all, Governmental Orders against, relating to, or affecting the Company or any of its properties or assets.
Section 3.15 Compliance with Laws; Permits.
(a) To Seller’s knowledge, the Company has complied, and is now complying, with all Laws applicable to it or its business, properties, or assets.
12
(b) To Seller’s knowledge, all permits, licenses, franchises, approvals, registrations, certificates, variances, and similar rights obtained, or required to be obtained, from Governmental Authorities (collectively, “Permits”) in order for the Company to conduct its business, including, without limitation, owning or operating any of the Real Property, have been obtained and are valid and in full force and effect. Section 3.15 of the Disclosure Schedules lists all current Permits issued to the Company and no event has occurred that would reasonably be expected to result in the revocation or lapse of any such Permit.
Section 3.16 Environmental Matters.
(a) The terms: (i) “Environmental Laws” means all Laws, now or hereafter in effect, in each case as amended or supplemented from time to time, relating to the regulation and protection of human health, safety, the environment, and natural resources, including any federal, state, or local transfer of ownership notification or approval statutes; and (ii) “Hazardous Substances” means: (A) “hazardous materials,” “hazardous wastes,” “hazardous substances,” “industrial wastes,” or “toxic pollutants,” as such terms are defined under any Environmental Laws; (B) any other hazardous or radioactive substance, contaminant, or waste; and (C) any other substance with respect to which any Environmental Law or Governmental Authority requires environmental investigation, regulation, monitoring, or remediation.
(b) To Seller’s knowledge, the Company has complied, and is now complying, with all Environmental Laws. Neither the Company nor Seller has received notice from any Person that the Company, its business or assets, or any real property currently or formerly owned, leased, or used by the Company is or may be in violation of any Environmental Law or any applicable Law regarding Hazardous Substances.
(c) To Seller’s knowledge, there has not been any spill, leak, discharge, injection, escape, leaching, dumping, disposal, or release of any kind of any Hazardous Substances in violation of any Environmental Law: (i) with respect to the business or assets of the Company; or (ii) at, from, in, adjacent to, or on any real property currently or formerly owned, leased, or used by the Company. There are no Hazardous Substances in, on, about, or migrating to any real property currently or formerly owned, leased, or used by the Company, and such real property is not affected in any way by any Hazardous Substances.
Section 3.17 Employee Benefit Matters.
Section 3.17 of the Disclosure Schedules contains a true and complete list of each “employee benefit plan” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974 (as amended, and including the regulations thereunder, “ERISA”), whether or not written and whether or not subject to ERISA, and each supplemental retirement, compensation, employment, consulting, profit-sharing, deferred compensation, incentive, bonus, equity, change in control, retention, severance, salary continuation, and other similar agreement, plan, policy, program, practice, or arrangement which is or has been established, maintained, sponsored, or contributed to by the Company or under which the Company has or may have any Liability (each, a “Benefit Plan”).
13
Section 3.18 Employment Matters.
(a) Section 3.18 of the Disclosure Schedules lists: (i) all employees, independent contractors, and consultants of the Company; and (ii) for each individual described in clause (i), (A) the individual’s title or position, hire date, and compensation,
(B) confirmation of the individual’s eligibility to work within the United States, (C) any Contracts entered into between the Company and such individual, and (D) the fringe benefits provided to each such individual. All compensation payable to all employees, independent contractors, or consultants of the Company for services performed on or prior to the Closing Date have been paid in full.
(b) The Company is not, and has not been, a party to or bound by any collective bargaining agreement or other Contract with a union or similar labor organization (collectively, “Union”), and no Union has represented or purported to represent any employee of the Company. There has never been, nor has there been any threat of, any strike, work stoppage, slowdown, picketing, or other similar labor disruption or dispute affecting the Company or any of its employees.
(c) To Seller’s knowledge, the Company is and has been in compliance with: (i) all applicable employment Laws and agreements regarding hiring, employment, termination of employment, plant closings and mass layoffs, employment discrimination, harassment, retaliation, and reasonable accommodation, leaves of absence, terms and conditions of employment, wages and hours of work, employee classification, employee health and safety, engagement and classification of independent contractors, payroll taxes, and immigration with respect to all employees, independent contractors, and contingent workers; and (ii) all applicable Laws relating to the relations between it and any labor organization, trade union, work council, or other body representing employees of the Company.
Section 3.19 Taxes.
(a) All returns, declarations, reports, information returns and statements, and other documents relating to Taxes (including amended returns and claims for refund) (collectively, “Tax Returns”) required to be filed by the Company on or before the Closing Date have been timely filed. Such Tax Returns are true, correct, and complete in all respects. All Taxes due and owing by the Company (whether or not shown on any Tax Return) have been timely paid. No extensions or waivers of statutes of limitations have been given or requested with respect to any Taxes of the Company. Seller has delivered to Buyer copies of all Tax Returns and examination reports of the Company and statements of deficiencies assessed against, or agreed to by, the Company, for all Tax periods ending after December 31, 2021. The term “Taxes” means all federal, state, local, foreign, and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties, or other taxes, fees, assessments, or charges of any kind whatsoever, together with any interest, additions, or penalties with respect thereto.
14
(b) The Company has not been a member of an affiliated, combined, consolidated, or unitary Tax group for Tax purposes. The Company has no Liability for Taxes of any Person (other than the Company) under Treasury Regulations Section 1.1502-
6 (or any corresponding provision of state, local, or foreign Law), as transferee or successor, by contract, or otherwise.
(c) There are no liens for Taxes (other than for current Taxes not yet due and payable) upon the assets of the Company.
(d) Seller is not a “foreign person” as that term is used in Treasury Regulations Section 1.1445-2. The Company is not, nor has it been, a United States real property holding corporation (as defined in Section 897(c)(2) of the Code) during the applicable period in Section 897(c)(1)(a) of the Code.
Section 3.20Books and Records. The minute books and share record and transfer books of the Company, all of which are in the possession of the Company and have been made available to Buyer, are complete and correct, and will be delivered to Buyer at the Closing.
Section 3.21Related Party Transactions. Except as set forth on Section 3.21 of the Disclosure Schedules, there are no Contracts or other arrangements involving the Company in which Seller, its Affiliates, or any of its or their respective directors, officers, or employees (or any immediate family members thereof) is a party, has a financial interest, or otherwise owns or leases any material asset, property, or right which is used by the Company.
Section 3.22Brokers. Except as set forth on Section 3.22 of the Disclosure Schedules, no broker, finder, or investment banker is entitled to any brokerage, finder’s, or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of Seller.
Section 3.23Full Disclosure. No representation or warranty by Seller in this Agreement and no statement contained in the Disclosure Schedules to this Agreement or any certificate or other document furnished or to be furnished to Buyer pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading.
15
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that the statements contained in this ARTICLE IV are true and correct as of the date hereof. For purposes of this ARTICLE IV, “Buyer’s knowledge,” “knowledge of Buyer,” and any similar phrases shall mean the actual or constructive knowledge of any director or officer of Buyer, after due inquiry.
Section 4.01Organization and Authority of Buyer. Buyer is a corporation duly organized, validly existing, and in good standing under the Laws of the state of Nevada. Buyer has full corporate power and authority to enter into this Agreement and the other Transaction Documents to which Buyer is a party, to carry out its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Buyer of this Agreement and any other Transaction Document to which Buyer is a party, the performance by Buyer of its obligations hereunder and thereunder, and the consummation by Buyer of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Buyer. This Agreement and each Transaction Document constitute legal, valid, and binding obligations of Buyer enforceable against Buyer in accordance with their respective terms.
Section 4.02No Conflicts; Consents. The execution, delivery, and performance by Buyer of this Agreement and the other Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) violate or conflict with any provision of the Articles of Incorporation, by-laws, or other governing documents of Buyer; (b) violate or conflict with any provision of any Law or Governmental Order applicable to Buyer; or (c) require the consent, notice, declaration, or filing with or other action by any Person or require any Permit, license, or Governmental Order.
Section 4.03Investment Purpose. Buyer is acquiring the Shares solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof or any other security related thereto within the meaning of the Securities Act of 1933, as amended (the “Securities Act”). Buyer acknowledges that Seller have not registered the offer and sale of the Shares under the Securities Act or any state securities laws, and that the Shares may not be pledged, transferred, sold, offered for sale, hypothecated, or otherwise disposed of except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations, as applicable.
Section 4.04Brokers. No broker, finder, or investment banker is entitled to any brokerage, finder’s, or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of Buyer.
Section4.05 Litigation. There is no Action pending or, to the knowledge of Buyer, threatened in writing against Buyer challenging, enjoining or preventing this Agreement and the other Transaction Documents or the consummation of the transaction contemplated hereby.
16
Section 4.06Financial Capacity. Buyer has sufficient cash on hand or other sources of immediately available funds to enable it to make payment of the Purchase Price and any other amounts due hereunder, and to consummate the transactions contemplated by this Agreement and the other Transaction Documents and that the making of such payments will not render Buyer insolvent. Buyer acknowledges that its obligations under this Agreement and the other Transaction Documents are not subject to a financing contingency.
Section 4.07Sophisticated Buyer. Buyer has significant experience in the industry in which the business operates, has conducted its own independent investigation, review and analysis of the business, and acknowledges that it has been provided adequate access to the properties, assets, premises, books and records, and other documents and data of Seller for such purpose. Buyer specifically acknowledges and agrees that: (i) in making its decision to enter into this Agreement and the other Transaction Documents and to consummate the transactions contemplated hereby, Buyer has relied solely upon its own investigation and the express representations and warranties of Seller set forth in this Agreement; (ii) neither Seller nor any other person has made any representation or warranty, express or implied, as to Seller, the business, or the operations or financial results of the same, or this Agreement, except as expressly set forth in Article IV of this Agreement.
ARTICLE V
COVENANTS
Section 5.01Confidentiality. From and after the Closing, each Seller shall, and shall cause its Affiliates and its and their respective directors, officers, employees, consultants, counsel, accountants, and other agents (collectively, “Representatives”) to, hold in confidence any and all information, in any form, concerning the Company, except to the extent that the Seller can show that such information: (a) is generally available to and known by the public through no fault of the Seller, any of its Affiliates, or their respective Representatives; or (b) is lawfully acquired by Seller, any of its Affiliates, or their respective Representatives from and after the Closing from sources which are not prohibited from disclosing such information by any obligation. If any Seller or any of its Affiliates or their respective Representatives are compelled to disclose any information by Governmental Order or Law, such Seller shall promptly notify Buyer in writing and shall disclose only that portion of such information which is legally required to be disclosed; provided, however, Seller shall use reasonable best efforts to obtain as promptly as possible an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.
Section 5.02 Non-Competition; Non-Solicitation.
(a) For a period of three (3) years commencing on the Closing Date (the “Restricted Period”), each Seller will not, and will not permit any of its respective Affiliates to, directly or indirectly: (i) engage in or assist others in engaging in the precision machining and custom component manufacturing business (the “Restricted Business”) in the State of California (the “Territory”); (ii) have an interest in any Person that engages, directly or indirectly, in the Restricted Business in the Territory in any capacity, including as a partner, stockholder, director, officer, member, manager, employee, contractor, principal, agent, volunteer, intern, advisor, or consultant; or (iii) intentionally interfere in any material respect with the business relationships (whether formed prior to or after the date of this Agreement) between the Company and customers or suppliers of the Company. Notwithstanding the foregoing, Seller may own, directly or indirectly, solely as an investment, securities of any Person traded on any national securities exchange if Seller is not a controlling Person of, or a member of a group which controls, such Person and does not, directly or indirectly, own two percent (2)% or more of any class of securities of such Person.
17
(b) During the Restricted Period, each Seller will not, and will not permit any of its respective Affiliates to, directly or indirectly, hire or solicit any current or former employee of the Company or encourage any employee to leave the Company’s employment, except pursuant to a general solicitation which is not directed specifically to any such employees; provided, however, nothing in this Section 5.02(b) shall prevent Seller or any of its Affiliates from hiring: (i) any employee terminated by the Company; or (ii) after one hundred eighty (180) days from the date of resignation, any employee that has resigned from the Company.
(c) Each Seller acknowledges that a breach or threatened breach of this Section 5.02 would give rise to irreparable harm to Buyer, for which monetary damages would not be an adequate remedy, and hereby agrees that in the event of a breach or a threatened breach by Seller of any such obligations, Buyer shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, or specific performance (without any requirement to post bond).
(d) Each Seller acknowledges that the restrictions contained in this Section 5.02 are reasonable and necessary to protect the legitimate interests of Buyer and constitute a material inducement to Buyer to enter into this Agreement and consummate the transactions contemplated by this Agreement. In the event that any covenant contained in this Section 5.02 should ever be adjudicated to exceed the time, geographic, product or service, or other limitations permitted by applicable Law in any jurisdiction or any Governmental Order, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service, or other limitations permitted by applicable Law or such Governmental Order. The covenants contained in this Section 5.02 and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written will not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction will not invalidate or render unenforceable such covenant or provision in any other jurisdiction. Any covenant or provision found enforceable under California law shall not be modified or enforced beyond the limits permitted by such law.
Section 5.03Audit. From and after the date of this Agreement, the Company agrees to, and the Seller agree to cause the Company to, cooperate with the Buyer and the Buyer’s auditors in conducting an audit of the Company’s financial statements for the fiscal years ending December 31, 2023 and December 31, 2024, and 2025 stub period review (the “Audit” and such audited financial statements referred to as the “Audited Financial Statements”). In connection therewith, the Company agrees to make all of its books and records available to the Buyer and its auditor and to make its employees and outside accountants available to the Buyer and its auditor in connection therewith.
18
Section 5.04Further Assurances and Cooperation. Following the Closing, each of the parties hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional documents and instruments and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement and the other Transaction Documents.
(a) Without limiting the foregoing, [***] and [***] shall each remain reasonably available to the Buyer for a period of four (4) weeks following the Closing Date to provide transition services to the Buyer, including assistance with the preparation and facilitation of any required financial audits, operational knowledge transfer, and other matters reasonably necessary to support post-Closing transition and integration. The parties shall enter into a Transition Services Agreement pursuant to which [***]and [***]shall provide such services and be compensated a therefore at a fixed flat fee for the services, payable in accordance with the terms of such agreement. The Transition Services Agreement may be entered into with an entity owned by [***]and [***] at their election. Buyer will cover the cost of [***] and [***]’s health insurance in a single, combined amount of $3,033.00, for an eighteen (18) month period or until [***]is eligible for Medicare, whichever event occurs first. Seller shall provide invoices to Buyer on the 20^th^ day of each month detailing these costs, and Buyer shall remit payment within five (5) days thereafter.
ARTICLE VI
TAX MATTERS
Section 6.01 Tax Covenants.
(a) Without the prior written consent of Buyer, Seller will not, to the extent it may affect or relate to the Company: (i) make, change, or rescind any Tax election; (ii) amend any Tax Return; (iii) take any position on any Tax Return; or (iv) take any action, omit to take any action, or enter into any other transaction that would have the effect of increasing the Tax liability or reducing any Tax asset of Buyer or the Company, in respect of any taxable period that begins after the Closing Date or, in respect of any taxable period that begins before and ends after the Closing Date (each such period, a “Straddle Period”), the portion of any Straddle Period beginning after the Closing Date.
(b) All transfer, documentary, sales, use, stamp, registration, value added, and other such Taxes and fees (including any penalties and interest) incurred in connection with this Agreement and the other Transaction Documents shall be borne and paid by Seller when due. Seller shall, at their own expense, timely file any Tax Return or other document with respect to such Taxes or fees (and Buyer shall cooperate with respect thereto as necessary).
19
(c) Buyer shall prepare, or cause to be prepared, all Tax Returns required to be filed by the Company after the Closing Date with respect to any taxable period or portion thereof ending on or before the Closing Date and all Straddle Period Tax Returns. Any such Tax Return shall be prepared in a manner consistent with past practice (unless otherwise required by Law) and without a change of any election or any accounting method.
Section 6.02Straddle Period. In the case of Taxes that are payable with respect to a Straddle Period, the portion of any such Taxes that are allocated to Pre-Closing Tax Periods (as defined in Section 6.04) for purposes of this Agreement is: (a) in the case of Taxes: (i) based upon, or related to, income, receipts, profits, wages, capital, or net worth; (ii) imposed in connection with the sale, transfer, or assignment of property; or (iii) required to be withheld, the amount of Taxes which would be payable if the taxable year ended with the Closing Date; and (b) in the case of other Taxes, the amount of such Taxes for the entire period multiplied by a fraction, the numerator of which is the number of days in the period ending on the Closing Date and the denominator of which is the number of days in the entire period.
Section 6.03Termination of Existing Tax Sharing Agreements. Any and all existing Tax sharing agreements (whether written or not) binding upon the Company shall be terminated as of the Closing Date. After such date neither the Company, any Seller, nor any of Seller’ Affiliates and their respective Representatives shall have any further rights or liabilities thereunder.
Section6.04 Tax Indemnification. The Seller shall jointly and severally indemnify the Buyer and each Buyer Indemnitee (as defined in Section 7.01) and hold them harmless from and against (a) any loss, damage, liability, deficiency, Action, judgment, interest, award, penalty, fine, cost or expense of whatever kind (collectively, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification under this Agreement, “Losses”) attributable to any breach of or inaccuracy in any representation or warranty made in Section 3.19; (b) any Loss attributable to any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking, or obligation in ARTICLE VI; (c) all Taxes of the Company or relating to the business of the Company for all Pre-Closing Tax Periods (as defined below); (d) all Taxes of any member of an affiliated, consolidated, combined, or unitary group of which the Company (or any predecessor of the Company) is or was a member on or prior to the Closing Date by reason of a liability under Treasury Regulation Section 1.1502-6 or any comparable provisions of foreign, state, or local Law; and (e) any and all Taxes of any Person imposed on the Company arising under the principles of transferee or successor liability or by contract, relating to an event or transaction occurring before the Closing Date. In each of the above cases, together with any out-of-pocket fees and expenses (including attorneys’ and accountants’ fees) incurred in connection therewith, the Company shall reimburse Buyer for any Taxes of the Company that are the responsibility of Seller pursuant to this Section 6.04 within ten business days after payment of such Taxes by Buyer or the Company. The term “Pre-Closing TaxPeriod” means any taxable period ending on or before the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.
20
Section 6.05Cooperation and Exchange of Information. The Seller and Buyer shall provide each other with such cooperation and information as either of them reasonably may request of the other in filing any Tax Return pursuant to this ARTICLE VI or in connection with any proceeding in respect of Taxes of the Company, including providing copies of relevant Tax Returns and accompanying documents. Each of the Seller’s and Buyer shall retain all Tax Returns and other documents in its possession relating to Tax matters of the Company for any Pre-Closing Tax Period (collectively, “Tax Records”) until the expiration of the statute of limitations of the taxable periods to which such Tax Records relate.
Section 6.06Survival. Notwithstanding anything in this Agreement to the contrary, the provisions of Section 3.19 and this ARTICLE VI shall survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation, or extension thereof) plus sixty (60) days.
Section 6.07Further Assurances. Following the Closing, each of the parties hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional documents and instruments and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement and the other Transaction Documents.
ARTICLE VII
INDEMNIFICATION
Section 7.01Indemnification by Seller. Subject to the other terms and conditions of this ARTICLE VII, each Seller shall jointly and severally, indemnify and defend Buyer and its Affiliates (including the Company,) and their respective Representatives (collectively, the “BuyerIndemnitees”), and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Buyer Indemnitees arising out of, relating to, or resulting from:
(a) any inaccuracy in or breach of any of the representations or warranties of the Seller or the Company contained in this Agreement or any of the other Transaction Documents;
(b) any breach or non-fulfillment of any covenant, agreement, or obligation to be performed by the Company (prior to the Closing) or any Seller pursuant to this Agreement or any of the other Transaction Documents;
(c) any Losses arising from or under the Continuing Guaranty executed by the Company, dated March 20, 2025, in favor of Flagstar Bank, N.A. in reference to that certain Real Estate Promissory Note made by MKS Holdings, LLC, a California limited liability company.
21
Section 7.02Indemnification by Buyer. Subject to the other terms and conditions of this ARTICLE VII, Buyer shall indemnify and defend the Seller and their respective Affiliates and Representatives (collectively, the “Seller Indemnitees”), and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Seller Indemnitees arising out of, relating to, or resulting from:
(a) any inaccuracy in or breach of any of the representations or warranties of Buyer contained in this Agreement or any of the other Transaction Documents; or
(b) any breach or non-fulfillment of any covenant, agreement, or obligation to be performed by Buyer pursuant to this Agreement.
Section 7.03 Indemnification Procedures.
(a) Whenever any claim shall arise for indemnification under this Agreement, the indemnified party (“Indemnified Party”) shall promptly provide written notice of such claim to the indemnifying party (the “Indemnifying Party”). Such notice by the Indemnified Party shall: (a) describe the claim in reasonable detail; (b) include copies of all material written evidence thereof; and (c) indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party.
(b) In connection with any third-party Action giving rise to indemnification hereunder, the Indemnifying Party may, at its sole cost and expense and upon written notice to the Indemnified Party, assume the defense of such Action with counsel reasonably satisfactory to the Indemnified Party. The Indemnified Party may participate in the defense at its own expense, subject to the Indemnifying Party’s right to control the defense. If the Indemnifying Party does not assume the defense, the Indemnified Party may defend or settle the Action in such manner as it deems appropriate, after giving notice to the Indemnifying Party, and the Indemnifying Party shall remain liable for any resulting Losses.
(c) The parties shall cooperate in all reasonable respects in connection with the defense of any such claim, including: (i) making available relevant records; and (ii) furnishing, without expense (other than reimbursement of actual out-of-pocket costs) to the defending party, management employees as reasonably necessary for the defense.
(d) Notwithstanding the foregoing, the Indemnifying Party shall not settle any Action without the Indemnified Party’s prior written consent (which shall not be unreasonably withheld, conditioned or delayed).
Section7.04 Survival. Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein, and all related rights to indemnification, shall survive the Closing for a period of twelve (12) months (the “Survival Period”); provided, however, that the representations and warranties in Section 3.01, Section 3.02, Section 3.03, Section 3.04, Section 3.05, Section 3.10(b), Section 3.19, Section 3.22, Section 4.01, Section 4.02 and Section 4.04 shall survive until sixty (60) days after the expiration of the statute of limitation applicable to the underlying subject matter of such representation (including any extensions or tollings thereof). Notwithstanding the foregoing, any claim timely asserted in writing by the non- breaching party prior to the expiration date of the applicable survival period shall survive until such claim is finally resolved.
22
Section 7.05Indemnification Limitations. Seller shall have no obligation to indemnify Buyer Indemnitees against, or reimburse any Buyer Indemnitees, and Buyer shall have no obligation to indemnify Seller Indemnitees against, or reimburse any Seller Indemnitees for, any Losses pursuant to Section 7.01 with respect to breaches of representations and warranties until all such Losses exceed Twenty-Five Thousand Dollars ($25,000.00) in the aggregate (the “Deductible”), in which case the Seller or Buyer, respectively, shall be obligated to indemnify Buyer Indemnitees or Seller Indemnitees, respectively, for the amount of any Losses which exceeds the Deductible that are indemnifiable pursuant to Section 7.01. Except to the extent otherwise provided, the Seller shall have no obligation to indemnify Buyer Indemnitees against, or reimburse any Buyer Indemnitees for, any Losses pursuant to Section 7.01(a) resulting from or arising out of or in connection with any breach of or inaccuracy in any representations and warranties after the aggregate amount of all payments made by the Seller herein in respect of such Losses equals the Indemnification Holdback (the “Indemnification Cap”). Notwithstanding the foregoing, the Indemnification Cap shall not be applicable to the representations and warranties set forth in Sections 3.01, 3.02, 3.03, the last sentence of 3.07, 3.19, 3.21, and 3.22 for any fraudulent or willful misrepresentations. If, at the end of the Survival Period, the aggregate amount of indemnification claims asserted by the Buyer Indemnitees is less than the amount of the Indemnification Holdback then held by Buyer, Buyer shall pay to the Seller the remaining balance of the Indemnification Holdback. If Buyer continues to retain any Indemnification Holdback beyond the Survival Period pursuant to a claim made in accordance with Section 7.03, Buyer shall pay to the Seller any remaining balance of the Indemnification Holdback within ten (10) calendar days following final adjudication or resolution of such claim(s).
Section 7.06Tax Claims. Notwithstanding any other provision of this Agreement, the control of any claim, assertion, event, or proceeding in respect of Taxes of the Company (including, but not limited to, any such claim in respect of a breach of the representations and warranties in Section 3.19 hereof or any breach or violation of or failure to fully perform any covenant, agreement, undertaking, or obligation in ARTICLE VI) shall be governed exclusively by ARTICLE VI hereof.
Section 7.07Cumulative Remedies. The rights and remedies provided for in this ARTICLE VII (and in ARTICLE VI) are cumulative and are in addition to and not in substitution for any other rights and remedies available at Law or in equity or otherwise.
ARTICLE VIII
MISCELLANEOUS
Section 8.01Expenses. All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses.
23
Section 8.02Notices. All notices, claims, demands, and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by email of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid, if sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 8.02):
| If to Seller: | |
|---|---|
| Email: | |
| [***] | |
| Attention: [***] and [***] | |
| with a copy (which will not<br><br> constitute notice) to: | |
| If to Buyer: | PMGC Holdings Inc. |
| 120 Newport Center Drive, Suite 250 | |
| Newport Beach, CA 92660 | |
| Email: [***] | |
| [***] | |
| Attention: Graydon Bensler; Braeden Lichti | |
| with a copy (which will not<br><br> constitute notice) to: | Sichenzia<br> Ross Ference Carmel LLP |
| 1185 Avenue of the Americas, 31^st^ Floor | |
| New York, NY 10036 | |
| Email: ckleidman@srfc.law | |
| Attention: Carl Kleidman, Esq. |
Section 8.03Interpretation; Headings. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The headings in this Agreement are for reference only and will not affect the interpretation of this Agreement.
Section 8.04Severability. If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability will not affect any other term or provision of this Agreement.
24
Section 8.05Entire Agreement. This Agreement and the other Transaction Documents constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Agreement and those in the other Transaction Documents, and the Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.
Section 8.06Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party, which consent will not be unreasonably withheld or delayed. No assignment shall relieve the assigning party of any of its obligations hereunder.
Section 8.07Amendment and Modification; Waiver. This Agreement may only be amended, modified, or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No failure to exercise, or delay in exercising, any right or remedy arising from this Agreement shall operate or be construed as a waiver thereof. No single or partial exercise of any right or remedy hereunder shall preclude any other or further exercise thereof or the exercise of any other right or remedy.
Section 8.08 Governing Law; Submission to Jurisdiction.
This Agreement shall be governed by and construed in accordance with the internal laws of the State of California, without giving effect to any choice or conflict of law provision or rule (whether of the State of California or any other jurisdiction). Any legal suit, action, proceeding, or dispute arising out of or related to this Agreement, the other Transaction Documents, or the transactions contemplated hereby or thereby may be instituted in the federal courts of the United States of America or the courts of the State of California, in each case located in the county of Orange, and each party hereto irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action, proceeding, or dispute.
Section 8.09Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by email or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
[SIGNATURE PAGE FOLLOWS]
25
IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase Agreement to be executed as of the date first written above.
| /s/ | |
|---|---|
| [***] | |
| SVM MACHINING, INC. | |
| By: | /s/ |
| [***] | |
| Chief Executive Officer | |
| PMGC HOLDINGS INC. | |
| By: | /s/ Graydon Bensler |
| Graydon Bensler | |
| Chief Executive Officer |
26
EXHIBIT A
DEFINITIONS CROSS-REFERENCETABLE
The following terms have the meanings set forth in the location in this Agreement referenced below:
| Term | Section |
|---|---|
| Actions | Section 3.14(a) |
| Affiliate | Section 3.13 |
| Agreement | Preamble |
| Balance Sheet | Section 3.06 |
| Balance Sheet Date | Section 3.06 |
| Buyer | Preamble |
| Buyer Indemnitees | Section 7.01 |
| Closing | Section 2.01 |
| Closing Date | Section 2.01 |
| Code | Section 2.02(f) |
| Company | Recitals |
| Company Intellectual Property | Section 3.11(b) |
| Company IP Registrations | Section 3.11(b) |
| Contracts | Section 3.05 |
| Disclosure Schedules | Section 1.02 |
| Earnout Payment | Section 5.03 |
| Earnout Period | Section 5.03 |
| Encumbrance | Section 1.01 |
| Environmental Laws | Section 3.16(a) |
| ERISA | Section 3.17(a) |
| Financial Statements | Section 3.06 |
| Governmental Authority | Section 2.02(e) |
| Governmental Order | Section 3.05 |
| Hazardous Substances | Section 3.16(a) |
| Indemnified Party | Section 7.03 |
| Indemnifying Party | Section 7.03 |
| Insurance Policies | Section 3.13 |
| Intellectual Property | Section 3.11(a) |
| Law | Section 3.05 |
| Liabilities | Section 3.07 |
| Losses | Section 6.04 |
| Material Contracts | Section 3.09(a) |
| Material Customers | Section 3.12(a) |
| Material Suppliers | Section 3.12(b) |
| Permits | Section 3.15(b) |
| Person | Section 3.03(b) |
| Pre-Closing Tax Period | Section 6.04 |
| Purchase Price | Section 1.02 |
| Real Property | Section 3.10(a) |
| Representatives | Section 5.01 |
| Restricted Business | Section 5.02(a) |
| Restricted Period | Section 5.02(a) |
| Securities Act | Section 4.03 |
| Seller | Preamble |
| Seller Indemnitees | Section 7.02 |
| Shares | Recitals |
| Straddle Period | Section 6.01(a) |
| Taxes | Section 3.19(a) |
| Tax Records | Section 6.05 |
| Tax Returns | Section 3.19(a) |
| Territory | Section 5.02(a) |
| Union | Section 3.18(b) |
27
Exhibit 99.1
PMGC Holdings Inc. Announces the Acquisition of SVM Machining, Inc.
NEWPORT BEACH, Calif. Feb 3, 2026 — PMGC Holdings Inc. (NASDAQ: ELAB) (“PMGC” or the “Company”), a diversified public holding company announced that it has completed the acquisition of SVM Machining, Inc. (“SVM”).
Founded in 1997 by Mark Serpa, SVM (aka Silicon Valley Manufacturing) is a Northern California-based ISO 9001:2015 Certified CNC precision machining and manufacturing services company serving medical, aerospace, biotech & pharmaceutical, semiconductor, and transportation markets.
This transaction represents PMGC’s third California based CNC machine shop acquisition to date, expanding PMGC’s growing footprint in precision manufacturing and furthering its strategy to assemble a multi-site machining platform serving aerospace, defence, medical and industrial industries.
SVM Overview
SVM is a precision manufacturing partner specializing in custom CNC-machined components, delivering high-quality, engineered solutions for customers in the following industries:
| ● | Medical (including surgical robotics components) |
|---|---|
| ● | Aerospace (including satellite/spaceflight, UAV components) |
| --- | --- |
| ● | Biotech & Pharmaceutical (including lab automation and analytical instruments) |
| --- | --- |
| ● | Semiconductor (including wafer handling fixtures and cleanroom-compatible<br>components) |
| --- | --- |
| ● | Transportation (including automotive and specialty vehicle parts) |
| --- | --- |
For the fiscal year ended December 31, 2024, SVM reported revenue of $3,042,701.
Summary of Material Transaction Terms
PMGC acquired 100% of the issued and outstanding shares of SVM from the seller, on a cash-free, debt-free basis.
| ● | Base Purchase Price: $2,250,000 in cash, consisting of $2,000,000 paid at<br>closing and a $250,000 indemnification holdback retained by PMGC at closing. |
|---|---|
| ● | Cash / Working Capital Mechanics: Purchase price includes a defined Final<br>Cash Balance and a net working capital adjustment relative to a “Net Working Capital Target” |
| --- | --- |
| ● | Earnout Consideration: In addition to the base purchase price, the seller<br>may be entitled to receive contingent earnout consideration based on SVM achieving certain defined revenue performance levels during a<br>specified post-closing measurement period. |
| --- | --- |
| ● | Timing of Earnout Payment: Any earned earnout amounts, if applicable, would<br>be payable within 10 days following PMGC’s filing of its Form 10-K for the fiscal year that includes the applicable earnout measurement<br>period. |
| --- | --- |
About SVM Machining Inc.
SVM Machining, Inc. is a California based ISO 9001:2015 Certified precision CNC machining and manufacturing services company that produces high-quality, engineered components for a diverse set of mission-critical industries, including medical technology, aerospace, semiconductor, biotech & pharmaceutical, and transportation. Known for its technical expertise, quality systems, and ability to deliver complex parts with precision tolerances, SVM supports original equipment manufacturers and advanced technology customers with reliable and responsive production capacity.
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. 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, 2024, filed with the SEC on March 28, 2025, 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
Financial Statements of
SILICON VALLEY MANUFACTURING INC.
For the years ended December31, 2024 and December 31, 2023
Independent Auditor’sReport
To Member or Shareholder of SVM Machining Inc.
Opinion
We have audited the accompanying financial statements of SVM Machining Inc., which comprise the statement of financial position as of December 31, 2024 and 2023, and the related statement of operations and member’s equity and cash flows for the years then ended, and the related notes to the financial statements.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of SVM Machining Inc. as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of SVM Machining Inc. and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the FinancialStatements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about SVM Machining Inc to continue as a going concern within one year after the date that the financial statements are available to be issued.
12 Greenway Plaza Suite 1100| Houston, Texas 77046
1
Auditor’s Responsibilitiesfor the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards, we:
| ● | Exercise professional judgment and maintain professional<br>skepticism throughout the audit. |
|---|---|
| ● | Identify and assess the risks of material misstatement of<br>the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures<br>include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. |
| --- | --- |
| ● | Obtain an understanding of internal control relevant to the<br>audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion<br>on the effectiveness of SVM Machining Inc.’s internal control. Accordingly, no such opinion is expressed. |
| --- | --- |
| ● | Evaluate the appropriateness of accounting policies used<br>and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial<br>statements. |
| --- | --- |
| ● | Conclude whether, in our judgment, there are conditions or<br>events, considered in the aggregate, that raise substantial doubt about SVM Machining Inc.’s ability to continue as a going concern<br>for a reasonable period of time. |
| --- | --- |
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audits.
HTL CPAs & Business Advisors LLC
Houston, TX
February 1, 2026
2
SILICON VALLEY MANUFACTURING INC.
Statements of financial position
As of December 31, 2024 and 2023
| As of: | Note | Dec 31,<br><br> 2024 | Dec 31,<br><br> 2023 | ||
|---|---|---|---|---|---|
| ASSETS | |||||
| Current Assets | |||||
| Cash | $ | 238,990 | $ | 230,087 | |
| Accounts Receivable, net | 4 | 184,031 | 84,568 | ||
| Inventory | 5 | 234,611 | 135,646 | ||
| Prepaid Expenses | 21,650 | 21,945 | |||
| Total Current<br> Assets | $ | 679,282 | $ | 472,246 | |
| Property and equipment, net | 6 | 537,270 | 776,045 | ||
| TOTAL ASSETS | $ | 1,216,552 | $ | 1,248,291 | |
| LIABILITIES | |||||
| Current Liabilities | |||||
| Accounts payable | $ | 46,606 | $ | 6,558 | |
| Credit card payable | 20,956 | 15,442 | |||
| Loans current portion | 7 | 473,789 | 272,894 | ||
| Other accrued liabilities - payroll | 57,161 | 55,002 | |||
| Total Current Liabilities | $ | 598,512 | $ | 349,896 | |
| Related party loans payable | 479,299 | 102,465 | |||
| Loans non-current | 7 | - | 462,913 | ||
| TOTAL LIABILITES | $ | 1,077,811 | $ | 915,274 | |
| COMMITMENT AND CONTINGENCY | |||||
| EQUITY | |||||
| Additional<br> Paid-in Capital | 10 | $ | 10,000 | $ | 10,000 |
| Retained Earnings | 10 | 128,741 | 323,017 | ||
| TOTAL EQUITY | $ | 138,741 | $ | 333,017 | |
| TOTAL LIABILITIES AND EQUITY | $ | 1,216,552 | $ | 1,248,291 |
3
SILICON VALLEY MANUFACTURING INC.
Statements of financial position
As of December 31, 2024 and 2023
| Note | Dec 31,<br><br> 2024 | Dec 31,<br><br> 2023 | |||||
|---|---|---|---|---|---|---|---|
| Revenue | 3 | $ | 3,042,701 | $ | 2,702,688 | ||
| Total revenue | 3,042,701 | 2,702,688 | |||||
| Cost<br> of Goods Sold | $ | 1,832,284 | $ | 1,941,897 | |||
| Gross Profit | $ | 1,210,417 | $ | 760,791 | |||
| Operating expenses | |||||||
| Bonus | 47,069 | 62,493 | |||||
| Depreciation | 30,191 | 39,818 | |||||
| Entertainment | 19,833 | 20,798 | |||||
| Finance Costs | 35,809 | 77,883 | |||||
| General & Administration | 163,807 | 167,793 | |||||
| Insurance | 51,726 | 43,793 | |||||
| IT & Software | 43,661 | 57,098 | |||||
| Lease | 25,688 | 14,551 | |||||
| Marketing | 74,643 | 70,800 | |||||
| Supplies | 62,794 | 170,335 | |||||
| Professional Fees | 48,915 | 162,267 | |||||
| Rental | 64,221 | 64,299 | |||||
| Repairs & Maintenance | 11,750 | 22,510 | |||||
| Salaries and Wages | 644,129 | 876,122 | |||||
| Telephone & Communication | 17,768 | 18,535 | |||||
| Travel | 5,568 | 8,591 | |||||
| Utilities | 27,854 | 30,267 | |||||
| Vehicles Repairs & Maintenance | 29,267 | 16,144 | |||||
| Total operating expenses | $ | 1,404,693 | $ | 1,924,097 | |||
| Operating income (loss) | (194,276 | ) | (1,163,306 | ) | |||
| Other Income and Expenses | 9 | - | 484,045 | ||||
| Total Net Income (Loss) | $ | (194,276 | ) | $ | (679,261 | ) |
4
SILICON VALLEY MANUFACTURING INC.
Statements of changes in equity
Years ended December 31, 2024 and 2023
| Additional<br><br> Paid-in<br><br> Capital | Retained<br><br> Earnings | Total <br> Equity | ||||||
|---|---|---|---|---|---|---|---|---|
| Balance as at January 1, 2023 | $ | 10,000 | $ | 1,002,278 | $ | 1,012,278 | ||
| Total Net Income (Loss) | - | (679,261 | ) | (679,261 | ) | |||
| Balance as at December 31, 2023 | $ | 10,000 | $ | 323,017 | $ | 333,017 | ||
| Balance as at January 1, 2024 | $ | 10,000 | $ | 323,017 | $ | 333,017 | ||
| Total Net Income (Loss) | - | (194,276 | ) | (194,276 | ) | |||
| Balance as at December 31, 2024 | $ | 10,000 | $ | 128,741 | $ | 138,741 |
5
SILICON VALLEY MANUFACTURING INC.
Statements of operations
Years ended December 31, 2024 and 2023
| Dec 31,<br> 2024 | Dec 31,<br> 2023 | |||||
|---|---|---|---|---|---|---|
| Operating activities | ||||||
| Net Income: | $ | (194,276 | ) | $ | (679,261 | ) |
| Adjustments to reconcile net income to net cash (used) provided by operating activities: | ||||||
| Depreciation, amortization and impairment | 30,191 | 16,057 | ||||
| Changes in operating assets and liabilities: | ||||||
| Change in accounts receivable | (99,735 | ) | 935,367 | |||
| Change in prepaid expenses | 295 | 29,128 | ||||
| Change in inventory | (98,965 | ) | (135,646 | ) | ||
| Change in accounts payable and accrued liabilities | 42,207 | (21,810 | ) | |||
| Cash flows (used) provided by operating activities | $ | (320,283 | ) | $ | 143,835 | |
| Investing activities | ||||||
| Proceeds<br> from sale of equipment | - | $ | 105,745 | |||
| Cash flows provided by investing activities | - | $ | 105,745 | |||
| Financing activities | ||||||
| Net change in credit card borrowings | $ | 5,514 | $ | (3,685 | ) | |
| Capital contributions from owners | 585,691 | 106,017 | ||||
| Repayment of loan principle | (262,018 | ) | (225,126 | ) | ||
| Cash flows (used) provided by financing activities | $ | 329,187 | $ | (122,794 | ) | |
| Increase(decrease) in cash | $ | 8,903 | $ | 126,786 | ||
| Cash, beginning of period | 230,087 | 103,301 | ||||
| Cash, ending of period | $ | 238,990 | $ | 230,087 |
6
SILICON VALLEY MANUFACTURING INC.
Notes to the financial statements
Notes to the financial statements
For the Years ended December 31, 2024and 2023
NOTE 1: Nature of Operations
Silicon Valley Manufacturing Inc. (the “Company”) is a California S-Corporation, formed on December 18, 2000, and incorporated in the State of California. The Company operates as a precision CNC machining and manufacturing job shop, providing custom machining, prototyping, and short-run and repeat production of components to customers primarily in the aerospace, technology, and pharmaceutical industries.
The Company’s principal place of business is located at 6520 Central Avenue, Newark, California 94560. The Company is registered with local authorities and operates under the business name Silicon Valley Mfg & Machining.
The Company derives substantially all of its revenue from machining services performed in accordance with customer purchase orders. The Company’s operations utilize specialized manufacturing equipment, including CNC machinery and related tooling, as well as inspection and quality control equipment.
NOTE 2: Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).
Going Concern
Management has evaluated the Company’s ability to continue as a going concern in accordance with ASC 205-40. Management believes the Company will continue as a going concern for a period of at least one year after the date the financial statements are available to be issued.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures in the accompanying notes. The estimates used for, but not limited to, the collectability of accounts receivable, inventory valuation, and fair value of long-lived assets. We have assessed the impact and are not aware of any specific events or circumstances that required an update to our estimates and assumptions or materially affected the carrying value of our assets or liabilities as of the date of issuance of this Annual Report. These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.
Concentration of Credit Risk
Cash and accounts receivable are the only financial instruments that are potentially subject to credit risk. The Company places its cash in credit-worthy financial institutions. Accounts receivable credit risk relate to timing differences between receiving proceeds and sales transactions. As of report date majority of the receivables have been collected.
7
SILICON VALLEY MANUFACTURING INC.
Notes to the financial statements
Risks and Uncertainties
The Company is subject to risks from, among other things, competition associated with the industry in general, regulatory environment, risks associated with financing, and rapidly changing customer requirements.
Cash
For purposes of the statements of cash flows, the Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Cash is carried at cost, which approximates fair value.
Accounts Receivable
Accounts receivable are stated at the amount management expects to collect less allowance of credit losses. Accounts receivable are generally unsecured and arise from sales to customers in the ordinary course of business. The Company does not charge interest on past due accounts.
Allowance for Credit Losses
The Company records an allowance for credit losses in accordance with ASC 326, Financial Instruments Credit Losses. The allowance is based on management’s estimate of expected credit losses, considering historical experience, current conditions, and reasonable and supportable forecasts. Accounts are written off against the allowance when they are determined to be uncollectible. Subsequent recoveries, if any, are credited to the allowance.
Inventory
Inventory consists of raw materials, work-in-process, and finished goods and is stated at the lower of cost or net realizable value. Cost is determined using the average cost method. Work-in-process and finished goods include direct materials, direct labor, and applicable manufacturing overhead. The Company periodically reviews inventory for excess and obsolete items and records a reserve when necessary.
Property and Equipment
Property and equipment are stated at cost, less depreciation. Expenditure for repairs and maintenance are expensed as incurred. Additions and improvements that increase the useful life or productive capacity of an asset are capitalized. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Estimated useful lives are generally as follows:
| ● | Machinery and equipment: 7 years |
|---|---|
| ● | Computers: 3 years |
| --- | --- |
| ● | Vehicles: 5 years |
| --- | --- |
When assets are sold or retired, the related cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in operations.
8
SILICON VALLEY MANUFACTURING INC.
Notes to the financial statements
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. The Company’s revenue is derived primarily from CNC machining and manufacturing services performed in accordance with customer purchase orders. The Company acts as the principal in these arrangements, as it controls the manufacturing process and the finished goods prior to transfer to the customer and is primarily responsible for fulfilling the promise to provide the specified goods or services.
Revenue is recognized at the point in time when control of the finished goods transfers to the customer, which generally occurs upon shipment or delivery in accordance with the applicable shipping terms and customer acceptance provisions.
The Company’s contracts generally include a single performance obligation to manufacture and deliver products and/or provide machining services. The transaction price is typically fixed based on agreed pricing in customer purchase orders. The Company may receive deposits or progress payments for certain orders; such amounts are recorded as contract liabilities until the related performance obligation is satisfied.
Cost of Good Sold
Cost of good sold includes direct materials, direct labor, subcontracted services, and applicable manufacturing overhead, including depreciation of manufacturing equipment and facility-related costs allocated to production.
Shipping and Handling
Shipping and handling costs billed to customers are included in revenue. Shipping and handling costs incurred by the Company are included in cost of revenue.
Income Taxes
The Company has elected to be treated as an S-Corporation for federal and state income tax purposes. Accordingly, the Company generally does not record a provision for federal income taxes, as taxable income or loss is passed through to the shareholders. The Company is subject to certain state-level taxes, including California franchise taxes, which are recognized as incurred.
The Company accounts for uncertainty in income taxes in accordance with ASC 740, Income Taxes, which prescribes a recognition threshold and measurement attribute for the financial statement recognition of uncertain tax positions. Management believes there are no uncertain tax positions that would require recognition or disclosure in the financial statements.
Recently Issued Accounting Standards
The Company assesses the adoption impacts of recently issued, but not yet effective, accounting standards by the Financial Accounting Standards Board on the Company’s financial statements.
There are no recently issued accounting standards which may have effect on the Company’s financial statements.
9
SILICON VALLEY MANUFACTURING INC.
Notes to the financial statements
NOTE 3: Revenue and Contract Balances
Revenue Stream
The Company generates revenue from a single operating segment and a single revenue stream, consisting of the manufacture and sale of precision machined parts and related machining services performed in accordance with customer purchase orders and approved quotations.
Contracts with Customers
Customer purchase orders generally represent a contract when issued by the customer and accepted by the Company. The Company’s contracts typically require the manufacture and delivery of machined parts that meet customer drawings, specifications, and quality requirements. Activities such as setup, tooling, programming, inspection, certification, and shipping and handling are integral to the delivery of finished products and are not separately priced.
The transaction price is generally fixed based on per-part or per-job pricing specified in customer purchase orders and approved quotations. The Company typically invoices customers upon delivery or customer pickup, at which time payment becomes unconditional.
The Company’s contracts do not generally include variable consideration such as rebates, retrospective price adjustments, or volume-based incentives. Payment terms are typically one year or less, and the Company applies the practical expedient related to significant financing components.
Contract Balances
Contract balances consist of accounts receivable, contract assets, and contract liabilities. Accounts receivable represent amounts billed to customers for which the Company has an unconditional right to consideration.
The Company invoices customers upon delivery or customer pickup and therefore does not generate contract assets. The Company does not receive customer deposits or advance payments in the ordinary course of business and therefore does not generate contract liabilities. Accordingly, the Company had no contract assets or contract liabilities as of December 31, 2024 or December 31, 2023.
Practical Expedients
The Company’s performance obligations are generally satisfied within a short period of time. Accordingly, the Company applies the practical expedient under ASC 606 and does not disclose the value of unsatisfied performance obligations, if any, as the original expected duration of its contracts is one year or less.
10
SILICON VALLEY MANUFACTURING INC.
Notes to the financial statements
NOTE 4: Accounts Receivable and Allowance for Credit Losses
Accounts Receivable
Accounts receivable represents amounts due from customers for machining services and manufactured components delivered in the ordinary course of business. Accounts receivable are generally unsecured and are recorded at net realizable value.
Accounts receivable consisted of the following at December 31:
| 2024 | 2023 | |||||
|---|---|---|---|---|---|---|
| Accounts receivable, gross | 184,595 | $ | 84,860 | |||
| Less: allowance for credit losses | (564 | ) | (292 | ) | ||
| Accounts receivable, net | 184,031 | $ | 84,568 |
Allowance for Credit Losses
The Company records an allowance for credit losses in accordance with ASC 326, Financial Instruments - Credit Losses. The allowance is based on management’s estimate of expected credit losses, considering historical experience, current conditions, and reasonable and supportable forecasts. The Company develops its estimate of expected credit losses using information about historical loss experience, current conditions, and reasonable and supportable forecasts.
Accounts are written off against the allowance when they are determined to be uncollectible. Subsequent recoveries, if any, are credited to the allowance. The allowance for credit losses was $564 and $292 as of December 31, 2024 and 2023, respectively.
NOTE 5: Inventory
Inventory is stated at the lower of cost or net realizable value. Cost is determined using the average cost method.
Inventory consisted of the following at December 31:
| 2024 | 2023 | |||
|---|---|---|---|---|
| Work in process | $ | 234,611 | $ | 135,646 |
| Inventory, net | $ | 234,611 | $ | 135,646 |
Work-in-Process Valuation
Work-in-process inventory is recorded based on the stage of completion of jobs in process as of year end and includes applicable direct and indirect manufacturing costs.
NOTE 6: Property and Equipment
Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Expenditures for repairs and maintenance are expensed as incurred. Additions and improvements that increase the useful life or productive capacity of an asset are capitalized. When property and equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in operations.
11
SILICON VALLEY MANUFACTURING INC.
Notes to the financial statements
Property and equipment consisted of the following at December 31, 2024:
| Cost | Accumulated<br> <br>Depreciation | Net | |||||
|---|---|---|---|---|---|---|---|
| Machinery and equipment | $ | 1,523,348 | $ | (1,136,318 | ) | $ | 387,030 |
| Computers | 8,067 | (7,891 | ) | 176 | |||
| Vehicles | 214,670 | (64,606 | ) | 150,064 | |||
| Totalproperty and equipment | $ | 1,746,085 | $ | (1,208,815 | ) | $ | 537,270 |
Property and equipment consisted of the following at December 31, 2023:
| Cost | Accumulated<br> <br>Depreciation | Net | |||||
|---|---|---|---|---|---|---|---|
| Machinery and equipment | $ | 1,523,348 | $ | (937,343 | ) | $ | 586,005 |
| Computers | 8,067 | (7,534 | ) | 533 | |||
| Vehicles | 214,670 | (25,163 | ) | 189,507 | |||
| Totalproperty and equipment | $ | 1,746,085 | $ | (970,040 | ) | $ | 776,045 |
During the years ended December 31, 2024 and 2023, we recorded depreciation expense of $238,775 and $219,807, respectively.
NOTE 7: Loans
The Company maintains various financing arrangements primarily related to the purchase of manufacturing machinery, equipment, and vehicles used in operations. These arrangements consist of term loans with commercial lenders and U.S. Small Business Administration (“SBA”) guaranteed loans. Substantially all such borrowings are secured by the related financed assets and, in certain cases, by substantially all business assets.
Loans outstanding balance consisted of the following as of December 31:
| 2024 | 2023 | |||
|---|---|---|---|---|
| Current portion of the long-term loan | $ | 473,789 | $ | 272,894 |
| Long-term portion of loan | - | 462,913 | ||
| Total notes payable and term debt | $ | 473,789 | $ | 735,807 |
12
SILICON VALLEY MANUFACTURING INC.
Notes to the financial statements
Machinery, Equipment, and Vehicle Financing
The Company’s term loan consisted of multiple loans obtained to finance CNC machining centers, lathes, related manufacturing equipment, and vehicles used in operations. These loans include SBA 7(a) guaranteed facilities with Chase Bank and equipment financing arrangements with U.S. Bank and Mitsubishi HC.
The loans require monthly principal and interest payments and bare interest at fixed rates based on the prime rate plus an applicable margin. Vehicle loans were included within the above balances and were secured by the related vehicles. Interest expense related to these borrowings is included in finance costs in the accompanying statements of operations.
Interest Expense
Interest expense recognized on loans was approximately as follows:
| 2024 | 2023 | |||
|---|---|---|---|---|
| Machine and equipment loans | $ | 21,546 | $ | 34,765 |
| Vehicle Loans | 6,729 | 1,440 | ||
| Total interest expense on debt | $ | 28,275 | $ | 36,205 |
Subsequent Repayment of Debt and Current Classification
As of December 31, 2024, the Company classified the entire outstanding term debt balance as current based on management’s expectation and intent to repay the borrowings within the subsequent twelve- month period. Subsequent to year end, the Company repaid all outstanding machinery and equipment loan balances in March 2025 and all vehicle loan balances in December 2025.
NOTE 8: Related Party Transactions
The Company’s owners also serve as members of management. Related parties include the Company’s owners, management, and entities controlled by such individuals. The Company may enter into transactions with related parties in the ordinary course of business, and management believes that all such transactions are conducted on terms consistent with those that would be obtained in arm’s-length transactions with unaffiliated third parties.
The Company leases its operating facility from an entity that is controlled by the Company’s owners and under month-to-month lease. Rent expense under this arrangement is based on market rates, as determined by management.
13
SILICON VALLEY MANUFACTURING INC.
Notes to the financial statements
During the years ended December 31, 2024 and 2023, the Company had the following related party balances:
| 2024 | 2023 | |||
|---|---|---|---|---|
| Mark loan to SVM | $ | 240,963 | 102,465 | |
| Mark loan to SVM | 238,336 | - | ||
| $ | 479,299 | 102,465 |
The loan receivable represents amounts advanced by Mark (the Company’s owner) to the Company in the ordinary course of business. The loan is unsecured, non-interest bearing, and is included in the accompanying balance sheets.
For the years ended December 31, 2024 and 2023, the Company had the following related party transactions:
| 2024 | 2023 | |||
|---|---|---|---|---|
| Rent expense | $ | 64,221 | $ | 64,229 |
| Rent capitalized to inventory (overhead) | 235,779 | 235,771 | ||
| Owner compensation expense | 353,219 | 574,831 | ||
| Owner bonus expense | 47,069 | 62,493 |
NOTE 9: Other Income and Expenses
Other income and expenses primarily includes (i) gains and losses on the disposal of machinery and equipment and (ii) amounts recognized from Employee Retention Credit (“ERC”) refunds. During the year ended December 31, 2023, the Company recognized a gain of $56,254 on the sale of machinery and equipment (proceeds less carrying value) and recognized $427,791 of ERC refunds related to payroll tax credits claimed for prior periods. These amounts are included in other income and expenses in the accompanying statements of operations.
14
SILICON VALLEY MANUFACTURING INC.
Notes to the financial statements
NOTE 10: Equity
The Company is authorized to issue common shares with no par value. As of December 31, 2024 and 2023, there were no changes to the Company’s authorized share structure and no shares issued and outstanding.
Additional Paid-in Capital
Additional paid-in capital represents amounts contributed by the Company’s shareholders in excess of stated capital. Additional paid-in capital totaled $10,000 as of both December 31, 2024 and December 31, 2023.
Retained Earnings
Retained earnings represent the accumulated earnings and losses of the Company since inception, net of distributions to shareholders. As of December 31, 2024, retained earnings were $128,741, compared to $323,017 as of December 31, 2023. The decrease in retained earnings during the year ended December 31, 2024 was primarily attributable to a net loss of $194,276 for the year.
NOTE 11: Subsequent Events
The Company has evaluated subsequent events through February 1, 2026, which is the date the financial statements were available to be issued, as required by ASC 855, Subsequent Events.
Subsequent to year end, the Company initiated a process to pursue a potential sale of the Company (or substantially all of its assets). As of February, 1, 2026, no definitive agreement had been executed and the sale process remained ongoing. Accordingly, no amounts have been recognized in the accompanying financial statements related to this matter.
Additionally, subsequent to year end, the Company repaid all outstanding loan balances by December 2025. Accordingly, no amounts related to this repayment have been recognized in the accompanying financial statements.
Other than the matters described above, the Company did not identify any subsequent events that require recognition in the financial statements or disclosure in the notes.
15
Financial Statements of
SILICON VALLEY MANUFACTURINGINC.
For the three and ninemonths ended September 30, 2025 and 2024 (Unaudited)
SILICON VALLEY MANUFACTURING INC.
Statements of financial position (unaudited)
| As of: | Note | Sept 30,<br><br> 2025 | Dec 31,<br><br> 2024 | ||||
|---|---|---|---|---|---|---|---|
| ASSETS | |||||||
| Current Assets | |||||||
| Cash | $ | 15,993 | $ | 238,990 | |||
| Accounts Receivable, net | 4 | 176,683 | 184,031 | ||||
| Inventory | 5 | 43,890 | 234,611 | ||||
| Prepaid Expenses | - | 21,650 | |||||
| Total Current Assets | $ | 236,566 | $ | 679,282 | |||
| Property and equipment, net | 6 | 358,663 | 537,270 | ||||
| TOTAL ASSETS | $ | 595,229 | $ | 1,216,552 | |||
| LIABILITIES | |||||||
| Current Liabilities | |||||||
| Accounts<br> payable | $ | 73,716 | $ | 46,606 | |||
| Credit card payable | 15,610 | 20,956 | |||||
| Loans current portion | 7 | 103,853 | 473,789 | ||||
| Other accrued liabilities - payroll | 282 | 57,161 | |||||
| Total Current Liabilities | $ | 193,461 | $ | 598,512 | |||
| Related party loans payable | 818,782 | 479,299 | |||||
| TOTAL LIABILITES | $ | 1,012,243 | $ | 1,077,811 | |||
| COMMITMENT AND CONTINGENCY | |||||||
| EQUITY | |||||||
| Additional<br> Paid-in Capital | 9 | $ | 10,000 | $ | 10,000 | ||
| Retained Earnings | 9 | (427,014 | ) | 128,741 | |||
| TOTAL EQUITY | $ | (417,014 | ) | $ | 138,741 | ||
| TOTAL LIABILITIES AND EQUITY | $ | 595,229 | $ | 1,216,552 |
1
SILICON VALLEY MANUFACTURING INC.
Statements of operations (unaudited)
| Three Months Ended <br> September 30, | Nine Months Ended <br> September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |||||||||
| Revenue | $ | 487,599 | $ | 705,999 | $ | 1,547,933 | $ | 2,238,635 | ||||
| Total revenue | 487,599 | 705,999 | 1,547,933 | 2,205,957 | ||||||||
| Cost of Goods Sold | 539,082 | 568,107 | 1,296,713 | 1,461,341 | ||||||||
| Gross Profit | (51,483 | ) | 137,892 | 251,220 | 777,294 | |||||||
| Operating expenses | ||||||||||||
| Bonus | - | 47,069 | - | 47,069 | ||||||||
| Depreciation | 7,906 | 7,853 | 20,705 | 21,505 | ||||||||
| Entertainment | 3,559 | - | 13,058 | 18,900 | ||||||||
| Finance Costs | 1,530 | 3,013 | 8,314 | 30,625 | ||||||||
| General & Administration | 42,136 | 39,493 | 72,822 | 58,024 | ||||||||
| Insurance | 17,579 | 14,161 | 52,127 | 30,970 | ||||||||
| IT & Software | 8,642 | 14,105 | 27,835 | 28,292 | ||||||||
| Lease | - | 3,358 | - | 10,074 | ||||||||
| Marketing | 17,967 | 14,182 | 45,795 | 45,682 | ||||||||
| Supplies | - | 10,544 | - | 62,794 | ||||||||
| Professional Fees | 2,828 | 8,250 | 43,936 | 42,627 | ||||||||
| Rental | 12,075 | 11,532 | 42,364 | 48,193 | ||||||||
| Repairs & Maintenance | 1,818 | 3,729 | 8,092 | 5,284 | ||||||||
| Salaries and Wages | 142,562 | 168,512 | 410,408 | 512,775 | ||||||||
| Telephone & Communication | 3,703 | 2,861 | 9,766 | 10,690 | ||||||||
| Travel | 22 | 138 | 3,936 | 4,563 | ||||||||
| Utilities | 11,694 | 12,446 | 20,653 | 18,440 | ||||||||
| Vehicles Repairs & Maintenance | 5,922 | 7,225 | 27,164 | 24,865 | ||||||||
| Total operating expenses | 279,943 | 368,471 | 806,975 | 1,021,372 | ||||||||
| Operating income (loss) | (331,426 | ) | (230,579 | ) | (555,755 | ) | (244,078 | ) | ||||
| Other Income and Expenses | - | - | - | - | ||||||||
| Total Net Income (Loss) | $ | (331,426 | ) | $ | (230,579 | ) | $ | (555,755 | ) | $ | (244,078 | ) |
2
SILICON VALLEY MANUFACTURING INC.
Statements of changes in equity (unaudited)
| Three Months Ended <br><br>September 30, | Nine Months Ended <br><br>September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |||||||||
| Additional Paid-in Capital | 10,000 | 10,000 | 10,000 | 10,000 | ||||||||
| Retained Earnings | ||||||||||||
| Beginning Balance (07/01/2025,07/01/2024,01/01/2025,01/01/2024) | (95,588 | ) | 309,518 | 128,741 | 323,017 | |||||||
| Net Income (loss) | (331,426 | ) | (230,579 | ) | (555,755 | ) | (244,078 | ) | ||||
| Ending Balance | (427,014 | ) | 78,939 | (427,014 | ) | 78,939 | ||||||
| Total Equity | (417,014 | ) | 88,939 | (417,014 | ) | 88,939 |
3
SILICON VALLEY MANUFACTURING INC.
Statements of cash flow (unaudited)
| Nine Months Ended <br><br>September 30, | ||||||
|---|---|---|---|---|---|---|
| 2025 | 2024 | |||||
| Operating activities | ||||||
| Net Income: | $ | (555,755 | ) | $ | (244,078 | ) |
| Adjustments to reconcile net income to net cash (used) provided by operating activities: | ||||||
| Depreciation, amortization and impairment | 20,705 | 21,505 | ||||
| Changes in operating assets and liabilities: | ||||||
| Change in accounts receivable | (1,768 | ) | (72,347 | ) | ||
| Change in prepaid expenses | 21,651 | 523 | ||||
| Change in inventory | 190,721 | (62,596 | ) | |||
| Change in accounts payable and accrued liabilities | 27,110 | 36,475 | ||||
| Cash flows (used) provided by operating activities | $ | (297,336 | ) | $ | (320,518 | ) |
| Financing activities | ||||||
| Net change in credit card borrowings | (5,346 | ) | 6,732 | |||
| Capital contributions from owners | 519,003 | 391,119 | ||||
| Repayment of loan principle | (439,318 | ) | (197,103 | ) | ||
| Cash flows (used) provided by financing activities | 74,339 | 200,748 | ||||
| Increase(decrease) in cash | (222,997 | ) | (119,770 | ) | ||
| Cash, beginning of period | 238,990 | 230,087 | ||||
| Cash, ending of period | 15,993 | 110,317 |
4
SILICON VALLEY MANUFACTURING INC.
Notes to the financial statements (unaudited)
Notes to the financial statements(unaudited)
As of September 30, 2025and December 31, 2024, and for the three and nine months ended September 30, 2025 and 2024 (Unaudited)
NOTE 1: Nature of Operations
Silicon Valley Manufacturing Inc. (the “Company”) is a California S-Corporation, formed on December 18, 2000, and incorporated in the State of California. The Company operates as a precision CNC machining and manufacturing job shop, providing custom machining, prototyping, and short-run and repeat production of components to customers primarily in the aerospace, technology, and pharmaceutical industries.
The Company’s principal place of business is located at 6520 Central Avenue, Newark, California 94560. The Company is registered with local authorities and operates under the business name Silicon Valley Mfg & Machining.
The Company derives substantially all of its revenue from machining services performed in accordance with customer purchase orders. The Company’s operations utilize specialized manufacturing equipment, including CNC machinery and related tooling, as well as inspection and quality control equipment.
NOTE 2: Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information.
In management’s opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the Company’s financial position as of September 30, 2025, and its results of operations, and changes in equity for the three and nine months ended September 30, 2025 and 2024 and cash flows for the nine months ended September 30, 2025 and 2024, have been included. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year.
Going Concern
Management has evaluated the Company’s ability to continue as a going concern in accordance with ASC 205-40. Management believes the Company will continue as a going concern for a period of at least one year after the date the financial statements are available to be issued.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs, and expenses and related disclosures. Significant estimates include, but are not limited to, the collectability of accounts receivable, inventory valuation, and the fair value of long-lived assets. Actual results could differ materially from those estimates Management has assessed the impact of current conditions and is not aware of any events or circumstances that would require material changes to its estimates or assumptions as of September 30, 2025. Actual results could differ from those estimates.
5
SILICON VALLEY MANUFACTURING INC.
Notes to the financial statements (unaudited)
Concentration of CreditRisk
Cash and accounts receivable are the only financial instruments that are potentially subject to credit risk. The Company places its cash in credit-worthy financial institutions. Accounts receivable credit risk relate to timing differences between receiving proceeds and sales transactions.. Subsequent to September 30, 2025, substantially all accounts receivable had been collected.
Risks and Uncertainties
The Company is subject to risks from, among other things, competition associated with the industry in general, regulatory environment, risks associated with financing, and rapidly changing customer requirements.
Cash
For purposes of the statements of cash flows, the Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Cash is carried at cost, which approximates fair value.
Accounts Receivable
Accounts receivable are stated at the amount management expects to collect less allowance of recredit losses. Accounts receivable are generally unsecured and arise from sales to customers in the ordinary course of business. The Company does not charge interest on past due accounts.
Allowance for Credit Losses
The Company records an allowance for credit losses in accordance with ASC 326, Financial Instruments Credit Losses. The allowance is based on management’s estimate of expected credit losses, considering historical experience, current conditions, and reasonable and supportable forecasts. Accounts are written off against the allowance when they are determined to be uncollectible. Subsequent recoveries, if any, are credited to the allowance.
Inventory
Inventory consists of raw materials, work-in-process, and finished goods and is stated at the lower of cost or net realizable value. Cost is determined using the average cost method. Work-in-process and finished goods include direct materials, direct labor, and applicable manufacturing overhead. The Company periodically reviews inventory for excess and obsolete items and records a reserve when necessary.
Property and Equipment
Property and equipment are stated at cost, less depreciation. Expenditure for repairs and maintenance are expensed as incurred. Additions and improvements that increase the useful life or productive capacity of an asset are capitalized. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Estimated useful lives are generally as follows:
| ● | Machinery<br> and equipment: 7 years |
|---|---|
| ● | Computers:<br> 3 years |
| --- | --- |
| ● | Vehicles:<br> 5 years |
| --- | --- |
6
SILICON VALLEY MANUFACTURING INC.
Notes to the financial statements (unaudited)
When assets are sold or retired, the related cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in operations.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. The Company’s revenue is derived primarily from CNC machining and manufacturing services performed in accordance with customer purchase orders. The Company acts as the principal in these arrangements, as it controls the manufacturing process and the finished goods prior to transfer to the customer and is primarily responsible for fulfilling the promise to provide the specified goods or services.
Revenue is recognized at the point in time when control of the finished goods transfers to the customer, which generally occurs upon shipment or delivery in accordance with the applicable shipping terms and customer acceptance provisions.
The Company’s contracts generally include a single performance obligation to manufacture and deliver products and/or provide machining services. The transaction price is typically fixed based on agreed pricing in customer purchase orders. The Company may receive deposits or progress payments for certain orders; such amounts are recorded as contract liabilities until the related performance obligation is satisfied.
Cost of Good Sold
Cost of good sold includes direct materials, direct labor, subcontracted services, and applicable manufacturing overhead, including depreciation of manufacturing equipment and facility-related costs allocated to production.
Shipping and Handling
Shipping and handling costs billed to customers are included in revenue. Shipping and handling costs incurred by the Company are included in cost of revenue.
Income Taxes
The Company has elected to be treated as an S-Corporation for federal and state income tax purposes. Accordingly, the Company generally does not record a provision for federal income taxes, as taxable income or loss is passed through to the shareholders. The Company is subject to certain state-level taxes, including California franchise taxes, which are recognized as incurred.
The Company accounts for uncertainty in income taxes in accordance with ASC 740, Income Taxes, which prescribes a recognition threshold and measurement attribute for the financial statement recognition of uncertain tax positions. Management believes there are no uncertain tax positions that would require recognition or disclosure in the financial statements.
7
SILICON VALLEY MANUFACTURING INC.
Notes to the financial statements (unaudited)
Recently Issued Accounting Standards
The Company assesses the adoption impacts of recently issued, but not yet effective, accounting standards by the Financial Accounting Standards Board on the Company’s financial statements.
There are no recently issued accounting standards which may have effect on the Company’s financial statements.
NOTE 3: Revenue and Contract Balances
The Company generates revenue from a single operating segment and a single revenue stream, consisting of the manufacture and sale of precision machined parts and related machining services performed in accordance with customer purchase orders and approved quotations.
The Company invoices customers upon delivery or pickup and therefore does not generate contract assets. The Company does not receive advance payments in the ordinary course of business and did not have contract assets or contract liabilities as of September 30, 2025 or December 31, 2024.
NOTE 4: Accounts Receivable and Allowance for Credit Losses
Accounts Receivable
Accounts receivable represents amounts due from customers for machining services and manufactured components delivered in the ordinary course of business. Accounts receivable are generally unsecured and are recorded at net realizable value.
Accounts receivable consisted of the following:
| September 30,<br> <br>2025 | December 31,<br> <br>2024 | |||||
|---|---|---|---|---|---|---|
| Accounts receivable, gross | 177,312 | 184,595 | ||||
| Less: allowance for credit losses | (629 | ) | (564 | ) | ||
| Accounts receivable, net | 176,683 | 184,031 |
Allowance for Credit Losses
The Company records an allowance for credit losses in accordance with ASC 326, Financial Instruments - Credit Losses. The allowance is based on management’s estimate of expected credit losses, considering historical experience, current conditions, and reasonable and supportable forecasts. The Company develops its estimate of expected credit losses using information about historical loss experience, current conditions, and reasonable and supportable forecasts.
Accounts are written off against the allowance when they are determined to be uncollectible. Subsequent recoveries, if any, are credited to the allowance. The allowance for credit losses was $629 and $564 as of September 30, 2025 and December 31, 2024, respectively.
8
SILICON VALLEY MANUFACTURING INC.
Notes to the financial statements (unaudited)
NOTE 5: Inventory
Inventory is stated at the lower of cost or net realizable value. Cost is determined using the average cost method.
Inventory consisted of the following:
| September 30,<br> <br>2025 | December 31,<br> <br>2024 | |||
|---|---|---|---|---|
| Work in process | $ | 43,890 | $ | 234,611 |
| Inventory, net | $ | 43,890 | $ | 234,611 |
The Company periodically reviews inventory for excess and obsolete items and records a reserve when necessary based on management’s estimate of net realizable value.
Work-in-Process Valuation
Work-in-process inventory is recorded based on the stage of completion of jobs in process as of the reporting date and includes applicable direct and indirect manufacturing costs.
NOTE 6: Property and Equipment
Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Expenditures for repairs and maintenance are expensed as incurred. Additions and improvements that increase the useful life or productive capacity of an asset are capitalized. When property and equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in operations.
Property and equipment consisted of the following at September 30, 2025:
| **** | Cost | Accumulated Depreciation | **** | Net | |||
|---|---|---|---|---|---|---|---|
| Machinery and equipment | $ | 1,523,348 | $ | (1,285,292 | ) | $ | 238,056 |
| Computers | 8,067 | (8,023 | ) | 44 | |||
| Vehicles | 214,670 | (94,107 | ) | 120,563 | |||
| Total property and equipment | $ | 1,746,085 | $ | (1,387,422 | ) | $ | 358,663 |
9
SILICON VALLEY MANUFACTURING INC.
Notes to the financial statements (unaudited)
Property and equipment consisted of the following at December 31, 2024:
| **** | Cost | Accumulated Depreciation | **** | Net | |||
|---|---|---|---|---|---|---|---|
| Machinery and equipment | $ | 1,523,348 | $ | (1,136,318 | ) | $ | 387,030 |
| Computers | 8,067 | (7,891 | ) | 176 | |||
| Vehicles | 214,670 | (64,606 | ) | 150,064 | |||
| Totalproperty and equipment | $ | 1,746,085 | $ | (1,208,815 | ) | $ | 537,270 |
During the nine month period ended September 30, 2025 and September 30, 2024, we incurred depreciation amounts of $178,607 and $179,081, respectively. Of these amounts, depreciation expense recognized in the statements of operations was $20,705 for 2025 and $21,505 for 2024, with the remaining depreciation capitalized to overheads.
During the three month period ended September 30, 2025 and September 30, 2024, we incurred depreciation amounts of $59,694 and $59,536, respectively. Of these amounts, depreciation expense recognized in the statements of operations was $7,906 for 2025 and $7,853 for 2024, with the remaining depreciation capitalized to overheads.
NOTE 7: Loans
The Company maintains various financing arrangements primarily related to the purchase of manufacturing machinery, equipment, and vehicles used in operations. These arrangements consist of term loans with commercial lenders and U.S. Small Business Administration (“SBA”) guaranteed loans. Substantially all such borrowings are secured by the related financed assets and, in certain cases, by substantially all business assets.
Loans outstanding balance was as at:
| September 30,<br> <br>2025 | December 31,<br> <br>2024 | |||
|---|---|---|---|---|
| Current portion of the long-term loan | $ | 103,853 | $ | 473,789 |
| Long-term portion of loan | - | - | ||
| Total notes payable and term debt | $ | 103,853 | $ | 473,789 |
Machinery, Equipment, and Vehicle Financing
Prior to repayment, the Company’s term debt consisted of multiple loans obtained to finance CNC machining centers, lathes, related manufacturing equipment, and vehicles used in operations. These arrangements included SBA 7(a)–guaranteed facilities with Chase Bank and equipment financing arrangements with U.S. Bank and Mitsubishi HC.
The loans required monthly principal and interest payments and bore interest at fixed or variable rates based on the prime rate plus an applicable margin. Vehicle loans were secured by the related vehicles. Interest expense related to these borrowings was included in interest expense in the accompanying statements of operations.
10
SILICON VALLEY MANUFACTURING INC.
Notes to the financial statements (unaudited)
Interest Expense
Interest expense recognized on loans was approximately as follows:
| **** | Three Months Ended Sept 30, 2025 | Three Months Ended Sep 30, 2024 | Nine Months Ended Sept 30, 2025 | Nine Months Ended Sep 30, 2024 | ||||
|---|---|---|---|---|---|---|---|---|
| Machine and equipment loans | - | $ | 3,243 | $ | 3,792 | $ | 21,703 | |
| Vehicle Loans | $ | 1,279 | $ | 1,593 | 4,136 | 5,169 | ||
| Total interest expense on debt | $ | 1,279 | $ | 4,836 | $ | 7,928 | $ | 26,872 |
Repayment of Debt
During the nine months ended September 30, 2025, the Company repaid all outstanding machinery loan balances in March 2025. Subsequent to September 30, 2025, the Company repaid all outstanding vehicle loan balances in December 2025. As a result, the Company had no outstanding machinery loan balances subsequent to September 30, 2025.
NOTE 8: Related Party Transactions
The Company’s owners also serve as members of management. Related parties include the Company’s owners, management, and entities controlled by such individuals. The Company may enter into transactions with related parties in the ordinary course of business, and management believes that all such transactions are conducted on terms consistent with those that would be obtained in arm’s-length transactions with unaffiliated third parties.
The Company leases its operating facility from an entity that is controlled by the Company’s owners and under month-to-month lease. Rent expense under this arrangement is based on market rates, as determined by management.
Related-party loan balances consisted of the following:
| September 30,<br> <br>2025 | December 31,<br> <br>2024 | |||
|---|---|---|---|---|
| Mark loan to SVM | $ | 201,085 | $ | 240,963 |
| Mark loan to SVM | 617,697 | 238,336 | ||
| $ | 818,782 | $ | 479,299 |
The loan receivable represents amounts advanced by Mark (the Company’s owner) to SVM (the Company) in the ordinary course of business. The loan is unsecured, non-interest bearing, and is included in the accompanying balance sheets.
11
SILICON VALLEY MANUFACTURING INC.
Notes to the financial statements (unaudited)
For the nine months ended September 30, 2025 and 2024, the Company had the following related party transactions:
| September 30, <br><br>2025 | September 30, <br><br>2024 | |||
|---|---|---|---|---|
| Rent expense | $ | 42,364 | $ | 48,193 |
| Rent capitalized to inventory (overhead) | 184,500 | 184,500 | ||
| Owner compensation expense | 214,455 | 274,581 | ||
| Owner bonus expense | - | 47,069 |
NOTE 9: Equity
The Company is authorized to issue common shares with no par value. As at September 30, 2025 and December 31, 2024, there were no changes to the Company’s authorized share structure and no shares issued and outstanding.
Additional Paid-in Capital
Additional paid-in capital represents amounts contributed by the Company’s shareholders in excess of stated capital. Additional paid-in capital totaled $10,000 as at both September 30, 2025 and December 31, 2024.
Retained Earnings
Retained earnings represent the accumulated earnings and losses of the Company since inception, net of distributions to shareholders. As of September 30, 2025, retained earnings were ($427,014), compared to $128,742 as of December 31, 2024. The change in retained earnings during the nine months ended September 30, 2025 was primarily attributable to the Company’s net results of operations for the period.
NOTE 10: Subsequent Events
The Company has evaluated subsequent events through February 1 2026, in accordance with ASC 855, Subsequent Events.
The Company continued to pursue a potential sale of the Company (or substantially all of its assets). As of February, 1, 2026, no definitive agreement had been executed and the sale process remained ongoing. Accordingly, no amounts have been recognized in the accompanying financial statements related to this matter.
The Company repaid its outstanding vehicle loan balances in December 2025. This repayment did not require recognition in the accompanying interim financial statements.
Other than the matters described above, the Company did not identify any subsequent events that require recognition in the financial statements or disclosure in the notes.
12
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
On February 2, 2026, PMGC Holdings Inc., a Nevada corporation (the “Buyer” or the “Company”), completed the acquisition of 100% of the issued and outstanding shares (the “Shares”) of SVM Machining, Inc., a California Subchapter S corporation (the “Target” or “SVM”), pursuant to a Stock Purchase Agreement dated as of February 2, 2026 (the “Stock Purchase Agreement” or the “SPA”), by and among the Buyer, SVM, and Mark Serpa, constituting all of the stockholders of SVM (the “Seller”). The Buyer’s acquisition of SVM is referred to as the “Transaction,” and the Buyer and SVM are referred to collectively as the “Parties.”
Upon the closing of the Transaction (the “Closing”), the aggregate purchase price for the Shares (the “Purchase Price”) consisted of: (i) $2,250,000 in cash, of which $2,000,000 was payable to the Seller at Closing (the “Closing Purchase Price”) and $250,000 was retained by the Buyer as an indemnification holdback (the “Indemnification Holdback”); plus (ii) the Final Cash Balance, defined in the SPA as a fixed amount of $130,000 (without regard to the actual cash and cash equivalents of SVM at Closing); plus (iii) a post-closing adjustment based on the extent to which Estimated Closing Net Working Capital exceeds or is less than the Net Working Capital Target of $281,638 (each as defined in the SPA). In addition, Seller may be entitled to receive contingent earnout payments of up to $1,250,000 for the twelve-month period ending December 31, 2026, based on the Company achieving specified revenue thresholds during the earnout period, as described in the SPA.
Following the Closing, the Buyer intends to continue operating the business at SVM’s existing facility located at 6520 Central Avenue, Newark, California 94560, pursuant to a commercial lease arrangement contemplated by the SPA. In addition, the Parties contemplated a transition services arrangement pursuant to which the Seller would provide post-Closing transition support for a limited period, on the terms set forth in the SPA and related transaction documents.
The foregoing description of the SPA and the Transaction does not purport to be complete and is qualified in its entirety by reference to the full text of the SPA, which is filed as an exhibit to this Current Report on Form 8-K and incorporated herein by reference.
The following unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the Transaction and has been derived by applying pro forma adjustments to the historical consolidated financial statements and other financial information of the Buyer and the Target. The historical financial information has been adjusted in the unaudited pro forma condensed combined financial statements to give effect to pro forma adjustments that are (1) directly attributable to the Transaction, (2) factually supportable, and (3) with respect to the statements of operations, expected to have a continuing impact on the combined results of the Buyer.
The unaudited pro forma condensed combined balance sheet is based on the individual historical balance sheets of the Buyer and the Target as of September 30, 2025 and has been prepared to reflect the Transaction as if it occurred as of such date. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2024, the year ended December 31, 2023, and the nine months ended September 30, 2025 combine the historical results of operations of the Buyer and the Target, giving effect to the Transaction as if it occurred on January 1, 2023.
The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and are based on the estimates and assumptions set forth in the accompanying notes. They do not purport to indicate the results that would actually have been obtained had the Transaction been completed on the assumed dates or for the periods presented, nor do they purport to project the future operating results or financial position of the Buyer following the consummation of the Transaction.
The unaudited pro forma condensed combined financial statements should be read in conjunction with:
| ● | the<br> accompanying notes to the unaudited pro forma condensed combined financial statements; |
|---|---|
| ● | the<br> historical unaudited interim financial statements of the Buyer as of and for the nine months<br> ended September 30, 2025, and the related notes, included in the Buyer’s Quarterly<br> Report on Form 10-Q filed with the SEC on November 14, 2025; |
| --- | --- |
| ● | the<br> historical audited financial statements of the Buyer as of and for the year ended December<br> 31, 2024, and the related notes, included in the Buyer’s Annual Report on Form 10-K<br> filed with the SEC on March 28, 2025; |
| --- | --- |
| ● | the<br> historical audited financial statements of the Buyer as of and for the year ended December<br> 31, 2023, and the related notes, included in the Buyer’s Annual Report on Form 10-K<br> filed with the SEC on March 29, 2024; |
| --- | --- |
| ● | the<br> historical reviewed, unaudited financial statements of the Target as of September 30, 2025,<br> and the related notes, included as Exhibit 99.2 to this Current Report; |
| --- | --- |
| ● | the<br> historical audited financial statements of the Target as of and for the years ended December<br> 31, 2024 and 2023, and the related notes, included as Exhibit 99.2 to this Current Report;<br> and |
| --- | --- |
| ● | the<br> Acquisition Agreement filed as Exhibit 10.1 to this Current Report. |
| --- | --- |
UNAUDITED PRO FORMA CONDENSEDCOMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 2025
| Buyer Historical | Target Historical | Acquisition Pro Forma Adjustments | Pro Forma Combined | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Bank | $ | 7,700,562 | $ | 15,993 | $ | (2,053,155 | ) | 1 | $ | 5,663,399 | ||
| Account Receivables, net | 271,492 | 176,683 | 149,585 | 1 | 597,760 | |||||||
| Other receivables | 97,940 | - | - | 97,940 | ||||||||
| Prepaids and deposits | 770,098 | - | - | 770,098 | ||||||||
| Inventory | 128,469 | 43,890 | 20,081 | 1 | 192,440 | |||||||
| Investment in securities- current | 804,070 | - | - | 804,070 | ||||||||
| Total current assets | 9,772,631 | 236,566 | (1,883,489 | ) | 8,125,707 | |||||||
| Fixed Assets, net | 413,446 | 358,663 | - | 772,109 | ||||||||
| Right-of-use-asset | 1,243,742 | - | - | 1,243,742 | ||||||||
| Intangibles, net | 2,548,664 | - | 3,041,762 | 1 | 5,590,426 | |||||||
| Goodwill | 959,535 | - | 959,535 | |||||||||
| Total assets | $ | 14,938,018 | $ | 595,229 | $ | 1,158,272 | $ | 16,691,519 | ||||
| LIABILITIES AND SHAREHOLDERS’<br> (DEFICIT) EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable and accrued liabilities | $ | 553,879 | $ | 89,326 | $ | (49,872 | ) | 1 | $ | 593,333 | ||
| Due to related parties - current | 486,848 | - | - | 486,848 | ||||||||
| Consideration Payable | 315,865 | - | - | 315,865 | ||||||||
| Loans – current | - | 103,853 | (103,853 | ) | 2 | - | ||||||
| Lease liability - short term | 229,229 | - | - | 229,229 | ||||||||
| Liabilities held for sale | 681,818 | - | - | 681,818 | ||||||||
| Other accrued liabilities | - | 282 | - | 282 | ||||||||
| Derivative liabilities | 3,194,053 | - | - | 3,194,053 | ||||||||
| Total current liabilities | 5,461,692 | 193,461 | (153,725 | ) | 5,501,428 | |||||||
| Lease liability - long term | 985,671 | - | - | 985,671 | ||||||||
| Contingent Earn-out Liability | - | - | 637,405 | 1 | 637,405 | |||||||
| Due to related parties – non current | - | 818,782 | (818,782 | ) | 2 | - | ||||||
| Total liabilities | 6,447,363 | 1,012,243 | (181,377 | ) | 7,278,229 | |||||||
| Shareholders’ (deficit) equity: | - | - | - | - | ||||||||
| Series B preferred stock | 637 | - | - | 637 | ||||||||
| Common stock | 74 | - | - | 74 | ||||||||
| Retained earnings | - | (427,014 | ) | 427,014 | 3 | - | ||||||
| Additional paid-in capital | 26,525,454 | 10,000 | 912,635 | 2 | 27,458,089 | |||||||
| Accumulated other comprehensive income | -753 | - | - | (753 | ) | |||||||
| Accumulated deficit | -18,034,757 | - | - | (18,034,757 | ) | |||||||
| Total stockholders’ (deficit) equity | 8,490,655 | (417,014 | ) | 1,339,649 | 9,413,290 | |||||||
| Total liabilities and stockholders’ equity | $ | 14,938,018 | $ | 595,229 | $ | 1,158,272 | $ | 16,691,519 |
The accompanying notes are an integral part of these financial statements
2
UNAUDITED PRO FORMA CONDENSEDCOMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDEDSEPTEMBER 30, 2025
| Buyer Historical | Target Historical | Acquisition Pro Forma Adjustments | Pro Forma Combined | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $ | 285,948 | $ | 1,547,933 | $ | - | $ | 1,833,881 | ||||
| Cost of Goods Sold | 207,918 | 1,296,713 | - | 1,504,631 | ||||||||
| Gross Profit | 78,030 | 251,220 | - | 329,250 | ||||||||
| Operating expenses: | ||||||||||||
| Consulting fees | 1,367,005 | - | - | 1,367,005 | ||||||||
| Depreciation and amortization | 36,389 | 20,705 | - | 57,094 | ||||||||
| Entertainment | - | 13,058 | - | 13,058 | ||||||||
| Finance costs | - | 8,314 | (8,314 | ) | - | |||||||
| Foreign exchange gain | 3,677 | - | - | 3,677 | ||||||||
| General and administration | 1,255,413 | 72,822 | - | 1,328,235 | ||||||||
| Insurance | - | 52,127 | - | 52,127 | ||||||||
| IT and software | - | 27,835 | - | 27,835 | ||||||||
| Investor relations | 161,157 | - | - | 161,157 | ||||||||
| Marketing and promotion | 182,407 | 45,795 | - | 228,202 | ||||||||
| Professional fees | 939,754 | 43,936 | - | 983,690 | ||||||||
| Rental | - | 42,364 | - | 42,364 | ||||||||
| Repair and maintenance | 312,579 | 8,092 | - | 320,671 | ||||||||
| Research and development | 114,108 | - | - | 114,108 | ||||||||
| Salaries and wages | - | 410,408 | - | 410,408 | ||||||||
| Telephone and communication | - | 9,766 | - | 9,766 | ||||||||
| Travel and entertainment | 119,684 | 3,936 | - | 123,620 | ||||||||
| Utilities | - | 20,653 | - | 20,653 | ||||||||
| Vehicles | - | 27,164 | - | 27,164 | ||||||||
| Total operating expenses | 4,492,173 | 806,975 | (8,314 | ) | 5,290,834 | |||||||
| Loss from operations | (4,414,143 | ) | (555,755 | ) | 8,314 | (4,961,584 | ) | |||||
| Other income (expense): | ||||||||||||
| Realized loss on investments | - | - | - | - | ||||||||
| Unrealized loss on investments | - | - | - | - | ||||||||
| Total other income (expense) | - | - | - | - | ||||||||
| Loss from continuing operations | (4,414,143 | ) | (555,755 | ) | 8,314 | (4,961,584 | ) | |||||
| Loss from discontinued operations | - | - | - | - | ||||||||
| Net loss | (4,414,143 | ) | (555,755 | ) | 8,314 | (4,961,584 | ) | |||||
| Other comprehensive income (loss) | ||||||||||||
| Currency translation adjustment | - | - | - | - | ||||||||
| Total comprehensive loss | $ | (4,414,143 | ) | (555,755 | ) | 8,314 | (4,961,584 | ) | ||||
| Net loss per share - basic and diluted: | ||||||||||||
| Continuing operations | $ | (35.195 | ) | $ | (39.559 | ) | ||||||
| Discontinued operations | - | - | ||||||||||
| Weighted average of common shares outstanding - basic and diluted | 125,421 | 125,421 |
The accompanying notes are an integral part of these financial statements
3
UNAUDITED PRO FORMA CONDENSEDCOMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHSENDED SEPTEMBER 30, 2025
| Buyer Historical | Target Historical | Acquisition Pro Forma Adjustments | Pro Forma Combined | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $ | 285,948 | $ | 487,599 | $ | - | $ | 773,547 | ||||
| Cost of Goods Sold | 207,918 | 539,082 | - | 747,000 | ||||||||
| Gross Profit | 78,030 | (51,483 | ) | - | 26,547 | |||||||
| Operating expenses: | ||||||||||||
| Consulting fees | 621,103 | - | - | 621,103 | ||||||||
| Depreciation and amortization | 35,284 | 7,906 | - | 43,190 | ||||||||
| Entertainment | - | 3,559 | - | 3,559 | ||||||||
| Finance costs | - | 1,530 | (1,530 | ) | - | |||||||
| Foreign exchange gain | 4,174 | - | - | 4,174 | ||||||||
| General and administration | 726,543 | 42,136 | - | 768,679 | ||||||||
| Insurance | - | 17,579 | - | 17,579 | ||||||||
| IT and software | - | 8,642 | - | 8,642 | ||||||||
| Investor relations | 44,380 | - | - | 44,380 | ||||||||
| Marketing and promotion | 64,484 | 17,967 | - | 82,451 | ||||||||
| Professional fees | 389,111 | 2,828 | - | 391,939 | ||||||||
| Rental | 12,075 | - | 12,075 | |||||||||
| Repair and maintenance | 312,579 | 1,818 | - | 314,397 | ||||||||
| Research and development | 15,000 | - | - | 15,000 | ||||||||
| Salaries and wages | 142,562 | - | 142,562 | |||||||||
| Telephone and communication | 3,703 | - | 3,703 | |||||||||
| Travel and entertainment | 64,273 | 22 | - | 64,295 | ||||||||
| Utilities | 11,694 | - | 11,694 | |||||||||
| Vehicles | 5,922 | - | 5,922 | |||||||||
| Total operating expenses | 2,276,931 | 279,943 | (1,530 | ) | 2,555,344 | |||||||
| Loss from operations | (2,198,901 | ) | (331,426 | ) | (1,530 | ) | (2,528,797 | ) | ||||
| Other income (expense): | ||||||||||||
| Realized loss on investments | - | - | - | - | ||||||||
| Unrealized loss on investments | - | - | - | - | ||||||||
| Total other income (expense) | - | - | - | - | ||||||||
| Loss from continuing operations | (2,198,901 | ) | (331,426 | ) | (1,530 | ) | (2,528,797 | ) | ||||
| Loss from discontinued operations | - | - | - | (27,644 | ) | |||||||
| Net loss | (2,198,901 | ) | (331,426 | ) | (1,530 | ) | (2,528,797 | ) | ||||
| Other comprehensive income (loss) | ||||||||||||
| Currency translation adjustment | - | - | - | - | ||||||||
| Total comprehensive loss | $ | (2,198,901 | ) | (331,426 | ) | (1,530 | ) | (2,528,797 | ) | |||
| Net loss per share - basic and diluted: | ||||||||||||
| Continuing operations | $ | (17.532 | ) | $ | (20.162 | ) | ||||||
| Discontinued operations | - | - | ||||||||||
| Weighted average of common shares outstanding - basic and diluted | 125,421 | 125,421 |
The accompanying notes are an integral part of these financial statements
4
UNAUDITED PRO FORMA CONDENSEDCOMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER31, 2024
| Buyer Historical | Target Historical | Acquisition Pro Forma Adjustments | Pro Forma Combined | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sales | $ | - | $ | 3,042,701 | $ | - | $ | 3,042,701 | |||||
| Cost of Goods Sold | - | 1,832.284 | - | 1,832.284 | |||||||||
| Gross Profit | - | 1,210,417 | - | 1,210,417 | |||||||||
| Operating expenses: | |||||||||||||
| Bonus | - | 47,069 | - | 47,069 | |||||||||
| Consulting fees | 1,367,273 | - | - | 1,367,273 | |||||||||
| Depreciation and amortization | 546 | 30,191 | - | 30,737 | |||||||||
| Entertainment | - | 19,833 | - | 19,833 | |||||||||
| Finance Costs | 35,809 | (35,809 | ) | a | - | ||||||||
| Foreign exchange gain | 5,846 | - | - | 5,846 | |||||||||
| General and administrative | 1,092,576 | 163,807 | - | 1,256,383 | |||||||||
| Insurance | - | 51,726 | - | 51,726 | |||||||||
| IT and software | - | 43,661 | - | 43,661 | |||||||||
| Investor relations | 208,326 | - | - | 208,326 | |||||||||
| Lease | - | 25,688 | - | 25,688 | |||||||||
| Marketing | 292,522 | 74,643 | - | 367,165 | |||||||||
| Materials | - | 62,794 | - | 62,794 | |||||||||
| Professional fees | 563,242 | 48,915 | - | 612,157 | |||||||||
| Rental | - | 64,221 | - | 64,221 | |||||||||
| Repairs and maintenance | - | 11,750 | - | 11,750 | |||||||||
| Research and development | 104,654 | - | - | 104,654 | |||||||||
| Salaries and wages | - | 644,129 | - | 644,129 | |||||||||
| Telephone and communication | - | 17,768 | - | 17,768 | |||||||||
| Travel | 28,581 | 5,568 | - | 34,149 | |||||||||
| Utilities | - | 27,854 | - | 27,854 | |||||||||
| Vehicles | - | 29,267 | - | 29,267 | |||||||||
| Total operating expenses | 3,663,566 | 1,404,693 | (35,809 | ) | 5,032,450 | ||||||||
| Income (loss) from operations | (3,663,566 | ) | (194,276 | ) | 35,809 | (3,822,033 | ) | ||||||
| Other income (expense): | |||||||||||||
| Change in fair value of derivative liabilities | 369,158 | - | - | 369,158 | |||||||||
| Interest income | 12,891 | - | - | 12,891 | |||||||||
| Interest expense | (735,197 | ) | - | - | (735,197 | ) | |||||||
| Total other income (expense) | (353,148 | ) | - | - | (353,148 | ) | |||||||
| Income (loss) from continuing operations | (4,016,714 | ) | (194,276 | ) | 35,809 | (4,175,181 | ) | ||||||
| Loss from discontinued operations | (2,229,023 | ) | - | - | (2,229,023 | ) | |||||||
| Net loss | (6,245,737 | ) | (194,276 | ) | 35,809 | (6,404,204 | ) | ||||||
| Other comprehensive income (loss) | |||||||||||||
| Currency translation adjustment | (539 | ) | - | - | (539 | ) | |||||||
| Total comprehensive loss | $ | (6,246,276 | ) | $ | (194,276 | ) | $ | 35,809 | $ | (6,404,743 | ) | ||
| Net loss per share - basic and diluted: | |||||||||||||
| Continuing operations | $ | (50.473 | ) | $ | (52.464 | ) | |||||||
| Discontinued operations | (28.009 | ) | (33.233 | ) | |||||||||
| Weighted average of common shares outstanding - basic and diluted | 79,582 | 79,582 |
The accompanying notes are an integral part of these financial statements
5
UNAUDITED PRO FORMA CONDENSEDCOMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER31, 2023
| Buyer Historical | Target Historical | Acquisition Pro Forma Adjustments | Pro Forma Combined | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sales | $ | - | $ | 2,702,688 | $ | - | $ | 2,702,688 | |||||
| Cost of Goods Sold | - | 1,941,897 | - | 1,941,897 | |||||||||
| Gross Profit | - | 760,791 | - | 760,791 | |||||||||
| Operating expenses: | |||||||||||||
| Bonus | - | 62,493 | - | 62,493 | |||||||||
| Consulting fees | 279,760 | - | - | 279,760 | |||||||||
| Depreciation and amortization | 554 | 39,818 | - | 40,372 | |||||||||
| Entertainment | - | 20,798 | - | 20,798 | |||||||||
| Finance Costs | - | 77,883 | (77,883 | ) | a | - | |||||||
| Foreign exchange gain | 6,130 | - | 6,130 | ||||||||||
| General and administrative | 347,653 | 167,793 | - | 515,446 | |||||||||
| Insurance | - | 43,793 | - | 43,793 | |||||||||
| IT and software | - | 57,098 | - | 57,098 | |||||||||
| Investor relations | 91,009 | 91,009 | |||||||||||
| Lease | - | 14,551 | - | 14,551 | |||||||||
| Marketing | 256,450 | 70,800 | - | 327,250 | |||||||||
| Materials | - | 170,335 | - | 170,335 | |||||||||
| Professional fees | 132,600 | 162,267 | - | 294,867 | |||||||||
| Rental | - | 64,299 | - | 64,299 | |||||||||
| Repairs and maintenance | - | 22,510 | - | 22,510 | |||||||||
| Research and development | 7,410 | 7,410 | |||||||||||
| Salaries and wages | - | 876,122 | - | 876,122 | |||||||||
| Telephone and communication | - | 18,535 | - | 18,535 | |||||||||
| Travel | 19,385 | 8,591 | - | 27,976 | |||||||||
| Utilities | - | 30,267 | - | 30,267 | |||||||||
| Vehicles | - | 16,144 | - | 16,144 | |||||||||
| Total operating expenses | 1,140,951 | 1,924,097 | (77,883 | ) | 2,987,165 | ||||||||
| Income (loss) from operations | (1,140,951 | ) | (1,163,306 | ) | 77,883 | (2,226,374 | ) | ||||||
| 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 | |||||||||
| ERC Refund | - | 484,045 | 484,045 | ||||||||||
| Total other income (expense) | (515,781 | ) | 484,045 | - | (31,736 | ) | |||||||
| Income (loss) from continuing operations | (1,656,732 | ) | (679,261 | ) | 77,883 | (2,258,110 | ) | ||||||
| Loss from discontinued operations | (2,644,778 | ) | - | - | (2,644,778 | ) | |||||||
| Net loss | (4,301,510 | ) | (679,261 | ) | 77,883 | (4,902,888 | ) | ||||||
| Other comprehensive income (loss) | |||||||||||||
| Currency translation adjustment | 91 | - | - | 91 | |||||||||
| Total comprehensive loss | $ | (4,301,419 | ) | $ | (679,261 | ) | $ | 77,883 | (4,902,797 | ) | |||
| Net loss per share - basic and diluted: | |||||||||||||
| Continuing operations | $ | (560.372 | ) | $ | (294.178 | ) | |||||||
| Discontinued operations | (344.552 | ) | (344.552 | ) | |||||||||
| Weighted average of common shares outstanding - basic and diluted | 7,676 | 7,676 |
The accompanying notes are an integral part of these financial statements
6
Notesto Unaudited Pro Forma Condensed Combined Financial Statements
Note 1 - Accounting for the Acquisition
The unaudited pro forma condensed combined financial statements give effect to the acquisition of SVM Machining, Inc. (the “Target” or “SVM”) by PMGC Holdings Inc. (the “Buyer” or the “Company”) under the acquisition method of accounting in accordance with FASB ASC 805, Business Combinations, with the Buyer treated as the accounting acquirer. Under the acquisition method, the total purchase consideration is allocated to the identifiable assets acquired and liabilities assumed based on their estimated fair values as of the Closing Date. The excess of the total purchase consideration over the estimated fair value of the net identifiable assets acquired, if any, is recorded as goodwill.
For purposes of estimating fair value, where applicable, of the assets acquired and liabilities assumed reflected in the unaudited pro forma condensed combined financial information, the Company has applied the guidance in ASC 820, Fair Value Measurement, which establishes a framework for measuring fair value. Fair value represents an exit price and is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
As of the date of this Current Report on Form 8-K/A (this “Current Report”), the Company has not finalized the valuation work necessary to determine the final fair values of the assets acquired and liabilities assumed. Accordingly, the preliminary purchase price allocation included in these unaudited pro forma condensed combined financial statements is based on management’s preliminary estimates. The preliminary purchase price allocation is subject to adjustment as additional information becomes available and as additional analyses are completed during the measurement period (not to exceed one year from the Closing Date). There can be no assurance that the finalization of the valuation work will not result in material changes from the preliminary purchase price allocation.
As of the Closing Date, the total consideration for the Acquisition included the following:
| Cash consideration at Closing | $ | 2,130,000 |
|---|---|---|
| Working capital adjustment | 69,148 | |
| Earnout liability | 637,405 | |
| Total consideration | $ | 2,836,553 |
The Earnout represents contingent consideration and, in accordance with ASC 805, is required to be recognized at fair value as of the Closing Date as part of purchase consideration. The Company has not finalized its valuation of the Earnout as of the date of this Current Report, and any preliminary estimate of fair value reflected in the unaudited pro forma condensed combined financial information is subject to change. Subsequent changes in the fair value of the contingent consideration liability, if any, will be recognized in earnings in the period in which they arise.
The preliminary allocation of the purchase consideration to the estimated fair values of assets acquired and liabilities assumed is as follows:
| Assets purchased: | |||
|---|---|---|---|
| Cash | $ | 130,000 | |
| Receivables, net | 326,268 | ||
| Inventory | 63,971 | ||
| Intangibles and goodwill | 2,355,768 | ||
| Total assets acquired | 2,451,070 | ||
| Liabilities assumed | |||
| Accounts payable and accrued liabilities | (39,454 | ) | |
| Total liabilities assumed | (39,454 | ) | |
| Total consideration | $ | 2,836,553 |
7
Note 2 - Basis of Presentation
The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X and has been derived from the historical financial statements of PMGC Holdings Inc. (the “Buyer”) and SVM Machining, Inc. (the “Target”). The pro forma adjustments have been identified and presented to provide relevant information necessary for an illustrative understanding of the Buyer upon consummation of the acquisition of the Target pursuant to the Stock Purchase Agreement (the “SPA”), in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes. The unaudited pro forma condensed combined financial information has been presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have been achieved had the acquisition occurred on the dates indicated. Further, the unaudited pro forma condensed combined financial information does not purport to project future operating results or financial position following the consummation of the acquisition. The pro forma adjustments represent management’s estimates based on information available as of the date of this unaudited pro forma condensed combined financial information and are subject to change as additional information becomes available and analyses are performed.
The Buyer and the Target had no historical relationship prior to the Transaction; accordingly, no adjustments were required to eliminate activities between the Buyer and the Target.
Note 3 - Reclassification Adjustments
The unaudited pro forma condensed combined balance sheet and condensed combined statements of operations have been adjusted to reflect certain reclassifications of the Target’s historical financial statements to conform to the Buyer’s financial statement presentation.
Note 4 - Pro Forma Adjustments
Adjustments to Unaudited Pro Forma CondensedCombined Balance Sheet
| 1. | Reflects the cash consideration due at<br> Closing net of adjustment for the estimated target working capital of $281,638. |
|---|---|
| 2. | Reflects the elimination of related party<br> amounts on the balance sheet. |
| --- | --- |
| 3. | Reflects the elimination of SVM’s<br> historical retained earnings. |
| --- | --- |
Adjustments to Unaudited Pro Forma CondensedCombined Statements of Operations
| a. | Reflects the removal of finance costs<br> as all loans were paid off at/around the Acquisition and there is no remaining debt. |
|---|
8