| Subsequent events |
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 1 for 5,000 reverse stock split of issued and outstanding shares of common and preferred
stock |
| 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 – 23,658 shares authorized with an “original
issuance price” of $8.874 per share |
| b. | Series D-2 – 315,256 shares authorized with an “original
issuance price” of $5.886 per share |
| c. | Series Seed-1 – 900,000 shares authorized with an “original
issuance price” of $0.936 per share |
| 3. | Adopted the 2025 Equity Incentive Plan, providing for the issuance of up to 2,800,000 shares of common
stock to employees, officers, directors, and non-employees in the form of non-qualified and incentive stock options, restricted stock
awards, and other stock-based awards. |
| 4. | Issued, under the 2025 Plan, stock options to employees, consultants, board members, and others to purchase
2,705,779 shares of common stock at an exercise price of $0.41 per share, which vest immediately and 57,122 shares of common stock
at an exercise price of $0.41 per share, which vest over a one-year period from the date of grant to employees. |
| 5. | Reclassified certain shares held by shareholders as follows: |
| a. | 11 shares of Series D preferred stock into 23,658 shares of
Series D1 preferred stock |
| b. | 96 shares of Series D preferred stock into 315,256 shares
of Series D2 preferred stock |
| c. | 203 shares of Series D preferred stock into 900,000 shares
of Seed Series-1 preferred stock |
| 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 | |
| 386 | | |
| 3,075 | | |
| 279 | | |
| - | |
| Shares issued upon note conversion (a) | |
| 534,850 | | |
| | | |
| | | |
| | |
common shares issued to advisors (c) | |
| 376,256 | | |
| | | |
| | | |
| | |
| penny warrants issued (b) | |
| | | |
| | | |
| | | |
| 6,008,589 | |
| Stock options issued under 2025 plan | |
| | | |
| | | |
| 2,762,901 | | |
| | |
| | |
| 911,492 | | |
| 3,075 | | |
| 2,763,180 | | |
| 6,008,589 | |
| a. | All convertible notes plus accrued interest outstanding at
the Merger date were converted into 534,850 shares of common stock |
| b. | Warrants to purchase 6,008,589 shares of common stock at
$0.01 per share were issued to investors. The Company received $6,008 from the exercise of such warrants at the Merger date. |
| c. | Issued 376,256 common shares to consultants, advisors and
for terminating a share subscription agreement. |
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, 1,322,081 shares of common stock
held by Indian stockholders of the Company are entitled to be exchanged for 825,448 shares of VHI common stock pursuant to the put/call
exercise in the future as per the terms of the agreements. |
| 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 86 shares in the Indian subsidiary at the Merger closing. Those shares are entitled to be exchanged for 800,361 shares of
common stock of VHI pursuant to the put/call exercise in the future as per the terms of the agreements. |
| 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 999 shares in the
Indian subsidiary. Those shares are entitled to be exchanged for 89,671 shares of common stock of VHI pursuant to the put/call exercise
in the future as per terms of this agreements. |
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. | 506,264 shares of common stock of VHI were issued to PIPE
investors (“concurrent financing”) in VHI upon completion of the share investment under the Securities Purchase Agreement
discussed in Note 8 above, pursuant to which the Company has received approximately $6.5 million under such commitments. |
| d. | 4,272,632 shares of the VHI were issued to Vyome shareholders
in exchange for their holdings in the Company. |
|