Business Context and Reporting Period
Reviv3 Procare Company (the "Company") filed this Form 8-K on June 22, 2022, reporting events occurring on June 16, 2022. The Company is an emerging growth company incorporated in Delaware. The filing details the completion of an asset acquisition from Axil & Associated Brands Corp. ("Axil").
Key Financial Metrics and Transaction Details
This filing reports a strategic acquisition rather than standard periodic financial results. Key transaction metrics include:
- Acquisition Target: The hearing protection business (ear plugs and ear muffs) and ear bud business of Axil. Axil's hearing aid line was excluded.
- Total Aggregate Value: $32,318,893.
- Consideration Structure:
- 73,183,893 shares of Company common stock.
- 250,000,000 shares of non-voting Series A Preferred Stock (convertible 1:1 to common stock).
- Valuation Discount: The aggregate value represented a 25.9% discount from the Company's average closing price over the 22-day valuation period (March 30, 2022, to April 29, 2022).
- Liquidity Context: Average daily trading volume during the valuation period was 4,819 shares.
The filing does not provide revenue, profit, cash flow, margin, debt, or liquidity metrics for the Company or the acquired assets in this specific report.
Material Changes and Related Parties
The primary material change is the expansion of the Company's business operations through the acquisition of Axil's hearing protection and ear bud assets. Significant related party transactions include:
- Intrepid Global Advisors: A stockholder of Axil holding 4.68% of Axil and 22.33% of the Company. Jeff Toghraie, the Company's Chairman and CEO, is a managing director of Intrepid.
- Voting Rights: Axil granted Company officers a proxy to vote the 73,183,893 Common Shares for two years post-closing.
- Restrictions: The Preferred Shares are non-transferable and non-convertible for two years. Post-restriction, conversion is limited to prevent any holder from beneficially owning more than 5% of the Company's common stock.
Guidance, Risks, and Contingencies
Forward-Looking Statements: The Company states there is no assurance the acquisition will be successful. Risks include unanticipated developments that could negatively impact the transaction's success.
Financial Reporting Contingencies:
- Financial statements of the acquired business (Axil) are not included in this filing but will be filed in an amendment within 71 calendar days.
- Pro forma financial information is also pending and will be filed within 71 calendar days.
Regulatory Status: The issuance of securities was made in reliance on exemptions under Section 4(a)(2) of the Securities Act and/or Regulation D.
Investor Verification Checklist
- Verify the upcoming 71-day filing deadline for Axil's financial statements and pro forma information to assess the acquired assets' historical performance.
- Review the impact of the 250,000,000 new Preferred Shares on future dilution once the two-year conversion restriction expires.
- Confirm the extent of Intrepid Global Advisors' influence given its significant ownership in both the acquirer and the target.
- Assess the liquidity risk of the Company's stock, noting the low average daily trading volume (4,819 shares) cited as a factor in the valuation discount.
- Examine the Voting Agreement (Exhibit 10.3) to understand the duration and scope of the proxy rights granted to Company officers.