Exhibit 99.1
VYOME THERAPEUTICS INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF
| (Amount in USD) | June
30, | December 31, 2024 | ||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivables, net | ||||||||
| Deferred offering costs | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible asset - shell company | ||||||||
| Goods and service tax and other credits receivable | ||||||||
| Right-of-use of asset, net | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders’ deficit | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Due to Affiliates | ||||||||
| Operating lease liability - current portion | ||||||||
| Salary and post-employment benefits payable | ||||||||
| Other current liability | ||||||||
| Convertible debt | ||||||||
| Promissory notes – ReShape | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Operating lease liability - net of current portion | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 13) | ||||||||
| Stockholders’ deficit | ||||||||
| Common stock, | ||||||||
| Preferred stock, | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
VYOME THERAPEUTICS INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER
COMPREHENSIVE LOSS (UNAUDITED)
| (Amount in USD) | Six Months ended June 30, 2025 | Six Months ended June 30, 2024 | ||||||
| Revenue | ||||||||
| Revenue | $ | $ | ||||||
| Cost of goods sold | ( | ) | ( | ) | ||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| Depreciation and amortization | ||||||||
| Selling, general and administrative | ||||||||
| Research and development expenses | ||||||||
| Total operating expenses | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Other income/(expense), net: | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Other income, net | ||||||||
| Fair value adjustment | ( | ) | ||||||
| Total other expense, net | ( | ) | ( | ) | ||||
| Net loss | ( | ) | ( | ) | ||||
| Other comprehensive income, net of tax | ||||||||
| Foreign currency translation adjustments | ( | ) | ||||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | ||
| Net Loss per share: | ||||||||
| Loss per share – basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of shares | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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VYOME THERAPEUTICS INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2024
| Common stock | Preferred stock | Additional Paid-in | Accumulated | Accumulated Other Comprehensive | Total Stockholders | |||||||||||||||||||||||||||
| (Amount in USD) | Shares | Amount | Shares | Amount | Capital | Deficit | Income (Loss) | Deficit | ||||||||||||||||||||||||
| Balance at December 31. 2023 | $ | | $ | | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Issuance of shares in settlement of liability | $ | |||||||||||||||||||||||||||||||
| Issuance of shares in settlement of accrued compensation liability | ||||||||||||||||||||||||||||||||
| Net loss for the period | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Foreign currency transition adjustment | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | | $ | | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Net loss for the period | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Foreign currency translation adjustment | ||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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VYOME THERAPEUTICS INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| (Amount in USD) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | ||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| (Gain) loss on fair value adjustment of convertible debt | ( | ) | ||||||
| Non cash accrued interest expense | ||||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivables, net | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Other assets | ||||||||
| Accounts payable & accrued expenses | ( | ) | ( | ) | ||||
| Due to Affiliates | ||||||||
| Post employment benefits | ||||||||
| Other liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of fixed assets | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of convertible debt | ||||||||
Proceeds from issuance of promissory notes – ReShape | ||||||||
| Advance from Affiliates | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ||||||
| Net (Decrease)/Increase in cash and cash equivalents | ||||||||
| Cash and cash equivalents at beginning of the period | ||||||||
| Cash and cash equivalents at end of the period | $ | $ | ||||||
| Supplemental non-cash and financing activities: | ||||||||
| Shares issued in settlement of liability to vendor | - | $ | ||||||
| Exchange of accrued fees to director for stock options | - | $ | ||||||
| Exchange of accrued compensation for stock options | - | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
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VYOME THERAPEUTICS INC. AND SUBSIDIARY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All amounts are in US Dollars except per share data and as stated otherwise)
1. Organization and principal activities
a) Business:
Vyome Therapeutics, Inc. (“VTI”), a Delaware corporation, was incorporated on August 22, 2017. VTI was formed with the intent of operating the R&D business of Vyome Biosciences India Private Limited, India (the “R&D Business”), which was transferred to Vyome Therapeutics Limited (a wholly owned subsidiary of VTI) pursuant to a Demerged order of National Company law Tribunal (“NCLT”) in India, formally consummated in December 2018. VTI and the wholly owned subsidiary in India, Vyome Therapeutics Limited (“VTL”) are collectively referred to as the “Company” or “Vyome”. “R&D business” is defined as novel drug development in the area of immune-inflammatory diseases space and the commercial exploitation of the same.
The Company is a Cambridge, Massachusetts-based clinical-stage specialty pharmaceutical company working to treat immune-inflammatory and rare diseases of unmet need with next-generation therapeutic solutions. The lead program VT-1953, a topical gel with a novel molecule to treat signs and symptoms of Malignant Fungating wounds, is a potential orphan drug program. The Company is planning to have discussions with the Food & Drug Administration (FDA) on the pivotal trial protocol in the fourth quarter of 2025. The Company had initiated a Phase II investigator-initiated trial for VT-1953. The Company also has a Pre-Investigative New Drug application stage ophthalmic drops program, a potentially orphan drug program, and a repurposed immune modulator to treat steroid-sparing anterior uveitis. Another late clinical-stage program, VB 1953, for moderate to severe inflammatory acne has successfully completed its Phase II clinical trial, and this program is Phase III ready. The Company may experience delays in the conduct of clinical trials of its candidates. Clinical trials can be delayed for a variety of reasons, including delays in obtaining regulatory approval to commence a clinical trial, in securing clinical trial agreements with prospective sites with acceptable terms, in obtaining institutional review board approval to conduct a clinical trial at a prospective site, in recruiting patients to participate in a clinical trial or in obtaining sufficient supplies of clinical trial materials. Any delays in completing the Company’s clinical trials will increase its costs, slow down its product development, timeliness, and approval process, and delay its ability to generate revenue.
The Company is also developing other assets for treating immune-inflammatory diseases, which are in pre-clinical or early clinical development.
The Company also has commercialized novel reformulated topical anti-fungal products using its patented technology after two such products successfully completed clinical testing in India. The Company has entered into a licensing and marketing agreement with the Sun Pharma group of companies in India (“Sun Pharma”) to sell a family of novel topical anti-fungal products owned by the Company. The Company used third-party entities to manufacture the products. In December 2024, the above arrangement was terminated.
The Company has entered into a Development and Licensing agreement for Luliconazole (an anti-fungal product) with Sun Pharma for additional development and commercialization in India. Sales of Luliconazole commenced in the third quarter of 2023 by Sun Pharma.
Since its inception, the Company has devoted substantially all its efforts to drug development, business planning, research and development, recruiting management and technical staff, acquiring operating assets, and raising capital. The Company is subject to risks common to companies in the biotechnology industry, including, but not limited to, successful development of technology, obtaining additional funding, protection of proprietary technology, compliance with government regulations, risks of failure of pre-clinical studies, clinical studies and clinical trials, the need to obtain marketing approval for its drug candidates and its consumer products, fluctuations in operating results, economic pressure impacting therapeutic pricing, dependence on key personnel, risks associated with changes in technologies, development by competitors of technological innovations and the ability to transition from pilot scale manufacturing to large scale production.
b) Merger Transaction:
The Company signed a definitive merger agreement (“Merger”) with ReShape Lifesciences, Inc. (“ReShape”) in July 2024, and such transaction was completed on August 14, 2025. Immediately prior to the Merger, ReShape sold substantially all of its assets and operations to a third-party. Immediately prior to the Merger, all of the convertible notes and preferred stock of the Company were converted into shares of common stock. As a result of the Merger, the Board of Directors and management team of ReShape resigned, the Board of Directors and management of the Company were installed, and the Company became a Nasdaq-listed company. The combined company changed its name to Vyome Holdings, Inc. (the “Combined Company”) and will focus on Vyome’s business of advancing the development of its immuno-inflammatory assets and on identifying additional opportunities in the world-class US-Indian innovation corridor for the global market.
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2. Summary of Significant Accounting Policies
a) Basis of Presentation
The unaudited condensed consolidated financial statements contained herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to SEC rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. Accordingly, the condensed consolidated financial statements reflect all normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the results of interim periods and may not include all disclosures required by accounting principles generally accepted in the United States (“GAAP”). The information as of June 30, 2025, and for the six months ended June 30, 2025, is unaudited, whereas the consolidated balance sheet as of December 31, 2024, is derived from the Company’s audited consolidated financial statements as of that date. These condensed consolidated financial statements and notes hereto should be read in conjunction with the consolidated financial statements and notes thereto included in the audited financial statements for the year ended December 31, 2024.
The results of operations for the interim periods presented are not necessarily indicative of results to be expected for any other interim period or for the year. Certain reclassifications have been made in prior year’s financial statements to conform to classifications used in the current year.
Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”).
In August 2025, the Board of Directors
of the Company approved a
b) Segments
The Company organized its operations into
two operating segments. The segments reflect the way the Company evaluates its business performance and manages its operations by the
Company’s chief operating decision maker (“CODM”) for making decisions, allocating resources, and assessing performance.
The Company’s CODM has been identified as the chief executive officer. The Company determined it has in
As the Company’s long-lived assets, except for the intangible asset and deferred offering costs, are substantially all located in India, and all of the Company’s revenue and expenses related to the sale of products are derived from within India, no geographical segments are presented.
c) Basis of Consolidation
The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiary, VTL. All intercompany accounts and transactions have been eliminated in the consolidation.
d) Going Concern
The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. For the six months ended June 30, 2025, and 2024, the Company has
generated a net loss of $
6
Obtaining additional financing to support the successful development of the Company’s contemplated plan of drug development and operations and its transition, ultimately, to the attainment of profitable operations, is necessary for the Company to continue operations. The Company will continue to seek funds through debt or equity financings, marketing and distribution arrangements, and other collaborations, strategic alliances, and licensing arrangements, or other sources of financing. However, there can be no assurances that such financings or other strategic transactions will be available on acceptable terms, or at all. If the Company is unable to raise additional funds, it will need to do one or more of the following:
| ● | Delay clinical trials and processes; |
| ● | License third parties to develop and commercialize products or technologies that it would otherwise seek to develop and commercialize itself; |
| ● | Seek strategic alliances or business combinations; |
| ● | Attempt to sell the Company; |
| ● | Cease operations; or |
| ● | Declare bankruptcy |
The Company continues to raise additional capital through the issuance of convertible notes. The Company is in discussions with investment bankers to raise additional capital in the public or private markets. There is no assurance that such financing can be completed. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management is implementing plans to reduce expenses and seek additional financing. However, there can be no assurance that these plans will be successful. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The consolidated financial statements do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
e) Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results, as determined at a later date, could differ from those estimates. Significant estimates used in preparing these audited consolidated financial statements include the realization of deferred tax assets, timing of the recognition of research and development costs, fair value of debt and equity-based instruments, and future obligations under employee benefit plans.
f) Foreign Currency Translation and Transactions
The Company also operates in India, which may give rise to significant foreign currency risks from fluctuations and the degree of volatility of foreign exchange rates between the US dollar and the Indian Rupee.
The Company’s functional currency is the United States Dollar. The functional currency of its Indian subsidiary is Indian National Rupees. Consequently, revenues and expenses of operations of the Indian subsidiary are translated into United States Dollars using average period exchange rates, while assets and liabilities of the Indian subsidiary are translated into United States Dollars using the year-end exchange rate in effect at the balance sheet dates. Adjustments resulting from the translation of functional currency financial statements to reporting currency are accumulated and reported as a part of Accumulated Other Comprehensive Income, a separate component of stockholders’ equity in the accompanying consolidated balance sheets.
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Transactions in foreign currencies are translated at the
exchange rate prevailing on the date of the transaction. Resulting gains or losses from the settlement of such foreign currency transactions
are included in the consolidated statements of operations. Monetary assets and liabilities denominated in foreign currencies are translated
into the functional currency at the exchange rates in effect on the balance sheet date. Non-monetary assets and liabilities denominated
in foreign currencies are expressed in functional currency at the historical exchange rates. Losses resulting from foreign currency transactions
amounting to ($
g) Cash and Cash Equivalents
Cash includes all highly liquid instruments
with a maturity of three months or less when purchased. The Company maintains its cash balances in financial institutions which are insured
by the Federal Deposit Insurance Corporation (“FDIC”). At various times during the year, such balances may exceed the FDIC
limit. The Company has not experienced any credit losses associated with its balances in such accounts. Cash held in the U.S. bank account
as of June 30, 2025, and December 31, 2024, was approximately $
h) Accounts Receivable, net
Accounts receivable is generally recorded at the invoiced amounts, net of an allowance for expected losses. The Company establishes credit terms for new customers based upon management’s review of their credit information and project terms and performs ongoing credit evaluations of its customers, adjusting credit terms when management believes appropriate based upon payment history and an assessment of the customer’s current credit worthiness. The Company follows Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments, which removed all current thresholds and requires entities under the new current expected credit loss (“CECL”) model to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that an entity expects to collect over the instrument’s contractual life. The new CECL model is based on expected losses rather than incurred losses. Management determined that no allowance for doubtful accounts was necessary as of June 30, 2025 and December 31, 2024.
i) Property and equipment, net
Property
and equipment, is stated as net of accumulated depreciation.
| Computers and software. | ||
| Office equipment. | | |
| Furniture and Fixtures. | ||
| Lab machinery. | ||
| Leasehold improvements | ||
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Repairs and maintenance costs are expensed as incurred; major renewals and betterments are capitalized. When assets are disposed of, the assets and related allowances for depreciation and amortization are eliminated from the accounts, and any resulting gain or loss is reflected in operations.
j) Goods and Service Tax and Other Credits Receivable
The Company has indirect tax credit carry-forwards arising in India, which may be utilized or refunded as VTL generates sales to third parties or invoices to VTI pursuant to intercompany transfer pricing arrangements. The Company expects to utilize these indirect tax credit carry-forwards over a 4-to-5-year period.
k) Intangible Assets
On August 21, 2021, Vyome acquired the
majority of the outstanding shares (purchase of substantially all of the outstanding shares of preferred stock) of Livechain, Inc., (“LICH”)
for $
Intangible assets with indefinite lives (i.e., non-reporting shell) are not amortized; rather, they are tested for impairment annually or whenever events or circumstances exist that would make it more likely than not that an impairment exists.
l) Impairment of Long-Lived Assets
The Company evaluates all long-lived assets for impairment annually, or sooner if events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the carrying amount is not fully recoverable, an impairment loss is recognized to reduce the carrying amount to fair value and is charged to expense in the period of impairment. As of June 30, 2025, and December 31, 2024, management has determined that these assets are not impaired.
m) Revenue Recognition
The Company recognizes revenue under ASC Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The Company determines revenue recognition through the following steps:
| ● | Step 1: Identify the contract with the customer; |
| ● | Step 2: Identify the performance obligations in the contract; |
| ● | Step 3: Determine the transaction price; |
| ● | Step 4: Allocate the transaction price to the performance obligations in the contract; and |
| ● | Step 5: Recognize revenue when the company satisfies a performance obligation. |
The Company records sales of its dermatological
products to the pharmaceutical company when performance obligations with customers are satisfied. The Company’s performance obligation
is a promise to transfer a distinct good to the customer and each distinct good represents a single performance obligation. Such performance
obligations are satisfied at a point in time and revenues are recognized when all rights and rewards of ownership are transferred. The
majority of the Company’s products are shipped by common carriers resulting in recognition of revenues upon shipment at which time
control passes to the customer. Revenue is measured at the amount of consideration the Company expects to receive in exchange for the
transferring of products. Customers may be entitled to cash discounts, typically denoted at the time of invoicing and shipping. Such amounts
are considered to be variable consideration under ASC 606. An estimate for cash discounts is included in the transaction price as a component
of sales and is estimated based on the satisfaction of outstanding receivables and historical performance. The Company does not have any
material financing terms as payment is received shortly after the transfer of control of the products to the customer within a period
of
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Net service fee payment and agent fees for sales of products made by Sun Pharma are recorded as service fee revenue in the period earned.
Pursuant to licensing and marketing contracts, the Company receives payments from its pharmaceutical company marketing partner for the right to distribute the products (“royalties”). Such royalty payments are linked to the net sales value of the products by its marketing partner to third parties and are recognized in the period to which the royalty relates. Such amounts are recorded under Revenue from operations in the Consolidated Statements of Operation and Comprehensive Loss.
The Company recognizes milestone payments under the license and marketing agreements when all performance obligations related to the identified performance obligations are completed.
n) Cost of products sold
The cost of products sold represents the cost of manufacturing the products supplied by third-party manufacturers.
o) Research and Development Expenses
Research and development costs are expensed as incurred. Research and development expenses consist of internal and external expenses. Internal expenses include employee compensation and overheads. External expenses include development, clinical trials, statistical analysis and report writing, and regulatory compliance costs incurred with clinical research organizations and other third-party vendors. At the end of the reporting period, the Company compares payments made to third-party service providers to the estimated progress toward completion of the research or development objectives. Such estimates are subject to change as additional information becomes available. Depending on the timing of payments to the service providers and the progress that the Company estimates have been made as a result of the service provided, the Company may record net prepaid or accrued expenses relating to these costs. Payments made to third parties that perform research and development services on the Company’s behalf are expensed as services are rendered, or as contractually agreed.
p) Stock-based Compensation
The Company accounts for stock options granted to employees and non-employees at fair value, which is measured using the Black-Scholes Option pricing model. The fair value measurement date for employee awards is the date of the grant. The Company recognizes stock-based compensation expense over the requisite service period of the individual grant, generally equal to the vesting period and uses the straight-line method to recognize stock-based compensation.
The Company’s policy is to account for forfeitures of awards when they occur in accordance with ASC 718, Compensation-Stock Compensation. The Company reverses compensation cost previously recognized, in the period the award is forfeited, for an award that is forfeited before completion of the requisite service period.
The Company utilizes the Black-Scholes option-pricing model, which incorporates assumptions and estimates to value options granted. Estimates and assumptions impacting the fair value measurement include the fair value per share of the underlying stock issuable upon exercise of the options, expected life of the options, risk-free interest rate, expected dividend yield, and expected volatility from peer public companies of the price of the underlying stock.
As the Company’s common stock has not been publicly traded, its board of directors periodically estimated the fair value of the Company’s common stock considering, among other things, contemporaneous valuations of its common stock prepared by an independent valuation firm in accordance with the guidance provided by the American Institute of Certified Public Accountants 2013 Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. The expected life of the stock options in years is estimated using the “simplified method,” as prescribed in SEC’s Staff Accounting Bulletin (SAB) No. 107, as the Company has no historical information from which to develop reasonable expectations about future exercise patterns and post-vesting employment termination behaviour for its stock option grants. The simplified method is the midpoint between the vesting period and the contractual term of the option. For stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of option grants. The risk-free rate is based on the U.S. Treasury yield curve commensurate with the expected life of the option. The expected dividend yield is zero as the Company has no history of paying dividends and no plans to do so in the near term.
q) Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards in the Condensed Consolidated Financial Statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the unaudited consolidated statements of operations in the period that includes the enactment date.
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Valuation allowances are recognized to reduce deferred tax assets to the amount that will more likely than not be realized. In assessing the need for a valuation allowance, management considers all available evidence for each jurisdiction including past operating results, estimates of future taxable income and the feasibility of ongoing tax planning strategies. When the Company changes its determination as to the amount of deferred tax assets that can be realized, the valuation allowance is adjusted with a corresponding impact to income tax expense in the period in which such determination is made.
The Company also accounts for uncertain tax positions in accordance with ASC Topic 740, Income Taxes. This guidance prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken in the Company’s income tax returns. As of June 30, 2025, and December 31, 2024, the Company had no uncertain tax positions that affected its financial position and its results of operations or its cash flows and will continue to evaluate for uncertain tax positions in the future. There are no interest costs or penalties provided for in the Company’s consolidated financial statements for the six months ended June 30, 2025, and 2024. If at any time the Company should record interest and penalties in connection with income taxes, the interest, and the penalties will be expensed within the general and administrative expenses category in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss.
r) Leases
ASC Topic 842, “Leases”, establishes a right-of-use (“ROU”) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. Lessor accounting under the new standard is substantially unchanged. Additional qualitative and quantitative disclosures are also required.
The Company adopted the following practical expedients and accounting policies elections related to this standard:
| ● | Short-term lease accounting policy election allowing lessees to not recognize ROU assets and liabilities for leases with a term of 12 months or less; option to not separate lease and non-lease components in the Company’s lease contracts; and |
| ● | The package of practical expedients applied to all of its leases, including (i) not reassessing whether any expired or existing contracts are or contain leases, (ii) not reassessing the lease classification for any expired or existing leases, and (iii) not reassessing the capitalization of initial direct costs for any existing leases. |
Disclosures related to the amount, timing and uncertainty of cash flows arising from leases are included in Note 12.
s) Notes Payable
The Company has elected to account for notes payable to a shareholder using the fair value option in accordance with the guidance contained in ASC 825-10-25. The fair value option provides an option to elect fair value as an alternative measurement for selected financial assets, financial liabilities, unrecognized firm commitments, and written loan commitments. See Note 8 for additional information. ASC 815-40-65-1(d) also allows a reporting entity to make a one-time irrevocable election to apply the fair value option in ASC 825-10 as of the date of adoption for any liability classified convertible securities that are within the scope of ASC 825-10. The impact of electing the fair value option would be reflected through a cumulative effect adjustment to the opening retained earnings balance as of the beginning of the first reporting period a reporting entity adopted ASU 2020-06.
t) Fair Value Measurements
The Company considers its cash and cash equivalents, accounts receivable, and accounts payable to meet the definition of financial instruments, and the carrying amounts of such instruments approximated their fair values due to the short maturities of these instruments. The Company records the convertible debt at fair value.
The Company measures fair value as required by the ASC Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. ASC Topic 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.
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As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, there exists a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
| Level 1 - | Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. |
| Level 2 - | Inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. |
| Level 3 - | Unobservable inputs for the asset or liability are only used when there is little if any, market activity for the asset or liability at the measurement date. |
The Company utilizes a Probability Weighted Expected Return Model (“PWERM”) to value the convertible debt and promissory notes. The quantitative information with respect to valuation methodology and significant unobservable inputs used for the Company’s convertible debt that is categorized within Level 3 of the fair value hierarchy included the discount rate and expected financing date. The other factors used in the calculation of fair value are contractual terms of the convertible note and promissory note instruments.
The following table sets forth the financial liabilities, measured at fair value, by level within the fair value hierarchy as of June 30, 2025, and December 31, 2024
| June 30, 2025 | December 31, 2024 | |||||||
| Level 3 | ||||||||
| Convertible debt | $ | $ | ||||||
| Promissory notes – ReShape | $ | |||||||
u) Basic and diluted net loss per common share
Net loss per share information is determined using the two-class method, which includes the weighted average number of shares of common stock outstanding during the period and other securities that participate in dividends (a “participating security”). The Company considered its Preferred Stock to be participating securities because the shares included rights to participate in dividends with the common stock.
Under the two-class method, basic net loss per share attributable to common stockholders is computed by dividing the net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. The net loss attributable to common stockholders is calculated by adjusting the net loss of the Company for the accretion on the Preferred Stock. Net losses are not allocated to preferred stockholders as they do not have an obligation to share in the Company’s net losses. In periods with net income attributable to common stockholders, the Company would allocate net income first to preferred stockholders based on dividend rights under the Company’s certificate of incorporation and then to preferred and common stockholders based on ownership interests. Diluted net loss per share attributable to common stockholders is computed using the more dilutive of (1) the two-class method or (2) the if-converted method.
During the six months ended June 30, 2025,
and 2024, diluted earnings per common share is the same as basic earnings per common share because, as the Company incurred a net loss
during each period presented, the potentially dilutive securities from the assumed exercise of all outstanding stock options would have
an anti-dilutive effect. The dilutive shares as of June 30, 2025, and 2024, not included in the loss per share calculation, include
v) Post Employment benefits
The Subsidiary in India has a defined
benefit gratuity scheme for its employees in India. This gratuity scheme provides for lump sum payment in accordance with the provisions
of the Payment of Gratuity Act, 1972 to vested employees at retirement or death while in employment or on termination of employment of
an amount equivalent to 15 days basic salary payable for each completed year of service or part thereof in excess of three months subject
to a limit of INR
12
Accumulated compensated absences, which are expected to be encashed within 12 months from end of the year, are treated as short-term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement at the end of the year. Actuarial gains or losses are recognized in the Condensed Consolidated Statement of Operations and Comprehensive Loss in the year in which they arise.
w) Recent accounting pronouncements
From time to time, new accounting pronouncements are issued by the FASB and are early adopted by the Company or adopted as of the specified effective date. There were no recent accounting pronouncements that impacted the Company or are expected to have a significant effect on its consolidated financial statements.
3. Other current assets
Other current assets consist of the following:
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Advances to suppliers | $ | $ | ||||||
| Other receivables | ||||||||
| Others | ||||||||
| Total | $ | $ | ||||||
4. Property and equipment, net
Property and equipment, net consist of the following:
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Buildings and Improvement | $ | $ | ||||||
| Computer and office equipment | ||||||||
| Furniture & fixtures | ||||||||
| Laboratory equipment | ||||||||
| Total | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Net fixed assets | $ | $ | ||||||
Depreciation expense is included in selling, general, and administrative
expenses in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss and was $
13
5. Goods and service tax and other credits receivable
The Company’s balance of goods and service tax and other credits receivable from government authorities as of June 30, 2025 and December 31, 2024, consist of the following:
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Tax deducted at source and tax collected at source receivable | $ | $ | ||||||
| Input goods and service tax credit | ||||||||
| $ | $ | |||||||
6. Accounts payable and Accrued expenses
Accounts payable and accrued expenses as of June 30, 2025 and December 31, 2024 consist of the following:
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| $ | $ | |||||||
7. Salary and post-employment benefits payable
Salary and post-employment benefits payable as of June 30, 2025 and December 31, 2024, consist of the following:
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Salaries payable | $ | $ | ||||||
| Accrued leave encashment (Note 12) | ||||||||
| Accrued gratuity plan (Note 12) | ||||||||
| $ | $ | |||||||
In June 2024, an officer and a director of the
Company agreed to forgo accrued salaries, and consulting fees payable of $
14
8. Convertible debt and Promissory Notes- ReShape
Convertible Debt
Commencing in October 2020, the Company
began raising money under a compulsorily convertible promissory note (the “Promissory Notes”) pursuant to a Subscription Agreement
(the “Subscription Agreement”). The Promissory Note was issued as part of a private placement (the “Offering”)
for the sale of up to $
a) In the event
that the Company issues and sells shares of its equity securities (“Equity Securities”) to investors (the “Investors”)
prior to the Maturity Date in an equity financing with total proceeds to the Company of not less than $
b) If the Company consummates a transaction that is a Deemed Liquidation Event (as defined in the Certificate of Incorporation) while this Note remains outstanding, then the outstanding principal amount of this Note and any unpaid accrued interest shall, immediately prior to the closing of such Deemed Liquidation Event, automatically convert in whole without any further action by the Holder into shares of a newly created series of preferred stock (“New Senior Preferred Stock”) at a conversion price equal to the Original Issue Price (as defined in the Certificate of Incorporation) for the most senior series of preferred stock of the Company outstanding at such time (the “New Senior Preferred Conversion Price”). The New Senior Preferred Stock shall have the identical rights, privileges, preferences and restrictions as the most senior series of preferred stock of the Company outstanding at the time of such conversion, other than with respect to: (i) the per share liquidation preference, which shall be equal to two (2) times in some notes three (3) times in the other notes the New Senior Preferred Conversion Price; (ii) the conversion price for purposes of price-based anti-dilution protection, which will equal the New Senior Preferred Conversion Price; and (iii) the per share dividend, which will be the same percentage of the New Senior Preferred Conversion Price as applied to determine the per share dividends of the holders of the most senior series of preferred stock of the Company outstanding at such time relative to the Original Issue Price for such shares. For the avoidance of doubt, the New Senior Preferred Stock shall be senior to the most senior series of preferred stock of the Company outstanding at such time and shall be pari passu with all other securities into which compulsory convertible notes issued by the Company convert.
15
c. If this Note has not otherwise been converted pursuant to the above transactions, then, effective as of the Maturity Date, all outstanding principal and accrued and unpaid interest under this Note shall be automatically converted into Senior D Preferred Stock, at a conversion price equal to the New Senior Preferred Conversion Price.
During 2023 and through June 2025, certain
Notes that had reached their maturity date were extended by an additional year. In connection with such extension, the conversion rate
was amended from
In July 2024, the Company began offering
investors the opportunity to participate in a Securities Purchase Agreement providing investors the right to certain equity instruments
and other equity rights in the Company and its subsidiary in India, some of which are dependent upon the completion of the Merger. An
aggregate of 34 investors agreed to participate in such financing through June 30, 2025, for an aggregate of approximately $
The fair value amount of the convertible debt and accrued expense is summarized as follows:
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Current portion | ||||||||
| Conversion rate at 70% of Merger Valuation | $ | $ | ||||||
| Conversion rate at 75% of Qualified Financing | ||||||||
| Total | $ | $ | ||||||
The Company has elected to record the convertible note at fair value.
| Six months ended | Six months ended | |||||||
| June 30, 2025 | June 30, 2024 | |||||||
| Balance, beginning of the period | $ | $ | ||||||
| Additional notes issued | ||||||||
Interest accrued | ||||||||
| Change in fair value | ||||||||
| Total | $ | $ | ||||||
16
Promissory Notes - ReShape
The Company entered into a note payable with ReShape
for $
| Six months ended | ||||
| June 30, 2025 | ||||
| Balance, beginning of the period | $ | |||
| Borrowings | ||||
Interest accrued | ||||
| Change in fair value | ( | ) | ||
| Total | $ | |||
Overall Debt
Interest expense on the above debt instruments was $
The fair value of the convertible notes
is classified within Level 3 of the fair value hierarchy, using the inputs below to calculate the fair value. The Company used a probability-weighted
scenario analysis to determine the fair value of the convertible notes.
| June 30, 2025 | December 31, 2024 | |||||||
| Adjusted Interest rate | % | % | ||||||
| Time to Financing Date | ||||||||
9. Common Stock and Preferred Stock
Authorized Capital
The Company had been authorized to issue
17
Preferred stock
As of June 30, 2025 and December 31, 2024, the Company has issued the following preferred stock:
| Number of shares issued as of June 30 2025 and December 31, | Conversion | Aggregate Liquidation Preference as of June 30, | Aggregate Liquidation Preference as December 31, | |||||||||||||
| 2024 | Price | 2025 | 2024 | |||||||||||||
| Series | ||||||||||||||||
| Series seed | $ | $ | $ | |||||||||||||
| Series A | $ | |||||||||||||||
| Series B | $ | |||||||||||||||
| Series B-1 | $ | |||||||||||||||
| Series C | $ | |||||||||||||||
| Series C-1 | $ | |||||||||||||||
| Series D | $ | |||||||||||||||
| Total | $ | $ | ||||||||||||||
The significant terms of the preferred stock, are as follows:
Preferred stock carries
an
Each share of preferred stock shall be convertible at the option of the holder, without the payment of additional consideration, into units of common stock at the conversion price as defined in the shareholders’ agreement. The conversion price is subject to adjustment in the event of subsequent issuance of common stock at a lower price than the original conversion price. Each series preferred stock is mandatorily convertible into common stock at the conversion price as defined in the shareholders’ agreement on the occurrence of an initial public offering (IPO).
In the event of voluntary or involuntary liquidation, dissolution, or winding up of the Company, all classes of preferred stockholders would be entitled to receive, in preference to common shareholders, an amount equal to the original issue price plus accrued and unpaid dividends. All series of preferred stock rank pari passu with each other in terms of liquidation preference except series B1 and C1. Part of the amount invested by series B1 and C1 preferred stock as mentioned in the shareholders’ agreement ranks junior to other preferred stockholders, however, rank pari passu with each other. After the liquidation preference payments to all classes of preferred stockholders have been met, preferred shareholders have unlimited right to participate on a prorated basis with common shareholders.
Holders of the preferred stock shall be
entitled to elect 5 members of the Board of Directors and also hold certain protective rights with respect to significant corporate transactions
as defined. Each holder of common stock shall be entitled to
10. Stock-Based Compensation
On December 14, 2018, the Company authorized an
Employee Stock Option Plan 2018 (‘ESOP plan’) under which
18
The Company recognized $ and $ of stock-based compensation expense (which is included in research and development expenses) in the Company’s Condensed Consolidated Statements of Operations and Comprehensive loss for the six months ended June 30, 2025 and 2024, respectively.
The fair value of stock-based compensation
transactions is measured using the Black-Scholes option pricing model. Measurement inputs include share price on the measurement date,
the exercise price of the instrument, expected volatility (based on weighted average historic volatility for a duration equal to the weighted
average life of the instruments, life based on the average of the vesting and contractual periods for employee awards as minimal prior
exercises of options in which to establish historical exercise experience), and the risk-free interest rate (based on government bonds).
Service and performance conditions attached to the transactions, if any, are not considered in determining fair value. The expected life
of the stock options is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption
that the historical volatility over a period similar to the life of the options is indicative of future trends, which may also not necessarily
be the actual outcome. The Company is a private company and lacks company-specific historical and implied volatility information. Therefore,
it estimates its expected stock volatility based on the historical data regarding the volatility of a publicly traded set of peer companies.
The expected term of stock options granted to non-employees is between
Stock-based compensation expense attributable
to equity awards granted to employees is measured at the grant date based on the fair value of the award. The expense is recognized on
a straight-line basis over the requisite service period for awards that vest, which is generally the period from the grant date to the
end of the vesting period. Stock-based awards provided to non-employees are measured and expensed as the services are provided and are
remeasured at each reporting period until these stock options vest. There were stock options granted in the first quarter of 2025.
In June 2024, the Company granted options to purchase
The Company has estimated the fair value of the 2024 stock option awards as of the date of grant by applying the Black-Scholes option-pricing model. In applying the Black-Scholes option pricing model, the Company used the following assumptions:
| Risk- free interest rate | % | |||
| Expected term | ||||
| Expected volatility | % | |||
| Expected dividends | ||||
| Grant date fair value of common stock | $ |
The summary of stock options activity for the six months ended June 30, 2025 and the year ended December 31, 2024, is as follows:
| Weighted Average | Weighted Average | |||||||||||
| Number of Options | Exercise Price | Time to Expiry | ||||||||||
| Outstanding as of December 31, 2023 | $ | |||||||||||
| Granted during 2024 year | $ | |||||||||||
| Exercised during 2024 year | — | |||||||||||
| Outstanding as of December 31, 2024 | $ | |||||||||||
| Granted during six months ended June 30, 2025 | ||||||||||||
| Expired during six months ended June 30, 2025 | ( | ) | $ | — | ||||||||
| Exercised during six months ended June 30, 2025 | — | |||||||||||
| Outstanding as of June 30, 2025 | $ | |||||||||||
| Exercisable as of December 31, 2024 | $ | |||||||||||
| Exercisable as of June 30, 2025 | $ | |||||||||||
19
The following outlines the outstanding and vested stock options by exercise price as of June 30, 2025 and December 31, 2024.
| Number of Options Outstanding and fully vested – June 30, 2025 | Number of Options Outstanding and fully vested – December 31, 2024 | |||||||
| $2,400.00 | ||||||||
| $4,500.00 | ||||||||
| $5,000.00 | ||||||||
| Total | ||||||||
As of June 30, 2025, there is no future
compensation cost to be recognized in the Condensed Consolidated Statements of Operations and Comprehensive Loss related to stock options
granted through June 30, 2025. The intrinsic value of vested and outstanding stock options was approximately $
11. Income taxes
Both VTI and VTL generated a current taxable
loss for the six months ended June 30, 2025, and 2024, and therefore the only current income taxes payable were certain minimum taxes.
The effective tax rate for the years ended June 30, 2025, and 2024 was NIL and differs from the federal statutory income tax rate of
As of December 31, 2024, VTI has net operating
loss carry-forwards of approximately $
20
12. Leases
The Company leases offices and laboratory space
in India which were automatically extended for two one-year periods ending December 2026 with monthly payments ranging from $
Operating leases are presented in the Company’s
Condensed Consolidated Balance Sheets as right-of-use assets, net, operating lease liabilities – current portion, and operating
lease liabilities, net of current portion. The assets and liabilities from our leases are recognized at the lease commencement date based
on the present value of remaining lease payments over the lease term using the Company’s incremental borrowing rates. Short-term
leases, which have an initial term of
If the Company renews
the lease for the entire
| Lease payments – From July 2025 to December 2025 | $ | |||
| Lease payments – 2026 | ||||
| Total undiscounted operating lease payments | ||||
| Less: Imputed interest | ( | ) | ||
| Present value of operating lease liabilities | $ | |||
| Current portion of lease liability | $ | |||
| Long-term portion of lease liability | ||||
| Total lease liability | $ |
| As of June 30, | As of December 31, | |||||||
| 2025 | 2024 | |||||||
| Weighted average remaining lease term in years | ||||||||
| Weighted average discount rate | % | % | ||||||
The Right of Use Asset on June 30, 2025, of $
21
13. Commitments and contingencies
a) CRO contract
In December 2018, the Company entered into
an agreement with a Contract Research Organization (“CRO”) for services to be rendered with respect to the phase 2B clinical
trials for the VB-1953 product. During 2022, the Company and the CRO signed a definitive agreement to convert
the liability of $
b) Employee Benefits – Gratuity
The Company has a defined benefit gratuity scheme
for its employees in India. This gratuity scheme provides for lump sum payment in accordance with the provisions of the Payment of Gratuity
Act, 1972 to vested employees at retirement or death while in employment or on termination of employment of an amount equivalent to 15
days basic salary payable for each completed year of service or part thereof in excess of six months subject to a limit of INR
| Six months ending | Six months ending | |||||||
| June 30, 2025 | June 30, 2024 | |||||||
| Obligation recognized in balance sheet: | ||||||||
| Beginning of the six months | $ | $ | ||||||
| Benefits paid | ( | ) | ( | ) | ||||
| Expenses charged to profit or loss | ||||||||
| Currency translation differences | ( | ) | ( | ) | ||||
| End of the six months | $ | $ | ||||||
22
c) Employee Benefits – Leave Encashment
Accumulated Compensated absences or paid leave encashment, which are expected to be encashed within 12 months from the end of the year and are treated as short-term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement at the end of the year. Actuarial gains or losses are recognized in the Condensed Consolidated Statement of Operations and Comprehensive Loss in the year in which they arise. A roll forward of the liability balance for the six months ended June 30, 2025 and 2024 are as follows:
| Six months ending | Six months ending | |||||||
| June 30, 2025 | June 30, 2024 | |||||||
| Obligation recognized in balance sheet: | ||||||||
| Beginning of the six months | $ | $ | ||||||
| Benefits paid | ( | ) | ( | ) | ||||
| Expenses charged to profit or loss | ||||||||
| Currency translation differences | ( | ) | ( | ) | ||||
| End of the six months | $ | $ | ||||||
d) Employee Benefits – Provident Fund
In accordance with Indian law, all employees in
India are entitled to receive benefits under the ‘Provident Fund’, which is a defined contribution plan. Both the employee
and the employer make monthly contributions to the plan at a predetermined rate (presently at
e) Litigation
From time to time, the Company is involved in various disputes, claims, liens and litigation matters arising out of the normal course of business which could result in a material adverse effect on the Company’s combined financial position, results of operations or cash flows. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. As of June 30, 2025, and December 31, 2024, the Company had no outstanding claims or litigation and had no liabilities recorded for loss contingencies.
23
14. Segments
The Company operates in
| Amount in USD | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | ||||||||||||||||||||||
| Biotechnology | Pharmaceutical | Total | Biotechnology | Pharmaceutical | Total | |||||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Gross margin | ||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||
| Selling, general and administrative | ||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||
| Total Operating expenses | ||||||||||||||||||||||||
| Other expenses | ||||||||||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Fair value adjustment | ( | ) | ( | ) | ||||||||||||||||||||
| Other income (loss), net | ||||||||||||||||||||||||
| Other expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Net income | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||
| Assets of segment | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
The Company derives revenues from the sale
of products, including royalties related to sales of such products and from the license of technology. Substantially all revenues for
the six months ended June 30, 2025, and 2024 are derived from one customer, a significant pharmaceutical company based in India - Sun
Pharma (“Major Customer”).
| Six months ending | Six months ending | |||||||
| June 30, 2025 | June 30, 2024 | |||||||
| Service fee for arrangements for sale of Dandruff products | $ | $ | ||||||
| Licensing and milestone fees – Luliconazole | ||||||||
| Sale of products | ||||||||
| Royalty income related to above product sales | ||||||||
| Total | $ | $ | ||||||
24
In December 2020, the Company entered into a licensing contract for a product to such a Major Customer, whereby the Company would be entitled to development and sales-based milestones and royalties on future sales of the product by the Major Customer. No development milestones, sales-based milestones or royalties have been received under this license during the six months ended June 30, 2025 or 2024.
During 2024, the Company amended its arrangement with the Major Customer such that the Company will no longer be responsible for purchasing and selling inventory of the Dandruff Lotion and Shampoo, but instead will receive a net service fee payment for sales of such products made by the Major Customer. These payments are recorded as service fee revenue in the period earned.
15. Due to affiliates
The Company incurred consultancy charges
to certain members of the Board of Directors of the Company (“Directors”) recognized as selling, general and administrative
expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss amounting to approximately $
The Company incurred compensation expenses to
the Chief Executive Officer of the Company (“CEO”) recognized as selling, general and administrative expenses in the Condensed
Consolidated Statements of Operations and Comprehensive Loss amounting to approximately $
Certain Directors have provided short-term advances
to the Company from time to time, amounting to approximately $
16. Subsequent events
For the consolidated financial statements as at and for the six months ended June 30, 2025, we have evaluated subsequent events through the date the consolidated financial statements were available to be issued and determined that there have been no events that have occurred that would require adjustments to our disclosures in the consolidated financial statements, other than the consummation of the Merger and related transactions described below.
Prior to the Merger transaction described in Note A, the Board of Directors of the Company approved the following:
| 1. | Authorized a |
25
| 2. | Amended the Articles of Incorporation of the Company to authorize three new classes of preferred stock, with similar rights as the previous shares of preferred stock: |
| a. | Series D-1 – |
| b. | Series D-2 – |
| c. | Series Seed-1 – |
| 3. | Adopted the 2025 Equity Incentive Plan, providing for the issuance of up to |
| 4. | Issued, under the 2025 Plan, stock options to employees, consultants, board members, and others to purchase
|
| 5. | Reclassified certain shares held by shareholders as follows: |
| a. | 11 shares of Series D preferred stock into |
| b. | 96 shares of Series D preferred stock into |
| c. | 203 shares of Series D preferred stock into |
| 6. | Terminated the Amended and Restated Investors’ Rights Agreement, the Amended and Restated Right of First Refusal and Co-Sale Agreement, and the Amended and Restated Voting Agreement, as amended September 5, 2019, between the Company and its shareholders |
Further, immediately prior to the Merger, the shares and share equivalents outstanding are summarized as follows:
| Common Stock | Preferred Stock (all classes) | Stock Options | Warrants | |||||||||||||
| Shares outstanding - post split | ||||||||||||||||
| Shares issued upon note conversion (a) | ||||||||||||||||
common shares issued to advisors (c) | ||||||||||||||||
| penny warrants issued (b) | ||||||||||||||||
| Stock options issued under 2025 plan | ||||||||||||||||
| a. | |
| b. | |
| c. |
26
Three put/call option agreements were put in place.
| a. | The first put/call option agreement between the Company,
ReShape Lifesciences, Inc, renamed as Vyome Holdings, Inc. (“VHI’). Through this agreement, |
| b. | The second put/call option agreement is between the Company’s
Indian subsidiary, VHI, and investors in the bridge investments that came in the form of Compulsory Convertible Debentures that were
converted to |
| c. | The third put/call option agreement is between the Company’s
Indian subsidiary, VHI, and investors for the concurrent (concurrent to Merger closing) financing for subscription of |
VHI may exercise its call options for the specified shares of VHI in the above three option agreements upon certain defined liquidation events. The investors may exercise their put options for the purchase of their shares by the Company upon certain defined financing and/or liquidation events, in all cases subject to approval by the Board of Directors of the Company and VHI. The consideration to be paid for such put/call options is based upon pro rata “liquidation event” proceeds or certain specified amounts, and in certain investor cases, for the exchange of common stock of VHI.
In connection with the Merger, the following transactions occurred:
| a. | The ReShape Board of Directors and management team resigned and were replaced by the Vyome Board of Directors and management team |
| b. | ReShape changed its name to VHI and began trading on the Nasdaq exchange under the ticker symbol “HIND” |
| c. |
| d | 4,272,632 shares of the VHI were issued to Vyome shareholders in exchange for their holdings in the Company. |
27