ELAB.NASDAQElevai Labs INC
8-K: Carmell Corporation to Acquire Elevai Skincare Assets in $1.075 Million Deal
Sentiment:
Asset Purchase Agreement
Carmell Corporation is set to acquire substantially all assets of Elevai Skincare for $1.075 million in stock, plus potential earnouts and cash payments.
Summary
- Carmell Corporation will acquire substantially all assets of Elevai Skincare, a subsidiary of PMGC Holdings, for a total consideration that includes stock, cash, and potential earnout payments.
- The initial stock consideration is valued at $1,075,463, with $100,000 held back for 12 months to cover potential indemnification claims.
- An additional $56,525 in cash will be paid within 60 days of Cutis Cura Corporation (a subsidiary of Carmell) selling 7,500 units of Enfinity and 20,000 tubes of Empower products.
- Earnout payments include 5% of net sales from existing products over the next five years and a $500,000 milestone payment upon achieving $500,000 in net revenue from existing hair and scalp products within 24 months.
- The deal includes the assumption of certain liabilities, primarily trade accounts payable and obligations under assigned contracts, while excluding other debts and liabilities of Elevai Skincare and PMGC Holdings.
- The closing is expected to occur within two business days after all conditions are met or waived.
Sentiment
Score: 7
Explanation: The document outlines a strategic acquisition with potential for future growth, but also includes risks and uncertainties related to earnouts and integration. The sentiment is positive overall, but tempered by the complexities of the deal.
Positives
- The acquisition provides Carmell Corporation with a business focused on innovative skincare and haircare products.
- The earnout structure aligns the interests of the seller and buyer, incentivizing future sales growth.
- The deal includes a holdback to cover potential indemnification claims, reducing risk for the buyer.
- The acquisition is structured to assume only specific liabilities, limiting exposure for Carmell Corporation.
Negatives
- The deal includes a holdback of $100,000 in stock for 12 months, which could impact the seller's immediate access to the full consideration.
- The cash payment of $56,525 is contingent on the sale of specific product quantities, which may not be guaranteed.
- The earnout payments are dependent on future sales performance, which introduces uncertainty for the seller.
- The seller is subject to restrictive covenants, including non-compete and non-solicitation clauses, for three years.
Risks
- The success of the acquisition depends on the future performance of the acquired business and its products.
- The earnout payments are contingent on achieving specific sales targets, which may not be met.
- The integration of the acquired assets and business into Carmell Corporation may present challenges.
- There is a risk of potential indemnification claims, which could reduce the final consideration received by the seller.
- The seller is subject to restrictive covenants, which could limit their future business activities.
Future Outlook
The agreement includes potential earnout payments based on future sales performance, indicating an expectation of continued growth and revenue generation from the acquired assets. The registration of the shares issued to the seller is also a key future event.
Industry Context
This acquisition reflects a trend of consolidation in the skincare and haircare industry, where companies seek to expand their product portfolios and market reach through strategic acquisitions. Carmell Corporation is leveraging this strategy to enter the skincare market.
Comparison to Industry Standards
- The structure of this deal, with a mix of stock, cash, and earnouts, is common in acquisitions of this type, particularly in the consumer goods sector.
- The earnout structure, based on a percentage of net sales, is a typical way to align the interests of the buyer and seller and incentivize future performance.
- The holdback of a portion of the stock consideration for indemnification is a standard practice to mitigate risks associated with representations and warranties.
- Comparable acquisitions in the beauty and personal care space often involve similar deal structures, with a focus on future revenue potential and integration of acquired assets.
Stakeholder Impact
- Shareholders of Carmell Corporation may see a positive impact from the acquisition, with potential for increased revenue and market share.
- Employees of Elevai Skincare will transition to the new ownership under Carmell Corporation.
- Customers of Elevai Skincare will continue to receive products and services under the new ownership.
- Suppliers and distributors of Elevai Skincare will continue their relationships with the business under Carmell Corporation.
Next Steps
- The parties will work to satisfy the conditions precedent to closing.
- Carmell Corporation will integrate the acquired assets and business into its operations.
- The seller will receive the closing stock consideration and potential future payments.
- Carmell will register the shares issued to the seller for resale.
Key Dates
| Date | Description |
|---|---|
| 2021-02-21 | Date of first assigned contract, Confidential Information and Inventions Assignment Agreement between Elevai Skincare and Rize Up Enterprises, LLC |
| 2022-02-16 | Date of assigned contract, Confidential Information and Inventions Assignment Agreement between PMGC Holdings and Ashley McGuire |
| 2022-02-22 | Date of assigned contract, Confidential Information and Inventions Assignment Agreement between Elevai Skincare and Mark Macicek/Real Aesthetics, LLC |
| 2022-02-24 | Date of assigned contract, Master Collaboration Agreement between Radyus Research, Inc. and PMGC Holdings |
| 2022-04-10 | Date of assigned contract, Sales Representative Agreement between Elevai Skincare and Lea Diamond |
| 2022-05-31 | Date of assigned contract, Confidential Information and Inventions Assignment Agreement between Elevai Skincare and Jane Ruffo |
| 2022-06-01 | Date of assigned contract, Sales Representative Agreement between Elevai Skincare and Jane Ruffo |
| 2022-06-02 | Date of assigned contract, Sales Representative Agreement between Elevai Skincare and Thao Duong and Confidential Information and Inventions Assignment between Elevai Skincare and Thao Duong |
| 2022-08-08 | Date of assigned contract, Confidential Information and Inventions Assignment Agreement between Elevai Skincare and Lea Diamond/Christina Douchar |
| 2022-08-22 | Date of assigned contract, Consulting Agreement between PMGC Holdings and Megan Enos and Confidential Information and Inventions Assignment Agreement between PMGC Holdings and Megan Enos |
| 2022-08-23 | Date of assigned contract, Confidential Information and Inventions Assignment Agreement between PMGC Holdings and Brianna Corzo |
| 2022-08-24 | Date of assigned contract, Consulting Agreement between PMGC Holdings and Brianna Corzo |
| 2022-08-30 | Date of assigned contract, Authorized Distributor Agreement between Elevai Skincare and Refine USA, LLC |
| 2023-01-17 | Date of assigned contract, Consulting Agreement between PMGC Holdings and Liony Ho and Confidential Information and Inventions Assignment Agreement between PMGC Holdings and Liony Ho |
| 2023-01-17 | Date of assigned contract, Consulting Agreement between PMGC Holdings and Puspita Hutajulu and Confidential Information and Inventions Assignment Agreement between PMGC Holdings and Puspita Hutajulu |
| 2023-02-02 | Date of RoosterBio Letter from RoosterBio |
| 2023-02-03 | Date of assigned contract, Research & Development and Manufacturing Agreement between Elevai Skincare and Allure Labs, LLC |
| 2023-02-14 | Date of assigned contract, Workforce Optimization Client Service Agreement between PMGC Holdings and Insperity PEO Services, L.P. |
| 2023-03-31 | Date of assigned contract, Consulting Agreement between PMGC Holdings and Myka Menard and Confidential Information and Inventions Assignment Agreement between PMGC Holdings and Myka Menard |
| 2023-05-01 | Date of assigned contract, Distributorship Agreement between PMGC Holdings and Central Circle Company W.L.L. (Kuwait) and Distributorship Agreement between PMGC Holdings and Cosbeauty Company Ltd. (Vietnam) |
| 2023-05-18 | Date of assigned contract, Master Services Agreement between Elevai Skincare and Orange County 3PL, LLC and Scope of Work #1 between Elevai Skincare and Orange County 3PL, LLC and Amendment Agreement between Elevai Skincare and Yuva Biosciences, Inc. |
| 2023-06-20 | Date of assigned contract, Material Transfer Agreement between Yuva Biosciences, Inc. and Elevai Skincare |
| 2023-06-25 | Date of assigned contract, Consulting Agreement between Elevai Skincare and Ramya Viswanathan and Confidential Information and Inventions Assignment Agreement between Elevai Skincare and Ramya Viswanathan |
| 2023-07-12 | Date of assigned contract, Mutual Confidentiality Agreement between PMGC Holdings and Tradis Gat (Israel) |
| 2023-08-01 | Date of assigned contract, Distributorship Agreement between PMGC Holdings and DMark Multi Sales Corp. (Phillipines) |
| 2023-08-15 | Date of assigned contract, Mutual Confidentiality Agreement between PMGC Holdings and BYSC (Netherlands) |
| 2023-08-18 | Date of assigned contract, Mutual Confidentiality Agreement between PMGC Holdings and SQinno (Netherlands) |
| 2023-09-01 | Date of assigned contract, Consulting Agreement between PMGC Holdings and Jenzel Arevalo and Confidential Information and Inventions Assignment Agreement between PMGC Holdings and Jenzel Arevalo |
| 2023-09-06 | Date of assigned contract, Quality Agreement between Elevai Skincare and Allure Labs, LLC |
| 2023-09-07 | Date of assigned contract, Mutual Confidentiality Agreement between PMGC Holdings and Rejuva Laser and Aesthetic |
| 2023-10-01 | Date of assigned contract, Consulting Agreement between PMGC Holdings and Jessica Riviera and Confidential Information and Inventions Assignment Agreement between PMGC Holdings and Jessica Riviera and Confidential Information and Inventions Assignment Agreement between PMGC Holdings and Dayna Hinson |
| 2023-10-13 | Date of assigned contract, Fulfillment Agreement and Credit Form between Elevai Skincare and Ship Central Inc |
| 2023-10-26 | Date of assigned contract, Sales Order/proposal between PMGC Holdings and Avalara |
| 2023-11-01 | Date of assigned contract, Order Form between PMGC Holdings and Exfluential, Inc. |
| 2023-11-03 | Date of assigned contract, Sales Order/proposal between Elevai Skincare and Avalara |
| 2023-11-28 | Date of assigned contract, Collaboration & License Agreement between Elevai Skincare and Yuva Biosciences, Inc. |
| 2023-12-01 | Date of assigned contract, Distributorship Agreement between PMGC Holdings and Skin Sana LTD. |
| 2023-12-06 | Date of RoosterBio Elevai Labs Quote between Roosterbio and Elevai Skincare |
| 2023-12-15 | Date of assigned contract, General Power of Attorney between Elevai Skincare and Sycip Salazar Hernanxez & Gatmaitan |
| 2023-12-20 | Date of assigned contract, Customer Warehouse Agreement between Elevai Skincare and SriSai Biopharmaceutical Solutions |
| 2024-04-09 | Date of assigned contract, Credit Application between Elevai Skincare and HCT Global |
| 2024-04-15 | Date of assigned contract, Distributorship Agreement between PMGC Holdings and Ilia International LTD. (Taiwan) |
| 2024-05-18 | Date of Amendment Agreement between Elevai Skincare and Yuva Biosciences, Inc. |
| 2024-06-17 | Date of assigned contract, Distributorship Agreement between PMGC Holdings and Subhaa Healthcare Pvt. Ltd. (India) |
| 2024-06-25 | Date of assigned contract, Consulting Agreement between Elevai Skincare and Ramya Viswanathan and Confidential Information and Inventions Assignment Agreement between Elevai Skincare and Ramya Viswanathan |
| 2024-08-01 | Date of assigned contract, Consulting Agreement between PMGC Holdings and Carrisa Friedman and Confidential Information and Inventions Assignment Agreement between PMGC Holdings and Carrisa Friedman |
| 2024-09-01 | Date of assigned contract, Consulting Agreement between PMGC Holdings and Jenzel Arevalo and Confidential Information and Inventions Assignment Agreement between PMGC Holdings and Jenzel Arevalo |
| 2024-12-17 | Date of assigned contract, Assignment and Assumption Agreement between Elevai Labs, Inc., Elevai Skincare, Inc. and Yuva Biosciences, Inc. |
| 2024-12-20 | Date of redomiciliation and name change of Parent consummated |
| 2024-12-23 | Date of the 8-K filing |
| 2024-12-31 | Date of the Asset Purchase Agreement |
| 2025-01-07 | Date of the signature of the 8-K filing |
| 2025-01-17 | Termination date if conditions precedent are not satisfied |
Keywords
asset purchase, acquisition, skincare, haircare, earnouts, indemnification, net sales, milestone payment, Cutis Cura Corporation, Carmell Corporation, Elevai Skincare, PMGC Holdings
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