8-K/A: Resonate Blends Completes Share Exchange, Divests Subsidiary, and Appoints New Leadership

Resonate Blends, Inc. finalized a share exchange agreement with Emergent Health Corp., divested its subsidiary, and appointed a new board of directors and executive team.

Summary

• Resonate Blends, Inc. entered into a Conveyance Agreement on March 14, 2024, transferring ownership of its subsidiaries, Resonate Blends, LLC and Entourage Labs, LLC, to former director Geoffrey Selzer.
• In exchange, Selzer assumed all liabilities of the subsidiaries, indemnified Resonate Blends, and agreed to pay 20% of any sale proceeds within one year and 10% within two years of the agreement.
• On March 14, 2024, Resonate Blends closed a Share Exchange Agreement with Emergent Health Corp. (EMGE), where EMGE preferred shareholders exchanged their equity for Series F Convertible Preferred Stock in Resonate Blends.
• The Series F Preferred Stock will convert into 93% of Resonate Blends' common stock on a fully diluted basis, after a six month waiting period or upon uplisting to a national exchange.
• Prior to the closing of the Exchange Agreement, all previous directors and officers of Resonate Blends resigned, and four new members were appointed to the Board of Directors.
• The company's business operations are now primarily represented by the business plan and operations of EMGE.
• EMGE engages in the discovery, development, and marketing of regenerative medicine products, focusing on stem cell mobilization and natural diet aids.
• EMGE has acquired several companies, including PharmaZu Corp., Regen Biowellness, Inc., and Evolutionary Biologics, Inc., expanding its reach in the pet, plant-based, and regenerative medicine sectors.
• Apollo Biowellness, Inc. was acquired in August 2023, consolidating five companies in the regenerative medicine industry, including Integrative Practice Solutions, LLC (IPS) and Juventix Regenerative Medical, LLC.
• IPS has a network of 200 licensed clinics in 37 states for osteoarthritis treatment, while Juventix supplies PRP blood processing kits to over 500 healthcare clinics.
• The global wellness market is valued at $4.5 trillion, with regenerative medicine predicted to reach $125.4 billion by 2030, growing at a CAGR of 16.2% from 2022 to 2030.
• The musculoskeletal, wound healing, and dermatology segments are growing at CAGRs of 22.5%, 23.2%, and 22.1%, respectively.
• The company faces challenges including finding partners, the development and commercial viability of products, competition, and maintaining supply chain integrity.
• The company has a material weakness in its internal control over financial reporting.
• The company's independent auditors have raised substantial doubt about its ability to continue as a going concern.

Sentiment

Score: 3

Explanation: The document highlights significant strategic changes and market opportunities, but is heavily overshadowed by financial concerns, including a going concern warning and material weakness in internal controls. The risks and challenges outlined are substantial, leading to a negative sentiment overall.

Positives

• The company has acquired several companies in the regenerative medicine space, expanding its product offerings and market reach.
• The company has a large, seasoned base of established customers through its acquired companies.
• The company is positioned in the three fastest-growing segments of the regenerative medicine market: musculoskeletal care, wound healing, and dermatology.
• The company has a vertically integrated approach with its own manufacturing capabilities through Nanosthetic Labs.
• The company has a strong management team with over 100 years of experience.
• The company has a robust intellectual property portfolio with several active and pending patents and trademarks.

Negatives

• The company has a history of losses and expects to continue incurring losses in the near term.
• The company's independent auditors have raised substantial doubt about its ability to continue as a going concern.
• The company has a material weakness in its internal control over financial reporting.
• The company faces significant competition in the pharmaceutical and regenerative medicine industries.
• The company is dependent on external sources for financing its operations.
• The company's success is dependent on the commercial viability of its products, which is uncertain.
• The company's products are subject to regulatory risks and may require reformation or market withdrawal.
• The company's products may not achieve the expected results, leading to potential litigation.
• The company's products are manufactured in an FDA-approved facility, but there is no independent third-party oversight.
• The company's intellectual property rights may be difficult to enforce and may be subject to third-party claims.
• The company's marketing strategies may not be successful in increasing sales.
• The company's products are subject to adverse publicity and consumer perception.
• The company's products are subject to government regulations and may require reformation or market withdrawal.
• The company's products are subject to product liability claims.
• The company's products are subject to cyber security threats, attacks and other disruptions.
• The company's products are subject to disruptions to manufacturing or supplier operations.
• The company's products are subject to disruptions to distribution operations.
• The company's products are subject to volatility in the cost or availability of raw materials.
• The company's products are subject to inaccurate demand forecasting.
• The company's products are subject to climate change and related regulations.
• The company's products are subject to difficulties in integrating acquired companies.
• The company's products are subject to difficulties in realizing the expected benefits of acquisitions.
• The company's products are subject to difficulties in obtaining regulatory approval.
• The company's products are subject to difficulties in obtaining reimbursement.
• The company's products are subject to competition.
• The company's products are subject to the volatility of the company's stock price.
• The company's products are subject to restrictions on the transfer of the company's securities.
• The company's products are subject to the potential dilution of the company's stock.
• The company's products are subject to the lack of cash dividends.
• The company's products are subject to anti-takeover provisions.
• The company's products are subject to the potential liability of the company's directors and officers.
• The company's products are subject to the control of the company's Series C Preferred Stock holder.

Risks

• The company's independent auditors have raised substantial doubt about its ability to continue as a going concern, which may impair its ability to raise capital.
• The company has incurred losses in prior periods, and future losses could negatively impact its stock price and financial condition.
• The company may be unable to obtain sufficient capital to implement its business plan.
• The company lacks a successful operating history, making it difficult to forecast future results.
• The company's new marketing strategies may not be successful.
• The company may never earn a profit in future financial periods.
• The company's success depends on the efforts of its executive officers, and their loss could disrupt operations.
• The company's newly implemented marketing strategies are not based on independent market studies.
• The company's Board of Directors may change policies without shareholder approval.
• The company's products may not provide the intended healthful effects, leading to potential litigation.
• The company's products are subject to adverse publicity and consumer perception.
• The company's products are subject to intellectual property rights claims.
• The company's products are subject to government regulations and may require reformation or market withdrawal.
• The company's products are subject to product liability claims.
• The company's products are subject to cyber security threats, attacks and other disruptions.
• The company's products are subject to disruptions to manufacturing or supplier operations.
• The company's products are subject to disruptions to distribution operations.
• The company's products are subject to volatility in the cost or availability of raw materials.
• The company's products are subject to inaccurate demand forecasting.
• The company's products are subject to climate change and related regulations.
• The company's products are subject to difficulties in integrating acquired companies.
• The company's products are subject to difficulties in realizing the expected benefits of acquisitions.
• The company's products are subject to difficulties in obtaining regulatory approval.
• The company's products are subject to difficulties in obtaining reimbursement.
• The company's products are subject to competition.
• The company's products are subject to the volatility of the company's stock price.
• The company's products are subject to restrictions on the transfer of the company's securities.
• The company's products are subject to the potential dilution of the company's stock.
• The company's products are subject to the lack of cash dividends.
• The company's products are subject to anti-takeover provisions.
• The company's products are subject to the potential liability of the company's directors and officers.
• The company's products are subject to the control of the company's Series C Preferred Stock holder.

Future Outlook

The company aims to be an industry leader in regenerative medicine by creating, developing, and commercializing transformative medicines. They plan to advance their lead product candidates, maximize their portfolio through strategic partnerships, and commercialize their products using a focused and efficient approach. The company also intends to continue cultivating a network of patient advocacy groups, key opinion leaders, research institutions, and healthcare providers.

Management Comments

• Management believes that the company's strengths will contribute to its success.
• Management is confident that they can achieve results due to the high level of confidence in their veteran management team.
• Management believes that Nanosthetic will allow them to dramatically reduce their cost of goods sold.
• Management believes that the company is positioned to become a leader in the fields of musculoskeletal care, wound healing and dermatology.
• Management believes that the company's office spaces are sufficient for its current needs.
• Management believes that the company will be successful in attracting experienced and capable personnel in the future.

Industry Context

This announcement reflects a strategic shift for Resonate Blends, moving away from its previous structure to focus on the rapidly growing regenerative medicine sector through its merger with Emergent Health Corp. The company is positioning itself to capitalize on the increasing demand for wellness and anti-aging products, aligning with broader industry trends in the health and beauty markets. The company is also leveraging the growth in the regenerative medicine market, which is expected to reach $125.4 billion by 2030.

Comparison to Industry Standards

• The company's focus on regenerative medicine aligns with the industry's growth trajectory, with the global market expected to reach $125.4 billion by 2030.
• The company's focus on musculoskeletal care, wound healing, and dermatology is consistent with the fastest-growing segments in the regenerative medicine market.
• The company's acquisition of multiple companies in the regenerative medicine space is a common strategy for growth in this industry.
• The company's development of its own manufacturing capabilities through Nanosthetic Labs is a strategic move to reduce costs and control product quality, similar to other vertically integrated companies in the industry.
• The company's reliance on third-party logistics companies for distribution is a common practice in the industry.
• The company's challenges, such as competition, regulatory hurdles, and supply chain issues, are typical for companies in the pharmaceutical and regenerative medicine industries.
• The company's material weakness in internal control over financial reporting is a concern, as it is important for companies in this industry to have strong financial controls.
• The company's going concern warning from its independent auditors is a significant issue, as it indicates a high level of financial risk.

Management Changes

Related Party Transactions

• Geoffrey Selzer, a former director, received the company's subsidiaries in exchange for assuming their liabilities and a percentage of future sale proceeds.
• James Morrison, the new President, Secretary and Director, purchased all of the company's Series C Preferred Stock from Geoffrey Selzer for $10.00.

Stakeholder Impact

• Shareholders will experience significant dilution due to the issuance of Series F Preferred Stock.
• Shareholders may face uncertainty due to the company's going concern warning and material weakness in internal controls.
• Employees will be impacted by the changes in management and the company's strategic direction.
• Customers may benefit from the company's expanded product offerings and focus on regenerative medicine.
• Suppliers may be impacted by the company's changes in operations and supply chain.
• Creditors may be concerned about the company's financial stability and ability to repay debts.

Next Steps

• The company will file financial statements and pro forma financial information within 71 days of closing the Exchange Agreement.
• The company will continue to develop and commercialize its regenerative medicine products.
• The company will seek regulatory approvals for its products in various jurisdictions.
• The company will continue to build its network of medical sales representatives and distributors.
• The company will continue to research and develop its proprietary intellectual property.
• The company will explore strategic partnerships for distribution.

Key Dates

Keywords

regenerative medicine, stem cell, platelet-rich plasma, osteoarthritis, wound healing, dermatology, biologics, exosomes, medical devices, nutraceuticals, wellness, healthcare, acquisitions, share exchange, preferred stock