Q/C Technologies, Inc 10-Q for FY2026 Q1
Q/C Technologies, Inc. (QCLS)
About this 10-Q
Q/C Technologies, Inc filed this 10-Q on May 15, 2026, covering the quarter ended March 31, 2026 (FY2026 Q1).
Headline figures
Quarter ended March 31, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $1.24M
- compared with a net loss of $1.12M a year earlier
- Diluted EPS
- -$0.19
- compared with -$0.36 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
or
For the transition period from ____________ to ____________
Commission
File Number:
(Exact name of registrant as specified in its charter)
| (State
or other jurisdiction of incorporation or organization) |
(I.R.S.
Employer Identification Number) | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s
telephone number, including area code:
Former name, former address and former fiscal year, if changed since last report: N/A
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class: | Trading Symbol(s) | Name of Each Exchange on Which Registered: | ||
| The |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of May 15, 2026, the registrant had shares of its Common Stock, par value $ per share, outstanding.
TABLE OF CONTENTS
| PART I – FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements | 3 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 34 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 50 |
| Item 4. | Controls and Procedures | 50 |
| PART II – OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 51 |
| Item 1A. | Risk Factors | 51 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 51 |
| Item 3. | Defaults Upon Senior Securities | 51 |
| Item 4. | Mine Safety Disclosures | 51 |
| Item 5. | Other Information | 51 |
| Item 6. | Exhibits | 52 |
| Signatures | 53 | |
| 2 |
PART I - Financial Information
Item 1. Financial Statements.
Q/C TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
March 31, 2026 and December 31, 2025
| As of | ||||||||
(unaudited) March 31, 2026 | December 31, 2025 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and Cash Equivalents | $ | $ | ||||||
| Marketable Securities | ||||||||
| Other Receivables | ||||||||
| Prepaid Expenses | ||||||||
| Total Current Assets | ||||||||
| Non-Current Assets | ||||||||
| Technology License | ||||||||
| Goodwill | ||||||||
| Total Non-Current Assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES | ||||||||
| Current Liabilities | ||||||||
| Trade and Other Payables | $ | $ | ||||||
| Due to MyMD FL Shareholders | ||||||||
| Dividends Payable | ||||||||
| License Fees Payable | ||||||||
| Derivative Liability | ||||||||
| Total Current Liabilities | ||||||||
| Non-Current Liabilities | ||||||||
| Contingent Consideration Payable | ||||||||
| Total Non-Current Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Mezzanine Equity | ||||||||
| Series G Convertible Preferred Stock, par
value $
and a stated value of $
per share,
shares authorized, and
shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively. Liquidation preference of $ | ||||||||
| Series G Convertible Preferred Stock – Discount | ( | ) | ( | ) | ||||
| Series
H Convertible Preferred Stock, par value $
and a stated value of $
per share,
shares authorized,
and
shares issued and outstanding as of March 31, 2026 and December
31, 2025, respectively. Liquidation preference of $ | ||||||||
| Series H Convertible Preferred Stock – Discount | ( | ) | ( | ) | ||||
| Series H Convertible Preferred Stock – Derivative | ( | ) | ( | ) | ||||
| Convertible Preferred Stock – Derivative | ( | ) | ( | ) | ||||
| Series I Convertible Preferred Stock, $ par value and a stated value of $ per share, shares designated, and shares issued and outstanding as of March 31, 2026 and December 31, 2025. | ||||||||
| Convertible preferred stock, value | ||||||||
| Total Mezzanine Equity | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred Stock, par value $, total preferred shares authorized | ||||||||
| Series
D Convertible Preferred Stock, $
par value and a stated value of $ | ||||||||
| Preferred stock, value | ||||||||
| Common Stock, par value $, shares authorized, and shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively | ||||||||
| Additional Paid in Capital | ||||||||
| Accumulated Deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
See accompanying notes to these unaudited condensed consolidated financial statements.
| 3 |
Q/C TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
| 2026 | 2025 | |||||||
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Product Revenue | $ | $ | ||||||
| Product Cost of Sales | ||||||||
| Gross Profit | ||||||||
| General and Administrative Expenses | ||||||||
| Research and Development Expenses | ||||||||
| Stock Based Compensation Expenses | ||||||||
| Franchise Tax Expense | ||||||||
| Loss from Operations | ( | ) | ( | ) | ||||
| Other (Income) Expenses | ||||||||
| Interest and Dividend Income | ( | ) | ( | ) | ||||
| Gain on Sale of Investments | ( | ) | ( | ) | ||||
| Unrealized (Gain) Loss on Marketable Securities | ( | ) | ||||||
| Change in fair value of Derivatives Liabilities | ( | ) | ( | ) | ||||
| Total Other Income | ( | ) | ( | ) | ||||
| Loss Before Income Tax | ( | ) | ( | ) | ||||
| Income Tax Benefit/(Provision) | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Preferred Stock Dividends | ||||||||
| Net Loss Attributable to Common Stockholders | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted net loss per common share | $ | ) | $ | ) | ||||
| Weighted average basic and diluted common stock outstanding | ||||||||
See accompanying notes to these unaudited condensed consolidated financial statements.
| 4 |
Q/C TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Changes in Mezzanine Equity and Stockholders’ Equity
For the Three Ended March 31, 2026 and 2025
(unaudited)
| Series F Convertible | Series F-1 Convertible | Series G Convertible | Series H Convertible | Series D Convertible | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | Additional | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Series F | Shares | Series F-1 | Shares | Series G | Shares | Series H | Shares | Series D | Shares | Par Value $0.001 | Paid In Capital | Accumulated
Deficit |
Total
|
||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | $ | | $ | | $ | | $ | ( |
) | $ | ||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - |
| ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||
| Adjustment | - | - | - | - | - | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock Dividends | - | - | - | - | - | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock Warrant Exercises | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock based compensation – Restricted Stock Units | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock based compensation - stock options | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | $ | $ | $ | ( |
) | $ |
|||||||||||||||||||||||||||||||||||||||||||||||||||
| 5 |
| Series F Convertible | Series F-1 Convertible | Series G Convertible | Series H Convertible | Series D Convertible | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | Additional | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Series F | Shares | Series F-1 | Shares | Series G | Shares | Series H | Shares | Series D | Shares | Par Value $0.001 |
Paid In Capital |
Accumulated Deficit |
Total Equity |
||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | $ | $ | |
$ | $ | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance | $ | $ | $ | $ | $ | $ | $ | $ | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - |
( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||
| Accelerated Conversion of shares of Series F Convertible Preferred Stock | ( |
) | ( |
) | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Accelerated Conversion of shares of Series F-1 Convertible Preferred Stock | - | - | ( |
) | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of shares of Series G Convertible Preferred Stock | - | - | - | - | ( |
) | - | - | - | - | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Series G Convertible Preferred Stock | - | - | - | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock Dividends | - | - | - | - | - | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||
| Stock based compensation - stock options | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance | $ | $ | $ | $ | $ | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to these unaudited condensed consolidated financial statements.
| 6 |
Q/C TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)
| 2026 | 2025 | |||||||
| For the Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Gain on sale of securities | ( | ) | ( | ) | ||||
| Loss on fair market value of equity investments | ||||||||
| Gain on fair market value of derivatives | ( | ) | ( | ) | ||||
| Share-based compensation: | - | |||||||
| To directors – options | ||||||||
| To key employees – options | ||||||||
| To non-employees – options/RSUs | ||||||||
| To non-employees – warrants | ||||||||
| Change in assets and liabilities: | ||||||||
| Deposits and other receivables | ( | ) | ||||||
| Prepaid expenses | ( | ) | ||||||
| Trade and other payables | ( | ) | ( | ) | ||||
| License Fees Payable | ( | ) | ||||||
| Net cash used by operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of marketable securities | ( | ) | ( | ) | ||||
| Proceeds from sale of marketable securities | ||||||||
| Net cash provided by/(used in) investing activities | ||||||||
| Cash flows from financing activities | ||||||||
| Dividends on Preferred Stock | ( | ) | ||||||
| Net proceeds from the exercise of warrants for common stock | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase/(decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental cash flow information | ||||||||
| Cash paid for: | ||||||||
| Interest | $ | $ | ||||||
| Income Taxes | $ | $ | ||||||
| Supplemental Schedule of Non-Cash Financing and Investing Activities | ||||||||
| Accrued dividends on Series G and Series H Convertible Preferred Stock | $ | |||||||
| Fair value of Series G Convertible Preferred Stock issued in-lieu of dividends | $ | $ | ||||||
See accompanying notes to these unaudited condensed consolidated financial statements.
| 7 |
Q/C TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
Note 1 – Organization and Description of Business
Q/C Technologies, Inc., formerly known as TNF Pharmaceuticals, Inc., is a Delaware corporation (“QCLS” or the “Company”) that was incorporated in New Jersey prior to its reincorporation in the State of Delaware (the “Reincorporation”) and was originally incorporated in Florida in November 2014. On July 22, 2024, the Company changed its name from MyMD Pharmaceuticals, Inc. to TNF Pharmaceuticals, Inc. by filing a certificate of amendment to its certificate of incorporation with the Secretary of State of Delaware. In addition, effective before the open of market trading on July 24, 2024, the Company’s common stock, par value $ per share (“Common Stock”) ceased trading under the ticker symbol “MYMD” and began trading on the Nasdaq Stock Market under the ticker symbol “TNFA.” On September 22, 2025, the Company again changed its name from TNF Pharmaceuticals, Inc. to Q/C Technologies, Inc. by filing a certificate of amendment to its certificate of incorporation with the Secretary of State of Delaware. In addition, effective before the open of market trading on September 25, 2025, the Company’s Common Stock ceased trading under the ticker symbol “TNFA” and began trading on the Nasdaq Stock Market under the ticker symbol “QCLS.”
As
part of the transition in the Company’s business model, on September 2, 2025, the Company entered into a Membership Interest Purchase
Agreement (the “MIPA”), by and among the Company, LPU Holdings LLC (“LPU”) and the members of LPU (the “Sellers”),
pursuant to which the Company agreed to acquire
Additionally, these consolidated financial statements include three wholly owned subsidiaries as of March 31, 2026, Akers Acquisition Sub, Inc., Bout Time Marketing Corporation and LPU (together, the “Company”). All material intercompany transactions have been eliminated in consolidation.
The Company has historically been engaged in the development and commercialization of two therapeutic platforms based on well-defined targets: (i) Isomyosamine (formerly known as MYMD-1), an oral, next-generation TNF-α inhibitor with the potential to transform the way TNF-α based diseases are treated due to its selectivity and ability to cross the blood brain barrier. Its ease of oral dosing is a significant differentiator compared to currently available TNF-α inhibitors, all of which require delivery by injection or infusion, and (ii) and Supera-CBD.
On
August 29, 2025, the Company effected a
In 2025, the Company shifted its business strategy to focus on energy-efficient blockchain, cryptocurrency infrastructure, and high-performance computing through quantum-class laser-based computing. The Company’s core strategy leverages an exclusive global licensing agreement with LightSolver Ltd. to deploy innovative LPUs, specifically the Company-branded qc-LPU100™, which harnesses the natural properties of light with the goal of achieving high computational speed and energy efficiency. Additionally, the Company is researching and designing quantum/laser-based computer technology.
The Company is pre-revenue and only has investment income for the periods ending 2026 and 2025.
Note 2 – Significant Accounting Policies
(a) Basis of Presentation
The condensed consolidated financial statements of the Company are prepared in U.S. Dollars and in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).
The accompanying unaudited condensed financial statements have been prepared by the Company. These statements include all adjustments (consisting only of normal recurring adjustments) which management believes necessary for a fair presentation of the statements and have been prepared on a consistent basis using the accounting policies described in Note 2 Significant Accounting Policies included in the Notes to Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission on April 15, 2026 (the “2025 Annual Report”). Certain financial information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the accompanying disclosures are adequate to make the information presented not misleading. The Notes to Financial Statements included in the 2025 Annual Report should be read in conjunction with the accompanying interim financial statements. The interim operating results for the three months ended March 31, 2026 may not be necessarily indicative of the operating results expected for the full year or any future period.
(b) Use of Estimates and Judgments
The preparation of financial statements in conformity with US GAAP requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements is included in the following notes for recording the fair value of financial instruments, derivative financial instruments valuations, research and development expenses, impairment of intangible assets and the valuation of share-based payments.
(c) Functional and Presentation Currency
These condensed consolidated financial statements are presented in U.S. Dollars, which is the Company’s functional currency. All financial information has been rounded to the nearest dollar. Foreign Currency Transaction Gains or Losses, resulting from cash balances denominated in Foreign Currencies, are recorded in the Condensed Consolidated Statements of Operations.
| 8 |
(d) Comprehensive Income (Loss)
The Company follows Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 220 in reporting comprehensive income. Comprehensive income (loss) is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income (loss). Since the Company has no items of other comprehensive income (loss), comprehensive loss is equal to net loss.
(e) Cash and Cash Equivalents
The Company considers all highly liquid investments, which include short-term bank deposits (up to three months from date of deposit) that are not restricted as to withdrawal date or use, to be cash equivalents.
(f) Fair Value of Financial Instruments
Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management as of and during the three months ended March 31, 2026. The carrying amounts of cash equivalents, accounts receivable, other current assets, other assets, accounts payable, and accrued expenses approximated their fair values as of March 31, 2026 due to their short-term nature. The fair value of the bifurcated embedded derivative related to the convertible preferred stock was estimated using a Monte Carlo simulation model, which uses as inputs the fair value of the Company’s Common Stock and estimates for the equity volatility and traded volume volatility of the Company’s Common Stock, the time to maturity of the convertible preferred stock, the risk-free interest rate for a period that approximates the time to maturity, dividend rate, a penalty dividend rate, and the probability of default. The fair value of the warrant liabilities was estimated using the Black Scholes Model which uses as inputs the following weighted average assumptions: dividend yield, expected term in years, equity volatility, and risk-free interest rate.
Fair Value Measurement
The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows:
| Level 1 | Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company can access. | ||
| Level 2 | Inputs to the valuation methodology include: | ||
| ● | quoted prices for similar assets or liabilities in active markets; | ||
| ● | quoted prices for identical or similar assets or liabilities in inactive markets; | ||
| ● | inputs other than quoted prices that are observable for the asset or liability; | ||
| ● | inputs that are derived principally from or corroborated by observable market data by correlation or other means | ||
| If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability. | |||
| Level 3 | Inputs to the valuation methodology are unobservable and significant to the fair value measurement. | ||
The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Valuation techniques maximize the use of relevant observable inputs and minimize the use of unobservable inputs.
| 9 |
(f) Fair Value of Financial Instruments, continued
The following is a description of the valuation methodologies used for assets measured at fair value as of March 31, 2026 and December 31, 2025.
Schedule of Marketable Securities
Marketable Securities: Valued using quoted prices in active markets for identical assets.
Quoted Prices in (Level 1) | Quoted Prices for Similar Assets or Liabilities in Active Markets | Significant Unobservable Inputs (Level 3) | ||||||||||
| Marketable securities at March 31, 2026 | $ | $ | $ | |||||||||
| Marketable securities at December 31, 2025 | $ | $ | $ | |||||||||
Marketable securities are classified as available for sale and are valued at fair market value. Maturities of the securities are less than one year.
As
of March 31, 2026 and December 31, 2025, the Company held certain mutual funds, which, under FASB ASC 321-10, were considered equity
investments. As such, the change in fair value in the three months ended March 31, 2026 and 2025 was a loss of $
Gains
and losses resulting from the sales of marketable securities were $
Proceeds
from the sales of marketable securities in the three months ended March 31, 2026 and 2025 were $
Fair Value on a Recurring Basis
The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. The estimated fair value of the warrant liabilities and bifurcated embedded derivatives represent Level 3 measurements. The following table presents information about the Company’s liabilities that are measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Schedule of Fair Value Hierarchy of the Valuation Inputs
| As of | ||||||||||||
| Description | Level | March 31, 2026 | December 31, 2025 | |||||||||
| Liabilities | ||||||||||||
| Derivative Liabilities | 3 | $ | $ | |||||||||
| Contingent Consideration Payable | 3 | $ | $ | |||||||||
Contingent consideration payables are classified as a Level 3 instrument with significant unobservable inputs. They are considered a non-current asset.
The following table sets forth a summary of the change in the fair value of the derivative liabilities that is measured at fair value on a recurring basis for the three months ended March 31, 2026 and March 31, 2025, respectively:
Summary of Change in Fair Value of Derivative Liabilities
| Description | 2026 | 2025 | ||||||
| Balance on December 31, 2025 and 2024 | $ | $ | ||||||
| Changes in fair value of derivative liabilities | ( |
) | ( |
) | ||||
| Balance on March 31, | $ | |||||||
| 10 |
(g) Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging.” If liability accounting is required, the Company’s derivative instruments are recorded at fair value at the issuance date and re-valued at each reporting date, with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified on the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within twelve (12) months of the balance sheet date.
The Company has determined that the Series F Warrants are derivatives that are required to be accounted for as liabilities. The Company has also determined that the following embedded features in the Series F Preferred Shares are not clearly and closely related to the debt host instrument; 1) make-whole interest upon a contingent redemption event; 2) make-whole interest upon a conversion event; 3) an installment redemption upon an Equity Conditions Failure (as defined in the Series F Certificate of Designations (as defined herein)); and 4) variable share-settled installment conversion and as such are bifurcated from the Series F Preferred Shares and accounted for as liabilities. The fair value of the Series F Warrants and embedded features are estimated using internal valuation models. The Company’s valuation models utilize inputs and other assumptions and may not be reflective of the price at which they can be settled.
The Company has determined that the Series F-1 Warrants are derivatives that are required to be accounted for as liabilities. The Company has also determined that the following embedded features in the Series F-1 Preferred Shares are not clearly and closely related to the debt host instrument: 1) make-whole interest upon a contingent redemption event; 2) make-whole interest upon a conversion event; 3) an installment redemption upon an Equity Conditions Failure (as defined in the Series F-1 Certificate of Designation); and 4) variable share-settled installment conversion and as such are bifurcated from the Series F-1 Preferred Shares and accounted for as liabilities. The fair value of the Series F-1 Warrants and embedded features are estimated using internal valuation models. The Company’s valuation models utilize inputs and other assumptions and may not be reflective of the price at which they can be settled.
Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own Common Stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be liability classified and recorded at their initial fair value on the date of issuance and remeasured at fair value and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the Statements of Comprehensive Income (Loss).
Modification of warrants
The Company applies the guidance in ASC 815-40 to account for warrants that are liability classified that are subsequently modified resulting in a reclassification to equity. The warrants are remeasured at fair value on the modification date, the change in fair value is recognized as a non-cash gain or loss on the Statement of Comprehensive Income (Loss), and the warrants are reclassified to additional paid-in capital.
(h) Prepaid Expenses
Prepaid expenses represent expenses paid prior to the date that the related services are rendered or used are comprised principally of prepaid insurance and research and development expenses.
(i) Concentrations
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash on deposit with financial institutions and accounts receivable. At times, the Company’s cash in banks exceeds the FDIC insurance limit. The Company has not experienced any loss because of these cash deposits. These cash balances are maintained with two banks as of March 31, 2026.
(j) Risk Management of Cash and Investments
It is the Company’s policy to minimize the Company’s capital resources to investment risks, prioritizing the preservation of capital over investment returns. Investments are maintained in securities, primarily publicly traded, short-term money market funds based on highly rated federal, state and corporate bonds, that minimize the risk to the Company’s capital resources and provide ready access to funds.
The Company’s investment portfolios are regularly monitored for risk and are held with one brokerage firm.
| 11 |
(k) Investments
Investments recorded using the cost method will be assessed for any decrease in value that has occurred that is other than temporary and the other than temporary decrease in value shall be recognized. As and when circumstances and facts change, the Company will evaluate the Company’s ability to significantly influence operational and financial policy to establish a basis for converting the investment accounted for using the cost method to the equity method of valuation in accordance with FASB ASC 323.
In accordance with FASB ASC 323, the Company recognizes investments in joint ventures based upon the Company’s ability to significantly influence the operational or financial policies of the joint venture. An objective judgment of the level of influence is made at the time of the investment based upon several factors including, but not limited to the following:
| a) | Representation on the Board of Directors | |
| b) | Participation in policy-making processes | |
| c) | Material intra-entity transactions | |
| d) | Interchange of management personnel | |
| e) | Technological dependencies | |
| f) | Extent of ownership and the ability to influence decision making based upon the makeup of other owners when the shareholder group is small. |
The Company follows the equity method for valuating investments in joint ventures when the existence of significant influence over operational and financial policy has been established, as determined by management; otherwise, the Company will valuate these investments using the cost method.
(l) Property, Plant and Equipment
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Costs include expenditures that are directly attributable to the acquisition of the asset.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognized within “other (income)/expense” in the Condensed Consolidated Statements of Operations.
Depreciation is recognized over the estimated useful lives of the property, plant and equipment. Leased assets are depreciated over the shorter of the lease term or their useful lives.
The estimated useful lives for the current and comparative periods are as follows:
Schedule of Estimated Useful Lives of Property Plant and Equipment
| Useful Life | ||
| (in years) | ||
| Plant and equipment | ||
| Furniture and fixtures | ||
| Computer equipment & software | ||
| Leasehold Improvements |
Depreciation methods, useful lives and residual values are reviewed at each reporting date.
(m) Intangible Assets
The Company’s long-lived intangible assets, other than goodwill, are assessed for impairment when events or circumstances indicate there may be an impairment. These assets were initially recorded at their estimated fair value at the time of acquisition and assets not acquired in acquisitions were recorded at historical cost. However, if their estimated fair value is less than the carrying amount, other intangible assets with indefinite lives are reduced to their estimated fair value through an impairment charge in the Condensed Consolidated Statements of Operations.
| 12 |
(m) Intangible Assets, continued
Patents and Trade Secrets
Propriety protection for the Company’s products, technology and process is important to its competitive position. As of March 31, 2026, the Company has 17 issued U.S. patents, 69 foreign patents, 2 U.S. patent applications and 7 foreign patent applications pending in such jurisdictions as Canada, China, Israel, and Japan, which if issued are expected to expire between 2036 and 2039. Management intends to protect all other intellectual property (e.g. copyrights, trademarks, and trade secrets) using all legal remedies available to the Company.
The Company records expenses related to the application for and maintenance of patents as a component of research and development expenses on the Condensed Consolidated Statement of Comprehensive Loss.
Patent Costs
Patents may be purchased from third parties. The costs of acquiring the patent are capitalized as patent costs if it represents a future economic benefit to the Company. Once a patent is acquired it is amortized over its remaining useful life and assessed for impairment when necessary.
Other Intangible Assets
Other intangible assets that are acquired by the Company, which have definite useful lives, are measured at cost less accumulated amortization and accumulated impairment losses.
Amortization
Amortization is recognized on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use. The estimated useful lives for the current and comparative periods are as follows:
Schedule of Estimated Useful lives of Intangible Assets
| Useful Life | ||
| (in years) | ||
| Patents and trademarks |
(n) Goodwill
Goodwill is evaluated annually for impairment or whenever the Company identifies certain triggering events or circumstances that would more likely than not reduce the fair value below its carrying amount. Events or circumstances that might indicate an interim evaluation is warranted include, among other things, unexpected adverse business conditions, economic factors (for example, the loss of key personnel), supply costs, unanticipated competitive activities, and acts by governments and courts.
Goodwill associated with the legacy business was evaluated at as of March 31, 2026 due to the change in the Company’s business model, which could be viewed as a triggering event. The net equity of the legacy business was assessed and used to measure the associated net book value of the goodwill. As of this measurement date, no impairment was required.
(o) Recoverability of Long-Lived Assets
In accordance with FASB ASC 360-10-35 “Impairment or Disposal of Long-lived Assets”, long-lived assets to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable or that the useful lives of those assets are no longer appropriate. The Company evaluates at each balance sheet date whether events and circumstances have occurred that indicate possible impairment.
The Company determines the existence of such impairment by measuring the expected future cash flows (undiscounted and without interest charges) and comparing such amount to the carrying amount of the assets. An impairment loss, if one exists, is then measured as the amount by which the carrying amount of the asset exceeds the discounted estimated future cash flows. Assets to be disposed of are reported at the lower of the carrying amount or fair value of such assets less costs to sell. Asset impairment charges are recorded to reduce the carrying amount of the long-lived asset that will be sold or disposed of to their estimated fair values. Charges for the asset impairment reduce the carrying amount of the long-lived assets to their estimated salvage value in connection with the decision to dispose of such assets.
(p) Right-of-Use Assets
The
Company leased a facility in Baltimore, Maryland under an operating lease (“2024 Baltimore Lease”) with annual rentals of
$
In accordance with FASB ASC, Topic 842, Leases (“ASC 842”), which increases transparency and comparability by recognizing a lessee’s rights and obligations resulting from leases by recording them on the balance sheet as lease assets and lease liabilities. The guidance requires the recognition of the right-of-use (“ROU”) assets and related operating and finance lease liabilities on the balance sheet.
The Company utilizes the package of practical expedients permitted within the standard, which allows an entity to forgo reassessing (i) whether a contract contains a lease, (ii) classification of leases, and (iii) whether capitalized costs associated with a lease meet the definition of initial direct costs. Also, the Company elected the expedient allowing an entity to use hindsight to determine the lease term and impairment of ROU assets and the expedient to allow the Company to not have to separate lease and non-lease components. The Company has also elected the short-term lease accounting policy under which the Company would not recognize a lease liability or ROU asset for any lease that at the commencement date has a lease term of twelve months or less and does not include a purchase option that the Company is more than reasonably certain to exercise.
| 13 |
(p) Right-of-Use Assets, continued
For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments. The Company generally uses its incremental borrowing rate as the discount rate for leases, unless an interest rate is implicitly stated in the lease. The present value of the lease payments is calculated using the incremental borrowing rate for operating leases, which was determined using a portfolio approach based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. The lease term for all the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered by either a Company option to extend the lease that the Company is reasonably certain to exercise, or an option to extend the lease controlled by the lessor. All ROU assets are reviewed for impairment.
Lease expense for operating leases consists of the lease payments plus any initial direct costs and is recognized on a straight-line basis over the lease term.
The Company’s operating leases are comprised of the 2024 Baltimore Lease on the Condensed Consolidated Balance Sheets. The information related to these leases is presented below.
The following provides details of the Company’s lease expense:
Schedule of Lease Expense
| Lease Expenses | Lease | Total | Lease | Total | ||||||||||||
For the Three Months Ended March 31, 2026 | For the Three Months Ended March 31, 2025 | |||||||||||||||
| 2024 Baltimore | 2024 Baltimore | |||||||||||||||
| Lease Expenses | Lease | Total | Lease | Total | ||||||||||||
| Operating Leases | ||||||||||||||||
| Lease Costs | $ | $ | $ | |||||||||||||
Other information as of March 31, 2026, related to leases is presented below:
Operating cash used for the 2024 Baltimore
Lease during the three months ended March 31, 2025, was $
(q) Income Taxes
The Company utilizes an asset and liability approach for financial accounting and reporting for income taxes. The provision for income taxes is based upon income or loss after adjustment for those permanent items that are not considered in the determination of taxable income. Deferred income taxes represent the tax effects of differences between the financial reporting and tax basis of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse.
The Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than not that some portion or all the deferred tax assets will not be realized. Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In management’s opinion, adequate provisions for income taxes have been made. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. As of March 31, 2026 and December 31, 2025, no liability for unrecognized tax benefits was required to be reported.
(q) Income Taxes, continued
There was income tax benefit recorded for the losses for the three months ended March 31, 2026 and 2025 since management determined that the realization of the net deferred tax assets is not more likely than not to be realized and has recorded a full valuation allowance on the net deferred tax assets.
The Company’s policy for recording interest and penalties associated with tax audits is to record such items as a component of general and administrative expense. There were amounts accrued for penalties and interest for the three months ended March 31, 2026 and 2025. The Company does not expect its uncertain tax position to change during the next twelve months. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.
| 14 |
The Company files U.S. federal income tax returns and state income tax returns. Since the Company had losses in the past, all prior years that generated net operating loss carryforwards are open and subject to audit examination in relation to the net operating loss generated from those years.
Basic earnings per Common Stock is based on the weighted average number of shares outstanding during the periods presented. Diluted earnings per share is computed using the weighted average number of Common Stock plus dilutive Common Stock equivalents outstanding during the period. Potential shares of Common Stock that would have the effect of increasing diluted earnings per share are considered anti-dilutive.
Diluted net loss per share is computed using the weighted average number of shares of Common Stock and dilutive potential Common Stock outstanding during the period.
As the Company reported a net loss for the three months ended March 31, 2026 and 2025, Common Stock equivalents were anti-dilutive.
Schedule of Weighted Average Number of Shares Outstanding Earnings Per Share
| 2026 | 2025 | |||||||
| For the Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Stock Options | ||||||||
| Unvested Restricted Stock Units | ||||||||
| Warrants to purchase Common Stock | ||||||||
| Series D Convertible Preferred Stock | ||||||||
| Series F Convertible Preferred Stock | ||||||||
| Series F-1 Convertible Preferred Stock | ||||||||
| Series G Convertible Preferred Stock | ||||||||
| Series H Convertible Preferred Stock | ||||||||
| Total potentially dilutive shares | ||||||||
The Company accounts for stock-based compensation under the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 718, “Compensation - Stock Compensation”, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. In June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation (“Topic 718”), Improvements to Nonemployee Share-Based Payment Accounting (the “2018 Update”). The amendments in the 2018 Update expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees. Prior to the 2018 Update, Topic 718 applied only to share-based transactions to employees. Consistent with the accounting requirement for employee share-based payment awards, nonemployee share-based payment awards within the scope of Topic 718 are measured at grant-date fair value of the equity instruments that an entity is obligated to issue when the good has been delivered or the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied.
The Company has elected to account for forfeiture of stock-based awards as they occur.
(t) Research and Development Costs
In accordance with FASB ASC 730, research and development costs are expensed as incurred and consist of fees paid to third parties that conduct certain research and development activities on the Company’s behalf.
(u) Recently Issued Accounting Pronouncements
As of March 31, 2026 and for the three months then ended, there were no recently issued accounting pronouncements that had a material effect on the Company’s consolidated financial statements.
In November 2024, the Financial Accounting Standards Board issued ASU 2024-03, “Disaggregation of Income Statement Expenses”, which requires enhanced disclosures of specified natural expense categories included within relevant income statement captions. The standard is intended to improve transparency by requiring disaggregation of expenses such as employee compensation, depreciation, and amortization in tabular format within the notes to the financial statements. The amendments in ASU 2024-03 are effective for fiscal years beginning after December 15, 2026, and interim periods thereafter. Early adoption is permitted. The Company expects that adoption will primarily impact the presentation and disclosure of expenses and is currently evaluating the effect of this guidance on its disclosures.
| 15 |
Note 3 – Recent Developments, Liquidity and Management’s Plans
As of March 31, 2026, the
Company’s cash on hand was $
During
the year ended December 31, 2025 the Company raised $
The Company evaluated the current cash requirements for operations in conjunction with management’s strategic plan and believes that the Company’s current financial resources as of the date of the issuance of these condensed consolidated financial statements are sufficient to fund its current operating budget and contractual obligations as of March 31, 2026 as they fall due within the next twelve-month period, following the issuance of these condensed consolidated financial statements, alleviating any substantial doubt raised by the Company’s historical operating results and satisfying its estimated liquidity needs for twelve months from the issuance of these condensed consolidated financial statements.
Note 4 – Trade and Other Payables
Trade and other payables consist of the following:
Schedule of Trade and Other Payables
March 31, 2026 | December 31, 2025 | |||||||
| Accounts Payable – Trade | $ | $ | ||||||
| Accrued Expenses | ||||||||
| Trade and other payables, Total | $ | $ | ||||||
Equity incentive Plans
2017 Stock Incentive Plan
On August 7, 2017, the Company’s stockholders approved, and the Company adopted the 2017 Stock Incentive Plan (“2017 Plan”). The 2017 Plan provides for the issuance of up to shares of the Company’s Common Stock. Due to the rounding up of each restricted stock grant to the respective option holder after several reverse stock splits, the total rounded shares of Common Stock issued and outstanding under the 2017 Plan as of March 31, 2026, totaled shares of restricted stock. These restricted shares have been issued pursuant to the 2017 Plan, and shares of Common Stock remain available for issuance.
2018 Stock Incentive Plan
On December 7, 2018, the Company’s stockholders approved, and the Company adopted the 2018 Stock Incentive Plan (“2018 Plan”). On August 27, 2020, the 2018 Plan was modified to increase the total authorized shares available for future issuance. The 2018 Plan, as amended, provides for the issuance of up to shares of the Company’s Common Stock. As of March 31, 2026, grants of RSUs and restricted stock to purchase shares of Common Stock have been issued pursuant to the 2018 Plan, and shares of Common Stock remain available for issuance.
2021 Stock Incentive Plan
On April 15, 2021, the Company’s stockholders approved, and the Company adopted the 2021 Stock Incentive Plan, (as amended the “2021 Plan”). The 2021 Plan provides for the issuance of up to shares of the Company’s Common Stock. As of March 31, 2026, grants of RSUs and stock options to purchase shares of Common Stock have been issued pursuant to the 2021 Plan, and
Stock Options
Summary of Stock Option Activity
| Weighted | ||||||||||||||||||||
| Average | ||||||||||||||||||||
| Weighted | Weighted | Remaining | ||||||||||||||||||
| Number | Average | Average | Contractual | Aggregate | ||||||||||||||||
| of | Exercise | Grant Date | Term | Intrinsic | ||||||||||||||||
| Shares | Price | Fair Value | (years) | Value | ||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | |||||||||||||||||
| Granted | - | |||||||||||||||||||
| Exercised | - | - | ||||||||||||||||||
| Forfeited | - | |||||||||||||||||||
| Canceled/Expired | ( | ) | - | |||||||||||||||||
| Balance March 31, 2026 | $ | |||||||||||||||||||
| Exercisable as of March 31, 2026 | $ | |||||||||||||||||||
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of $ for the Company’s Common Stock on March 31, 2026 and the closing stock price of $ for the Company’s Common Stock on December 31, 2025.
During
the three months ended March 31, 2026 and 2025, the Company recognized stock option expenses totaling $
The unamortized stock option expenses as of March 31, 2026 totaled $.
| 16 |
Restricted Stock Units
On October 14, 2021, the Compensation Committee of the Board of Directors approved grants totaling Restricted Stock Units to the Company’s then current six directors and then current seven key employees. Each RSU had a grant date fair value of $ which will be amortized upon vesting into administrative expenses within the Consolidated Statements of Operations. Such RSUs were granted under the 2021 Plan. Vesting of each RSU is:
| ● | ||
| ● | ||
| ● | ||
| ● |
As of March 31, 2026 and 2025, none of the vesting milestones have been met, respectively.
The following is the status of outstanding unvested RSUs outstanding as of March 31, 2026 and the changes for the three months ended March 31, 2026:
Summary of Restricted Stock Units Activity
| Weighted | ||||||||
| Average | ||||||||
| Number of | Grant Date | |||||||
| RSUs | Fair Value | |||||||
| Balance at December 31, 2025 | $ | |||||||
| Granted | ||||||||
| Vested | ||||||||
| Forfeited | - | |||||||
| Canceled/Expired | - | |||||||
| Balance at March 31, 2026 | $ | |||||||
As of March 31, 2026, the unamortized value of the RSUs was $.
Note 6 – Equity
Authorized Capital Stock
At the Company’s annual meeting of stockholders, held on June 3, 2025, which was reconvened from May 20, 2025, the Company’s stockholders approved an amendment to the Company’s Certificate of Incorporation (the “Share Increase Amendment”) to increase the number of authorized shares of Common Stock from shares to and to make a corresponding change to the number of authorized shares of the Company’s capital stock. Following the 2025 annual meeting, on June 6, 2025, the Company filed the Share Increase Amendment with the Secretary of State.
As
of March 31, 2026, the Company’s authorized capital stock consisted of
As March 31, 2026 and December 31, 2025, there were and shares of Common Stock issued and outstanding, respectively. There were shares and shares of Series D Preferred Stock issued and outstanding as of March 31, 2026 and December 31, 2025, respectively. There were and shares of Series G Preferred Stock issued and outstanding as of March 31, 2026 and December 31, 2025, respectively. There were and shares of Series H Preferred Stock issued and outstanding as of March 31, 2026 and December 31, 2025, respectively. There were shares of Series C Convertible Preferred Stock, Series E Junior Participating Preferred Stock, Series F Convertible Preferred Stock, Series F-1 Convertible Preferred Stock or Series I Convertible Preferred Stock issued and outstanding as of March 31, 2026 and December 31, 2025.
In September 2025, the Company completed a reverse stock split which primarily includes adjustments to share amounts and per share amounts. All share amounts and per share amounts have been retrospectively adjusted to account for the reverse stock split.
Preferred Stock
The holders of preferred shares or preferred warrants are entitled to vote, as determined and as limited by the certificate of designation for each class of preferred shares or warrants, at meetings of the Company stockholders.
| 17 |
Series D Convertible Preferred Stock
The following are the principal terms of the Series D Preferred Stock:
Rank
The Series D Preferred Stock ranks (1) on parity with Common Stock on an “as converted” basis, (2) senior to any series of the Company’s capital stock hereafter created specifically ranking by its terms junior to the Series D Preferred Stock, (3) on parity with any series of the Company’s capital stock hereafter created specifically ranking by its terms on parity with the Series D Preferred Stock, and (4) junior to any series of the Company’s capital stock hereafter created specifically ranking by its terms senior to the Series D Preferred Stock in each case, as to dividends or distributions of assets upon the Company’s liquidation, dissolution or winding up whether voluntary or involuntary.
Conversion Rights
A
holder of Series D Preferred Stock is entitled at any time to convert any whole or partial number of shares of Series D Preferred Stock
into shares of the Company’s Common Stock, determined by dividing the stated value equal to $
Dividend Rights
In addition to stock dividends or distributions for which proportionate adjustments will be made, holders of Series D Preferred Stock are entitled to receive dividends on shares of Series D Preferred Stock equal, on an as-if-converted-to-common-stock basis, to and in the same form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock. No other dividends are payable on shares of Series D Preferred Stock.
Voting Rights
Subject to the Series D Beneficial Ownership Limitation, on any matter presented to the Company’s stockholders for their action or consideration at any meeting of the Company’s stockholders (or by written consent of stockholders in lieu of a meeting), each holder, in its capacity as such, shall be entitled to cast the number of votes equal to the number of whole shares of the Company’s Common Stock into which the Series D Preferred Stock beneficially owned by such holder are convertible as of the record date for determining stockholders entitled to vote on or consent to such matter (taking into account all Series D Preferred Stock beneficially owned by such holder). Except as otherwise required by law or by the other provisions of the Certificate of Designation of Series D Convertible Preferred Stock (the “Series D Certificate of Designation”), the holders of Series D Preferred Stock, in their capacity as such, shall vote together with the holders of the Company’s Common Stock and any other class or series of stock entitled to vote thereon as a single class.
Liquidation Rights
Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of Series D Preferred Stock are entitled to receive, pari passu with the holders of Common Stock, out of the assets available for distribution to stockholders an amount equal to such amount per share as would have been payable had all shares of Series D Preferred Stock been converted into Common Stock immediately before such liquidation, dissolution or winding up, without giving effect to any limitation on conversion as a result of the Series D Beneficial Ownership Limitation, as described above.
| 18 |
Failure to Deliver Conversion Shares
Compensation for Series D Buy-In on Failure to Timely Deliver Shares
If the Company fails to timely deliver the Series D Conversion Shares to the holder, and if after the required delivery date the holder is required by its broker to purchase (in an open market transaction or otherwise) or the holder or its brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the holder of the Series D Conversion Shares which the holder anticipated receiving upon such conversion or exercise (a “Series D Buy-In”), then the Company is obligated to (A) pay in cash to such holder (in addition to any other remedies available to or elected by such holder) the amount, if any, by which (x) such holder’s total purchase price (including any brokerage commissions) for the shares of Common Stock so purchased exceeds (y) the product of (1) the aggregate number of Series D Conversion Shares that such holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of such holder, either reissue (if surrendered) the shares of Series D Preferred Stock equal to the number of shares of Series D Preferred Stock submitted for conversion (in which case, such conversion shall be deemed rescinded) or deliver to such holder the number of Series D Conversion Shares that would have been issued if the Company had timely complied with its delivery requirements.
As of March 31, 2026 and December 31, 2025, the Company had shares of Series D Convertible Preferred Stock outstanding which represent underlying shares of the Company’s Common Stock.
Series F Convertible Preferred Stock
On
February 21, 2023, the Company entered into a Securities Purchase Agreement (the “Series F Purchase Agreement”) with
certain accredited investors (the “Series F Investors”), pursuant to which it agreed to sell to the Series F Investors
(i) an aggregate of
shares of the Company’s newly-designated Series F convertible preferred stock (the “Series F Preferred Shares”)
with a stated value of $
Following
the Company’s
Prior
to the Series F Certificate of Amendment (as defined below), the Company was initially required to redeem the Series F Preferred Shares
in 12 equal monthly installments, commencing on July 1, 2023.
On
April 5, 2024, the Company entered into an Omnibus Waiver and Amendment (the “Omnibus Agreement”) with the Required
Holders (as defined in the Series F Certificate of Designations). Pursuant to the Omnibus Agreement, the Required Holders agreed (i)
to defer payment of the monthly installment amounts due on March 1, 2024, and April 1, 2024 (the “Installments”), under
Section 9(a) of the Series F Certificate of Designations, until May 1, 2024, and (ii) to waive any breach or violation of the Series
F Purchase Agreement, the Series F Certificate of Designations, or the Series F Warrants resulting from missing the Installments.
The Company may require holders to convert their Series F Preferred Shares into shares of Common Stock if the closing price of the
Common Stock exceeds $
per share (as adjusted for the 2025 Reverse Stock Split) (subject to adjustment for stock splits, stock dividends, stock
combinations, recapitalizations or other similar events) for 20 consecutive trading days and the daily dollar trading volume of the
Common Stock exceeds $
| 19 |
On
May 20, 2024, the Company entered into an Omnibus Waiver, Consent, Notice and Amendment (the “Series F Agreement”) with the
Required Holders (as defined in the Series F Certificate of Designations). Pursuant to the Series F Agreement, the Required Holders agreed
to (i) amend the Series F Purchase Agreement to amend certain terms relating to purchase rights thereunder, (ii) waive certain rights
under the Series F Purchase Agreement and Series F Certificate of Designations in respect of the issuance of the Company’s Series
F-1 Convertible Preferred Stock, with a par value of $ per share and a stated value of $
On
April 8, 2025, the Company entered into an Omnibus Amendment Agreement (“April 2025 Amendment Agreement”) with the Required
Holders (as defined in the Series F Certificate of Designations and Series F-1 Certificate of Designations), pursuant to which, the Required
Holders agreed to amend (i) the Series F-1 Certificate of Designations, as described below, by filing a Certificate of Amendment to the
Series F-1 Certificate of Designations with the Secretary of State (the “April 2025 Series F-1 Certificate of Amendment”),
(ii) the Series F Certificate of Designations, as described below, by filing a Certificate of Amendment to the Series F Certificate of
Designations with the Secretary of State (the “April 2025 Series F Certificate of Amendment”), (iii) the Series F-1 Purchase
Agreement, to amend the definition of “Excluded Securities” such that the definition includes the issuance of Common Stock
issued after the date of the Series F-1 Purchase Agreement pursuant to an Approved Stock Plan (as defined in the Series F-1 Purchase
Agreement), which in the aggregate does not exceed more than
The
April 2025 Series F Certificate of Amendment amends the Series F Certificate of Designations to (A) (i) extend the maturity date to June
30, 2025, and (ii) modify the schedule of Installment Dates (as defined in the Series F Certificate of Designations), in each case, effective
as of December 31, 2024, and (B) subject to obtaining the approval of the Company’s stockholders, effective January 1, 2025, increase
the aggregate Stated Value of the Series F Preferred Shares outstanding to an amount equal to
On August 19, 2025, the Company entered into an Omnibus Amendment Agreement (“August 2025 Amendment Agreement”) with the Required Holders (as defined in the Series F Certificate of Designations and Series F-1 Certificate of Designations), pursuant to which, the Required Holders agreed to amend (i) the Series F-1 Certificate of Designations, as described below, by filing a Certificate of Amendment to the Series F-1 Certificate of Designations with the Secretary of State (the “August 2025 Series F-1 Certificate of Amendment”), (ii) the Series F Certificate of Designations, as described below, by filing a Certificate of Amendment to the Series F Certificate of Designations with the Secretary of State (the “August 2025 Series F Certificate of Amendment”), and (iii) to amend the term of the Series F Warrants and Series F-1 Warrants such that such warrants have a term expiring on August 15, 2030. In addition, in consideration of the foregoing, the Required Holder is entitled to nominate one director to the board of directors, provided that such nomination shall be approved by the Company’s Nominating and Governance Committee, which approval shall not be unreasonably withheld.
The August 2025 Series F Certificate of Amendment amends the Series F Certificate of Designations to (A) (i) extend the maturity date to December 31, 2025, and (ii) modify the schedule of Installment Dates (as defined in the Series F Certificate of Designations), in each case, effective as of June 30, 2025. The August 2025 Series F-1 Certificate of Amendment amends the Series F-1 Certificate of Designations to (A) (i) extend the maturity date to December 31, 2025, and (ii) modify the schedule of Installment Dates (as defined in the Series F Certificate of Designations), in each case, effective as of June 30, 2025.
On September 2, 2025, the Company entered into an Omnibus Amendment Agreement (the “September 2025 Omnibus Amendment”) with the Required Holders (as defined in each of (i) the Series F Certificate of Designations and (ii) the Series F-1 Certificate of Designations) pursuant to which, the Required Holders agreed to (i) amend and restate the Series F Certificate of Designations by filing a Second Amended and Restated Certificate of Designations of the Series F Preferred Stock (the “Second Amended and Restated Series F Certificate of Designations”) with the Secretary of State, and (ii) amend and restate the Series F-1 Certificate of Designations by filing an Amended and Restated Certificate of Designations of the Series F-1 Preferred Stock (the “Amended and Restated Series F-1 Certificate of Designations”) with the Secretary of State. Each of the Second Amended and Restated Series F Certificate of Designations and the Amended and Restated Series F-1 Certificate of Designations (i) extend the maturity date of each of Series F Convertible Preferred Stock and Series F-1 Convertible Preferred Stock to March 2, 2027, and (ii) remove the amortization payments and related terms and covenants.
The Series F Preferred Shares are classified in temporary equity as the holder of the Series F Preferred Shares have the right to require the Company to redeem for cash all or any portion of each such holder’s shares upon the suspension from trading or the failure of the Common Stock to be trading or listed (as applicable) on an eligible trading market for a period of five (5) consecutive trading days. The Series F Preferred Shares are not unconditionally redeemable and are only conditionally puttable at the holder’s option upon this trading suspension or failure. This would not be considered to be within the Company’s control.
The
Series F Preferred Shares were determined to be more akin to a debt-like host than an equity-like host. The Company identified the following
embedded features that are not clearly and closely related to the debt host instrument: 1) make-whole interest upon a contingent redemption
event, 2) make-whole interest upon a conversion event, 3) an installment redemption upon an Equity Conditions Failure (as defined in
the Series F Certificate of Designations), and 4) variable share-settled installment conversion. These features were bundled together,
assigned probabilities of being affected and measured at fair value. Subsequent changes in fair value of these features are recognized
in the Consolidated Statements of Operations. The Company estimated at issuance the $
| 20 |
The
discount to the fair value is included as a reduction to the carrying value of the Series F Preferred Shares. The Company recorded a
total discount of $
The
Company performed an analysis of the change in fair value of the derivative liabilities pre and post the September 2, 2025 modification
and determined the change in fair value to be immaterial. During the three months ended March 31, 2026 and 2025, the Company recorded
gains of $
The following are the principal terms of the Series F Preferred Shares:
Dividends
The
holders of the Series F Preferred Shares are entitled to dividends of
Liquidation
Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, each holder of the Series F Preferred Shares shall be entitled to receive out of the assets, whether capital or surplus, of the Company an amount per share of Series F Preferred Shares equal to the greater of (A) 125% of the stated value of such share of Series F Preferred Shares (plus any applicable make-whole amount, unpaid late charge or other applicable amount) on the date of such payment and (B) the amount per share such holder would receive if such holder converted such share of Series F Preferred Shares into Common Stock immediately prior to the date of such payment. All shares of capital stock of the Company shall be junior in rank to all Series F Preferred Shares with respect to the preferences as to payments upon liquidation.
Series F-1 Preferred Stock
On
May 20, 2024, the Company entered into a Securities Purchase Agreement (the “Series F-1 Purchase Agreement”) with certain
accredited investors (the “Series F-1 Investors”) pursuant to which it agreed to sell to the Series F-1 Investors (i) an
aggregate of shares of the Company’s newly-designated Series F-1 Preferred Stock, initially convertible into up to
shares of Common Stock at a conversion price of $
On
April 17, 2025, in connection with the issuance of stock options to certain officers of the Company and pursuant to the full ratchet
anti-dilution provisions contained in the Series F Certificate of Designations the Series F-1 Conversion Price was adjusted to $
The
Company initially was required to redeem the Series F-1 Preferred Stock in equal monthly installments, commencing on December 1, 2024.
On April 8, 2025, the Company entered into the April 2025 Amendment Agreement with the Required Holders (as defined in the Series F Certificate of Designations and Series F-1 Certificate of Designations), pursuant to which, the Required Holders agreed to amend (i) the Series F-1 Certificate of Designations, as described below, by filing the April 2025 Series F-1 Certificate of Amendment with the Secretary of State of the State of Delaware, (ii) the Series F Certificate of Designations, as described below, by filing the April 2025 Series F Certificate of Amendment, (iii) the Series F-1 Purchase Agreement, to amend the definition of “Excluded Securities” such that the definition includes the issuance of Common Stock issued after the date of the Series F-1 Purchase Agreement pursuant to an Approved Stock Plan (as defined in the Series F-1 Purchase Agreement), which in the aggregate does not exceed more than 2% of the shares of Common Stock issued and outstanding as of the date of such issuance, and (iv) to amend the term of the Series F-1 Short-Term Warrants to be five years from the date of issuance. In addition, in consideration of the foregoing, the Company agreed to reduce the size of the board of directors of the Company to no more than six directors, no later than the Company’s 2025 annual meeting of stockholders.
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The April 2025 Series F-1 Certificate of Amendment amends the Series F-1 Certificate of Designations to amend the definition of “Excluded Securities” substantially similar to the Excluded Securities Modification. The April 2025 Series F-1 Certificate of Amendment was filed with the Secretary of State of the State of Delaware, effective as of April 8, 2025.
On August 19, 2025, the Company entered the August 2025 Amendment Agreement with the Required Holders (as defined in the Series F Certificate of Designations and Series F-1 Certificate of Designations), pursuant to which, the Required Holders agreed to amend (i) the Series F-1 Certificate of Designations, as described below, by filing a Certificate of Amendment to the Series F-1 Certificate of Designations with the Secretary of State, (ii) the Series F Certificate of Designations, as described below, by filing a Certificate of Amendment to the Series F Certificate of Designations with the Secretary of State, and (iii) to amend the term of the Series F Warrants and Series F-1 Warrants such that such warrants have a term expiring on August 15, 2030. In addition, in consideration of the foregoing, the Required Holder is entitled to nominate one director to the board of directors, provided that such nomination shall be approved by the Company’s Nominating and Governance Committee, which approval shall not be unreasonably withheld.
The August 2025 Series F Certificate of Amendment amends the Series F Certificate of Designations to (A) (i) extend the maturity date to December 31, 2025, and (ii) modify the schedule of Installment Dates (as defined in the Series F Certificate of Designations), in each case, effective as of June 30, 2025. The August 2025 Series F-1 Certificate of Amendment amends the Series F-1 Certificate of Designations to (A) (i) extend the maturity date to December 31, 2025, and (ii) modify the schedule of Installment Dates (as defined in the Series F Certificate of Designations), in each case, effective as of June 30, 2025.
On September 2, 2025, the Company entered into the September 2025 Omnibus Amendment with the Required Holders (as defined in each of (i) the Series F Certificate of Designations and (ii) the Series F-1 Certificate of Designations) pursuant to which, the Required Holders agreed to (i) amend and restate the Series F Certificate of Designations by filing a Second Amended and Restated Certificate of Designations of the Series F Preferred Stock with the Secretary of State, and (ii) amend and restate the Series F-1 Certificate of Designations by filing an Amended and Restated Certificate of Designations of the Series F-1 Preferred Stock with the Secretary of State. Each of the Second Amended and Restated Series F Certificate of Designations and the Amended and Restated Series F-1 Certificate of Designations (i) extend the maturity date of each of Series F Convertible Preferred Stock and Series F-1 Convertible Preferred Stock to March 2, 2027, and (ii) remove the amortization payments and related terms and covenants.
The shares of Series F-1 Preferred Stock are classified as temporary equity as the holders of the Series F-1 Preferred Stock have the right to require the Company to redeem for cash all or any portion of each such holder’s shares upon the suspension from trading or the failure of the Common Stock to be trading or listed (as applicable) on an eligible trading market for a period of five (5) consecutive trading days. The Series F-1 Preferred Stock is not unconditionally redeemable and is only conditionally puttable at the holder’s option upon this trading suspension or failure. This would not be considered to be within the Company’s control.
The
estimated fair value of the Series F-1 Preferred Stock on the issuance date of approximately $
The
approximately $
The
Company performed an analysis of the change in fair value of the derivative liabilities pre and post the September 2, 2025 modification
and determined the change in fair value to be immaterial. During the three months ended March 31, 2026 and 2025, the Company recorded
a gains of $
The following are the principal terms of the Series F-1 Preferred Stock:
Dividends
The
holders of the Series F-1 Preferred Stock are entitled to dividends of
Liquidation
Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, each holder of shares of the Series F-1 Preferred Stock shall be entitled to receive out of the assets, whether capital or surplus, of the Company an amount per share of Series F-1 Preferred Stock equal to the greater of (A) 125% of the stated value of such share of Series F-1 Preferred Stock (plus any applicable make-whole amount, unpaid late charge or other applicable amount) on the date of such payment and (B) the amount per share such holder would receive if such holder converted such share of Series F-1 Preferred Stock into Common Stock immediately prior to the date of such payment. All shares of capital stock of the Company shall be junior in rank to all shares of Series F-1 Preferred Stock with respect to the preferences as to payments upon liquidation.
| 22 |
Series G Preferred Stock
On
May 20, 2024, the Company entered into a Securities Purchase Agreement (the “Series G Purchase Agreement” and
collectively with the Series F-1 Purchase Agreement, each a “Purchase Agreement” and collectively, the “Purchase
Agreements”) with certain accredited investors (the “Series G Investors” and collectively with the Series F-1
Investors, the “Investors”), pursuant to which it agreed to sell to the Series G Investors (i) an aggregate of
shares of the Company’s newly-designated Series G Preferred Stock, initially convertible into up to
shares of the Company’s Common Stock (the “Series G Conversion Shares”), at an initial conversion price of $
On
April 17, 2025, in connection with the issuance of stock options to certain officers of the Company, (i) the Series G Conversion Price
was equal to $
At any time after the issuance date of the Series G Preferred Shares, the Company has the option to redeem in cash all or any portion of the shares of Series G Preferred Shares then outstanding at a premium upon notice by the Company to all holders of the Series G Preferred Shares.
The
holders of the Series G Preferred Shares will be entitled to dividends of
Notwithstanding the foregoing, the Company’s ability to settle conversions and make dividend make-whole payments using shares of Common Stock is subject to certain limitations set forth in the Series G Certificate of Designations. Further, the Series G Certificate of Designations contains a certain beneficial ownership limitation, which applies to each Series G Investor, other than PharmaCyte Biotech, Inc., after giving effect to the issuance of shares of Common Stock issuable upon conversion of the Series G Preferred Shares or as part of any dividend make-whole payment under the Series G Certificate of Designations.
| 23 |
Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, each holder of shares of the Series G Preferred Stock shall be entitled to receive out of the assets, whether capital or surplus, of the Company an amount per share of Series G Preferred Stock equal to the greater of (A) 125% of the stated value of such share of Series G Preferred Stock (plus any applicable make-whole amount, unpaid late charge or other applicable amount) on the date of such payment and (B) the amount per share such holder would receive if such holder converted such share of Series G Preferred Stock into Common Stock immediately prior to the date of such payment. All shares of capital stock of the Company shall be junior in rank to all shares of Series G Preferred Stock with respect to the preferences as to payments upon liquidation.
On June 17, 2024, the Company entered into an Amendment Agreement (the “Series G Amendment”) with the Required Holders (as defined in the Series G Certificate of Designations). Pursuant to the Series G Amendment, the Required Holders agreed to amend the Series G Certificate of Designations by filing a Certificate of Amendment (“Series G Certificate of Amendment”) to the Series G Certificate of Designations with the Secretary of State of the State of Delaware (the “Secretary of State”) to increase the number of authorized shares of Series G Preferred Stock from to , in order to authorize a sufficient number of shares of Series G Preferred Stock for the payment of PIK Shares. On June 17, 2024, the Company filed the Series G Certificate of Amendment with the Secretary of State, thereby amending the Series G Certificate of Designations. The Series G Certificate of Amendment became effective with the Secretary of State upon filing.
The shares of Series G Preferred Stock are classified as temporary equity as the holders of the Series G Preferred Stock have the right to require the Company to redeem for cash all or any portion of each such holder’s shares upon the suspension from trading or the failure of the Common Stock to be trading or listed (as applicable) on an eligible trading market for a period of five (5) consecutive trading days. The Series G Preferred Stock is not unconditionally redeemable and is only conditionally puttable at the holder’s option upon this trading suspension or failure. This would not be considered to be within the Company’s control.
The
estimated fair value of the Series G Preferred Stock on the issuance date of approximately $
The
approximately $
Since
the fair value of the liabilities required to be subsequently measured at fair value exceeds the net proceeds received, the excess of
the fair value over the net proceeds received is recognized as a loss in earnings. As such, the Company recognized a loss on the issuance
of preferred stock of approximately $
On August 8, 2024, the Company entered into an Amendment Agreement (the “August Series G Amendment”) with the Required Holders (as defined in the Series G Certificate of Designations). Pursuant to the August Series G Amendment, the Required Holders agreed to amend the Series G Certificate of Designations by filing a Certificate of Amendment (“August Series G Certificate of Amendment”) to the Series G Certificate of Designations with the Secretary of State to adjust the calculation of the PIK Shares. On August 8, 2024, the Company filed the August Series G Certificate of Amendment with the Secretary of State, thereby amending the Series G Certificate of Designations. The August Series G Certificate of Amendment became effective with the Secretary of State upon filing.
During the three months ended March 31, 2026 and March 31, 2025, the Company did not issue Series G Preferred Stock in lieu of dividends.
| 24 |
Series H Preferred Stock
On
September 2, 2025, the Company entered into a Securities Purchase Agreement (the “Series H Purchase Agreement”) with certain
accredited investors (the “Series H Investors”), pursuant to which it issued and sold on September 4, 2025 (the “Series
H Closing Date”) in a private placement (i) an aggregate of shares of the Company’s newly-designated Series H Preferred
Stock, initially convertible into up to shares of Common Stock (the “Series H Conversion Shares”) at an initial
conversion price of $
The Series H Conversion Price is subject to customary adjustments for stock dividends, stock splits, reclassifications, stock combinations and the like, and subject to price-based adjustment in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable Series H Conversion Price (subject to certain exceptions).. The Series H Conversion Price may also be voluntarily reduced by the Company to any amount and for any period of time deemed appropriate by the Board at any time with the prior written consent of the holders of at least a majority of the outstanding shares of Series H Preferred Stock, subject to the rules and regulations of Nasdaq.
The
holders of the Series H Preferred Stock are entitled to dividends of
Notwithstanding the foregoing, the Company’s ability to issue any shares of Common Stock upon conversion of any shares of Series H Preferred Stock or otherwise pursuant to the terms of the Series H Certificate of Designations is subject to certain limitations set forth in the Series H Certificate of Designations, including a limit on the number of shares that may be issued until the time, if any, that the Company’s stockholders have approved the issuance of the Series H Conversion Shares and shares issuable upon exercise of the Series H Investor Warrants (the “Series H Stockholder Approval”). The Series H Stockholder Approval was obtained on November 14, 2025 at a special meeting of stockholders of the Company. Further, except with respect to Pharmacyte, the Series H Certificate of Designations contains a certain beneficial ownership limitation after giving effect to the issuance of shares of Common Stock issuable upon conversion of the Series H Preferred Stock.
The
shares of Series H Preferred Stock were determined to be more akin to a debt-like host than an equity-like host. The Company identified
the following embedded features that are not clearly and closely related to the debt host instrument: 1) certain contingent redemption
options, 2) optional conversion features inclusive of make-whole interest and 3) an increase in the dividend rate related to the occurrence
of a triggering event. These features were bundled together, assigned probabilities of being affected and measured at fair value. Subsequent
changes in fair value of these features are recognized in the Consolidated Statement of Operations. The Company estimated the $
The
discount to the fair value is included as a reduction to the carrying value of the Series H Preferred Stock. On September 30, 2025, the
Company recorded a total discount of $
| 25 |
In connection with the Series H Private Placement, the Company and the Series H Investors entered into that certain Registration Rights Agreement, dated as of September 2, 2025 (the “Series H Registration Rights Agreement,” and, together with the Series H Purchase Agreement, the Series H Certificate of Designations, and the Series H Investor Warrants, the “Transaction Documents”), pursuant to which, the Company agreed to, among other things, prepare and file with the SEC a registration statement (the “Series H Registration Statement”) covering the resale of all of the Registrable Securities (as defined in the Series H Registration Rights Agreement) prior to the applicable Filing Deadline (as defined in the Series H Registration Rights Agreement).
On September 30, 2025, the Company entered into an Omnibus Waiver and Amendment (the “September 2025 Amendment”) with the Required Holders (as defined in the Series H Certificate of Designations). Pursuant to the Amendment, the Required Holders agreed (A) to amend (i) the Series H Certificate of Designations, as described below, by filing a Certificate of Amendment (“September 2025 Certificate of Amendment”) to the Series H Certificate of Designations with the Secretary of State, (ii) the Series H Purchase Agreement to amend the definition of “Excluded Securities” such that the definition includes the issuance of Common Stock issued after the date of the Series H Purchase Agreement pursuant to an Approved Stock Plan (as defined in the Series H Purchase Agreement) which in the aggregate does not exceed more than 15.0% of the sum of (x) shares of Common Stock issued and outstanding as of the date of the Series H Purchase Agreement, and (y) the shares of Common Stock issuable upon conversion of certain of the Company’s outstanding shares of preferred stock (the “Excluded Securities Modification”), and (iii) the Series H Registration Rights Agreement such that the Series H Registration Statement is required to be filed with the SEC by the date that is 30 calendar days following the Series H Closing Date and (B) waive (i) any prohibitions or limitations under the Transaction Documents in connection with the issuance by the Company of certain warrants to purchase Common Stock to certain current and future consultants of the Company, (ii) any prohibitions or limitations under the Transaction Documents in connection with the registration of certain securities of the Company, and (iii) any failure by the Company to file the Series H Registration Statement by the Filing Deadline.
The September 2025 Certificate of Amendment amends the Series H Certificate of Designations to amend the definition of “Excluded Securities” substantially similar to the Excluded Securities Modification. On October 3, 2025, the Company filed the September 2025 Certificate of Amendment with the Secretary of State, thereby amending the Series H Certificate of Designations. The September 2025 Certificate of Amendment became effective with the Secretary of State upon filing.
Series I Preferred Stock
On
September 2, 2025, the Company entered into that certain Membership Interest Purchase Agreement (the “MIPA”), by and among
the Company, LPU Holdings LLC (“LPU”) and the members of LPU (the “Sellers”), pursuant to which the Company agreed
to acquire
The
shares of Series I Preferred Stock are convertible into shares of Common Stock at the election of the holder at any time at an initial
conversion price of $
The number of Series I Conversion Shares initially may not exceed (the “Maximum Issuance”); provided, however, that (A) upon the issuance of Common Stock in connection with any conversions of the Series F Preferred Stock pursuant to the terms of Series F Certificate of Designations, the Series F-1 Preferred Stock pursuant to the terms of the Series F-1 Certificate of Designations, the shares of Series I Preferred Stock pursuant to the terms of the Series I Certificate of Designations (collectively, the “Existing Preferred Stock”), and (B) upon the issuance of Common Stock in connection with any exercise, conversion or issuance of any securities exchanged for Existing Preferred Stock after the date of issuance of the Series I Preferred Stock (“Exchanged Securities”), the Maximum Issuance shall be increased to equal the sum of (i) the Maximum Issuance immediately prior to the date of such conversion plus (ii) shares of Common Stock for each share of Common Stock issued upon conversion, exercise or issuance of the applicable Existing Preferred Stock or Exchanged Securities.
| 26 |
Holders of Series I Preferred Stock are entitled to receive, and the Company shall pay, dividends as and when paid to the holders of Common Stock of the Company on an as-converted basis, ignoring for such purposes any limitations on conversion hereunder. Subject to applicable beneficial ownership limitations, on any matter presented to the stockholders of the Company for their action or consideration at any meeting of stockholders of the Company (or by written consent of stockholders in lieu of a meeting), each holder of Series I Preferred Stock, in its capacity as such, shall be entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the Series I Preferred Stock beneficially owned by such holder are convertible as of the record date for determining stockholders entitled to vote on or consent to such matter (taking into account all Series I Preferred Stock beneficially owned by such holder).
The Series I Preferred Stock was determined to be more akin to an equity-like host than a debt-like host. There were no embedded derivative features identified requiring bifurcation. The Series I Preferred Stock is classified in mezzanine equity pursuant to ASC 480-10-S99 as it may be settled for cash upon an event outside of the Company’s control.
The
Series I Preferred Stock was issued as consideration in connection with an asset acquisition (see Note 9) and was thus recognized at
its issuance date fair value of $
Common Stock
As of March 31, 2026, the Company had shares of Common Stock issued and outstanding.
During the three months ended March 31, 2026, the Company issued shares of Common Stock, for the exercise of Series H Preferred Stock Warrants and shares of Common Stock for the conversion of vested Restricted Stock Units.
Common Stock Warrants
The table below summarizes the warrant activity for the three months ended March 31, 2026:
Summary of Warrant Activity
| Weighted | Average | |||||||||||||||
| Average | Remaining | Aggregate | ||||||||||||||
| Number of | Exercise | Contractual | Intrinsic | |||||||||||||
| Warrants | Price | Term (years) | Value | |||||||||||||
| Balance at December 31, 2025 | $ | $ | ||||||||||||||
| Issued | - | - | ||||||||||||||
| Exercised | ( | ) | - | - | ||||||||||||
| Forfeited | - | - | ||||||||||||||
| Canceled/Expired | - | - | ||||||||||||||
| Balance at March 31, 2026 | $ | $ | ||||||||||||||
| Exercisable as of March 31, 2026 | $ | $ | ||||||||||||||
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of $ for the Company’s Common Stock on March 31, 2026 and the closing stock price of $ for the Company’s Common Stock on December 31, 2025. All warrants were vested on date of grant.
On
April 17, 2025, in connection with the issuance of Stock Options, (i) the Series F Conversion Price, Series F-1 Conversion Price and
Series G Conversion Price was adjusted to $
| 27 |
Series F Common Stock Warrants
Pursuant
to the February 2023 Offering, the Company issued to investors the Series F Warrants to purchase
Following
the 2024 Reverse Stock Split, the exercise price of the Series F Warrants was reduced to $
The Series F Warrants were initially accounted for as liabilities based on the following analysis:
The
Series F Warrants were determined to be within the scope of ASC 480-10 as they are puttable to the Company at the Holders’ election
upon the occurrence of a Fundamental Transaction (as defined in the agreements). As such, the Company recorded the Series F Warrants
as a liability at fair value with subsequent changes in fair value recognized in earnings. The Company utilized the Black Scholes Model
to calculate the value of these warrants. The fair value of the Series F Warrants of $
Transaction
costs incurred attributable to the issuance of the Series F Warrants of $
Series F-1 Warrants
Pursuant
to the Series F-1 Private Placement, the Company issued to investors (i) the Series F-1 Long-Term Warrants to purchase
On April 17, 2025, in connection with the issuance of stock options to certain officers of the Company and pursuant to the full ratchet anti-dilution provisions contained in the Series F-1 Warrants, the exercise price of the Series F-1 Warrants was reduced to $ per share and the number of shares of Common Stock issuable upon exercise of the Series F-1 Warrants was adjusted proportionately. In September 2025, in connection with the 2025 Reverse Stock Split and pursuant to the stock combination event adjustment provisions contained in the Series F-1 Warrants, the exercise price of the Series F-1 Warrants was reduced to $ per share and the number of shares of Common Stock issuable upon exercise of the Series F-1 Warrants was adjusted proportionately.
| 28 |
Pursuant
to the April 2025 Amendment Agreement, the Series F-1 Short-Term Warrants were extended to expire
The
Series F-1 Preferred Shares were determined to be more akin to a debt-like host than an equity-like host. The Company identified the
following embedded features that are not clearly and closely related to the debt host instrument: 1) make-whole interest upon a contingent
redemption event, 2) make-whole interest upon a conversion event, 3) an installment redemption upon an Equity Conditions Failure (as
defined in the Series F-1 Certificate of Designations), and 4) variable share-settled installment conversion. These features were bundled
together, assigned probabilities of being affected and measured at fair value. Subsequent changes in fair value of these features are
recognized in the Consolidated Statements of Operations. The Company estimated at issuance the $
Series G Warrants
Pursuant
to the Series G Private Placement, the Company issued to investors (i) the Series G Long-Term Warrants to purchase
The exercise price of the Series G Warrants and the number of shares issuable upon exercise of the Series G Warrants are subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment, on a “full ratchet” basis, in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable exercise price (subject to certain exceptions). Upon any such price-based adjustment to the exercise price, the number of shares issuable upon exercise of the Series G Warrants will be increased proportionately.
On April 17, 2025, in connection with the issuance of stock options to certain officers of the Company and pursuant to the full ratchet anti-dilution provisions contained in the Series G Warrants, the exercise price of the Series G Warrants was reduced to $ per share and the number of shares of Common Stock issuable upon exercise of the Series G Warrants was adjusted proportionately. In September 2025, in connection with the 2025 Reverse Stock Split and pursuant to the stock combination event adjustment provisions contained in the Series G Warrants, the exercise price of the Series G Warrants was reduced to $ per share and the number of shares of Common Stock issuable upon exercise of the Series G Warrants was adjusted proportionately.
The
Series G Preferred Shares were determined to be more akin to a debt-like host than an equity-like host. The Company identified the following
embedded features that are not clearly and closely related to the debt host instrument: 1) make-whole interest upon a contingent redemption
event, 2) make-whole interest upon a conversion event, 3) an installment redemption upon an Equity Conditions Failure (as defined in
the Series G Certificate of Designations), and 4) variable share-settled installment conversion. These features were bundled together,
assigned probabilities of being affected and measured at fair value. Subsequent changes in fair value of these features are recognized
in the Consolidated Statements of Operations. The Company estimated at issuance the $
During the three months ended March 31, 2026 and 2025, there were no exercises of Series G Short-Term Warrants.
| 29 |
Series H Warrants
Pursuant
to the Series H Private Placement, the Company issued investors the Series H Investor Warrants to purchase
Note 7 – Commitments and Contingencies
Consulting Agreement with James Altucher and Z-List Media
On October 1, 2025, the Company entered into a consulting agreement (the “Altucher Consulting Agreement”) with James Altucher and Z-List Media, Inc. (collectively, the “Consultants”), pursuant to which, the Consultants agreed to provide certain consulting services to the Company, including fund raising, crypto portfolio management, investor relations, strategic planning, deal flow analysis, introductions to further its business goals, advice related to sector growth initiatives and any other consulting or advisory services which the Company reasonably requests that the Consultants provide to the Company. The Altucher Consulting Agreement has a term of two years unless earlier terminated pursuant to the terms of the Altucher Consulting Agreement or upon the mutual written consent of the Company and the Consultants in accordance with the terms of the Altucher Consulting Agreement.
Pursuant
to the Altucher Consulting Agreement, the Company agreed to issue to Z-List Media, Inc. warrants to purchase up to an aggregate of
Litigation and Settlements
Raymond Akers Actions
On April 14, 2021, Raymond F. Akers, Jr., Ph.D. filed a lawsuit against the Company (f/k/a Akers Biosciences, Inc.) in the Superior Court of New Jersey, Law Division, Gloucester County (the “First Raymond Akers Action”). Dr. Akers asserts one common law whistleblower retaliation claim against the Company.
On September 23, 2021, the Court granted the Company’s Motion to Dismiss Plaintiff’s Amended Complaint and dismissed Plaintiff’s Amended Complaint. The Court indicated that Dr. Akers is “free to file another complaint, however, tort-based ‘Pierce’ allegations, and/or CEPA claims are barred by the statute of limitations.”
On March 1, 2022, Dr. Akers filed a second action against the Company in the Superior Court of New Jersey, Law Division, Gloucester County (the “Second Raymond Akers Action”) again asserting one common law whistleblower retaliation claim against the Company. The Company believes that the Second Raymond Akers Action was filed against the Court’s specific admonition that Plaintiff does not attempt to circumvent the statute of limitations.
On May 27, 2022, the Court granted-in-part and denied-in-part the Company’s Motion to Dismiss Plaintiff’s Complaint. The Court reaffirmed the ruling in the First Raymond Akers Action that any tort-based Pierce claims are time-barred. However, the Court denied the Motion as it pertained to Plaintiff’s contract-based Pierce claim and “Repayment of Monies Owed” claim. On July 29, 2022, the Company filed its Answer, which included affirmative defenses.
On April 29, 2025, the complaint was confidentially settled between the parties. There was no material impact on the Company’s financial condition or the results of operations. All legal fees incurred were expensed as and when incurred.
Note 8 – Related Parties
Consulting Agreement with Chelsea Voss
On January 16, 2026, the Company entered into a consulting agreement (the “Voss Consulting Agreement”) with Chelsea Voss, a current director of the Company, pursuant to which, Ms. Voss agreed to provide certain consulting services to the Company, including evaluating companies and making related introductions, analyzing technologies and operations, reviewing and advising on potential acquisitions and any other consulting or advisory services which the Company reasonably requests that Ms. Voss provide to the Company. The Voss Consulting Agreement has a term of twelve (12) months, unless earlier terminated pursuant to the terms of the Voss Consulting Agreement or upon the mutual written consent of the Company and Ms. Voss in accordance with the terms of the Voss Consulting Agreement.
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Pursuant to the Voss Consulting Agreement, Ms. Voss
is entitled to a monthly fee equal to $
SRQ Patent Holdings and SRQ Patent Holdings II
The Company is a party to two Amended and Restated Confirmatory Patent Assignment and Royalty Agreements, both dated November 11, 2020, with SRQ Patent Holdings and SRQ Patent Holdings II, under which the Company (or its successor) is obligated to pay to SRQ Patent Holdings or SRQ Patent Holdings II (or its designees) certain royalties on product sales or other revenue received on products that incorporate or are covered by the intellectual property that was assigned to the Company. The royalty is equal to 8% of the net sales price on product sales and, without duplication, 8% of milestone revenue or sublicense compensation. SRQ Patent Holdings and SRQ Patent Holdings II are affiliates of Mr. Jonnie Williams, Sr., a former significant stockholder. No revenue has been received subject to these agreements for the three months ended March 31, 2026 and 2025.
MIRA Pharmaceuticals Limited License Agreement
The Company is a party to an Amended and Restated Limited License Agreement, dated June 27, 2022 and amended on April 20, 2023, with MIRA Pharmaceuticals, Inc. (Nasdaq: MIRA), under which the parties agreed to share technical information and know-how pertaining to the synthetic manufacture and formulation of the parties’ respective Supera-CBD™ and MIRA1a™ product candidates. The Company, which holds patent rights to MIRA1a™ in 22 foreign countries, was granted a perpetual, non-exclusive, royalty-free license to use improvements to MIRA1a™ made under the agreement, and MIRA was granted a limited, perpetual, worldwide, non-exclusive, royalty-free license to use Supera-CBD™ as a synthetic intermediate in the manufacture of MIRA1a™.
Series G Preferred Stock Issuance
On May 20, 2024, the Company entered into the Series G Purchase Agreement
with the Series G Investors, including PharmaCyte Biotech, Inc. (“PharmaCyte”), pursuant to which it agreed to sell to the
Series G Investors (i) an aggregate of shares of Series G Preferred Stock, initially convertible into up to shares of the
Company’s Common Stock at an initial conversion price of $
Series H Preferred Stock Issuance
On
September 2, 2025, the Company entered into the Series H Purchase Agreement with the Series H Investors, including PharmaCyte
Biotech, Inc., pursuant to which it agreed to sell to the Series H Investors (i) an aggregate of
shares of Series H Preferred Stock, initially convertible into up to
shares of the Company’s Common Stock, at an initial conversion price of $
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Note 9 – Employee Benefit Plan
The
Company maintains a defined contribution benefit plan under section 401(k) of the Internal Revenue Code covering substantially all qualified
employees of the Company (the “401(k) Plan”). Under the 401(k) Plan, the Company matches
The
Company made matching contributions to the 401(k) Plan during the three months ended March 31, 2026 and 2025 of $
Note 10—Patent Assignment and Royalty Agreement
In November 2016, the Company entered into an agreement with the holders of certain intellectual property relating to the Company’s current product candidate. Under the terms of the agreement, the counterparty assigned its rights and interest in certain patents to the Company in exchange for future royalty payments based on a fixed percentage of future revenues, as defined. The agreement is effective until the later of (1) the date of expiration of the assigned patents or (2) the date of expiration of the last strategic partnership or licensing agreement including the assigned patents. revenue has been received subject to this agreement for the three months ended March 31, 2026 and 2025.
On September 2, 2025, the Company entered into a Membership Interest Purchase Agreement (the “MIPA”) whereas, the Company agreed to acquire 100% of the membership interests of LPU Holdings LLC from the Sellers, and entered into certain other related agreements, including (i) a Support Agreement, (ii) a Registration Rights Agreement, and (iii) a License Agreement, by and between LPU and LightSolver Ltd. (the “License Agreement”, and, collectively, with the MIPA, the “Acquisition”). The Acquisition closed on September 4, 2025 (the “Acquisition Closing Date”).
The Acquisition was accounted for as an asset acquisition pursuant to ASC 805-50 as all of the fair value was concentrated in a single intangible asset, the Exclusive License.
As consideration for the Membership Interests, the Company delivered to the Sellers shares of Series I Convertible Preferred Stock, subject to certain conversion limitations as set forth in the Certificate of Designations of the Series I Convertible Preferred Stock (see Note 6).
The
Acquisition price consisted of total upfront consideration comprised of $
Additionally,
after the closing of the Acquisition, the Company is required to pay additional contingent consideration under both the MIPA and the
License Agreement (the “Contingent Consideration”) upon the achievement of various specified milestones, including completion
of an offering of the Company’s Common Stock or Common Stock equivalents (“Equity Offering”), which Contingent Consideration
including certain specified cash payments, cash payments calculated based on any Equity Offering proceeds, shares of Common Stock that
would result in the Sellers collectively beneficially owning specified percentage of the Company and warrants to purchase Common Stock.
The Contingent Consideration was determined to be comprised of liabilities which meet the definition of a derivative under ASC 815, and
was thus required to be recognized at its fair value at closing, with such fair value included as a component of the cost of the asset
acquisition. The liability will then be remeasured each reporting period with changes in fair value recognized in earnings. As of the
Acquisition Closing Date, the Company estimated the fair value of $
The following table presents the total purchase consideration and the allocation of the purchase consideration for the Acquisition as of September 2, 2025 :
Schedule of Asset Acquisition
| Acquisition Consideration (cash) | $ | |||
| Fair value of Series I Preferred Stock ( shares) | ||||
| Transaction Costs | ||||
| Total Preliminary Consideration Transferred | ||||
| Contingent Consideration | ||||
| Purchase Price | $ |
The total purchase price was allocated in its entirety to the exclusive license under the License Agreement. The agreement has no specified term and will only be terminated upon mutual agreement between the Company and Lightsolver, material breach of contract by either party, insolvency of either party, certain other failures to perform under the terms of the agreement, or at the Company’s convenience. As of the Acquisition date, the Company believes that the probability of termination under any of the above conditions is remote; the Company intends to hold the Exclusive License into perpetuity thus does not foresee a limit on the asset’s useful life as of the Acquisition Date. Management thus concludes that the Exclusive License is an indefinite-lived asset and will perform an annual assessment for impairment and will reassess whether events and circumstances indicate that the life of the asset is no longer indefinite each reporting period.
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Note 11—Segments
The
Company has
To date, the Company has not generated any product revenues and has incurred losses and negative cash flows from operations since inception.
The following table presents certain financial data for the Company’s two reportable segments and a reconciliation to the Company’s consolidated net loss.
Schedule of Reconciliation Consolidated Net Loss
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Pharmaceuticals | Computing Technology | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Sales | ||||||||||||||||
| Product Cost of Sales | ||||||||||||||||
| Gross Profit | ||||||||||||||||
| Operating Expenses | ||||||||||||||||
| Administrative Expenses | ||||||||||||||||
| Research and Development Expenses | ||||||||||||||||
| Stock Based Compensation | ||||||||||||||||
| Franchise Tax Expense | ||||||||||||||||
| Warrant Issuance Expense | ||||||||||||||||
| Segment Net Loss | ||||||||||||||||
| Reconcilement of Net Loss | ||||||||||||||||
| Adjustments and Reconciling Items | ||||||||||||||||
| Dividends Paid on Series H Preferred Stock | ||||||||||||||||
| Interest and Dividend Income | ||||||||||||||||
| Gain (Loss) on Sales of Marketable Securities | ||||||||||||||||
| Unrealized Gain (Loss) on Marketable Securities | ( | ) | ||||||||||||||
| Change in Fair Value of Derivative Liabilities | ||||||||||||||||
| Loss on FMV of Contingent Compensation | ||||||||||||||||
| Casualty Gain/(Loss) | ||||||||||||||||
| Total Adjustments and Reconciling Items | ||||||||||||||||
| Consolidated Net Loss | ( | ) | ( | ) | ( | ) | ||||||||||
Segment assets are not reviewed by the CODM and, accordingly, asset information is not presented.
Note 12—Subsequent Events
The Company has evaluated subsequent events through May 15, 2026, the date these condensed consolidated financial statements were available to be issued, and identified the following items:
On April 13, 2026, the Company entered into an executive compensation agreement (the “Employment Agreement”) with Joshua Silverman, who serves as the Company’s Executive Chairman, setting forth the terms and conditions of Mr. Silverman’s continued employment as a member of the Company’s Board of Directors and as the Company’s Executive Chairman. The Employment Agreement has a three-year initial term commencing on April 13, 2026 (the “Effective Date”), which term automatically renews each year for successive one-year terms, unless earlier terminated by either party in accordance with the terms of the Employment Agreement.
The Employment Agreement provides
that Mr. Silverman will be entitled to receive an annual base salary of one hundred and twenty thousand dollars ($
Pursuant to the Employment Agreement, Mr. Silverman is entitled to receive, on the Effective Date and subsequently on the first day of each calendar quarter thereafter, a number of fully vested restricted stock units (“RSUs”) equal to an aggregate value of $ per grant calculated based on the closing price of the Company’s Common Stock as of the grant date or the closing price of the last preceding business day if the grant date is not a business day (rounded down for any fractional shares). The RSUs granted pursuant to the Employment Agreement are subject to the terms and conditions of the Company’s standard restricted stock unit award agreement and the Company’s long-term equity incentive plan. With respect to the RSU grants provided in the Employment Agreement, the Company further agreed to provide Mr. Silverman with an additional lump-sum cash payment equal to any estimated personal income and applicable employment taxes to be withheld or paid in connection with Mr. Silverman’s receipt of the applicable RSUs.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The information set forth below should be read in conjunction with our condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the Securities and Exchange Commission on April 15, 2026. This discussion and analysis contains forward-looking statements based on our current expectations, assumptions, estimates and projections. These forward-looking statements involve risks and uncertainties. Our actual results could differ materially from those indicated in these forward-looking statements as a result of certain factors, including those discussed in Part II, Item 1A of this Quarterly Report on Form 10-Q, entitled “Risk Factors.” References in this discussion and analysis to “us,” “we,” “our,” or “the Company” refer collectively to Q/C Technologies, Inc.
Our financial statements are prepared in accordance with GAAP. These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q (this “Form 10-Q”).
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of forward-looking terms such as “anticipates,” “assumes,” “believes,” “can,” “could,” “estimates,” “expects,” “forecasts,” “guides,” “intends,” “is confident that,” “may,” “plans,” “seeks,” “projects,” “targets,” “would” and “will” or the negative of such terms or other variations on such terms or comparable terminology. Such forward-looking statements include, but are not limited to, future financial and operating results, the company’s plans, objectives, expectations and intentions, statements concerning the Company’s expectations regarding its transition to an energy-efficient blockchain and cryptocurrency infrastructure through quantum-class laser-based computing focused business and other statements that are not historical facts. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. These forward-looking statements speak only as of the date of this Form 10-Q and are subject to a number of risks, uncertainties, and assumptions that could cause actual results to differ materially from our historical experience and our present expectations, or projections described under the sections in this Form 10-Q and our other reports filed with the SEC titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
For a more detailed discussion of other factors that may affect our business and that could cause our actual results to differ materially from those projected in these forward-looking statements, see the risk factors and uncertainties set forth in Part II, Item 1A of this Form 10-Q and in Part I, Item 1A of our Annual Report on Form 10-K as filed with the SEC on April 15, 2026. Any one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate. We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise, except as required by law.
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Overview
QCLS has historically been engaged in the development and commercialization of two therapeutic platforms based on well-defined targets: Isomyosamine and Supera-CBD. Recently, the Company has shifted its business strategy to focus on energy-efficient blockchain and cryptocurrency infrastructure through quantum-class laser-based computing. The Company’s core strategy leverages an exclusive global licensing agreement with LightSolver Ltd. (“LightSolver”) entered into on September 2, 2025, to deploy innovative laser processing units (“LPUs”), specifically the Company-branded qc-LPU100™ (“qc-LPU100”), which harnesses the natural properties of light with the goal of achieving high computational speed and energy efficiency. The qc-LPU100 is intended to address complex combinatorial and physical problems, such as partial differential equations, and is targeted for applications in cryptocurrency, decentralized physical infrastructure tokens (“DePin Tokens”), and artificial intelligence-driven high-performance computing that relies on decentralized networks. The Company seeks to position itself as a first-mover in bridging laser-based computing with cryptocurrency infrastructure, addressing industry challenges including high energy consumption, scalability limitations, and reliance on traditional graphics processing units (“GPUs”). LPUs are designed to operate at room temperature in standard rack-unit sizes and are intended to outperform GPUs and quantum processing units (“QPUs”) in speed, efficiency, and sustainability, while enhancing blockchain security.
The Company is evaluating the potential divestiture of Isomyosamine and Supera-CBD to fund its new strategic focus, with the objective of creating long-term stockholder value.
Recent Events
Reverse Stock Split
On August 29, 2025, the Company filed a Certificate of Amendment to the Certificate of Incorporation to effect a 1-for-100 reverse stock split of the shares of the Company’s Common Stock, either issued and outstanding or held by the Company as treasury stock, effective as of 4:05 p.m. (New York time) on August 29, 2025 (the “2025 Reverse Stock Split”) and began trading on a Reverse Stock Split-adjusted basis on the Nasdaq Capital Market on September 2, 2025. All share amounts have been retroactively adjusted for the 2025 Reverse Stock Split.
Executive Employment Agreement
On April 13, 2026, the Company entered into an executive compensation agreement (the “Employment Agreement”) with Joshua Silverman, who serves as the Company’s Executive Chairman, setting forth the terms and conditions of Mr. Silverman’s continued employment as a member of the Company’s Board of Directors and as the Company’s Executive Chairman. The Employment Agreement has a three-year initial term commencing on April 13, 2026 (the “Effective Date”), which term automatically renews each year for successive one-year terms, unless earlier terminated by either party in accordance with the terms of the Employment Agreement.
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The Employment Agreement provides that Mr. Silverman will be entitled to receive an annual base salary of one hundred and twenty thousand dollars ($120,000) (“Base Salary”), payable in accordance with the Company’s normal payroll practices. For each fiscal year during the employment period, Mr. Silverman is eligible to receive an annual bonus upon achievement of target objectives and performance criteria, payable on or before March 15 of the fiscal year following the fiscal year to which the bonus relates. The Employment Agreement also entitles Mr. Silverman to receive customary benefits and reimbursement for ordinary business expenses.
Pursuant to the Employment Agreement, Mr. Silverman is entitled to receive, on the Effective Date and subsequently on the first day of each calendar quarter thereafter, a number of fully vested restricted stock units (“RSUs”) equal to an aggregate value of $60,000 per grant calculated based on the closing price of the Company’s Common Stock as of the grant date or the closing price of the last preceding business day if the grant date is not a business day (rounded down for any fractional shares). The RSUs granted pursuant to the Employment Agreement are subject to the terms and conditions of the Company’s standard restricted stock unit award agreement and the Company’s long-term equity incentive plan. With respect to the RSU grants provided in the Employment Agreement, the Company further agreed to provide Mr. Silverman with an additional lump-sum cash payment equal to any estimated personal income and applicable employment taxes to be withheld or paid in connection with Mr. Silverman’s receipt of the applicable RSUs.
In the event Mr. Silverman’s employment is terminated by the Company for Cause (as defined in the Employment Agreement) or by Mr. Silverman without Good Reason (as defined in the Employment Agreement), Mr. Silverman will be entitled to: (i) any earned but unpaid Base Salary earned during his employment and applicable to all pay periods prior to the termination date, and (ii) any unpaid expense reimbursements and vested amounts and benefits in accordance with the terms of any applicable plan, program, corporate governance document, policy, agreement or arrangement of the Company (collectively, “Accrued Compensation”).
If Mr. Silverman’s employment is terminated prior to the end of the term by the Company without Cause or by Mr. Silverman for Good Reason, then, subject to certain conditions set forth in the Employment Agreement (including the execution and non-revocation of a general release of claims), Mr. Silverman will be entitled to: (i) Accrued Compensation; (ii) severance equal to two times the sum of (A) Mr. Silverman’s Base Salary in effect at the time his employment terminates and (B) the target bonus for the year of termination prorated based upon the number of days worked for the year of termination; and (iii) accelerated vesting of the unvested portion of any outstanding equity awards.
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If Mr. Silverman’s employment is terminated prior to the end of the term by the Company without Cause or by Mr. Silverman for Good Reason within two (2) years after a Change in Control (as defined in the Employment Agreement) or within six (6) months prior to a Change in Control, Mr. Silverman will be entitled to: (i) Accrued Compensation; (ii) severance equal to three times the sum of (A) Mr. Silverman’s Base Salary in effect at the time his employment terminates and (B) the target bonus for the year of termination prorated based upon the number of days worked for the year of termination; and (iii) accelerated vesting of the unvested portion of any outstanding equity awards.
The Employment Agreement also contains customary provisions relating to, among other things, confidentiality and non-disparagement.
Liquidity and Capital Resources
As of March 31, 2026, the Company’s cash on hand was $1.13 million and marketable securities were $11.85 million. The Company has incurred a net loss from operations of $1.86 million for the three months ended March 31, 2026. As of March 31, 2026, the Company had working capital of $10.02 million and stockholders’ equity of $20.70 million including an accumulated deficit of $145.65 million. During the three months ended March 31, 2026, cash flows used in operating activities were $3.29 million consisting primarily of a net loss of $1.24 million, Since its inception, the Company has met its liquidity requirements principally through the sale of its Common Stock and Preferred Stock in public and private placements.
The Company evaluated the current cash requirements for operations in conjunction with management’s strategic plan and believes that the Company’s current financial resources as of the date of the issuance of these condensed consolidated financial statements are sufficient to fund its current operating budget and contractual obligations as of March 31, 2026 as they fall due within the next twelve-month period following the issuance of these condensed consolidated financial statements, alleviating any substantial doubt raised by the Company’s historical operating results and satisfying its estimated liquidity needs for twelve months from the issuance of these condensed consolidated financial statements.
Financial Operations Overview
We will not generate meaningful revenue from product sales unless and until we successfully complete development, certification, pilot deployment, and commercialization of our laser-based computing products, including our qc-LPU100. Our ability to generate revenue from our new strategic focus depends on our capacity to finalize LPU prototypes, validate performance for blockchain, DePin Token, and artificial intelligence high-performance computing applications, secure applicable regulatory and hardware certifications, and achieve commercial adoption by early users. The development and commercialization of new photonic hardware systems require substantial time, engineering resources, and capital, and any delay or failure in these efforts would materially adversely affect our business.
Although our primary resources are now directed toward laser-based computing, we continue to own our historical Isomyosamine and Supera-CBD therapeutic platforms. We are evaluating strategic alternatives for these programs, including potential divestiture, partnering or licensing transactions intended to maximize their residual value.
As a result of anticipated expenditures in both our new laser-based computing operations and our efforts to preserve and monetize our legacy pharmaceutical assets, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. If we are unable to raise additional capital on acceptable terms or at all, we may be required to delay or reduce planned development activities, defer commercialization milestones, or modify our strategic objectives.
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Components of our Results of Operations
Revenue
We have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products or services in the near future.
Operating Expenses
Our operating expenses are broken into several components, including research and development and general and administrative costs.
We expect operating expenses to increase as we advance development activities for our qc-LPU100.
Research and Development
Our research and development expenses consist of costs associated with both our laser-based computing business and the maintenance of our legacy pharmaceutical product candidates, Isomyosamine and Supera-CBD. For our laser-based computing business, these costs include prototype development expenses for the qc-LPU100, performance benchmarking activities, LightSolver licensing costs, consulting and general development expenses, and related engineering and technical costs. For our legacy pharmaceutical business, these costs include, but are not limited to:
| ● | Contractual agreements with third parties, including contract research organizations, for the maintenance of legacy pharmaceutical programs; | |
| ● | Outside consultants including fees and expenses; | |
| ● | Laboratory supplies and equipment; | |
| ● | Regulatory compliance; and | |
| ● | Patent application and maintenance costs to protect our intellectual property. |
None of our two employees are principally involved in research and development activities for either the laser-based computing business or our legacy pharmaceutical product candidates, Isomyosamine or Supera-CBD. Their salaries, wages and benefits are captured as a component of research and development but not allocated to specific projects.
We utilize third party contractors and consultants with expertise in specific research or development activities to perform work under the supervision of our researchers. We believe this allows us to control costs and to progress through the development cycle and to utilize our staff more efficiently.
It is difficult to project with absolute accuracy the duration or final cost of the development of our laser-based computing products, including the qc-LPU100, or our legacy pharmaceutical product candidates, Isomyosamine and Supera-CBD, or if revenue will be generated from the commercialization of any of these products. For our laser-based computing business, costs will depend on the pace of prototype development, benchmarking results, regulatory certifications, and deployment timelines. For our legacy pharmaceutical business, the process of achieving regulatory approval is very costly and time consuming.
General and Administrative
General and administrative expenses primarily consist of salaries, wages and benefits for our employees in the executive, legal and accounting functions and third-party costs for legal, accounting, insurance, investor relations, stock market and board expenses.
Although treated as components of general and administrative expenses, we have chosen to disclose the following significant items separately:
Stock Based Compensation
Stock based compensation includes the fair market value, as determined using the Black-Scholes option pricing model, of stock options issued to key staff and consultants.
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Other Income (Expense), net
Other income (expense), net consists of interest and dividends earned on our cash, cash equivalents, and investments, gains on the sale marketable securities, losses on equity investments, gains on the forgiveness of debt and an uninsured casualty loss.
Results of Operations
Summary of Statements of Consolidated Operations for the Three Months Ended March 31, 2026 and 2025
The following table summarized the results of consolidated operations for the three months ended March 31, 2026 and 2025.
| For the Three Months Ended March 31, | ||||||||
| Description | 2026 | 2025 | ||||||
| Operating Expenses | ||||||||
| General and Administrative | $ | 1,066,650 | $ | 841,685 | ||||
| Research and Development | 510,534 | 1,545,513 | ||||||
| Stock-Based Compensation | 58,606 | 84,636 | ||||||
| Franchise Tax Expenses | 219,403 | - | ||||||
| Total Operating Expenses | 1,855,193 | 2,471,834 | ||||||
| Loss from Operations | (1,855,193 | ) | (2,471,834 | ) | ||||
| Other Income (Expense), net | (612,416 | ) | 1,347,091 | |||||
| Net Loss | $ | (1,242,777 | ) | $ | (1,124,743 | ) | ||
Revenue
We had no revenue from operations during the three months ended March 31, 2026 and 2025.
General and Administrative Expenses
The table below summarizes our general and administrative expenses for the three months ended March 31, 2026 and 2025:
| For the Three Months Ended March 31, | ||||||||
| Description | 2026 | 2025 | ||||||
| Personnel Costs | $ | 154,117 | $ | 110,631 | ||||
| Professional Service Costs | 552,935 | 237,331 | ||||||
| Stock Market & Investor Relations Costs | 46,151 | 178,152 | ||||||
| Other Administrative Costs | 313,447 | 315,571 | ||||||
| Total General and Administrative Expenses | $ | 1,066,650 | $ | 841,685 | ||||
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Personnel costs increased $43,486, or 39%, during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. During the three months ended March 31, 2025, the Company had three employees, during the three months ended March 31, 2026, there are three employees. Employment for two employees terminated in 2025 and two new employees joined the Company for the three months ended March 31, 2026. The increase in personal cost directly relates to the increased compensation (salaries) of the new employees hired in 2026.
Professional services costs increased $315,604, or 133%, during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. These costs included legal and accounting and specialized consulting services regularly incurred in the normal course of business. The increase is primarily related to increases in fees for recruiting services, legal fees, and general business consulting services; primarily supporting the 2025 financial statement audit and the preparation of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Stock market and investor relations costs decreased $132,001, or 74%, during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. These costs include the annual Nasdaq listing fees, activities related to keeping the shareholder base informed through press releases, presentations and other communication efforts and the costs of annual stockholder meetings. The decrease is primarily due to the costs associated with corporate branding efforts during the three months ended March 31, 2026, in connection with the Company’s quantum-class laser-based computing business strategy.
Other administrative expenses decreased $2,124, or 1%, during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. These costs include board of director expenses, business insurance, corporate travel and other general operating expenses. Costs were generally unchanged during the three months ended March 31, 2026, compared to the three months ended March 31, 2025.
Stock-Based Compensation
Stock-based compensation decreased $26,030, or 31%, during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. All of the stock options issued on June 7, 2023 fully vested during June 2025.
Francise Tax Expenses
Franchise taxes for the state of Delaware totaled $219,403 and $0 for the three months ended March 31, 2026 and 2025, respectively. The increase is related to the franchise tax for 2025 that was paid late and is reflected in the condensed consolidated financial statements as of September 30, 2025.
Research and Development Expenses
The table below summarizes our research and development expenses for the three months ended March 31, 2026 and 2025:
| For the Three Months Ended March 31, | ||||||||
| Description | 2026 | 2025 | ||||||
| Salaries and Wages | $ | 24,000 | $ | 63,362 | ||||
| Development Programs | 463,075 | 1,359,421 | ||||||
| Professional Services | 23,459 | 118,940 | ||||||
| Other Research and Development Expenses | - | 3,790 | ||||||
| Total Research and Development Expenses | $ | 510,534 | $ | 1,545,513 | ||||
Salaries and wages decreased $39,362, or 62%, during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. During the three months ended March 31, 2025, the Company recorded payroll and severance expenses for one employee. During the three months ended March 31, 2026, the Company one staff member.
Development program costs include those associated with pre-clinical development, clinical trials and other material and development programs. Costs decreased $896,346, or 66%, during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The decrease is related to the suspension of the Company’s Phase 2b study of Isomyosamine.
Professional services costs decreased $95,481, or 80%, during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. These costs are primarily related to consulting services not related to a specific development program and legal and maintenance fees associated with the protection of our intellectual property.
Other research and development expenses decreased $3,790, or 100%, during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. These expenses include laboratory supplies, training and travel for department personnel while working with third-party trial sites. The decrease during the three months ended March 31, 2025 is primarily related to decreased expenses for international shipping.
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Other Income and Expense
The table below summarizes our other income and expenses for the three months ended March 31, 2026 and 2025:
| For the Three Months Ended March 31, | ||||||||
| Description | 2026 | 2025 | ||||||
| Interest and Dividend Income | $ | (71,340 | ) | $ | (62,512 | ) | ||
| Gain on Sale of Investments | (11,782 | ) | (2,176 | ) | ||||
| Unrealized (Gain) Loss on Marketable Securities | (19,294 | ) | 1,597 | |||||
| Change in fair value of Derivative Liabilities | (510,000 | ) | (1,284,000 | ) | ||||
| Total Other Income | $ | (612,416 | ) | $ | (1,347,091 | ) | ||
Other income totaled $612,416, for the three months ended March 31, 2026, and other income, net of expenses, totaled $1,347,091 for the three months ended March 31, 2025.
During the three months ended March 31, 2026 interest and dividend income increased $8,828 primarily related to the availability of cash for investment.
During the three months ended March 31, 2026, we recorded a loss of $510,000 related to the change in fair value of the Series H Derivative liabilities, which is recorded in other income (expense) on the Statements of Operations. We estimated the $1,647,000 fair value of the bifurcated embedded derivative at March 31, 2026 using a Monte Carlo simulation model, with the following inputs: the fair value of our common stock of $1.62 on the valuation date, estimated equity volatility of 100.0%, estimated traded volume volatility of 275.0%, the time to maturity of 1 year, a discounted market interest rate of 4.18%, dividend rate of 10.0%, a penalty dividend rate of 15.0%, and probability of default of 5.2%.
During the three months ended March 31, 2025, the Company recorded a gain of $1,284,000 related to the change in fair value of the derivative liabilities, which is recorded in other income (expense) on the Statements of Comprehensive Loss. The Company estimated the $0 fair value of the bifurcated embedded derivative at March 31, 2025 using a Monte Carlo simulation model, with the following inputs: the fair value of our Common Stock of $0.364 on the valuation date, estimated equity volatility of 110.0%, estimated traded volume volatility of 265.0%, the time to maturity of 0.25 years, a discounted market interest rate of 8.1%, dividend rate of 10.0%, a penalty dividend rate of 15.0%, and probability of default of 2.5%.
Liquidity and Capital Resources
Overview
Our primary source of liquidity to date has been funding from our stockholders through the sale of equity securities and the exercise of derivative securities, including warrants. We expect our primary sources of future liquidity in the short to mid-term to be derived from the exercising of outstanding warrants, and future equity or debt financings.
As of March 31, 2026, the Company’s cash on hand was $1,127,619 and marketable securities were $11,847,305. The Company has incurred a net loss attributable to stockholders of $1,528,448 for the three months ended March 31, 2026. As of March 31, 2026, the Company had working capital of $10,016,447 and stockholders’ equity of $20,719,606, including an accumulated deficit of $145,651,183. Since its inception, the Company has met its liquidity requirements principally through the sale of its Common Stock and preferred stock in public and private placements.
Based on our current operating plan, existing cash balances, and expected cash flows, management believes that the Company has sufficient liquidity to fund its operations for at least the next twelve months. However, our ability to continue as a going concern is dependent on our ability to increase revenues, manage operating expenses, and access additional capital as needed. Liquidity constraints and access to capital markets could negatively affect our liquidity and require changes to our operating or investment strategy.
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Our future capital requirements will depend on numerous factors, including the timing and extent of market acceptance of our products and services, investments in product development, sales and marketing activities, working capital requirements, and the timing and amount of future revenue. We may seek to raise additional capital through equity or debt financings, strategic partnerships, or other arrangements. There can be no assurance that such financing will be available on acceptable terms, or at all
Operating Activities
During the three months ended March 31, 2026, cash flows used in operating activities were $3,286,563, consisting primarily of a net loss of $1,242,777 and changes in operating assets and liabilities.
Our net cash used in operating activities totaled $2,640,240 for the three months ended March 31, 2025, consisting primarily of a net loss of $1,124,743, a gain on the fair value of derivatives of $1,284,000, and a decrease of $308,478 in trade and other payables.
Investing Activities
Our net cash provided by investing activities totaled $2,973,256 for the three months ended March 31, 2026. During the three months ended March 31, 2026, we purchased securities totaling $144,977 and sold securities totaling $3,118,233.
Our net cash provided by investing activities totaled $2,540,330 for the three months ended March 31, 2025. During the three months ended March 31, 2025, we purchased securities totaling $5,859,483 and sold securities totaling $8,399,813.
Financing Activities
Net cash provided by financing activities during the three months ended March 31, 2026 was $453,930 which consisted of receipts for the exercise of outstanding.
Net cash consumed by financing activities during the three months ended March 31, 2025 was $ 0.
February 2023 Offering
On February 21, 2023, the Company entered into a Securities Purchase Agreement (the “Series F Purchase Agreement”) with certain accredited investors (the “Series F Investors”), pursuant to which it agreed to sell to the Investors in a private placement (i) an aggregate of 15,000 shares of the Company’s newly-designated Series F convertible preferred stock with a stated value of $1,000 per share, and (ii) warrants to acquire up to an aggregate of 2,218 shares of the Company’s Common Stock, subject to adjustment (the “Series F Warrants”) (collectively, the “February 2023 Offering”) with an initial exercise price of $6,765.00 (the “Series F Exercise Price”).
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Pursuant to the February 2023 Offering, the Company issued to investors the Series F Warrants to purchase 2,218 shares of Common Stock, with an initial exercise price of $6,765 per share (the “Series F Exercise Price”), subject to adjustment, for a period of five years from the date of issuance. The Series F Exercise Price and the number of shares issuable upon exercise of the Series F Warrants are subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment, on a “full ratchet” basis, in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable Series F Exercise Price (subject to certain exceptions). Upon any such price-based adjustment to the exercise price, the number of shares issuable upon exercise of the Series F Warrants will be increased proportionately.
In February 2024, in connection with the Company’s 1-for-30 reverse stock split and the stock combination event adjustment provisions contained in the Series F Warrants, the Series F Exercise Price was adjusted to $318.00 (the “2024 Reverse Stock Split”). In connection with the Private Placements (as defined herein), the Series F Exercise Price was further adjusted to $181.60 per share pursuant to the full ratchet anti-dilution provisions contained in the Series F Warrants. On April 17, 2025, in connection with the issuance of stock options to certain officers of the Company and pursuant to the full ratchet anti-dilution provisions contained in the Series F Warrants, the Series F Exercise Price was adjusted to $18.32 per share. In September 2025, in connection with the Company’s 1-for-100 reverse stock split (the “2025 Reverse Stock Split”), and pursuant to the stock combination event adjustment provisions contained in the Series F Warrants, the Series F Exercise Price was reduced to $3.3713 per share and the number of shares of Common Stock issuable upon exercise of the Series F Warrants was adjusted proportionately.
As of March 31, 2026, the Series F Exercise Price was $3.3713 per share.
Series F-1 Private Placement
On May 20, 2024, the Company entered into a Securities Purchase Agreement (the “Series F-1 Purchase Agreement”) with certain accredited investors (the “Series F-1 Investors”) pursuant to which it agreed to sell to the Series F-1 Investors in a private placement (i) shares of the Company’s newly-designated Series F-1 Preferred Stock, (ii) short-term warrants to acquire up to an aggregate of 27,813 shares of Common Stock (the “Series F-1 Short-Term Warrants”) at an exercise price of $181.60 per share (the “Series F-1 Short-Term Warrants Exercise Price”), and (iii) long-term warrants to acquire up to an aggregate of 27,813 shares of Common Stock (the “Series F-1 Long-Term Warrants,” and collectively with the Series F-1 Short-Term Warrants, the “Series F-1 Warrants”) at an initial exercise price of $181.60 (the “Series F-1 Long-Term Exercise Price” and, together with the Series F-1 Short-Term Warrants Exercise Price, the “Series F-1 Exercise Price”) per share (collectively, the “Series F-1 Private Placement”). The closing of the Series F-1 Private Placement occurred on May 23, 2024 (the “Series F-1 Closing Date”).
Pursuant to that certain Omnibus Amendment Agreement, dated as of April 8, 2025, by and among the Company and the Required Holders (as defined in the Series F-1 Warrants) (the “April 2025 Amendment Agreement”), the Series F-1 Short-Term Warrants were extended to expire five years from the date of issuance.
The exercise price of the Series F-1 Warrants and the number of shares issuable upon exercise of the Series F-1 Warrants are subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment, on a “full ratchet” basis, in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable exercise price (subject to certain exceptions). Upon any such price-based adjustment to the exercise price, the number of shares issuable upon exercise of the Series F-1 Warrants will be increased proportionately.
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On April 17, 2025, in connection with the issuance of stock options to certain officers of the Company and pursuant to the full ratchet anti-dilution provisions contained in the Series F-1 Warrants, the Series F-1 Exercise Price was adjusted to $18.32 per share. In September 2025, in connection with the 2025 Reverse Stock Split, and pursuant to the stock combination event adjustment provisions contained in the Series F-1 Warrants, the Series F-1 Exercise Price was reduced to $3.3713 per share and the number of shares of Common Stock issuable upon exercise of the Series F-1 Warrants was adjusted proportionally.
As of March 31, 2026, the Series F-1 Exercise Price was equal to $3.3713 per share and Series F-1 Short-Term Warrants and Series F-1 Long-Term Warrants were outstanding to purchase up to 1,322,942 shares and 1,497,942 shares of Common Stock, respectively.
Series G Private Placement
On May 20, 2024, the Company entered into a Securities Purchase Agreement (the “Series G Purchase Agreement” and collectively with the Series F-1 Purchase Agreement, each a “Purchase Agreement” and collectively, the “Purchase Agreements”) with certain accredited investors (the “Series G Investors” and collectively with the Series F-1 Investors, the “Investors”), pursuant to which it agreed to sell to the Series G Investors in a private placement (i) an aggregate of 8,950 shares of the Company’s newly-designated Series G Preferred Stock, initially convertible into up to 49,288 shares of the Company’s Common Stock at an initial conversion price of $181.60 per share (the “Series G Conversion Price”), (ii) short-term warrants to acquire up to an aggregate of 49,288 shares of Common Stock (the “Series G Short-Term Warrants”) at an exercise price of $181.60 per share, and (iii) long-term warrants to acquire up to an aggregate of 49,288 shares of Common Stock (the “Series G Long-Term Warrants,” and collectively with the Series G Short-Term Warrants, the “Series G Warrants”) at an initial exercise price of $181.60 per share (the “Series G Exercise Price”) (collectively, the “Series G Private Placement” and collectively with the Series F-1 Private Placement, each a “Private Placement” and collectively, the “Private Placements”). The closing of the Series G Private Placement occurred on May 23, 2024 (the “Series G Closing Date” and collectively with the Series F-1 Closing Date, the “Closing Date”).
On April 17, 2025, in connection with the issuance of stock options to certain officers of the Company, the Series G Conversion Price was equal to $18.32 per share due to the full ratchet anti-dilution provisions contained in the Series G Certificate of Designations. In August 2025, in connection with the 2025 Reverse Stock Split, and pursuant to the stock combination event adjustment provisions contained in the Series G Certificate of Designations, the Series G Conversion Price was reduced to $3.3713 per share.
We received net proceeds from the Series G Private Placement of approximately $8.9 million, after deducting various fees and expenses. We intend to use the net proceeds from this offering for general corporate purposes.
As of March 31, 2026, there were 8,804 shares of Series G Preferred Stock outstanding, Series G Short-Term Warrants outstanding to purchase up to 2,654,765 shares of Common Stock, and Series G Long-Term Warrants outstanding to purchase up to 2,654,765 shares of Common Stock.
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Series G Warrants
Pursuant to the Series G Private Placement, the Company issued to investors (i) the Series G Long-Term Warrants to purchase 49,288 shares of Common Stock, with an initial exercise price of $181.60 per share (subject to adjustment, the “Series G Exercise Price”), for a period of five years from the date of issuance and (ii) the Series G Short-Term Warrants to purchase 49,288 shares of Common Stock, with an initial exercise price of $181.60 per share (subject to adjustment), for a period of eighteen months from the date of issuance. On April 17, 2025, in connection with the issuance of stock options to certain officers of the Company and pursuant to the full ratchet anti-dilution provisions contained in the Series G Warrants, the Series G Exercise Price was equal to $18.32 per share and the number of shares of Common Stock issuable upon exercise of the Series G Warrants was adjusted proportionally. In August 2025, in connection with the 2025 Reverse Stock Split and pursuant to the stock combination event adjustment provisions contained in the Series G Warrants, the Series G Exercise Price was reduced to $3.3713 per share and the number of shares of Common Stock issuable upon exercise of the Series G Warrants was adjusted proportionally.
The exercise price of the Series G Warrants and the number of shares issuable upon exercise of the Series G Warrants are subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment, on a “full ratchet” basis, in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable exercise price (subject to certain exceptions). Upon any such price-based adjustment to the exercise price, the number of shares issuable upon exercise of the Series G Warrants will be increased proportionately.
Registration Rights Agreements
In connection with the Series F-1 Private Placement, the Company entered into a Registration Rights Agreement with the Series F-1 Investors (the “Series F-1 Registration Rights Agreement”), pursuant to which the Company agreed to file a resale registration statement (the “Series F-1 Registration Statement”) with the SEC to register for resale (A) 200% of the Series F-1 Conversion Shares and (B) 200% of the shares of Common Stock issuable upon exercise of the Series F-1 Warrants (the “Series F-1 Warrant Shares”) promptly following the Closing Date, but in no event later than 30 calendar days after the Closing Date, and to have such Series F-1 Registration Statement declared effective by the Effectiveness Deadline (as defined in the Series F-1 Registration Rights Agreement).
In connection with the Series G Private Placement, the Company entered into a Registration Rights Agreement with the Series G Investors (the “Series G Registration Rights Agreement” and, together with the Series F-1 Registration Rights Agreement, the “Registration Rights Agreements”) pursuant to which the Company agreed to file a resale registration statement (the “Series G Registration Statement”) with the SEC to register for resale (A) 200% of the shares of Common Stock issuable upon conversion of the Series G Preferred Stock (the “Series G Conversion Shares”), (B) 200% of the shares of Common Stock issuable upon conversion of the PIK Shares, and (C) 200% of the shares of Common Stock issuable upon exercise of the Series G Warrants (the “Series G Warrant Shares”) promptly following the Closing Date, but in no event later than 30 calendar days after the Closing Date, and to have such Series G Registration Statement declared effective by the Effectiveness Deadline (as defined in the Series G Registration Rights Agreement).
In connection with the Registration Rights Agreements, the Company filed a registration statement on Form S-3 covering such securities, which registration statement was filed on June 21, 2024, amended on August 8, 2024 and declared effective by the SEC on August 12, 2024. Under the Series F-1 Registration Rights Agreement, the Company is obligated to pay certain liquidated damages to the Series F-1 Investors if the Company, among other things, failed to file the Series F-1 Registration Statement when required, failed to file or cause the Series F-1 Registration Statement to be declared effective by the SEC when required, or fails to maintain the effectiveness of the Series F-1 Registration Statement.
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Placement Agent Warrants
In connection with the Private Placements, pursuant to (A) an engagement letter (the “GPN Agreement”) with GP Nurmenkari Inc. (“GPN”) and (B) an engagement letter (the “Palladium Agreement,” and collectively with the GPN Agreement, the “Engagement Letters”) with Palladium Capital Group, LLC (“Palladium,” and collectively with GPN, the “Placement Agents”), the Company engaged the Placement Agents to act as non-exclusive placement agents in connection with each Private Placement, pursuant to which, the Company agreed to (i) pay the Placement Agents a cash fee equal to 3% of the gross proceeds of each Private Placement (including any cash proceeds realized by the Company from the exercise of the Series F Warrants), (ii) reimbursement and payment of certain expenses, and (iii) issue to the Placement Agents on the Closing Date, warrants to purchase up to an aggregate of 693,833 of shares of Common Stock to each Placement Agent, which is equal to 3% of the aggregate number of shares of Common Stock underlying the securities issued in each Private Placement, including upon exercise of any Series F Warrants, with terms identical to the Series G Long-Term Warrants and Series F-1 Long-Term Warrants.
Series H Preferred Stock
On September 2, 2025, we entered into the Securities Purchase Agreement (the “Series H Purchase Agreement”) with certain accredited investors (the “Series H Investors”), pursuant to which we issued and sold on September 4, 2025 (the “Series H Closing Date”) in a private placement (i) an aggregate of 7,000 shares of Series H Preferred Stock, initially convertible into up to 1,400,000 shares of the Company’s Common Stock (the “Series H Conversion Shares”) at an initial conversion price of $5.00 per share (the “Series H Conversion Price”) and (ii) warrants to acquire up to an aggregate of 1,400,000 shares of Common Stock at an initial exercise price of $5.00 per share (the “Series H Investor Warrants”) (collectively, the “Series H Private Placement”).
The terms of the shares of Series H Preferred Stock are as set forth in the Certificate of Designations of the Series H Convertible Preferred Stock (the “Series H Certificate of Designations”), which was filed and became effective with the Secretary of State of the State of Delaware on September 3, 2025. The Series H Investor Warrants became exercisable upon receipt of the Series H Stockholder Approval (as defined herein) and expire five years from the date of the Series H Stockholder Approval.
In connection with the Series H Private Placement, pursuant to an engagement agreement (the “GPN Engagement Agreement”), dated August 28, 2025, between the Company and GP Nurmenkari Inc. (“GPN”), the Company engaged GPN to act as a non-exclusive placement agent in connection with the Series H Private Placement. Pursuant to the GPN Engagement Agreement, the Company agreed to (i) pay GPN a cash fee equal to 4% of the gross proceeds of the Series H Private Placement (including any cash proceeds realized by the Company from the exercise of outstanding warrants of the Company), (ii) reimbursement and payment of certain expenses, and (iii) issue to GPN on the Series H Closing Date, warrants to purchase up to an aggregate number of shares of Common Stock equal to 4% of the aggregate number of shares of Common Stock underlying the securities issued in the Series H Private Placement, with terms identical to the Series H Investor Warrants.
Additionally, pursuant to an engagement agreement (the “Rodman Engagement Agreement” and, collectively with the GPN Engagement Agreement, the “Engagement Agreements”), dated August 27, 2025, between the Company and Rodman & Renshaw LLC (“Rodman”), the Company engaged Rodman and H.C. Wainwright & Co., LLC (“Wainwright” and, together with Rodman and GPN, the “Placement Agents”) to act as non-exclusive placement agents in connection with the Series H Private Placement. Pursuant to the Rodman Engagement Agreement, the Company agreed to (i) pay Rodman and Wainwright an aggregate cash fee equal to 5% of the gross proceeds of the Series H Private Placement (including any cash proceeds realized by the Company from the exercise of outstanding warrants of the Company) (provided, however, that such cash fee shall be reduced to 2.5% with respect to any gross proceeds raised from the enumerated list of existing investors of the Company (the “Existing Series H Investors”)), (ii) reimburse and pay certain expenses, and (iii) issue to Rodman and Wainwright on the Series H Closing Date, warrants to purchase up to an aggregate number of shares of Common Stock equal to 5% (or 2.5% in case of securities issued to Existing Series H Investors) of the aggregate number of shares of Common Stock underlying the securities issued in the Series H Private Placement, with terms identical to the Series H Investor Warrants.
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Series H Registration Rights Agreements
In connection with the Series H Private Placement, we entered into the Series H Registration Rights Agreement, pursuant to which we are obligated, among other things, to (A) file a resale registration statement (the “Registration Statement”) with the SEC to register for resale promptly following the Series H Closing Date, but in no event later than 15 calendar days after the Series H Closing Date, the sum of (i) 200% of the maximum number of Series H Conversion Shares issuable upon conversion of the shares of Series H Preferred Stock ((x) assuming for purposes hereof that the shares of Series H Preferred Stock are convertible at the Floor Price (as defined herein) and (y) any such conversion shall not take into account any limitations on the conversion of the shares of Series H Preferred Stock set forth in the Series H Certificate of Designations) and (ii) 200% of the maximum number of Common Stock issuable upon exercise of the Series H Investor Warrants ((x) assuming for purposes hereof that such Series H Investor Warrants will be exercised at the initial exercise price as set forth in such Series H Investor Warrants and (y) any such exercise shall not take into account any limitations on the exercise of such Series H Investor Warrants as set forth therein), in each case subject to the adjustments set forth in the Series H Certificate of Designations and Series H Investor Warrants, (B) have such Registration Statement declared effective by the Effectiveness Deadline (as defined in the Series H Registration Rights Agreement and as may be amended from time to time), and (C) maintain the registration until the earlier of (x) the date on which the selling stockholders may sell their Series H Conversion Shares or shares issuable upon exercise of the Series H Investor Warrants without restriction pursuant to Rule 144 under the Securities Act, and (y) the date on which the selling stockholders no longer hold any such Series H Conversion Shares or shares issuable upon exercise of the Series H Investor Warrants. The Company will be obligated to pay certain liquidated damages to the Series H Investors if the Company fails to file the Registration Statement when required, fails to cause the Registration Statement to be declared effective by the SEC when required, or fails to maintain the effectiveness of the Registration Statement pursuant to the terms of the Series H Registration Rights Agreement.
Shares of Series H Preferred Stock
All shares of capital stock of the Company rank junior to the shares of Series H Preferred Stock, with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company. Further to the foregoing, shares of Series H Preferred Stock rank junior to shares of (i) Series F Convertible Preferred Stock, par value $0.001 per share, of the Company issued and outstanding pursuant to the Series F Certificate of Designations, (ii) Series F-1 Convertible Preferred Stock, par value $0.001 per share, of the Company issued and outstanding pursuant to the Series F-1 Certificate of Designations, and (iii) Series G Convertible Preferred Stock, par value $0.001 per share, of the Company issued and outstanding pursuant to the Series G Certificate of Designations, in each case, with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company.
Following the receipt of the Series H Stockholder Approval (as defined herein), the shares of Series H Preferred Stock became convertible into Common Stock at the election of the holder at any time at the initial Series H Conversion Price of $5.00. The Series H Conversion Price is subject to customary adjustments for stock dividends, stock splits, reclassifications, stock combinations and the like. The Series H Conversion Price may also be voluntarily reduced by the Company to any amount and for any period of time deemed appropriate by the Board at any time with the prior written consent of the holders of at least a majority of the outstanding shares of Series H Preferred Stock, subject to the rules and regulations of Nasdaq.
The holders of the shares of Series H Preferred Stock are entitled to dividends of 7% per annum, compounded each calendar quarter, which are payable in arrears (i) on the first trading day of each quarter, commencing on October 1, 2025 and (ii) upon any redemption or any required payment upon any Triggering Event (as defined in the Series H Certificate of Designations). The holders of the shares of Series H Preferred Stock are also entitled to receive a dividend make-whole payment.
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Upon the occurrence and during the continuance of a Triggering Event, the shares of Series H Preferred Stock accrue dividends at the rate of 15% per annum. The holders of the shares of Series H Preferred Stock are entitled to vote with holders of the Common Stock on an as-converted basis, with the number of votes to which each holder of shares of Series H Preferred Stock is entitled to be calculated assuming a conversion price of $4.83 per share, which was the Minimum Price (as defined in Rule 5635 of the Rules of the Nasdaq Stock Market) applicable immediately before the execution and delivery of the Series H Purchase Agreement, subject to certain beneficial ownership limitations as set forth in the Series H Certificate of Designations.
The Series H Certificate of Designations includes certain Triggering Events (as defined in the Series H Certificate of Designations), including, among other things, the suspension from trading or the failure of our Common Stock to be trading or listed (as applicable) on an eligible market for a period of five (5) consecutive trading days and our failure to pay any amounts due to the holders of the shares of Series H Preferred Stock when due. Upon the occurrence of a Triggering Event, each holder of shares of Series H Preferred Stock will be able to require us to redeem in cash any or all of the holder’s shares of Series H Preferred Stock at a premium set forth in the Series H Certificate of Designations. Further, upon a Triggering Event, a holder of shares of Series H Preferred Stock, at such holder’s option, by delivery of a notice of conversion (“Triggering Event Conversion Notice”) to the Company, may convert all, or any number of shares of Series H Preferred Stock held by such holder into shares of Common Stock at a price equal to the lowest of (A) the applicable Series H Conversion Price as in effect on the applicable date of conversion, and (B) $0.616, which was 20% of the “Minimum Price” (as defined in Nasdaq Stock Market Rule 5635) on the date on which the Series H Stockholder Approval (as defined herein) was obtained or, in any case, such lower amount as permitted, from time to time, by the Nasdaq Capital Market, and, in each case, subject to adjustment for stock splits, stock dividends, stock combinations, recapitalizations or other similar events, which are subject to certain adjustments as set forth in the Series H Certificate of Designations (the “Floor Price”), and (ii) 80% of the lowest volume weighted average price of the Common Stock of any trading day during the twenty (20) consecutive trading day period ending and including the trading day immediately preceding the delivery or deemed delivery of the applicable Triggering Event Conversion Notice.
Notwithstanding the foregoing, our ability to issue any shares of Common Stock upon conversion of any shares of Series H Preferred Stock or otherwise pursuant to the terms of the Series H Certificate of Designations is subject to certain limitations set forth in the Series H Certificate of Designations, including a limit on the number of shares that may be issued until the time, if any, that our stockholders have approved the issuance of the Series H Conversion Shares and shares issuable upon exercise of the Series H Investor Warrants (the “Series H Stockholder Approval”). The Series H Stockholder Approval was obtained on November 14, 2025 at a special meeting of stockholders of the Company. Further, the Series H Certificate of Designations contains a certain beneficial ownership limitation which applies to each holder of the shares of Series H Preferred Stock, other than PharmaCyte Biotech, Inc. (“PharmaCyte”), after giving effect to the issuance of shares of Common Stock issuable upon conversion of the shares of Series H Preferred Stock.
Warrants
The Series H Investor Warrants were exercisable upon receipt of Series H Stockholder Approval, at an exercise price of $5.00 per share, and expire five years from the date of the Series H Stockholder Approval. The exercise price of each Series H Investor Warrant is subject to customary adjustments for stock dividends, stock splits, reclassifications, stock combinations and the like. Upon any such price-based adjustment to the exercise price, the number of shares of Common Stock issuable upon exercise of the Series H Investor Warrants will be increased proportionately. The exercise price may also be voluntarily reduced by the Company to any amount and for any period of time with the prior written consent of the holders of at least a majority of the outstanding Series H Investor Warrants, subject to the rules and regulations of Nasdaq. The Series H Investor Warrants may be exercised for cash, provided that, if there is no effective registration statement available registering the exercise of the Series H Investor Warrants, the Series H Investor Warrants may be exercised on a cashless basis.
MIPA
On September 2, 2025, the Company entered into a Membership Interest Purchase Agreement (the “MIPA”), by and among the Company, LPU and the members of LPU identified on the signature pages attached thereto (the “Sellers”), pursuant to which the Company agreed to acquire 100% of the membership interests (the “Membership Interests”) of LPU from the Sellers (the “Acquisition”).
As consideration for the Membership Interests, the Company delivered to the Sellers that number of shares of Series I Preferred Stock that is convertible into a number of shares of Common Stock equal to 747,362, subject to certain conversion limitations as described in the Certificate of Designations for the Series I Convertible Preferred Stock. As of March 31, 2026, no shares of Series I Preferred Stock are issued and outstanding.
Following the closing of the Acquisition, the Sellers are entitled to additional contingent consideration (the “Contingent Consideration”) upon the achievement of various specified milestones, including completion of an offering of the Company’s Common Stock or Common Stock equivalents (an “Equity Offering”), which Contingent Consideration includes certain specified cash payments, cash payments calculated based on any Equity Offering proceeds, shares of Common Stock that would result in the Sellers collectively beneficially owning a specified percentage of the Company, and warrants to purchase Common Stock (collectively, the “Milestone Securities”).
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Notwithstanding the foregoing, the Company’s ability to issue the Milestone Securities or the Common Stock underlying the Milestone Securities is subject to certain limitations, including a limit on the number of shares that may be issued until the time, if any, that the Company’s stockholders have approved the issuance in accordance with Nasdaq listing standards (the “MIPA Stockholder Approval”). The MIPA Stockholder Approval was obtained on November 14, 2025 at a special meeting of stockholders of the Company.
In connection with the transaction contemplated by the MIPA, the Company engaged Palladium to act as a non-exclusive financial advisor pursuant to the Advisory Agreement. Pursuant to the Advisory Agreement, the Company agreed to (i) pay Palladium a monthly retainer of $15,000 and (ii) issue to Palladium 15,433 shares of Common Stock of the Company, which shares were issued following the date of the receipt of the MIPA Stockholder Approval.
License Agreement
In connection to the transactions contemplated by the MIPA, prior to entering into the MIPA, on September 2, 2025, LPU and LightSolver Ltd., an Israeli company (“Lightsolver” or “Licensor”) entered into a license agreement (as may be subsequently amended, supplemented, amended and restated or otherwise modified, the “License Agreement”). withPursuant to the License Agreement, Lightsolver granted LPU, among other things, an exclusive license to use and commercialize its proprietary laser processing hardware units (the “Machines”) specifically configured for cryptocurrency mining applications and its proprietary intangible technology necessary or useful to utilize the Machines (the “Technology”) solely for cryptocurrency mining applications.
In addition, pursuant to the License Agreement, Lightsolver agreed to perform certain development work to develop, customize, configure, and enhance its proprietary Machines and Technology for cryptocurrency mining applications, for which LPU will pay Lightsolver, upon the achievement of certain associated developmental milestones by Lightsolver, (the “Milestone Events”), a total of up to $8,500,000 in non-recurring engineering fees. In addition to such non-recurring engineering fees, no later than one (1) business day after the effective date of the License Agreement, LPU agreed to make a one-time cash payment to Lightsolver equal to the greater of (i) 25% of the aggregate proceeds received by the Company from the Private Placement and (ii) $1,500,000. Furthermore, promptly upon the occurrence of any of the Milestone Events, LPU agreed to deliver, or cause to be delivered, to Lightsolver the consideration described above.
Critical Accounting Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. The most significant accounting estimates inherent in the preparation of our financial statements include estimates associated with the determinations of the fair-market value of the preferred stock, stock-based compensation, and the impairment analysis of intangibles.
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Our financial position, results of operations and cash flows are impacted by the accounting policies we have adopted. In order to get a full understanding of our financial statements, one must have a clear understanding of the accounting policies employed. A summary of our critical accounting policies is presented within the notes to our consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Our management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of our financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our financial statements. These items are monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on historical experience, known trends and events, and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may materially differ from these estimates under different assumptions or conditions.
Our critical accounting estimates have not changed materially from those previously reported in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on April 15, 2026.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Our principal executive officer and principal financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”) Rule 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q, have concluded that, based on such evaluation, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our principal executive officer and principal financial officer as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time we are a party to litigation and subject to claims incident to the ordinary course of business. Future litigation may be necessary to defend ourselves and our customers by determining the scope, enforceability, and validity of third-party proprietary rights or to establish our proprietary rights. For a description of certain legal proceedings, please read Note 6 to the interim condensed consolidated financial statements, which information is incorporated herein by reference.
Item 1A. Risk Factors
There are no additional risk factors other than those previously disclosed in “Item 1A. Risk Factors” of our annual report on Form 10-K for the fiscal year ended December 31, 2025, as filed with the SEC on April 15, 2026. Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in our annual report, any one or more of which could, directly or indirectly, cause our actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, operating results, and stock price.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
There were no unregistered sales of the Company’s equity securities during the three months ended March 31, 2026, other than those previously reported in a Current Report on Form 8-K.
Item 3. Defaults Upon Senior Securities
There has been no default in the payment of principal, interest, sinking or purchase fund installment, or any other material default, with respect to any indebtedness of the Company.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information.
None
of the Company’s officers or directors
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Item 6. Exhibits.
Exhibit Number |
Exhibit Description |
+ Filed herewith
* Furnished herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Q/C TECHNOLOGIES INC. | ||
| Date: May 15, 2026 | By: | /s/ Joshua Silverman |
| Name: | Joshua Silverman | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| Date: May 15, 2026 | By: | /s/ Ian Rhodes |
| Name: | Ian Rhodes | |
| Title: | Interim Chief Financial Officer | |
| (Principal Financial Officer) | ||
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Exhibit 31.1
CERTIFICATION PURSUANT TO SARBANES–OXLEY ACT OF 2002
I, Joshua Silverman, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Q/C Technologies, Inc; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: May 15, 2026 | By: | /s/ Joshua Silverman |
| Name: | Joshua Silverman | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION PURSUANT TO SARBANES–OXLEY ACT OF 2002
I, Ian Rhodes, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Q/C Technologies, Inc; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: May 15, 2026 | By: | /s/ Ian Rhodes |
| Name: | Ian Rhodes | |
| Title: | Interim Chief Financial Officer | |
| (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO SECTION 906
OF THE SARBANES–OXLEY ACT OF 2002
In connection with the Quarterly Report of Q/C Technologies, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, the undersigned, Joshua Silverman, in the capacity and on the date indicated below, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
| 1. | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: May 15, 2026 | By: | /s/ Joshua Silverman |
| Name: | Joshua Silverman | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO SECTION 906
OF THE SARBANES–OXLEY ACT OF 2002
In connection with the Quarterly Report of Q/C Technologies, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, the undersigned, Ian Rhodes, in the capacity and on the date indicated below, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
| 1. | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: May 15, 2026 | By: | /s/ Ian Rhodes |
| Name: | Ian Rhodes | |
| Title: | Interim Chief Financial Officer | |
| (Principal Financial Officer) |