What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-28 compared with 2024-03-29 · 138 added, 228 removed, 144 unchanged (72% of the section changed)

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Dollars are denoted herein by “USD”, “$” and “dollars”.

was incorporated in Delaware in June 2020.

We are a topical skincare company specializing in aesthetic biotechnology.

created, and continue to research, and commercialize innovative and science-driven topical skincare technologies for the medical aesthetic

skincare market.

We principally produce, commercialize, distribute, and sell a new generation of cosmetic topical products containing

our proprietary stem cell-derived Elevai Exosomes TM .

bring our products to market, we developed a robust fully-commercialized process from source to skin (exosome secretion to product bottling)

that holds and utilizes advanced patent pending knowledge alongside our cohesive production process.

Our specialty product lines are

topically applied to the skin to aid in the reduction of the appearance of a range of the most common skin conditions, including pre-mature

aging, oxidative stress, photodamage, hyperpigmentation, elasticity, and soft tissue deficits, such as fine lines and wrinkles.

sell our products through the physician dispensed channel.

and Overview of Operations

December 31, 2024, the Company entered into an asset purchase agreement (the “Asset Purchase Agreement”) with an unrelated

third party, pursuant to which it was agreed to sell the skincare business.

The sale of the skincare business closed on January 16, 2025.

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.

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.

– is a biopharmaceutical company focusing on the development and acquisition

of cutting-edge aesthetic medicines and therapeutic products.

Our 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.

Research Inc.

– based in Canada, is currently dedicated to medical scientific research and development efforts, utilizing

Canadian research grants and partnering with leading Canadian Universities to push the boundaries of innovation.

Capital LLC – is a multi-strategy investment firm focused on direct investments, strategic lending, and acquiring undervalued

companies and assets across diverse markets.

Our mission is to identify and seize high-potential opportunities, delivering sustainable

growth and maximizing returns on capital.

the next twelve months, we intend to focus on:

our revenue using our existing infrastructure to accelerate the commercialization of our

clinical validation studies to show the efficacy of our products;

to create new product formulations and bring them to market;

our distribution partnerships internationally;

the identification and review of strategic acquisitions to complement our business.

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 biotechnology

assets across various unrelated pharmaceutical indications.

clinical validation studies to strengthen the commercial potential and scientific credibility

of our portfolio companies’ technologies.

clinical development to progress NorthStrive Biosciences, Inc.’s clinical assets toward

Investigational New Drug (IND) applications.

additional acquisitions of operating companies and biotechnology assets to expand and diversify

our portfolio.

potential spin-offs of wholly owned subsidiaries, creating new publicly traded companies

to unlock shareholder value.

of Operations

of the Years Ended December 31, 2024 and 2023.

following table provides certain selected financial information for the periods presented:

Cost of revenue

Gross profit percentage

following table provides certain selected financial information for continuing operations for the periods presented:

Year Ended December 31, 2024

Year Ended December 31, 2023

Marketing and Promotion

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Research and Development

Foreign exchange (gain) loss

Travel and entertainment

Total operating expenses

Loss from operations

$ (3,766,211 )

$ (1,791,041 )

$ (1,975,170 )

Other income (expense) 1

$ (4,301,517 )

$ (1,800,268 )

$ (2,501,249 )

Total Comprehensive Loss

$ (4,301,426 )

$ (1,800,359 )

Net loss from continuing operations

$ (4,016,714 )

Basic and dilutive loss per common share

Weighted average number of shares outstanding – basic

expenses relates to interest income, interest expense, loss on sale of equipment and fair

value gain/loss on derivative liability.

for the year ended December 31, 2023 was $1,712,595 as compared to $766,277 for the year ended December 31, 2022, an increase of $946,318.

revenue by product category is as follows:

label distributor

2023 and 2022, the Company sold 7,613 and 2,114 bottles of Enfinity, respectively, an increase of 5,499 bottles or 260%.

the Company sold 1,464 (eight packs) of Empower tubes in 2023, compared to 350 (eight packs) of Empower tubes during 2022, and an increase

of 1,114 (eight packs) or 318%.

The Company also sells its media containing its Elevai Exosomes TM under a white label deal.

During 2023 and 2022, the Company sold approximately 196 and 287 liters, respectively, under this white label distributor agreement,

a decrease of 91 liters or 32%.

In 2023, the company sold 200 units of Scalp & Hair Cleanser as they embark on diversifying their

product offerings.

The increase in sales volumes is primarily due to enhanced market acceptance, continued growth in the number of US

accounts, onboarding of international distributors, and repeat business from current customers and distributors.

Additionally, the Company

has decided not to renew the white label distribution agreement, which concluded on January 16, 2024.

of Revenue for the year ended December 31, 2023 was $578,015 as compared to $318,968 for the year ended December 31, 2022.

cost of revenue by product category is as follows:

label distributor

Cost of Revenue

increase in cost of revenue is directly attributed to the increase in sales during 2023 compared to 2022.

The following is a breakdown

of the components of cost of revenue:

Cost of inventory

Cost of Revenue

profit for the year ended December 31, 2023, was $1,134,580 as compared to $447,309 for the year ended December 31, 2022, an increase

This represents an overall gross margin percentage of 66% during 2023, compared to 58% in 2022.

The overall increase in

gross margin percentage is primarily due to the Company selling a higher ratio of Enfinity and Empower products compared to while label

distributor sales which are sold at a lower margin.

The Company also saw gross margin improvements in each of its product categories

due to operational efficiencies gained, a reduction in the relative inventory write down compared to sales, and securing better volume

pricing with some of its key suppliers.

following is a breakdown of gross profit percentage by product category:

label distributor

Gross Profit Percentage

Basic and dilutive loss per common share – continuing operations

Weighted average number of shares outstanding – basic and diluted

expenses relate to interest income, interest expense, listing expense and fair value gain/loss on derivative liability.

and Development Expenses

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an increase of $97,244.

Research and Development related to the Company’s Enfinity, Empower and development of new products

for the Company.

The increase in R&D is mainly driven by an increase in lab employees hired towards the end of July 2022.

the Company was in its old lab location during Q1 2022 compared to the new lab location for the entire year ended December 31, 2023 (the

Company has been in its new lab since July 2022).

The new lab location has a higher production and R&D capacity which brings an increase

in rent and utilities.

During both the years ended December 31, 2023 and 2022, the Company’s lab staff worked on increasing the

efficiency and refining the production process.

Research and Development related to the development of the Company’s intangible assets.

The increase in

R&D is due to the intangible assets acquired during fiscal 2024 and includes amortization of intangible assets of $82,556 during

the year ended December 31, 2024 compared to Nil during the year ended December 31, 2023.

and Promotion

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an increase of $36,072.

During 2023, the Company increased its marketing and promotion efforts to drive sales and support the

Company’s existing customers, which included giving out product samples with a cost of $124,376 (2022 - $46,693), and attending

and sponsoring industry conferences.

The Company’s marketing and promotional efforts were consistent year of year.

and Administrative Expenses

and administrative expenses for the year ended December 31, 2023, were $2,329,067, compared to $1,019,708 for the year ended December

31, 2022, an increase of $1,309,359.

The increase is mainly the result of salaries and wages of $1,386,339 and office rent of $126,096

incurred during 2023, compared to $617,425 and $73,363 in 2022, a combined increase of $821,647.

The Company increased its headcount

and moved into a larger office location to accommodate the commercialization of its products and growth in operations during 2023.

2023, office and administrative expenses also include share-based compensation of $476,905, compared to $164,907 in 2022, an increase

The increase in share-based compensation expense is due to the continued vesting of stock options granted during 2021 and

2022, with additional options issued during 2023.

The remaining increase is consistent with the increase in operations in the year ended

December 31, 2023, compared to the year ended December 31, 2022.

fees for the year ended December 31, 2023, were $459,498, compared to $324,395 for the year ended December 31, 2022, an increase

During 2023 and 2022, the Company incurred consulting fees in relation to recruitment, strategic introductions, business

advisory, international relations, and strategy.

In addition, the Company received services from a number of parties (including companies

controlled by related parties and the CFO) in a consulting capacity.

The increase in consulting fees is consistent with the increase

in operations.

fees for the year ended December 31, 2023 was $579,111, compared to $192,409 for the year ended December 31, 2022, an increase of

Professional fees comprise of legal, audit and accounting services.

The increase during 2023 is primarily due to an increase

in audit, legal and accounting services pursuant to the completion of the Company’s initial public offering (“IPO”).

and Entertainment

and entertainment for the year ended December 31, 2023 was $339,147, compared to $198,442 for the year ended December 31, 2022,

and administrative expenses for the year ended December 31, 2024, were $1,092,576, compared to $347,653 for year ended December 31, 2023,

an increase of $744,923.

Travel and entertainment expenses are related primarily to costs incurred during the attendance of industry

trade shows and conferences.

The increase in the year ended December 31, 2023, compared to 2022 is due to the Company increasing its

presence at trade shows and conferences to raise awareness of the Company, its products and to drive business development.

Approximately $400,000 of the increase is the result of directors’ and officers’ insurance for the

full 12 months of 2024 compared to only one month post IPO in 2023.

In addition, during 2024 the Company paid directors fees of $165,000

($55,000 each to its three independent directors) compared to Nil in 2023.

Consulting fees for the year ended December 31,

2024, were $1,367,273, compared to $279,767 for the year ended December 31, 2023, an increase of $1,087,506.

The Company’s CEO,

CFO and Chairman provide services in a consulting capacity.

During 2024, consulting fees to key management (excluding 2024 year-end bonuses)

increased by $177,233 to bring compensation in line with market rates for similar public companies.

In addition, the Company accrued

$350,000 in bonuses payable to key management following the successful recapitalization and restructuring of the business during Q3-Q4

The remaining increase in consulting fees relates to business advisory and strategy services acquired during 2024 that were not

present in 2023.

Professional fees for the year ended December

31, 2024, was $563,242, compared to $132,600 for the year ended December 31, 2023, an increase of $430,642.

Professional fees comprise

of legal, audit and accounting services.

The increase during 2024, is primarily due to an increase in audit, legal and accounting services

as the company is now listed on the NASDAQ exchange.

relations for the year ended December 31, 2024, was $208,326, compared to $91,009 for the year ended December 31, 2023.

in investor relations spending is consistent with the Company’s growth strategy, which includes promotion to current and potential

investors as the company is now listed on the NASDAQ exchange.

and Capital Resources

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to continue operations, and ultimately the attainment of profitable operations.

of December 31, 2023 and 2022, the Company had a net working capital of $3,622,091 and $963,050, respectively, and has an accumulated

deficit of $7,023,890 and $2,722,373, respectively.

Furthermore, for the years ended December 31, 2023 and 2022, the Company incurred

a net loss of $4,301,517 and $1,800,268, respectively and used $4,556,811 and $1,585,876, 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 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.

principal liquidity requirements are for working capital, capital expenditure, research and development and inventory production.

fund our liquidity requirements primarily through cash on hand, cash flows from operations, and the issuance of common and preferred

As of December 31, 2024 and 2023, the Company

had a net working capital of $4,251,867 and $3,622,091, respectively, and has an accumulated deficit of $13,269,627 and $7,023,890, respectively.

Furthermore, for the years ended December 31, 2024 and 2023, the Company incurred a net loss of $6,245,737 and $4,301,517, respectively

and used $5,486,980 and $4,556,811, respectively of cash flows for operating activities.

These factors raise substantial doubt regarding

the Company’s ability to continue as a going concern.

These Company’s 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.

principal liquidity requirements are for working capital, capital expenditure and research and development.

We fund our liquidity requirements

primarily through cash on hand, cash flows from operations, the issuance of common, warrants and preferred stock, and the issuance of

As of December 31, 2024, we had cash of $3,984,453, with $3,326,851 as of December 31, 2023.

following table provides selected financial data as of December 31, 2023 and 2022, respectively.

following table summarizes our cash flows from operating, investing and financing activities:

used in operating activities

$ (4,556,811 )

The Company expects an improvement in liquidity

and capital resources, including cash used in operations following the sale of the loss-making skincare business on January 16, 2025.

Cash flows used in discontinued operating and investing activities and assets and liabilities held for sale have been excluded from our

following table provides selected financial data as of December 31, 2024, and December 31, 2023, respectively (excluding assets and liabilities

held for sale).

December 31, 2024

December 31, 2023

Current assets

Current liabilities

Working capital

following table summarizes our cash flows from operating, investing and financing activities from continuing operations:

Year Ended December 31, 2024

Year Ended December 31, 2023

Cash used in operating activities

$ (2,800,601 )

$ (2,114,871 )

used in investing activities

provided by financing activities

Cash used in investing activities

Cash provided by financing activities

Flow from Operating Activities

the year ended December 31, 2023, net cash flows used in operating activities was $4,556,811 compared to $1,585,876 used during

the year ended December 31, 2022, respectively, primarily due to net loss and timing of settlement of assets and liabilities.

the year ended December 31, 2024, net cash flows used in operating activities for continuing operations was $2,800,601 compared to $2,114,871

used during the year ended December 31, 2024, respectively, primarily due to net loss and timing of settlement of assets and liabilities.

Flows from Investing Activities

the years ended December 31, 2023 and 2022, we used $11,191 and $32,027, respectively, in investing activities primarily related

to the purchase of equipment for our lab space to be used on the production of inventory and research and development.

In 2022, net cash

used in investing activities include proceeds of $3,500 generated on the sale of equipment.

the year ended December 31, 2024, and 2023, we used $601,404 and $nil, respectively, in investing activities primarily related to the

acquisition of intangible assets of $462,320.

In addition, the Company participated in a private placement of a company in the U.S.

energy market with an investment of 139,084.

Flows from Financing Activities

the year ended December 31, 2023, we had cash flow provided by financing activities of $6,738,890 compared to cash flow provided

by financing activities of $2,362,259 in 2022, an increase of $4,376,631.

During 2023, the Company raised $1,463,585 through the issuance

of common stock and common stock purchase warrants, and another $37,500 upon the exercise of stock options in exchange for common stock.

Additionally, the Company completed its IPO and issued 1,500,000 common shares, for gross proceeds of $6,000,000 ($5,237,806 net of share

issuance cost).

In 2022, the Company raised $183,970 through short term convertible notes that were converted into Series A preferred

stock and common stock purchase warrants.

The Company raised an additional $2,153,289, net of share issuance cost of $33,132, through

its Series A preferred stock financing and another $25,000 upon the exercise of stock options in exchange for common shares.

the year ended December 31, 2024, we had net cash flow provided by financing activities of $6,757,500 compared to cash flow provided

by financing activities of $6,738,890 in 2023.

During 2024, and 2023, the Company raised $6,993,058 and $1,463,586, respectively, through

the issuance of common stock and common stock purchase warrants;

$914,442 and $Nil, respectively, through the issuance of Notes;

$Nil and $37,500, respectively, upon the exercise of stock options in exchange for common stock.

The cash provided by financing activities

during the year ended December 31, 2024, was partially offset by the repayment of Notes of $1,150,000.

In addition, during 2023 the Company

completed its IPO financing and raised net proceeds of $5,237,805.

Accounting Policies and Significant Judgments and Estimates

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reflected in the consolidated financial statements in the period they are determined.

Company’s policy for property and equipment requires 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.

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.

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.

assessment of whether the going concern assumption is appropriate requires management to take into account all available information

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as a going concern.

May 2014, the FASB issued ASU No.

2014-09, Revenue from Contracts with Customers.

Since ASU 2014-09 was issued, several additional ASUs

have been issued to clarify various elements of the guidance.

These standards provide guidance on recognizing revenue, including a five-step

model to determine when revenue recognition is appropriate.

Company recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer.

measured based on the consideration the Company expects to receive in exchange for those products.

In instances where financial acceptance

of the product is specified by the customer, revenue is deferred until all acceptance criteria have been met.

Revenues are recognized

under ASC 606, “Revenue from Contracts with Customers,” in a manner that reasonably reflects the delivery of its products

and services to customers in return for expected consideration.

Company generates revenue through the sale of skincare products.

Revenue from the sale of skincare products are recognized at the point

in time when the Company considered revenue realized or realizable and earned, which is typically when all of the five following criteria

(1) the contract with the customer is identifiable (i.e.

when a sales transaction has been entered into between the Company

and the customer), (2) the performance obligation in the contract is identifiable (i.e.

the customer has ordered a known quantity of

product to be delivered), (3) the transaction price is determinable (i.e.

the customer has agreed to the Company’s price for the

products ordered), (4) the Company is able to allocate the transaction price to the performance obligations in the contract, and (5)

the performance obligations have been satisfied, which is typically upon delivery of the product to the customer.

prices for performance obligations are explicitly outlined in relevant agreements;

therefore, the Company does not believe that significant

judgements are required with respect to the determination of the transaction price, including any variable consideration identified.

Company is responsible for providing the products to customers.

As a result, the Company is considered the Principal when providing products

to customers.

As the Company collects payment at the time of the customer order, its contracts do not have a significant financing component.

Customers are entitled to replacement or full refund of any damaged or defective product, after the return of the damaged or defective

product to the Company.

There were no significant returns or refunds during the year ended December 31, 2023 and 2022

Currency Translation

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The functional currency of the Company’s Canadian subsidiary,

Elevai Research Inc.

(“Elevai Research”) is the Canadian dollar.

PMGC Research Inc.

(“PMGC Research”) is the Canadian dollar.

Monetary assets and liabilities denominated in foreign currencies

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Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination

accounts of Elevai Research are translated to U.S.

accounts of PMGC Research are translated to U.S.

dollars using the current rate method.

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income (loss).

consist of raw materials, work-in-progress and finished goods and are valued at the lower of cost or net realizable value.

The Company’s

manufacturing process involves the production of our proprietary stem cell-derived Elevai Exosomes TM .

Finished goods consists

of a new generation of cosmetic topical products containing our proprietary stem cell-derived Elevai Exosomes TM .

Cost is determined

using the weighted average cost formula.

Net realizable value is determined on the basis of anticipated sales proceeds less the estimated

selling expenses.

Management compares the cost of inventories with the net realizable value and an allowance is made to write down inventories

to net realizable value, if lower.

Share-Based Compensation

- The Company accounts for share-based compensation under the fair value method which requires all such compensation to employees,

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the years ended December 31, 2024 and 2023, the Company recorded $97,167 and $487,738, respectively, in share-based compensation expense,

of which $476,905 and $10,833, and $164,907 and $6,962 , respectively is included in office and administration and research and development,

of which $93,449 and $3,718, and $250,067 and $237,671, respectively is included in office and administration and discontinued operations,

respectively.

Within discontinued operations for the years ended December 31, 2024 and 2023, ($599) and $4,317, and $226,838 and $10,833,

respectively is included in office and administration and research and development, respectively.

the appropriate fair value model and the related assumptions requires judgment.

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the expected dividend yield is assumed to be zero.

Concentrations

the year ended December 31, 2023, the Company recorded 34% of its revenue from its 3 largest customers.

The Company’s largest customer,

representing $234,800 of revenue, relates to sales to a wholesaler during the period.

During the year ended December 31, 2022, the Company

recorded 54% of its revenue from its two largest customers, each representing 45% and 9% respectively.

The Company’s largest customer,

representing $344,018 of revenue, relates to a white label distributor agreement signed during the year.

of December 31, 2023, the Company had $49 receivables due from these customers and $7,500 in customer deposits were received from its

largest customer.

Company expects its dependence on these major customers to decrease over time as it enters into additional distributor agreements and

builds out its sales team.

the year end December 31, 2023 and 2022, the Company had 3 key suppliers that represented approximately 73% and 3 key suppliers that

represented approximately 64%, respectively, of the cost incurred in the purchase and production of inventory.

The table below represents

a breakdown of each supplier as a percentage of the cost incurred (Suppliers are shown from largest to smallest and does not necessarily

represent the same suppliers period over period):

Company continually evaluates the performance of its suppliers and the availability of alternatives to substitute or supplement its inventory

production supply chain.

The Company believes that a breakdown in supply from one of its key suppliers would be overcome in a short amount

of time given the availability of alternatives.

Off-Balance Sheet

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Related Party Transactions

completion of this Offering, the Corporate Governance Committee of our Board of Directors (which we will establish and which will consist

solely of independent directors) will be required to approve all related party transactions.

All related party transactions will be made

or entered into on terms that are no less favorable to use than can be obtained from unaffiliated third parties.

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.

do not believe the impact of inflation on our Company is material.

exposed to inflation risk.

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.

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.

risk is the risk of loss arising from adverse changes in market rates and prices.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis