Annual report [Section 13 and 15(d), not S-K Item 405]

BUSINESS COMBINATION

v3.26.1
BUSINESS COMBINATION
 12 Months Ended
Dec. 31, 2025
BUSINESS COMBINATION  
BUSINESS COMBINATION

NOTE 4 – BUSINESS COMBINATION

 

On March 4, 2025, the Company and BioCorRx Pharmaceuticals, Inc. entered into the APA with the Seller. The Seller does business as US WorldMeds. Pursuant to the APA, BioCorRx Pharmaceuticals, Inc. purchased certain assets and assumed certain liabilities related to Lucemyra, an FDA approved prescription medication for opioid withdrawal. The upfront purchase price was $400,000 to be paid via Seller’s retention, until such amounts equal $400,000 of 50% of the Net Sales (as defined in the APA) of Lucemyra and 50% of the Net Distributable Profits (as defined in the APA) of the generic version of Lucemyra. The Company shall also pay to the Seller a royalty equal to 3% of the Net Sales of Lucemyra and 3% of the Net Distributable Profits of the generic version of Lucemyra on a calendar quarter basis. Royalty payments shall commence on the date of the acquisition and shall continue for a period of 5 years following the date of the acquisition. Additionally, as part of the consideration paid to the Seller for the purchase of the assets, the Company issued 500,000 shares of the Company’s common stock at $0.31 per share, and issued a warrant to the Seller for the purchase of 500,000 shares of common stock. The warrant is exercisable for two years and has an exercise price of $1.00 per share.

 

The following table summarizes the consideration transferred and the amounts of identified assets acquired and liabilities assumed at the date of the acquisition:

 

Fair value of consideration transferred:

 

 

 

Upfront purchase price

 

 $ 392,441

 

Royalty payments

 

 

 108,260

 

Stock consideration

 

 

 153,500

 

Warrant consideration

 

 

 89,770

 

Total

 

 

 743,971

 

 

 

 

 

 

Recognized amounts of identifiable assets acquired and liabilities assumed:

 

 

 

 

Inventories

 

 $ 133,597

 

Trademarks (included in intangibles)

 

 

 249,500

 

Customer base (included in intangibles)

 

 

 336,200

 

Other payable

 

 

 (538,484 )

Total identifiable net assets

 

 $ (180,813 )

Goodwill

 

 

 563,158

 

 

The Company issued 500,000 shares of common stock that had a total fair value of $153,500 based on the closing market price of $0.31 per share on March 4, 2025, the acquisition date.

 

The fair value of warrant was estimated by applying the Black-Scholes option pricing model. The Company used the following assumptions:

 

Risk-free interest rate

 

 

 3.96 %

Expected term (years)

 

 

 2.00

 

Expected volatility

 

 

 161.00 %

Expected dividends

 

 

 0.00

 

 

The fair value of the upfront purchase price and royalty payments recognized on the acquisition date of $392,441 and $108,260, respectively, were estimated by applying the income approach. That measure is based on significant Level 3 inputs not observable in the market. Revenues related to the timing of the upfront purchase price payments and royalty payments were based on management’s financial projections. The upfront purchase price payments were discounted at the risk-free rate of 4.04%. The royalty payments were risk adjusted and discounted at the required metric risk premium of 24.09%.

 

The fair value of the identifiable intangible assets acquired include the following:

 

 

 

Fair Value

 

 

Estimated

useful life

 

Trademark

 

 $ 249,500

 

 

Indefinite

 

Customer base

 

 

 336,200

 

 

 

 10

 

 

All finite-lived intangible assets are amortized on a straight-line basis, which approximates the pattern in which the economic benefits of the intangible assets are consumed. Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired and is primarily attributable to intangible assets that do not qualify for separate recognition, including the assembled workforce of the acquired business, and expected synergies at the time of the acquisition.

 

Pro Forma Financial Information (Unaudited)

 

The acquired business contributed revenues of $795,454 and earnings of $661,498 to the Company for the period from March 4, 2025 to December 31, 2025. The following unaudited pro forma financial information summarizes the results of operations for the Company as though the Business Combination had occurred on January 1, 2024.

 

 

 

2025

 

 

 2024

 

 

 

(Unaudited)

 

 

(Unaudited)

 

Total revenue

 

 $ 797,244

 

 

 $ 803,119

 

Net loss

 

 $ (2,985,852 )

 

 $ (5,112,846 )

 

These pro forma amounts have been calculated after applying the Company’s accounting policies and reflecting the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied from January 1, 2024, with the consequential tax effects.

 

During the period from March 4, 2025 to December 31, 2025, the Company incurred $528,622 of acquisition-related costs. These expenses are included in operating expenses on the Company’s consolidated statement of operations for the year ended December 31, 2025. The 2025 supplemental pro forma earnings were adjusted to exclude the $528,622 of acquisition-related costs, and instead, these costs are reflected in pro forma earnings for the year ended December 31, 2024 in the table above.