ELAB 10-Q
PMGC Holdings Inc. (ELAB)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For The Quarterly
Period Ended
OR
Commission File Number:
| (Exact name of registrant as specified in its charter) |
| (State of incorporation) | (I.R.S. Employer Identification No.) |
(Address of principal executive office) (Zip code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, during the preceding 12 months (or for such shorter period than the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| 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.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As
of May 13, 2025, there were
PMGC Holdings Inc. Quarterly Report on Form 10-Q
TABLE OF CONTENTS
| PART I – FINANCIAL INFORMATION | 1 | |||
| Item 1. | Financial Statements | 1 | ||
| Notes to Unaudited Condensed Consolidated Financial Statements | 5 | |||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 | ||
| Item 3. | Quantitative and Qualitative Disclosure About Market Risk | 28 | ||
| Item 4. | Controls and Procedures | 28 | ||
| PART II – OTHER INFORMATION | 29 | |||
| Item 1. | Legal Proceedings | 29 | ||
| Item 1A. | Risk Factors | 29 | ||
| Item 2. | Recent Sales of Unregistered Securities; Use of Proceeds and Issuer Purchases of Equity Securities | 29 | ||
| Item 3. | Defaults Upon Senior Securities | 30 | ||
| Item 4. | Mine Safety Disclosures | 30 | ||
| Item 5. | Other Information | 30 | ||
| Item 6. | Exhibits | 31 | ||
| SIGNATURES | 33 | |||
i
Forward-Looking Statements
This Quarterly Report on Form 10-Q (this “Quarterly Report”) of PMGC Holdings Inc. (“we,” “us,” “our,” “PMGC” and the “Company”) contains statements that constitute “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical facts may be deemed to be forward-looking statements. These statements appear in several different places in this Quarterly Report and, in some cases, can be identified by words such as “anticipates,” “estimates,” “projects,” “expects,” “contemplates,” “intends,” “believes,” “plans,” “may,” “will” or their negatives or other comparable words, although not all forward-looking statements contain these identifying words. Forward-looking statements in this Quarterly Report may include, but are not limited to, statements and/or information related to: our financial performance and projections; our business prospects and opportunities; our business strategy and future operations; the projection of timing and delivery of products in the future; projected costs; expected production capacity; expectations regarding demand and acceptance of our products; estimated costs of research and development to develop new pipeline products; trends in the market in which we operate; the plans and objectives of management; our liquidity and capital requirements, including cash flows and uses of cash; trends relating to our industry; and plans relating to our current products.
We have based these forward-looking statements on our current expectations about future events on information that is available as of the date of this Quarterly Report, and any forward-looking statements made by us speak only as of the date on which they are made. While we believe these expectations are reasonable, such forward-looking statements are inherently subject to risks and uncertainties, many of which are beyond our control. Our actual future results may differ materially from those discussed or implied in our forward-looking statements for various reasons, including, our ability to change the direction of the Company; our ability to keep pace with new technology and changing market needs; our capital needs, and the competitive environment of our business. Additional Factors that could contribute to such differences include, but are not limited to:
| ● | general economic and business conditions, including changes in interest rates; |
| ● | prices of other competitive products, costs associated with research and development of our products and other economic conditions; |
| ● | the effect of an outbreak of disease or similar public health threat, such as any future outbreak of COVID-19 on our business (natural phenomena, including the lingering effects of the COVID-19 pandemic); |
| ● | the impact of political unrest, natural disasters or other crises, terrorist acts, acts of war and/or military operations, and our ability to maintain or broaden our business relationships and develop new relationships with strategic alliances, suppliers, customers, distributors or otherwise; |
| ● | breaches in data security, failure of information security systems, cyber-attacks or other security or privacy-related incidents affecting us or our suppliers; |
| ● | the ability of our information technology systems or information security systems to operate effectively; |
| ● | actions by government authorities, including changes in government regulation; |
| ● | uncertainties associated with legal proceedings; |
| ● | changes in the size of the medical aesthetics, cosmetics and biotechnology market; |
| ● | future decisions by management in response to changing conditions; |
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| ● | our ability to execute prospective business plans; |
| ● | misjudgments in the course of preparing forward-looking statements; |
| ● | our ability to raise sufficient funds to carry out its proposed business plan; |
| ● | inability to keep up with advances in medical aesthetics and biotechnology; |
| ● | inability to design, develop, market and sell new medical aesthetics and biotech products that address additional market opportunities to generate revenue and positive cash flows; |
| ● | dependency on certain key personnel and any inability to retain and attract qualified personnel; |
| ● | our expectations regarding our ability to obtain, maintain, protect, defend and enforce our intellectual property rights and operate without infringing, misappropriating, or otherwise violating the intellectual property rights of others; |
| ● | disruption of supply or shortage of raw materials; |
| ● | the unavailability, reduction or elimination of government and economic incentives; |
| ● | failure to manage future growth effectively; and |
| ● | the other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission (“SEC”), including but not limited to those described under “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K as amended for the year ended December 31, 2024, filed with the SEC on March 28, 2025 (the “Form 10-K”). |
Although management has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There is no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such forward-looking statements. Accordingly, readers should not place undue reliance on forward-looking statements. These cautionary remarks expressly qualify, in their entirety, all forward-looking statements attributable to us or persons acting on our behalf. We do not undertake to update any forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such statements, except as, and to the extent required by, applicable securities laws.
iii
PART I - FINANCIAL INFORMATION
Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Financial Statements of
PMGC Holdings Inc. (formerly Elevai Labs Inc.)
For the three months ended March 31, 2025, and 2024
(Unaudited - Expressed in United States Dollars)
PMGC Holdings Inc. (formerly Elevai Labs Inc.)
Condensed Consolidated Balance Sheets
(Unaudited - Expressed in United States dollar)
| As of: | March
31, 2025 | December 31,
2024 | ||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | | |||||
| Receivables, net | ||||||||
| Prepaids and deposits | ||||||||
| Other receivables | ||||||||
| Investment in securities- current | ||||||||
| Assets held for sale | ||||||||
| Total Current Assets | ||||||||
| Investment in securities-noncurrent | ||||||||
| Equipment, net | ||||||||
| Intangibles, net | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Due to related parties | ||||||||
| Current portion of consideration payable | ||||||||
| Liabilities held for sale | ||||||||
| Total Current Liabilities | ||||||||
| Consideration payable | ||||||||
| TOTAL LIABILIITES | $ | $ | ||||||
| Commitments and Contingencies | ||||||||
| EQUITY | ||||||||
| Preferred stock $ | ||||||||
| Series B preferred stock, | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL EQUITY | ||||||||
| TOTAL LIABILITIES AND EQUITY | $ | $ | ||||||
| (1) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
1
PMGC Holdings Inc. (formerly Elevai Labs Inc.)
Condensed Consolidated Statements of Operations and Comprehensive Loss
For the three months ended March 31, 2025, and 2024
(Unaudited - Expressed in United States dollar)
| Three months ended March 31, 2025 | Three months ended March 31, 2024 | |||||||
| Operating expenses | ||||||||
| Depreciation and amortization | ||||||||
| Marketing and promotion | ||||||||
| Consulting fees | ||||||||
| Office and administrative | ||||||||
| Professional fees | ||||||||
| Investor relations | ||||||||
| Research and development | ||||||||
| Foreign exchange (gain) loss | ||||||||
| Travel and entertainment | ||||||||
| Total operating expenses | $ | |||||||
| Other income (expense) | ||||||||
| Change in fair value of derivative liabilities | ||||||||
| Gain on the termination of the intangible asset | ||||||||
| Interest income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Realized loss on investments | ( | ) | ||||||
| Unrealized loss on investments | ( | ) | ||||||
| Net loss from continuing operations | $ | ( | ) | ( | ) | |||
| Loss from discontinued operations (Note 4) | ( | ) | ( | ) | ||||
| Total net loss | ( | ) | ( | ) | ||||
| Other comprehensive income (loss) | ||||||||
| Currency translation adjustment | ( | ) | ||||||
| Total comprehensive loss | $ | ( | ) | ( | ) | |||
| Basic and diluted loss per share | ||||||||
| Continuing operations | $ | ( | ) | ( | ) | |||
| Discontinued operations | $ | ( | ) | ( | ) | |||
| Weighted average shares outstanding(1) | ||||||||
| (1) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
2
PMGC Holdings Inc. (formerly Elevai Labs Inc.)
Condensed Consolidated Statements of Changes in Stockholders’ Equity
For the three months ended March 31, 2025, and 2024
(Unaudited - Expressed in United States dollars)
| Common Stock | Series B Preferred Stock | Additional | Accumulated other | |||||||||||||||||||||||||||||
| Number of shares | Amount | Number of shares | Amount | paid-in capital | Accumulated deficit | comprehensive income | Total | |||||||||||||||||||||||||
| # | $ | # | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Balance, January 1, 2024(1) | ( | ) | ||||||||||||||||||||||||||||||
| Share-based compensation | - | - | ||||||||||||||||||||||||||||||
| Net loss for the period | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Currency translation adjustment | - | - | ||||||||||||||||||||||||||||||
| Balance, March 31, 2024(1) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, January 1, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Settlement of accrued bonus liability | - | |||||||||||||||||||||||||||||||
| Issued and issuable shares for acquisition of intangible assets | - | |||||||||||||||||||||||||||||||
| Exercise of Series A Warrants | - | - | ||||||||||||||||||||||||||||||
| Issued pursuant to the registered direct offering | - | - | ||||||||||||||||||||||||||||||
| Repurchase of shares | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Round up shares due to reverse stock splits | - | |||||||||||||||||||||||||||||||
| Share-based compensation | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net loss for the period | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||
| Currency translation adjustment | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance, March 31, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| (1) |
3
PMGC Holdings Inc. (formerly Elevai Labs Inc.)
Condensed Consolidated Statements of Cash Flows
For the three months ended March 31, 2025, and 2024
(Unaudited - Expressed in United States dollars)
| March 31, 2025 | March 31, 2024 | |||||||
| Operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Share-based compensation | ( | ) | ||||||
| Straight-line rent expense | ( | ) | ( | ) | ||||
| Change in fair value of derivative liabilities | ( | ) | ||||||
| Non-cash interest expense | ||||||||
| Research and development costs for intangible assets | ||||||||
| Gain on termination of intangible asset | ( | ) | ||||||
| Loss on the sale of Skincare | ||||||||
| Realized loss on sale of investments | ||||||||
| Unrealized loss on investments | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables | ( | ) | ( | ) | ||||
| Prepaid expenses and deposits | ( | ) | ||||||
| Inventory | ( | ) | ||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
| Customer deposits | ( | ) | ( | ) | ||||
| Due to related parties | ( | ) | ||||||
| Cash flows used in operating activities1 | $ | ( | ) | $ | ( | ) | ||
| Investing activities | ||||||||
| Purchase of investments | ( | ) | ||||||
| Proceeds from sale of investments | ||||||||
| Purchase of equipment | ( | ) | ||||||
| Purchase of intangible assets | ( | ) | ||||||
| Cash flows used in investing activities1 | $ | ( | ) | $ | ( | ) | ||
| Financing activities | ||||||||
| Exercise of Series A warrants | ||||||||
| Proceeds from the issuance of common stock and warrants | ||||||||
| Share issuance costs | ( | ) | ||||||
| Repurchase of shares and warrants | ( | ) | ||||||
| Cash flows provided by financing activities | $ | $ | ||||||
| Effect of exchange rate changes on cash | ( | ) | ||||||
| Increase in cash | ( | ) | ||||||
| Cash, beginning of period | ||||||||
| Cash, ending of period | $ | $ | ||||||
| Supplemental cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | ||||||||
| Non-cash Investing and Financing transactions: | ||||||||
| Common stock issued and issuable on acquisition of intangible asset | ||||||||
| Shares received as proceeds for the sale of Skincare | ||||||||
| Series B preferred shares issues to settle accrued bonus liability | ||||||||
| Consideration payable settled through termination of the agreement | ||||||||
| 1 |
4
| 1. | Organization and nature of operations |
PMGC Holdings Inc. (formerly Elevai
Labs Inc.) (“PMGC”) was incorporated under the laws of the State of Delaware on
On April 29, 2024, PMGC Impasse Corp (“Skincare”) and Northstrive Biosciences Inc. (“BioSciences”) were incorporated under the laws of the state of Delaware. PMGC is the sole shareholder of Skincare and BioSciences. The purpose of Skincare was to operate the Company’s skincare business, while the purpose of BioSciences is to hold and develop the Company’s intellectual property. Effective May 1, 2024, PMGC transferred its operating assets and liabilities relating to its skincare business to Skincare in exchange for common stock of Skincare. On November 13, 2024, PMGC Capital LLC (“PMGC Capital”) was incorporated under the laws of the state of Nevada, with PMGC as the sole shareholder of PMGC Capital.
On December 31, 2024, PMGC and Skincare entered into an asset purchase agreement (the “Asset Purchase Agreement”) with an unrelated third party, pursuant to which PMGC agreed to sell and the unrelated third party agreed to purchase, PMGC’s skincare business. The sale of this skincare business was consummated on January 16, 2025. In accordance with ASC 205-20 “Discontinued Operations”, the assets and liabilities and the results of operations of the skincare business have been presented in these unaudited condensed consolidated financial statements as assets and liabilities held for sale and discontinued operations. The Company also retrospectively adjusted the unaudited condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2024, to reflect discontinued operations separately from continuing operations (Note 4).
Prior to entering into the Asset Purchase Agreement, the Company’s principal business was operating a skincare development company engaged in the design, manufacture, and marketing of skincare products in the skincare industry. With the sale of the skincare business, the Company changed its principal business. After this sale, PMGC became a diversified holding company that manages and grows its portfolio through strategic acquisitions, investments, and development across various industries. PMGC currently manages and operates a diverse portfolio of three wholly owned subsidiaries:
| ● | Northstrive BioSciences Inc. – Biosciences is a biopharmaceutical company focusing on the development and acquisition of cutting-edge aesthetic medicines and therapeutic products. Its lead asset, EL-22, is leveraging a first-in-class engineered probiotic approach to address obesity’s pressing issue of preserving muscle while on weight loss treatments, including GLP-1 receptor agonists. |
| ● | PMGC Research Inc. – PMGC Research is based in Canada and currently dedicated to medical scientific research and development efforts. This company utilizes Canadian research grants and partners with leading Canadian Universities, with aims of pushing the boundaries of innovation. |
| ● | PMGC Capital LLC – PMGC Capital is a multi-strategy investment firm focused on direct investments, strategic lending, and acquiring undervalued companies and assets across diverse markets. This company’s mission is to identify and seize high-potential opportunities, delivering sustainable growth and maximizing returns on capital. |
5
| 2. | Going Concern |
These unaudited condensed consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders and the ability of the Company to obtain necessary equity financing to continue operations, and ultimately the attainment of profitable operations.
As of March 31, 2025, and December
31, 2024, the Company had a net working capital of $
The assessment of whether the going concern assumption is appropriate requires management to take into account all available information about the future, which is at least, but not limited to, 12 months from the date the financial statements are issued. The Company is aware that material uncertainties related to events or conditions may cast substantial doubt upon the Company’s ability to continue as a going concern.
Management’s plans that alleviate substantial doubt about the Company’s ability to continue as a going concern include, raising additional debt or equity financing, and the acquisition of cash flow generating assets or businesses. Although the Company has been successful in raising funds in the past, and expects to do so in the future, there are no guarantees that it will be able to raise funds as anticipated.
| 3. | Summary of Significant Accounting Policies |
Basis of Presentation
These unaudited condensed consolidated financial statements have been prepared in accordance with rules and regulations of the Securities and Exchange Commission (“SEC”) and generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and are expressed in United States dollars. Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, we have included all adjustments considered necessary for a fair presentation and such adjustments are of a normal recurring nature. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the years ended December 31, 2024, and 2023. The results of operations for the three months ended March 31, 2025, are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2025.
Principles of Consolidation
The unaudited condensed consolidated
financial statements include the accounts of PMGC, and its
6
Use of Estimates
The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to revenue recognition, the collectability of receivables, valuation of inventory, fair value of investments in securities, derivative liabilities and stock options, useful lives and recoverability of long-lived assets, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgements about the carrying value of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from those estimates. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the unaudited condensed consolidated financial statements in the period they are determined.
Foreign Currency Translation
The Company’s functional and reporting currency is the U.S. dollar. The functional currency of PMGC Research is the Canadian dollar. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets, liabilities, and items recorded in income arising from transactions denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.
The accounts of PMGC Research are translated to U.S. dollars using the current rate method. Accordingly, assets and liabilities are translated into U.S. dollars at the period-end exchange rate while revenues and expenses are translated at the average exchange rates during the period. Related exchange gains and losses are included in a separate component of stockholders’ equity as accumulated other comprehensive income (loss).
Investments in securities
Investments in securities include publicly traded equity securities and a convertible debenture that is convertible at any time into publicly traded securities. All investments are classified as trading securities and are reported at fair value, with both realized and unrealized gains and losses recognized in earnings. Equity securities have readily determinable fair values and are measured in accordance with ASC 321 – Accounting for Equity Interests. The convertible debenture is measured at fair value under ASC 320 – Investments – Debt Securities.
The cost of securities sold is determined using the specific identification or average cost method. Investments, including publicly traded shares and those that management intends to convert into equity upon favorable market conditions, are classified as current assets on the condensed consolidated balance sheet.
New Accounting Standards
Recently Adopted Accounting Standards
In June 2022, the FASB issued ASU 2022-03, ASC Subtopic 820 “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The FASB is issuing this Update (1) to clarify the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, (2) to amend a related illustrative example, and (3) to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820.
7
Stakeholders asserted that the language in the illustrative example resulted in diversity in practice on whether the effects of a contractual restriction that prohibits the sale of an equity security should be considered in measuring that equity security’s fair value. Some stakeholders apply a discount to the price of an equity security subject to a contractual sale restriction, whereas other stakeholders consider the application of a discount to be inappropriate under the principles of Topic 820.
For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The adoption of this standard did not have a significant impact on the Company’s consolidated financial statements.
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), intended to improve reportable segments disclosure requirements primarily through enhanced disclosures about significant segment expenses.
ASU 2023-07 includes a requirement to disclose significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, the title and position of the CODM, an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources, and all segments’ profit or loss and assets disclosures. ASU 2023-07 is effective for all public companies for fiscal years beginning after December 15, 2023, and interim periods for the interim period beginning on January 1, 2025. Adoption of ASU 2023-07 did not have a material impact on the Company’s financial statement.
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 unaudited condensed consolidated financial statements.
There are no recently issued accounting standards which may have effect on the Company’s unaudited condensed consolidated financial statements
| 4. | Assets and liabilities held for sale and Discontinued operations |
Pursuant to the Asset Purchase Agreement,
the Company agreed to sell its skincare business for (i)
Following the closing which occurred
on January 16, 2025 (the “Closing” or “Closing Date”), buyer will pay additional earn-out consideration for the
sale, if and when payable: (a) buyer will pay, for each year ending on the anniversary of the Closing Date during the five-year period
following the Closing, an amount, if any, equal to
8
The following table summarizes the major line items for the skincare business that are included in loss from discontinued operations, net of taxes in the consolidated statements of operations:
| March 31, 2025 | March 31, 2024 | |||||||
| Revenue | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Gross profit | $ | $ | ||||||
| Expenses | ||||||||
| Depreciation | ||||||||
| Marketing and promotion | ||||||||
| Consulting fees | ||||||||
| Office and administrative | ||||||||
| Professional fees | ||||||||
| Investor relations | ||||||||
| Research and development | ||||||||
| Foreign exchange (gain) loss | ( | ) | ||||||
| Travel and entertainment | ||||||||
| Total expenses | $ | $ | ||||||
| Other income | ( | ) | ( | ) | ||||
| Interest expense | ||||||||
| Loss on the sale of Skincare | ||||||||
| Loss from discontinued operations | $ | $ | ||||||
The following table summarizes the carrying amounts of major classes of assets and liabilities of discontinued operations as at the Closing Date (January 16, 2025) and December 31, 2024:
Closing
Date | December 31, 2024 | |||||||
| Assets | ||||||||
| Receivables, net | ||||||||
| Inventory | ||||||||
| Prepaid expenses and deposits | ||||||||
| Property and equipment | ||||||||
| Right of use asset | ||||||||
| Total assets held for sale | ||||||||
| Liabilities | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| Customer deposits | ||||||||
| Lease liability | ||||||||
| Total liabilities held for sale | ||||||||
| Total assets and liabilities held for sale, net | ||||||||
9
The Company recorded a loss on sale
of discontinued operations of $
The following represents the cash flows from operating and investing activities of discontinued operations for the three months ended March 31, 2025 and 2024:
| March 31, 2025 | March 31, 2024 | |||||||
| Cashflows used in operating activities | $ | ( | ) | $ | ( | ) | ||
| Cashflows used in investing activities | ( | ) | ||||||
| 5. | Receivables |
As of March 31, 2025 and December 31, 2024, receivables consisted of the following:
| March 31, 2025 | December 31, 2024 | |||||||
| Sales taxes receivable | $ | $ | | |||||
| $ | $ | |||||||
The Company records sales taxes receivable for recoverable sales taxes paid on eligible purchases in its Canadian subsidiary. As at March 31, 2025, and December 31, 2024, the Company recorded a provision for credit losses of $ and $, respectively.
| 6. | Prepaids and Deposits |
As of March 31, 2025, and December 31, 2024, prepaid and deposits consisted of the following:
| March 31, 2025 | December 31, 2024 | |||||||
| Prepaid expenses | $ | $ | ||||||
| Deposits | ||||||||
| $ | $ | | ||||||
| 7. | Investment in securities |
As of March 31, 2025, the Company’s investments consist of publicly traded equity securities and a convertible debenture. These investments are reported under ASC 321 – Investments in Equity Securities and ASC 320 – Investments – Debt Securities, as applicable. The Company has classified the investments as held for trading.
The following table summarizes the changes in investments for the three months ended March 31, 2025 and year ended December 31, 2024:
| Public Company Investment | Private Company Investment | Convertible Debenture | Total | |||||||||||||
| Balance, December 31, 2023 | $ | |||||||||||||||
| Purchases | ||||||||||||||||
| Balance, December 31, 2024 | $ | |||||||||||||||
| Purchases | $ | |||||||||||||||
| Transfer | ( | ) | ||||||||||||||
| Acquired in the sale of Skincare business | ||||||||||||||||
| Proceeds on sale | ( | ) | ( | ) | ||||||||||||
| Interest | ||||||||||||||||
| Realized loss | ( | ) | ( | ) | ||||||||||||
| Unrealized loss | ( | ) | ( | ) | ||||||||||||
| Balance, March 31, 2025 | $ | |||||||||||||||
10
Equity Securities
The Company’s equity investments
consist of publicly traded equity securities with readily determinable fair values. In accordance with ASC 321, these securities are
measured at fair value, with changes in fair value recognized in profit or loss. For the three months ended March 31, 2025, the Company
recognized a realized loss of $
Convertible Debenture
The Company also holds a convertible
debenture, classified as a trading security under ASC 320, as it is held within a portfolio of investments and is intended to be converted
into equity upon favorable market conditions. The debenture is measured at fair value, with changes in value recognized through profit
or loss. For the three months ended March 31, 2025, the Company recognized interest income of $
Fair Value Measurement
| Fair Value Measurement Using: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Equity securities | $ | |||||||||||||||
| Convertible debenture | ||||||||||||||||
| Total | $ | |||||||||||||||
| 8. | Equipment |
| Computers | ||||
| Cost | ||||
| Balance, December 31, 2023 | $ | |||
| Foreign currency translation | ( | ) | ||
| Balance, December 31, 2024 | $ | |||
| Foreign currency translation | ||||
| Balance, March 31, 2025 | $ | |||
| Accumulated depreciation | ||||
| Balance, December 31, 2023 | $ | |||
| Depreciation | ||||
| Foreign currency translation | ( | ) | ||
| Balance, December 31, 2024 | $ | |||
| Depreciation | ||||
| Foreign currency translation | ||||
| Balance, March 31, 2025 | $ | |||
| Net book value | ||||
| December 31, 2024 | $ | |||
| March 31, 2025 | $ | |||
11
| 9. | Intangible assets and consideration payable |
| License #1 | License # 2 (IPR&D asset) | Total | ||||||||||
| Cost: | ||||||||||||
| Balance, December 31, 2024 | $ | |||||||||||
| Additions | ||||||||||||
| Termination of agreement | ( | ) | ( | ) | ||||||||
| Balance, March 31, 2025 | $ | |||||||||||
| Accumulated amortization: | ||||||||||||
| Balance, December 31, 2024 | $ | |||||||||||
| Additions | ||||||||||||
| Termination of agreement | ( | ) | ( | ) | ||||||||
| Balance, March 31, 2025 | $ | |||||||||||
| Net book value: | ||||||||||||
| December 31,2024 | $ | |||||||||||
| March 31, 2025 | ||||||||||||
On January 15, 2024, the Company entered
into a license agreement with a Biotechnology company to use their proprietary technology and process to assist in formulating stem cells
(“License #1”). The term of the license is
| a) | $ |
| b) | $ |
| c) | $ |
| 1 | Effective February 27, 2025, the Company and the Biotechnology
company entered into a mutual termination agreement to terminate the Company’s right to License #1 and to release the Company of
the remaining undiscounted obligation payable of $ |
The cost of License #1 was measured
at $
| Consideration payable | ||||
| Consideration payable – undiscounted | $ | |||
| Discount on initial recognition | ( | ) | ||
| Fair value on initial recognition | $ | |||
| Paid in cash | ( | ) | ||
| Accretion | ||||
| Balance, December 31, 2024 | $ | |||
| Accretion | ||||
| Termination of agreement | ( | ) | ||
| Balance, March 31, 2025 | $ | |||
As a result of the termination, the
Company derecognized the associated intangible asset and the related consideration payable, recognizing a gain of $
12
On April 30, 2024, the Company entered into an exclusive license agreement with a pharmaceutical company granting the Company rights to develop, manufacture, and commercialize licensed products (“License # 2”). The Company has classified License # 2 as an IPR&D asset resulting in only the acquisition costs plus any transaction costs to be capitalized upon acquisition. The research and development project associated with License # 2 is not yet complete and as a result the Company has not yet determined the useful life of the IPR&D asset.
The Company paid consideration of $
The Black-Scholes Option Pricing Model requires six basic data inputs: the exercise or strike price, expected time to expiration or exercise, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement.
The following assumptions were used in the Black-Scholes option pricing model:
| Initial recognition – April 30, 2024 | ||||
| Risk-free interest rate | % | |||
| Expected life | ||||
| Expected dividend rate | % | |||
| Expected volatility | % | |||
The consultant who assisted in acquiring
License # 2 is to receive
| ● | May
3, 2024: |
| ● | August
1, 2024: |
| ● | November
1, 2024: |
| ● | February
2, 2025: |
The cost of License # 2 IPR&D asset
is $
On March 26, 2025, the Company entered
into a first amendment to the exclusive license agreement covering License # 2, expanding its rights to include the growing animal health
market. The amendment to the existing agreement now covers a broad array of animal health applications, including pharmaceuticals for
muscular, metabolic, cardiovascular, neurological, and endocrine conditions, alongside innovative animal health solutions such as feed
additive applications. The Company agreed to pay $
The shares issued to the pharmaceutical
company are unregistered and subject to trading restrictions for six months from the issue date resulting in a fair value discount adjustment
of $
13
The Black-Scholes Option Pricing Model requires six basic data inputs: the exercise or strike price, expected time to expiration or exercise, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement.
The following assumptions were used in the Black-Scholes option pricing model:
| Initial recognition – March 26, 2025 | ||||
| Risk-free interest rate | % | |||
| Expected life | ||||
| Expected dividend rate | % | |||
| Expected volatility | % | |||
| 10. | Derivative liabilities |
On July 15, 2022, the Company issued
On November 21, 2023, the Company completed
its Initial Public Offering (“IPO”) and issued
We analyzed the common stock purchase warrants issued as partial settlement of the promissory notes payable and the IPO warrants against the requirements of ASC 480, Distinguishing Liabilities from Equity, and determined that the warrants should be classified as financial liabilities.
ASC 815, Derivatives and Hedging, requires that the warrants be accounted for as derivative liabilities with initial and subsequent measurement at fair value with changes in fair value recorded as other income (expense).
A continuity of the Company’s common stock purchase derivative liability warrants is as follows:
| Derivative liabilities | ||||
| Outstanding, December 31, 2023 | $ | |||
| Change in fair value of derivative liabilities | ( | ) | ||
| Outstanding, December 31, 2024 | $ | |||
| Change in fair value of derivative liabilities | ||||
| Outstanding, March 31, 2025 | $ | |||
We determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes Option Pricing Model to calculate the fair value as of initial recognition and at subsequent period ends. The Black-Scholes Option Pricing Model requires six basic data inputs: the exercise or strike price, expected time to expiration or exercise, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement
The following assumptions were used in the Black-Scholes option pricing model:
| March
31, 2025 | December
31, 2024 | December
31, 2023 | November 21,
2023 | December 31,
2022 | July
15, 2022 | |||||||||||||||||||
| Risk-free interest rate | % | % | % | % | | % | % | |||||||||||||||||
| Expected life | | | ||||||||||||||||||||||
| Expected dividend rate | % | % | % | | % | % | % | |||||||||||||||||
| Expected volatility | % | % | % | | % | % | % | |||||||||||||||||
14
As of March 31, 2025, the following warrants were outstanding:
| Outstanding | Expiry date | Weighted average exercise price ($) | ||||||
As of March 31, 2025, and December
31, 2024, the weighted average life of derivative liability warrants outstanding was
| 11. | Equity |
Common Stock
Authorized
As of March 31, 2025, and December
31, 2024, the Company had
Issued and outstanding
As of March 31, 2025, and December
31, 2024, the Company had
Transactions during the three months ended March 31, 2025
On January 28, 2025, the Company entered
into and completed a warrant inducement transaction with the holders of its Series A Warrants pursuant to a warrant inducement agreement.
Under the agreement, the exercise price of the outstanding Series A Warrants was reduced from $
On February 2, 2025, the Company issued
On March 7, 2025, the Company repurchased
a total of
On March 18, 2025, the Company entered
into a securities purchase agreement with an existing investor to repurchase
On March 21, 2025, the Company closed
the issuance of
15
On March 26, 2025, the Company entered
into a first amendment to the exclusive license agreement covering License # 2 (Note 8), expanding its rights to include the growing
animal health market. The Company agreed to issue
Transactions during the three months ended March 31, 2024
No share capital activity in the Company during the three months ended March 31, 2024.
Preferred Stock
Authorized
As of March 31, 2025, and December
31, 2024, the Company had
Issued and outstanding
As at March 31, 2025, and December
31, 2024, the Company had
Transactions during the three months ended March 31, 2025, and 2024
On
March 26, 2025, at a special meeting of the shareholders, the shareholders approved the issuance of
Equity Warrants
Transactions during the three-month ended March 31, 2025.
On January 28, 2025, in connection
with the warrant inducement agreement (see above) and the exercise of the Series A Warrants, the Company issued
On March 18, 2025, the Company entered
into a securities purchase agreement with an existing investor to repurchase warrants to purchase
On March 21, 2025, the Company closed
a registered direct offering with institutional investors, issuing
Transactions during the three-month ended March 31, 2024.
There was no equity warrant activity during the three months ended March 31, 2024
16
As of March 31, 2025, the following equity warrants were outstanding:
| Outstanding | Expiry date | Weighted average exercise price ($) | ||||||
As of March 31, 2025, and December 31, 2024, the weighted
average life of equity warrants outstanding was
Stock Options
The Company has a stock option plan
included in the Company’s 2020 Equity Incentive Plan (the “Plan”) where the Board of Directors or any of its committees
can grant Incentive Stock Options, Nonstatutory Stock Options, and Restricted Stock to employees, advisors and directors of the Company.
As of March 31, 2025 and December 31, 2024, the aggregate number of shares allocated and made available for issuance pursuant to stock
options granted under the Plan shall not exceed
Transactions during the three-month ended March 31, 2025
There was no stock option activity during the three months ended March 31, 2025.
Transactions during the three-month ended March 31, 2024
In January 2024, the Company granted
On March 6, 2024, the Company granted
The continuity of stock options for the three months ended March 31, 2025, and December 31, 2024, is summarized below:
| Number of stock options | Weighted average exercise price | |||||||
| Outstanding, December 31, 2023 | ||||||||
| Granted | ||||||||
| Forfeited | ( | ) | ||||||
| Outstanding, December 31, 2024 | ||||||||
| Granted | ||||||||
| Forfeited | ( | ) | ( | ) | ||||
| Exercised | ||||||||
| Outstanding, March 31, 2025 | ||||||||
17
As of March 31, 2025, the following options were outstanding, entitling the holders thereof the right to purchase one common stock for each option held as follows:
| Outstanding | Vested | Expiry date | Weighted average exercise price ($) | |||||||||
As of March 31, 2025, and December
31, 2024, the weighted average life of stock options outstanding was
With the sale of the skincare business
on January 16, 2025,
During the three months ended March
31, 2025 and 2024, the Company recorded ($
18
| 12. | Related Party Transactions |
Related parties consist of the following individuals and corporations:
| ● | Braeden Lichti, Non-executive Chairman |
| ● | Jordan Plews, Former Director (resigned December 23, 2024) and CEO of Skincare and BioSciences (resigned January 16, 2025) |
| ● | Graydon Bensler, CFO, CEO and Director |
| ● | Tim Sayed, Former Chief Medical Officer and Former Director (resigned August 1, 2024) |
| ● | Brenda Buechler, Former Chief Marketing Officer (effective June 20, 2024) |
| ● | Christoph Kraneiss, Former Chief Commercial Officer (effective June 20, 2024) |
| ● | Jeffrey Parry, Director (appointed June 1, 2023) |
| ● | Julie Daley, Director (appointed June 1, 2023) |
| ● | Crystal Muilenburg, Former Director (appointed June 1, 2023, resigned February 29, 2024) |
| ● | George Kovalyov, Director (appointed March 1, 2024) |
| ● | GB Capital Ltd., controlled by Graydon Bensler |
| ● | JP Bio Consulting LLC, controlled by Jordan Plews |
| ● | BWL Investments Ltd., controlled by Braeden Lichti |
| ● | Northstrive Companies Inc., controlled by Braeden Lichti |
Key management personnel include those
persons having authority and responsibility for planning, directing, and controlling the activities of the Company as a whole. The Company
has determined that key management personnel consist of members of the Company’s Board of Directors, corporate officers, and individuals
with more than
Remuneration attributed to key management personnel are summarized as follows:
| Three months ended March 31, 2025 | Three months ended March 31, 2024 | |||||||
| Consulting fees | $ | $ | ||||||
| Salaries | ||||||||
| Share-based compensation | ||||||||
| $ | | $ | | |||||
During the three months ended March
31, 2025, the Company incurred consulting fees of $
19
Jordan Plews, Former Director and former
CEO of Skincare and BioSciences , earned a salary of $
Brenda Buechler, Former Chief Marketing
Officer, earned a salary of $ and $
Christoph Kraneiss, Former Chief Commercial
Officer, earned a salary of $ and $
During the three months ended March 31, 2025, and 2024, the company issued the following stock options to related parties:
On March 1, 2024, the Company granted
Details of the fair value, as calculated on the grant date, to each related party in the current and prior periods, and the related expense recorded for the three months ended March 31, 2025, and 2024 is as follow:
| Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Grant date fair value | ||||||||||
| Braeden Lichti, Non-executive Chairman | $ | $ | $ | |||||||||
| Graydon Bensler, CEO, CFO and Director | ||||||||||||
| Jordan Plews, Former Director and former CEO of Skincare and BioSciences2 | ||||||||||||
| Tim Sayed, Former Chief Medical Officer and Former Director1 | ||||||||||||
| Jeffrey Parry, Director | ||||||||||||
| Crystal Muilenburg, Former Director1 | ( | ) | ||||||||||
| Julie Daley, Director | ||||||||||||
| George Kovalyov, Director | ||||||||||||
| Brenda Buechler, Former Chief Marketing Officer1 | ||||||||||||
| Christoph Kraneiss, Former Chief Commercial Officer1 | ||||||||||||
| $ | | $ | | $ | ||||||||
| 1 |
As of March 31, 2025, and December
31, 2024, the Company had $
As of March 31, 2025, the Company had
$
| 13. | Commitments and Contingencies |
There were commitments as of March 31, 2025, and December 31, 2024, or during the periods then ended.
As of December 31, 2024, the Company had an ongoing dispute that arose in the normal course of business. In February 2025, solely to avoid the cost and burdens associated with litigation, the Company and the parties (each a “Party” or collectively “Parties”) entered into a settlement agreement to fully and finally resolve any and all claims between them, without the Company or any Party admitting any liability or fault. Due to the confidential nature of the settlement agreement, the Company is not in a position to disclose the terms of the settlement, however the amounts payable by the Company to the Parties and their legal counsel is included in accounts payable and accrued liabilities as of December 31, 2024. The amounts were paid in full by March 31, 2025.
20
| 14. | Subsequent Events |
Management has evaluated events subsequent to the year ended March 31, 2025, up to May 14, 2025, for transactions and other events that may require adjustment of and/or disclosure in the consolidated financial statements.
As of April 14, 2025, all
On April 9, 2025, Northstrive Biosciences Inc., a wholly owned subsidiary of the Company, entered into a Development and License Agreement with Yuva Biosciences, Inc., under which Northstrive obtained a worldwide, exclusive license to research, develop, and commercialize therapeutic products targeting cardiac diseases and obesity, based on mitochondrial science-related technology developed using artificial intelligence. Under the agreement, Yuva Biosciences will receive upfront and program-based payments, milestone payments tied to the development of licensed products, and royalties on net sales during the royalty term. The agreement includes customary provisions relating to ownership of intellectual property, sublicensing rights, and early termination rights. As of the issuance date of these financial statements, the agreement had been executed, and initial development activities are underway.
On April 24, 2025, the Company entered
into an At-The-Market Issuance Sales Agreement (the “Sales Agreement”) with Univest Securities, LLC, allowing for the issuance
and sale of up to $
On April 29, 2025, the exercise price
of the New Warrants issued in connection with the January 28, 2025 warrant inducement transaction was adjusted in accordance with their
terms. The exercise price was reset to the contractual floor price of $
21
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the notes to those statements included elsewhere in this Quarterly Report and the audited consolidated financial statements and the other information set forth in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the U.S. Securities and Exchange Commission on March 28, 2025.
Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s registration statement on Form S-1 filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Organization and Overview of Operations
On December 31, 2024, the Company entered into an asset purchase agreement (the “Asset Purchase Agreement”) with an unrelated third party, pursuant to which the Company agreed to sell, and the unrelated third party agreed to purchase, the Company’s skincare business. The sale of the skincare business was consummated on January 16, 2025.
Prior to entering into the Asset Purchase Agreement, the Company’s principal business was operating a skincare development company engaged in the design, manufacture, and marketing of skincare products in the skincare industry. After the sale of the skincare business, the Company changed its principal business. PMGC Holdings Inc. is a diversified holding company that manages and grows its portfolio through strategic acquisitions, investments, and development across various industries. The Company currently manages and operates a diverse portfolio of three wholly owned subsidiaries:
| ● | NorthStrive BioSciences Inc. – Biosciences is a biopharmaceutical company focusing on the development and acquisition of cutting-edge aesthetic medicines and therapeutic products. This company’s lead asset, EL-22, is leveraging a first-in-class engineered probiotic approach to address obesity’s pressing issue of preserving muscle while on weight loss treatments, including GLP-1 receptor agonists. For more information, please visit www.northstrivebio.com. |
| ● | PMGC Research Inc. – PMGC Research is based in Canada and is currently dedicated to medical scientific research and development efforts. This company utilizes Canadian research grants and partnering with leading Canadian Universities, with aims of pushing the boundaries of innovation. |
| ● | PMGC Capital LLC – PMGC Capital is a multi-strategy investment firm focused on direct investments, strategic lending, and acquiring undervalued companies and assets across diverse markets. This company’s mission is to identify and seize high-potential opportunities, delivering sustainable growth and maximizing returns on capital. |
22
Outlook
Management’s Plans
Over the next twelve months, we intend to focus on:
| ● | Increasing revenue by achieving successful returns on capital through PMGC Capital LLC, our multi-strategy investment vehicle, by acquiring and managing undervalued assets, public and private investments, and structured financing opportunities. |
| ● | Establishing new wholly owned subsidiaries to develop and commercialize newly acquired or licensed assets across various industries. |
| ● | Utilizing clinical validation studies to strengthen the commercial potential and scientific credibility of our portfolio companies’ technologies. |
| ● | Advancing clinical development to progress NorthStrive Biosciences, Inc.’s clinical assets toward Investigational New Drug (IND) applications. |
| ● | Pursuing additional acquisitions of operating business-to-business companies with positive EBITDA. |
| ● | Evaluating potential opportunities such as out licensing our biotechnology applications, potential spin-offs, and creating new publicly traded companies, such as Special Purpose Acquisition Corporations (“SPACs”) |
Results of Operations
Comparison of the three months ended March 31, 2025.
In January 2025, the Company sold its skincare business, which had previously contributed to the financial results of the Company. The financial results of the disposed operations from January 1, 2025 until January 16, 2025 have been classified as discontinued operations. The following table provides certain selected financial information for continuing operations for the periods presented and does not include activity from the skincare business of the Company:
| Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | ||||||||||
| Marketing and Promotion | $ | 35,594 | $ | 131,516 | $ | (95,922 | ) | |||||
| Consulting Fees | $ | 547,557 | $ | 378,473 | $ | 169,084 | ||||||
| Office and Administration | $ | 209,031 | $ | 132,459 | $ | 76,572 | ||||||
| Professional Fees | $ | 266,468 | $ | 43,290 | $ | 223,178 | ||||||
| Investor Relations | $ | 69,950 | $ | 91,578 | $ | (21,628 | ) | |||||
| Research and Development | $ | 32,433 | $ | 2,782 | $ | 29,651 | ||||||
| Total operating expenses | $ | 1,121,624 | $ | 799,974 | $ | 321,649 | ||||||
| Other income (expense)1 | $ | (379,087 | ) | $ | 255,853 | $ | (634,940 | ) | ||||
| Net loss from continuing operation | $ | (1,580,811 | ) | $ | (544,121 | ) | $ | (1,036,690 | ) | |||
| Basic and dilutive loss per common share- continuing operations | $ | (2.902 | ) | $ | (43.937 | ) | $ | 41.035 | ||||
| Weighted average number of shares outstanding – basic and diluted | 544,715 | 12,384 | ||||||||||
| 1 | Other expenses relate to interest income, interest expense, unrealized fair value gain/loss on investment, realized loss on sale of investments, gain on the termination of the intangible asset and fair value gain/loss on derivative liability. |
23
Research and Development Expenses
Research and development expenses for the three months ended March 31, 2025, were $32,433 compared to $2,782 for the three months ended March 31, 2024, an increase of $29,651. Research and Development related to the Company’s spending on clinical validation studies. The increase in research and development is mainly driven by the company continuously working on the research project of EL-22 and the costs of the Type B pre-Investigational New Drug (“pre-IND”) meeting with the U.S. Food and Drug Administration.
Marketing and Promotion
Marketing and promotion expenses for the three months ended March 31, 2025, were $35,594 compared to $131,516 for the three months ended March 31, 2024, a decrease of $95,922. During the three months ended March 31, 2024, the Company engaged an investor relations agency under a $125,000 agreement signed on January 5, 2024, to support external communications and investor engagement efforts. No comparable agreement was entered into during the three months ended March 31, 2025.
Office and Administrative Expenses
Office and administration expenses for the three months ended March 31, 2025, were $209,031, compared to $132,459 for the three months ended March 31, 2024, an increase of $76,572. The increase was driven by higher business activity levels, general price increases, and a shift in cost responsibilities following the disposition of the skincare business. Additionally, share-based compensation rose by $15,731 due to the vesting of stock options granted after the first fiscal quarter of 2024.
Consulting Fees
Consulting fees for the three months ended March 31, 2025, were $547,557, compared to $378,473 for the three months ended March 31, 2024, an increase of $169,084. The Company’s Chief Executive Officer, Chief Financial Officer, and Chairman provide services in a consulting capacity. The increase was primarily driven by bonus-related consulting expenses of $300,000 (2024 – $27,072), incurred in connection with the sale of the Skincare business, and fundraising efforts during the quarter. The increases were partially offset by a decrease in external consulting services.
Professional Fees
Professional fees for the three months ended March 31, 2025 were $266,468, compared to $43,290 for the three months ended March 31, 2024, an increase of $223,178. Professional fees comprise of legal, audit and accounting services. The increase during 2025 is primarily due to an increase in audit, legal and accounting services given the corporate restructuring and financing efforts conducted during the first three months of 2025 compared to 2024.
Investor Relations
Investor relations expenses for the three months ended March 31, 2025 were $69,950, compared to $91,578 for the three months ended March 31, 2024, a decrease of $21,628. The decrease is primarily attributable to a decrease in public relations and media coverage expenses during the current quarter.
Other income (expense)
Other income (expense) for the three months ended March 31, 2025 amounted to a net expense of $379,087, compared to net income of $255,853 for the three months ended March 31, 2024, representing an unfavorable variance of $634,940. The variance was primarily driven by a realized loss on investments of $466,678 and an unrealized loss of $60,404 recorded in the current period, whereas no such losses were recognized in the prior period. Additionally, the comparative period included a $274,939 fair value gain on derivative liabilities, which did not recur in the current quarter. Partially offsetting these declines, the Company recognized a $129,613 gain on the termination of an intangible asset and interest income of $28,856, compared to only $86 in the prior year. Interest expense also declined to $10,474 from $19,172, reflecting lower financing costs during the quarter.
24
Liquidity and Capital Resources
The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and ultimately the attainment of profitable operations.
As of March 31, 2025, we had cash of $5,364,434 and as of December 31, 2024, we had cash of $3,984,453. The increase between December 31, 2024 and March 31, 2025 was attributable to cash provided by financing activities exceeding cash used in operating and investing activities. As of March 31, 2025 and December 31, 2024, the Company had a net working capital of $6,055,880 and $4,251,867, respectively, and has an accumulated deficit of $14,878,082 and $13,269,627, respectively. Furthermore, for the three months ended March 31, 2025, and 2024, the Company incurred a net loss of $1,608,455 and $1,397,250, respectively and used $1,347,416 and $2,324,068, respectively of cash flows for operating activities. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company believes it will have sufficient funds for at least the next 12 months from the issuance date of the unaudited condensed consolidated financial statements.
Our principal liquidity requirements are for working capital, capital expenditure and research and development. We fund our liquidity requirements primarily through cash on hand and the issuance of common and preferred stock.
The Company expects an improvement in liquidity and capital resources, including cash obtained from any sale of investment securities it currently owns. Cash flows used in discontinued operating and investing activities and assets and liabilities held for sale has been excluded from our analysis. The Company may be paid additional earn-out consideration in connection with the sale of its skincare business, consisting of potential payments for each year ending on the anniversary of the closing date of the disposition during the five-year period following the closing equal to 5% of the sales generated during such year from the existing products as of the closing and a one-time payment of $500,000 if the buyer achieves $500,000 in revenue from sales of the existing hair and scalp products as of the closing on or before the 24-month anniversary of the closing date of the disposition. The Company plans to use the cash obtained from any sale of investment securities or earnout payment for working capital.
The following table provides selected financial data as of March 31, 2025, and December 31, 2024, respectively (excluding assets and liabilities held for sale).
| March 31, 2025 | December 31, 2024 | Change | ||||||||||
| Current assets | $ | 6,816,148 | $ | 4,858,193 | $ | 1,957,955 | ||||||
| Current liabilities | $ | 760,268 | $ | 1,250,218 | $ | (489,950 | ) | |||||
| Working capital | $ | 6,055,880 | $ | 3,607,975 | $ | 2,447,905 | ||||||
The following table summarizes our cash flows from operating, investing and financing activities from continuing operations:
| Three Month Ended March 31, 2025 | Three Month Ended March 31, 2024 | Change | ||||||||||
| Cash used in operating activities | $ | (1,155,514 | ) | $ | (889,600 | ) | $ | (265,914 | ) | |||
| Cash used in investing activities | $ | (215,319 | ) | $ | (50,000 | ) | $ | (165,319 | ) | |||
| Cash provided by financing activities | $ | 2,943,185 | $ | - | $ | 2,943,185 | ||||||
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Cash Flow from Operating Activities
For the three months ended March 31, 2025, net cash flows used in operating activities was $1,155,514 compared to $889,600 used during the three months ended March 31, 2024, respectively, primarily due to net loss and timing of settlement of assets and liabilities.
Cash Flows from Investing Activities
During the three months ended March 31, 2025, and 2024, we used $215,319 and $50,000, respectively, in investing activities. In 2025, the Company made strategic investments in publicly traded companies of $430,024, which was partially offset by cash proceeds obtained in connection with the sale of shares that were issued to the Company in connection with the sale of its Skincare business. In the three months ended March 31, 2024, the Company paid $50,000 towards the purchase of intangible assets.
Cash Flows from Financing Activities
During the three months ended March 31, 2025, we had cash flow provided by financing activities of $2,943,185 compared to cash flow provided by financing activities of $Nil in the three months ended March 31, 2024. During the three months ended March 31, 2025, the Company raised $1,245,306 through the issuance of common stock and prefunded warrants, and $1,698,058 through the exercise of Series A warrants.
Critical Accounting Policies and Significant Judgments and Estimates
This discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to revenue recognition, the collectability of receivables, valuation of inventory, fair value of investments in securities, derivative liabilities and stock options, useful lives and recoverability of long-lived assets, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgements about the carrying value of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from those estimates. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the consolidated financial statements in the period they are determined.
The Company’s policy for intangible assets require judgement in determining whether the present value of future expected economic benefits exceeds capitalized costs. The policy requires management to make certain estimates and assumptions about future economic benefits related to its operations. Estimates and assumptions may change if new information becomes available. If information becomes available suggesting that the recovery of capitalized cost is unlikely, the capitalized cost is written off/impaired to the consolidated statement of operations.
The assessment of whether the going concern assumption is appropriate requires management to take into account all available information about the future, which is at least, but not limited to, 12 months from the date the financial statements are issued. The Company is aware that material uncertainties related to events or conditions may cast substantial doubt upon the Company’s ability to continue as a going concern.
Foreign Currency Translation
The Company’s functional and reporting currency is the U.S. dollar. The functional currency of the Company’s Canadian subsidiary, PMGC Research Inc. (“PMGC Research”), is the Canadian dollar. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets, liabilities, and items recorded in income arising from transactions denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.
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The accounts of PMGC Research are translated to U.S. dollars using the current rate method. Accordingly, assets and liabilities are translated into U.S. dollars at the period-end exchange rate while revenues and expenses are translated at the average exchange rates during the period. Related exchange gains and losses are included in a separate component of stockholders’ equity as accumulated other comprehensive income (loss).
Stock-Based Compensation
Employees - The Company accounts for share-based compensation under the fair value method which requires all such compensation to employees, including the grant of employee stock options, to be calculated based on its fair value at the measurement date (generally the grant date), and recognized in the consolidated statement of operations over the requisite service period.
Nonemployees - During June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”) to simplify the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees. Under the requirements of ASU 2018-07, the Company accounts for share-based compensation to non-employees under the fair value method which requires all such compensation to be calculated based on the fair value at the measurement date (generally the grant date) and recognized in the statement of operations over the requisite service period.
During the three months ended March 31, 2025 and 2024, the Company recorded ($58,838) and $55,339, respectively, in share-based compensation expense, of which $20,762 and ($79,600), and $5,029 and $50,310, respectively is included in office and administration and discontinued operations, respectively. Within discontinued operations for the years ended March 31, 2025 and 2024, ($73,768) and ($5,832), and $48,900 and $1,410, respectively is included in office and administration and research and development, respectively.
Determining the appropriate fair value model and the related assumptions requires judgment. During the three months ended March 31, 2025 and the year ended 2024, the fair value of each option grant was estimated using a Black-Scholes option-pricing model.
The expected volatility represents the historical volatility of comparable publicly traded companies in similar industries, adjusted for variables such as stock price, market capitalization and life cycle. Due to limited historical data, the expected term for options granted is equal to the contractual life. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of stock options. The Company has not paid and does not anticipate paying cash dividends on its shares of common stock; therefore, the expected dividend yield is assumed to be zero.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditure or capital resources that is material to investors.
JOBS Act
On April 5, 2012, the Jumpstart Our Business Startups Act (the “JOBS Act”) was signed into law. The JOBS Act contains provisions that, among other things, eases certain reporting requirements for qualifying public companies. We will qualify as an “emerging growth company” and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Future Related Party Transactions
The Corporate Governance Committee of our Board of Directors is required to approve all related party transactions. All related party transactions are made or entered into on terms that are no less favorable to use than can be obtained from unaffiliated third parties.
Impact of Inflation
We do not believe the impact of inflation on our Company is material.
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Inflation Risk
We are also exposed to inflation risk. Inflationary factors, such as increases in labor costs, could impair our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and operating expenses.
Market Risk
Market risk is the risk of loss arising from adverse changes in market rates and prices. Our market risk exposure is generally limited to those risks that arise in the normal course of business, as we do not engage in speculative, non-operating transactions, nor do we utilize financial instruments.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act at the end of the period covered by this Quarterly Report.
Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of end of the period covered by this Quarterly Report, our disclosure controls and procedures (as defined in § 240.13a-15(e) or 240.15d-15(e) of Regulation S-K) were effective to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information (i) is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures and (2) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
We recognize that any controls system, no matter how well designed and operated, can provide only reasonable assurance of achieving its objectives, and our management necessarily applies its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the period covered by this Quarterly Report that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not currently a party to any pending legal proceedings that we believe will have a material adverse effect on our business or financial conditions. We may, however, be subject to various claims and legal actions arising in the ordinary course of business from time to time.
ITEM 1A. RISK FACTORS
As a smaller reporting company, we are not required to make disclosures under this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
In addition to the following transactions, there have been no sales of unregistered equity securities that we have not previously disclosed in filings with the U.S. Securities and Exchange Commission.
| ● | In February 2025, the Company issued 438 shares of its common stock to a consultant in relation to the acquisition of License # 2. |
| ● | In March 2025, the Company issued 12,000 shares of its common stock to a consultant in exchange for the expansion of its rights under License # 2. |
| ● | In March 2025, the Company issued 3,036,437 shares of Series B Preferred Stock to an entity owned by the Chief Executive Officer, Chief Financial Officer and a director of the Company. |
| ● | In March 2025, the Company issued 3,336,437 shares of Series B Preferred Stock to an entity owned by the Chairman of the Board of the Company. |
The issuances of the shares were deemed exempt from registration under Section 4(a)(2) of the Securities Act in that the issuance of shares did not involve a public offering.
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The following table provides information with respect to repurchases of our Common Stock during each month of the quarter ended March 31, 2025.
Issuer Purchases of Common Stock(1)
| Period | Total Number of Shares Purchased |
Average Price Paid Per Share |
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs |
||||||||||||
| January 1, 2025 - January 31, 2025 | - | $ | - | - | $ | - | ||||||||||
| February 1, 2025 - February 28, 2024 | - | $ | - | - | $ | - | ||||||||||
| March 1, 2025 - March 31, 2025 | 100 | $ | 4.98 | - | $ | - | ||||||||||
| Total | 100 | |||||||||||||||
| (1) | All shares of Common Stock repurchased during the quarter ended March 31, 2025 were made pursuant to share purchase agreements entered into by the Company and certain investors in a privately negotiated transaction not made pursuant to a publicly announced repurchase plan or program. The Company was approached to purchase the shares individually by the investors to buy back the shares. The Company may or may not decide to buy back more shares from investors in the future. |
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
| (a) |
| (b) | None. |
| (c) | None. |
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ITEM 6. EXHIBITS
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.
EXHIBIT INDEX
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| # | Management contract or compensatory plan. |
| † | Certain portions of this document that constitute confidential information have been redacted in accordance with Item 601(b)(10) of Regulation S-K. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| PMGC Holdings Inc. | ||
| Date: May 14, 2025 | By: | /s/ Graydon Bensler |
| Name: | Graydon Bensler | |
| Title: | Chief Executive Officer and Chief Financial Officer | |
| (Principal Executive, Accounting and Financial Officer) | ||
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