Elevai Labs Inc. (NASDAQ:ELAB) has entered into amended and restated consulting agreements with key executives, as revealed in a recent SEC filing dated October 25, 2024. The pharmaceutical preparations company, formerly known as Reactive Medical Labs Inc., has detailed material agreements for its non-employee Chief Executive Officer and non-Executive Chairman.
The agreements, effective October 25, 2024, involve GB Capital Ltd. and Northstrive Companies Inc., respectively. GB Capital will continue to designate Mr. Graydon Bensler to serve as the non-employee CEO, while Northstrive will have Mr. Braeden Lichti maintain his role as non-executive Chairman. Both entities will operate as independent contractors.
Under the new terms, Mr. Bensler’s annual consultant fee is set at $250,000. Additionally, he is eligible for a one-time bonus of $175,000, part in cash and part in Series B Preferred Stock, and potential annual bonuses tied to performance objectives. Mr. Bensler may also receive bonuses linked to company acquisitions, equity financing, EBITDA targets, and market valuation milestones.
Similarly, Northstrive’s compensation for Mr. Lichti’s services includes an annual fee of $300,000, a one-time bonus identical to Bensler’s, and milestone bonuses for acquisitions, equity financings, and market valuations.
The agreements provide for severance payments under specific circumstances, such as a change of control or termination by the company without cause. Mr. Bensler’s severance is set at $250,000, while Mr. Lichti’s severance includes a sum of $1,875,000 plus health coverage and acceleration of stock options.
In other recent news, Elevai Labs has inked a Master Services Agreement with KCRN Research, Inc. to support the development of its obesity and muscle loss treatment, EL-22. The partnership aims to advance Elevai Labs' efforts to bring EL-22 to the clinical trial stage. Elevai Labs has also reported promising preclinical findings for its experimental drug EL-32, which may enhance muscle preservation and fat loss in obesity treatments. The company has filed two patent applications for its lead candidate, EL-22, targeting muscle loss in obese patients.
On the corporate side, Elevai Labs has modified its license agreement with INmune Bio Inc., secured a $200,000 unsecured credit line from NorthStrive Fund II LLP, and announced the formation of two wholly owned subsidiaries. The company has also initiated a clinical study to evaluate the efficacy of their exosome-based skincare products, and has acquired exclusive licensing rights for two novel drug candidates from South Korean company MOA Life Plus Co., Ltd.
InvestingPro Insights
Elevai Labs Inc.'s recent executive compensation agreements come at a critical time for the company, as reflected in the latest financial data and market trends. According to InvestingPro data, ELAB's market capitalization stands at a modest $4.59 million, with the stock trading near its 52-week low. This context is crucial when considering the substantial compensation packages outlined for the non-employee CEO and non-Executive Chairman.
Despite the company's impressive revenue growth of 140.04% over the last twelve months, ELAB is not currently profitable, with an operating income margin of -195.46%. This stark contrast between growth and profitability aligns with an InvestingPro Tip indicating that the company is "quickly burning through cash." This financial situation may raise questions about the sustainability of the new executive compensation structures.
Another relevant InvestingPro Tip notes that ELAB has "impressive gross profit margins," which is confirmed by the data showing a gross profit margin of 69.25% for the last twelve months. This strength in margins could be a factor in the company's strategy to invest in top executive talent despite current profitability challenges.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for ELAB, providing a deeper understanding of the company's financial health and market position.
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