Acquisition

6 Months Ended

Jun. 30, 2025

Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]

Acquisition

5. Acquisition

Silly George Acquisition

On May 15, 2024, the Company entered into and closed a transaction related to an Asset Purchase Agreement dated May 15, 2024 (the “SG Purchase Agreement”) with Semmens Online Pty Ltd as Trustee for Semmens Business Trust, an Australian proprietary limited company (the “SG Seller”), whereby the Company purchased the Silly George assets (the “Silly George acquisition”). The Company believes the Silly George assets will be accretive and synergistic to its existing health and beauty customer product brands.

Under the terms of the SG Purchase Agreement on May 15, 2024, the Company paid the SG Seller a cash payment of $400 thousand and issued $200 thousand in shares of the Company’s common stock based on the 10-Day VWAP (as defined in the SG Purchase Agreement), or 89,892 of shares of the Company’s common stock. Additionally, the Company will pay the Seller a cash earn-out based on 20% of the Net Profit (as defined in the SG Purchase Agreement) related to the Silly George assets for the fiscal quarterly period beginning June 30, 2024 and ending on June 30, 2028. Per the scope exception under ASC 815, the Company has not accrued the contingent consideration.

The table below shows an analysis for the Silly George acquisition ($ in thousands):

Schedule of Business Acquisitions

Provisional purchase consideration at preliminary fair value:
Purchase price	$	600
Consideration paid	$	600

Trademark related intangibles	$	600
Intangible assets acquired	$	600

Kenkoderm Acquisition

On December 1, 2023, the Company closed a transaction related to an Asset Purchase Agreement dated November 30, 2023 (the “Kenkoderm Purchase Agreement”) with Olympus Trading Company, LLC, a Virginia limited liability company, whereby the Company purchased all assets related to the Kenkoderm Seller’s skincare line focused on reducing symptoms associated with psoriasis operating under the tradename “Kenkoderm” (“Kenkoderm acquisition”). The Company believes the Kenkoderm brand fits its health and wellness lines of product.

Under the terms of the Kenkoderm Purchase Agreement, the Company paid the Kenkoderm Seller a cash payment of $547 thousand on December 1, 2023. The Kenkoderm Seller is entitled to a quarterly contingent earn-out payment based on a set formula. The earn-out is equal to two times the base purchase price of $547 thousand times the ratio of current quarter’s sales divided by the quarterly sales from the same period in the prior year less the base purchase price and multiplied by one quarter. Additionally, the Company will pay the Kenkoderm Seller a cash earn-out of the same amount each quarter, payable in the subsequent month following quarter end, subject to adjustment. The cash earn-out can fluctuate higher or lower based on the quarterly results of the Kenkoderm business during 2024 according to the formula contained in the Kenkoderm Purchase Agreement. The contingent consideration has been settled and the earn-out payments amounted to $178 thousand and $279 thousand in 2025 and 2024, respectively, net of an adjustment in fair value of contingent consideration of $18 in 2024.

The fair value of the purchase consideration issued to the Kenkoderm Seller was allocated to the net tangible assets acquired. The Company accounted for the Kenkoderm acquisition as the purchase of a business under GAAP under the acquisition method of accounting, and the assets and liabilities acquired were recorded as of the acquisition date, at their respective fair values and consolidated with those of the Company. The fair value of the net assets acquired was approximately $169 thousand. The excess of the aggregate fair value of the net tangible assets has been allocated to goodwill.

The table below shows an analysis for the Kenkoderm acquisition ($ in thousands):

Schedule of Business Acquisitions

Purchase consideration at fair value:
Purchase price	$	547
Contingent consideration liability		439
Amount of consideration	$	986
Assets acquired and liabilities assumed at fair value
Inventory	$	56
Product/technology related intangibles		77
Marketing related intangibles		36
Net tangible assets acquired	$	169

Total net assets acquired	$	169
Consideration paid		986
Goodwill	$	817

Interest in Joint Venture – CGN

On March 1, 2023, the Company acquired a 50% interest in the CGN JV (see Note 1). The CGN JV is owned 50% by the Company and 50% by CG Labs. CG Labs contributed its existing converting and packaging division to the CGN JV, including, but not limited to, its facilities, equipment, employees, and customers. The Company will contribute $500 thousand to the CGN JV, on a schedule to be determined, to be used for equipment and facility upgrades as well as general corporate purposes for the CGN JV.

The CGN JV is considered to be a VIE and we have consolidated the CGN JV because we believe we are the primary beneficiary because we meet the power and the economics criteria, as laid out in ASC 323.

The Company recorded assets acquired and liabilities assumed in connection with the formation of the CGN JV based on their estimated fair values as of March 1, 2023.

The table below set forth the CGN JV purchase price allocation ($ in thousands):

Schedule of Business Acquisitions

Purchase consideration at fair value:
Cash contributed by the Company	$	500
Noncontrolling interest portion of CG Labs contributed business		500
Amount of consideration	$	1,000
Assets acquired and liabilities assumed at fair value
Cash contributed by the Company	$	500
Fixed assets		213
Product/technology related intangibles		217
Marketing related intangibles		70
Net tangible assets acquired	$	1,000

Interest in Joint Venture – Enigma

On January 6, 2023, the Company acquired a 50% interest in a newly formed joint venture (the “Enigma JV”) to pursue branded consumer product retail opportunities and the development of new patch products. The Enigma JV agreement was effective January 6, 2023. As a result of this transaction, the Company owned 50% of the Enigma JV, with the remaining 50% held by Moiety. However, the Enigma JV was dissolved on December 23, 2024. As of December 31, 2024, the Company contributed $20 thousand and the non-controlling interest portion of Enigma JV contributed $37 thousand.

The Enigma JV is considered to be a VIE and we have consolidated the Enigma JV because we believe we are the primary beneficiary because we meet the power and the economics criteria, as laid out in ASC 323.

The allocation of the purchase price to identifiable assets is based on the preliminary valuations performed to determine the fair value of the net assets as of the acquisition date. The measurement period for the valuation of net assets acquired ends as soon as information on the facts and circumstances that existed as of the acquisition dates becomes available, but not to exceed 12 months following the acquisition date. Adjustments in purchase price allocations may require a change in the amounts allocated to net assets acquired during the periods in which the adjustments are determined.

The unaudited pro-forma results of operations are presented for information purposes only. The unaudited pro-forma results of operations are not intended to present actual results that would have been attained had the Silly George acquisitions been completed as of January 1, 2024 or to project potential operating results as of any future date or for any future periods ($ in thousands except share and per share amounts):

	2025			2024
	For the Six Months Ended June 30,
	2025			2024
Revenues, net	$	5,690		$	3,280
Net loss allocable to common shareholders	$	(1,377	)	$	(1,780	)
Net loss per share	$	(0.18	)	$	(0.29	)
Weighted average number of shares outstanding		7,649,878			6,208,104

- Definition

The entire disclosure for business combination.

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+ Details

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