STEK 10-Q
Stemtech Corp (STEK)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
or
For the transition period from to
Commission file number:
(Exact name of registrant as specified in its charter)
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State or other jurisdiction of incorporation or organization |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Name of each exchange on which registered | |
| None | N/A |
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 and posted 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 and post 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
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: shares of common stock, $0.001 par value, issued and outstanding as of June 22, 2026.
STEMTECH CORPORATION
FORM 10-Q
March 31, 2026
INDEX
| 2 |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information set forth in this Quarterly Report on Form 10-Q, including in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere herein may address or relate to future events and expectations and as such constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements which are not historical reflect our current expectations and projections about our future results, performance, liquidity, financial condition, prospects and opportunities and are based upon information currently available to us and our management and their interpretation of what is believed to be significant factors affecting our business, including many assumptions regarding future events. Such forward-looking statements include statements regarding, among other things:
| · | the size and growth of the potential markets for our products and the ability to serve those markets; | |
| · | our expectations regarding our expenses and revenue, the sufficiency of our cash resources and needs for additional financing; | |
| · | the rate and degree of market acceptance of any of our products; | |
| · | our expectations regarding competition; | |
| · | our anticipated growth strategies; | |
| · | our ability to attract or retain key personnel; | |
| · | our ability to establish and maintain development partnerships; | |
| · | regulatory developments in the U.S. and foreign countries, especially those related to change in, and enforcement of, cannabis laws; | |
| · | our ability to obtain and maintain intellectual property protection for our products; and | |
| · | the anticipated trends and challenges in our business and the market in which we operate. |
Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “should,” “would,” “could,” “scheduled,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “seek,” or “project” or the negative of these words or other variations on these words or comparable terminology. Actual results, performance, liquidity, financial condition and results of operations, prospects and opportunities could differ materially and perhaps substantially from those expressed in, or implied by, these forward-looking statements as a result of various risks, uncertainties and other factors. These statements may be found under the section of our Annual Report on Form 10-K for the year ended December 31, 2023 (filed on July 10th, 2024) entitled “Risk Factors” as well as in our other public filings.
In light of these risks and uncertainties, and especially given the start-up nature of our business, there can be no assurance that the forward-looking statements contained herein will in fact occur. Readers should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.
| 3 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Stemtech Corporation
Consolidated Balance Sheets
(Unaudited)
| March 31, 2026 | December 31, 2025 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Other long term assets | ||||||||
| Long term deposits | ||||||||
| Operating lease right-of-use assets - net | ||||||||
| Goodwill | ||||||||
| Intercompany | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Notes payable | ||||||||
| Convertible debentures, net of discount | ||||||||
| Operating lease liabilities - current | ||||||||
| Deferred revenues | ||||||||
| Factoring liability | ||||||||
| Derivative liability | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| Notes payable - Long term | ||||||||
| Operating lease liabilities - noncurrent | ||||||||
| Other long term liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| COMMITMENTS AND CONTINGENCIES (Note 10) | ||||||||
| STOCKHOLDERS' EQUITY | ||||||||
| 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 other comprehensive loss | ( | ) | ||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Stemtech Corporation shareholders’ deficit | ( | ) | ( | ) | ||||
| Non-controlling interest in subsidiaries | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS EQUITY | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 4 |
Stemtech Corporation
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
| For The Three Months Ending | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| NET SALES | $ | $ | ||||||
| COST OF GOODS SOLD: | ||||||||
| Cost of goods sold | ||||||||
| Freight-in | ||||||||
| TOTAL COST OF GOODS SOLD | ||||||||
| GROSS PROFIT | ||||||||
| OPERATING EXPENSES: | ||||||||
| Commissions | ||||||||
| Selling and marketing | ||||||||
| General and administrative | ||||||||
| Research and development | ||||||||
| TOTAL OPERATING EXPENSES | ||||||||
| OPERATING LOSS | ( | ) | ( | ) | ||||
| OTHER INCOME (EXPENSE): | ||||||||
| Change in fair value of derivative liability | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Other income and expenses, net | ( | ) | ||||||
| Gain on settlement of derivative liabilities | ||||||||
| Gain (loss) on extinguishment of debt | ( | ) | ||||||
| Loss on disposal of assets | ||||||||
| TOTAL OTHER INCOME (EXPENSE) | ( | ) | ( | ) | ||||
| INCOME (LOSS) BEFORE INCOME TAXES | ( | ) | ( | ) | ||||
| PROVISION FOR INCOME TAXES | ||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | ||
| NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | ( | ) | ||||||
| NET LOSS AVAILABLE TO COMMON STOCKHOLDERS | $ | ( | ) | $ | ( | ) | ||
| Net loss per common share | ||||||||
| Basic | $ | ( | ) | $ | ( | ) | ||
| Diluted | $ | ( | ) | $ | ( | ) | ||
| Shares used to compute loss per share | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
| Comprehensive loss | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Change in foreign currency translation adjustments | ||||||||
| Comprehensive loss available to common stockholders | $ | ( | ) | $ | ( | ) | ||
The accompanying notes are an integral part of these consolidated financial statements.
| 5 |
Stemtech Corporation
Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)
| Accumulated | ||||||||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||||||||
| Common Stock | Additional | Comprehensive | Non- | Total | ||||||||||||||||||||||||||||
No. of Shares | Amount | Paid-in Capital | Accumulated Deficit | Income (Loss) | Subtotal | Controlling Interest | Stockholders’Deficit | |||||||||||||||||||||||||
| Balance at December 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Stock based compensation | – | |||||||||||||||||||||||||||||||
| Stock issued for services | ||||||||||||||||||||||||||||||||
| Conversion of convertible notes and accrued interest to common stock | | |||||||||||||||||||||||||||||||
| Settlement of accrued liabilities for common stock | ||||||||||||||||||||||||||||||||
| Stock issued for LFR Acquisition | ||||||||||||||||||||||||||||||||
| Reclassification of derivative liabilities to APIC | – | |||||||||||||||||||||||||||||||
| Issuance of stock for cancellation of options | ||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | – | |||||||||||||||||||||||||||||||
| Loss attributable to non-controlling interests | – | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Stock based compensation | – | |||||||||||||||||||||||||||||||
| Stock issued for services | ||||||||||||||||||||||||||||||||
| Conversion of convertible notes and accrued interest to common stock | ||||||||||||||||||||||||||||||||
| Settlement of accrued liabilities for common stock | – | |||||||||||||||||||||||||||||||
| Stock issued for LFR Acquisition | – | |||||||||||||||||||||||||||||||
| Reclassification of derivative liabilities to APIC | – | |||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Non-controlling interest | – | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Stock based compensation | – | |||||||||||||||||||||||||||||||
| Stock issued for services | ||||||||||||||||||||||||||||||||
| Conversion of convertible notes and accrued interest to common stock | – | |||||||||||||||||||||||||||||||
| Settlement of accrued liabilities for common stock | – | |||||||||||||||||||||||||||||||
| Stock issued for LFR Acquisition | – | |||||||||||||||||||||||||||||||
| Reclassification of derivative liabilities to APIC | – | |||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | – | |||||||||||||||||||||||||||||||
| Non-controlling interest | – | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Stock based compensation | – | |||||||||||||||||||||||||||||||
| Stock issued for services | ( | ) | ||||||||||||||||||||||||||||||
| Conversion of convertible notes and accrued interest to common stock | ( | ) | ||||||||||||||||||||||||||||||
| Settlement of accrued liabilities for common stock | – | |||||||||||||||||||||||||||||||
| Stock issued for LFR Acquisition | – | |||||||||||||||||||||||||||||||
| Reclassification of derivative liabilities to APIC | – | |||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | – | |||||||||||||||||||||||||||||||
| Non-controlling interest | – | |||||||||||||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 6 |
Stemtech Corporation
Consolidated Statements of Cash Flows
(Unaudited)
| For the Three Months Ended Mar 31, | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of right of use asset | ||||||||
| Operating lease liabilities | ||||||||
| Stock compensation expense | ||||||||
| Non-cash interest expense from issuance on debt (derivative) | ||||||||
| Amortization of debt discount | ( | ) | ||||||
| Change in fair value of derivative liabilities | ||||||||
| Gain (loss) on settlement of derivative liabilities | ||||||||
| Cancellation of shares returned by shareholders | ||||||||
| Stock issued for services | ||||||||
| (Gain) loss on extinguishment of debt | ||||||||
| Changes in operating assets and liabilities, net of effect of acquisitions: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Long term deposits | ||||||||
| Operating lease liabilities | ||||||||
| Deferred revenues | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | ||||||||
| Net cash used in investing activities | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from notes payable | ( | ) | ||||||
| Net proceeds from factoring arrangement | ( | ) | ( | ) | ||||
| Repayment of note payable | ( | ) | ||||||
| Stock issued for cash | ||||||||
| Proceeds from note payable - related parties | ||||||||
| Net cash provided (used) by financing activities | ( | ) | ||||||
| Effects of currency translation on cash | ||||||||
| Net increase (decrease) in cash | ||||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Supplemental disclosure cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 7 |
Stemtech Corporation
Notes to Consolidated Financial Statements
(Unaudited)
Note 1 – Organization and Basis of Presentation
Stemtech Corporation and its Subsidiaries (collectively, the “Company”, or “Stemtech”) was incorporated in the State of Nevada, USA on September 4, 2009 under the name Globe Net Wireless Corp. with ticker symbol “GNTW”. Our corporate name was changed to Stemtech Corporation in the state of Nevada in August 2021. On August 19, 2021, Stemtech Corporation, a Delaware corporation (the “accounting acquirer”), completed a reverse merger with Globe Net Wireless Corp., the Nevada legal registrant and continuing SEC reporting entity. The historical financial statements presented reflect the operations of Stemtech Corporation (Delaware) as the accounting acquirer for financial reporting purposes. We were listed on the OTCQB market under symbol “STEK” in April 2021. Stemtech is a global network marketing company that develops science-based products that it believes supports wellness by helping the body maintain healthy stem cell physiology, also known as stem cell enhancers. Known as the Stem Cell Nutrition Company®, the Company is a pioneer in stem cell science, and believes it can demonstrate that adult stem cells function as the natural renewal system of the body. The Company believes our products enhance and support the work of the body’s stem cells by releasing more stem cells, helping to circulate them in the blood and migrate them into tissues, where they can perform their daily function of renewal for optimal health. Our Mission is to enhance wellness and prosperity around the world. These products are marketed internationally by the Companies subsidiaries and through independent distributors. The Company markets its products under the following brands: RCM System, stemrelease3™, StemFlo® MigraStem® and OraStem® (Oral Health Care). Stemtech also introduced a new skincare product in December 2022: Cellect One® Rapid Renew Stem Cell Peptide Night Cream. In January 2025, the Company introduced Cellect One® Shield HOCL – (Hypochlorous Acid) skin care product.
On August 19, 2021, Stemtech Corporation (“Stemtech”), a (Delaware corporation), entered into a Merger Agreement (the “Merger Agreement”) with Globe Net Wireless Corp. (“Globe Net” or “GNTW”). The merger is accounted for as a reverse acquisition and recapitalization in accordance with the Accounting Standards Codification topic 805, Business Combinations (“ASC 805”). Management evaluated the guidance contained in ASC 805 with respect to the identification of the acquirer in the merger and concluded, based on a consideration of the pertinent facts and circumstances, that Stemtech acquired Globe Net for financial accounting purposes. On November 9, 2021, the Company changed its fiscal year end date from August to December.
The consolidated financial statements include the accounts of Stemtech (Parent) and its thirteen (13) subsidiaries:
| 1. | Stemtech HealthSciences Corp (U.S.A.) (“Stemtech HealthSciences”) |
| 2. | Stemtech IP Holdings, LLC (U.S.A.) |
| 3. | Stemtech Canada, Inc. (“Canada”) |
| 4. | Stemtech Health Sciences S. de R.L. de C.V. (“Mexico”) - Non-Trading |
| 5. | Stemtech Services SARL de C.V. (Mexico) (“Stemtech Mexico”) - Non-Trading |
| 6. | Tecrecel Mexico SA de CV (“TME”) |
| 7. | Stemtech Malaysia Holdings Sdn. Bhd. (“Malaysia Holdings”) - Non-Trading |
| 8. | Stemtech Malaysia Sdn. Bhd. (“Malaysia”) - Non-Trading |
| 9. | Stemtech Taiwan Holding, Inc. (“Taiwan”) - Non-Trading |
| 10. | Stemtech Taiwan Branch - Non-Trading |
| 11. | Tecrecel S.A. (“Ecuador”) - Non-Trading |
| 12. | Food & Health Tech Foodhealth SA (“FHT Ecuador”) |
| 13. | Life Factor Research (“LFR”) |
| 8 |
Note 2 — Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and considering the requirements of the United States Securities and Exchange Commission (“SEC”). All intercompany accounts and transactions have been eliminated in consolidation.
Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and classification of liabilities and commitments in the normal course of business. The accompanying consolidated financial statements do not reflect any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classifications of liabilities that might result if the Company is unable to continue as a going concern.
The Company has experienced recurring net losses and
negative cash flows from operations since inception and has an accumulated deficit of approximately $ million and a working capital
deficiency of approximately $
The Company’s ability to continue as a going concern for the next twelve months from the issuance of these consolidated financial statements depends on its ability to execute its business plan, increase revenue, and reduce expenditures. The Company has reduced its labor force, cut out significant overhead and increased sales in attempts to address the above.
Cash and Cash Equivalents
Cash and cash equivalents include investments in highly
liquid financial instruments with original maturities of three months or less. The Company maintains accounts at financial institutions
that, from time to time, may exceed the federal depository insurance coverage limit. On March 31, 2026, the uninsured cash balance amounted
to approximately $
Inventory
The Company values inventory, consisting of finished goods and raw materials, at the lower of cost and net realizable value. Cost is determined using an average cost method. The Company reduces inventory for the diminution of value, resulting from product obsolescence, damage or other issues affecting marketability, equal to the difference between the cost of the inventory and its net realizable value. The Company evaluates its current level of inventory considering historical sales and other factors and, based on this evaluation, classifies inventory markdowns in the statement of operations as a component of cost of goods sold. These markdowns are estimates, which could vary significantly from actual requirements if future economic conditions, customer demand or competition differ from expectations. Currently, there are no Markdowns identified. The Company continuously evaluates the levels of inventory held and any inventory held above the expected level of sales in the next twelve months, is classified as non-current inventory.
| 9 |
Intangible Assets and Goodwill
The estimated fair values of acquired intangibles are generally determined based upon future economic benefits such as earnings and cash flows. Acquired identifiable intangible assets are recorded at fair value and are amortized over their estimated useful lives. Acquired intangible assets with an indefinite life are not amortized but are reviewed for impairment at least annually or more frequently whenever events or changes in circumstances indicate that the carrying amounts of those assets are below their estimated fair values. Impairment is tested under ASC 350, Intangibles - Goodwill and Other.
Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. Goodwill is not amortized but is tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset may be impaired. The fair value of the reporting unit is evaluated on qualitative factors to determine if the reported value may be impaired. If the qualitative factors indicate a likelihood of impairment, we then evaluate carrying value of the reporting unit based on quantitative factors using the income approach. An impairment charge is recognized for the excess of the carrying value of goodwill for the reporting unit over its implied fair value.
Notes Payable and Convertible Debentures
U.S. GAAP requires companies to bifurcate conversion options from their host instruments and account for them as freestanding derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable U.S. GAAP with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under ASC 480, Distinguishing Liabilities From Equity. See Note 6 – Notes Payable and Convertible Debentures
Factoring Liability
We have entered into factoring agreements with various financial institutions to receive cash for our future revenues. These transactions are treated as a debt instrument and are accounted for as a liability because the Company makes weekly payments towards the balance and fees. We utilize factoring arrangements as an integral part of our financing for working capital. Any change in the availability of these factoring arrangements could have a material adverse effect on our consolidated financial condition.
Derivative Liabilities
The Company classifies as equity any contracts that: (i) require physical settlement or net-share settlement; or (ii) provide the Company with a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement) providing that such contracts are indexed to the Company’s own stock. The Company classifies as assets or liabilities any contracts that: (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the Company’s control); or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). The Company assesses classification of its common stock purchase warrants and other freestanding derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required.
| 10 |
The Company’s freestanding derivatives consisted of warrants to purchase common stock that were issued in connection with the issuance of debt and the sale of common shares, and of embedded conversion options within convertible notes. The Company evaluated these derivatives to assess their proper classification in the accompanying consolidated balance sheet as of March 31, 2026 and December 31, 2025 using the applicable classification criteria enumerated under ASC 815, Derivatives and Hedging. See Note 7 – Derivative Liabilities
Impairment of Long-Lived Assets
The Company assesses, on an annual basis, the recoverability of the carrying amount of intangible assets and long-lived assets used in continuing operations. A loss is recognized when expected future cash flows (undiscounted and without interest) are less than the carrying amount of the asset. The impairment loss is determined as the difference by which the carrying amount of the asset exceeds its fair value. The Company evaluated its long-lived assets for any indications of impairment. The Company concluded that there was no impairment, however there can be no assurance that market conditions will not change or demand for the Company’s products will continue which could result in impairment of long-lived assets in the future.
Revenue Recognition
It is the Company’s policy that revenues from product sales is recognized in accordance with ASC 606 Revenues from Contracts with Customers. Five basic steps must be followed before revenue can be recognized; (1) Identifying the contract(s) with a customer that creates enforceable rights and obligations; (2) Identifying the performance obligations in the contract, such as promising to transfer goods or services to a customer; (3) Determining the transaction price, meaning the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer; (4) Allocating the transaction price to the performance obligations in the contract, which requires the Company to allocate the transaction price to each performance obligation on the basis of the relative standalone selling prices of each distinct good or services promised in the contract; and (5) Recognizing revenue when (or as) the entity satisfies a performance obligation by transferring a promised good or service to a customer. The amount of revenue recognized is the amount allocated to the satisfied performance obligation.
Revenues from direct retail sales to consumers and revenues from independent distributors occur when title and risk of loss has passed, which generally occurs at the time the products are shipped. Revenues are recorded net of estimated sales returns and allowances.
Comprehensive Loss
The other comprehensive loss in the accompanying consolidated financial statements relates to the net loss of the Company for the respective period as well as unrealized foreign currency translation adjustments.
Foreign Currency Translation
A portion of the Company’s business operations occur outside the United States. The local currency of each of the Company’s subsidiaries is generally its functional currency. All assets and liabilities are translated into U.S. Dollars at exchange rates existing at the consolidated balance sheet dates, revenue and expenses are translated at weighted-average exchange rates and stockholders’ deficit is recorded at historical exchange rates. The resulting foreign currency translation adjustments are recorded as a separate component of stockholders’ deficit in the consolidated balance sheets and as a component of comprehensive loss. Transaction gains and losses are included in other income (expense), net in the consolidated statements of operations and comprehensive loss.
| 11 |
Leases
In February 2016, the FASB issued ASC 842, Leases, (“ASC 842”) to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet for leases previously classified as operating leases. The Company adopted ASC 842 effective January 1, 2022 and recognized and measured operating leases existing at, or entered into after, January 1, 2021 (the beginning of the earliest comparative period presented) using a modified retrospective approach, with certain practical expedients available (see Note 5). The Company’s accounting for finance leases under ASC 842 remained substantially unchanged.
In accordance with ASC 842, the Company determines if an arrangement is a lease at inception. Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent the Company’s right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of future lease payments, the Company estimates the incremental borrowing rates corresponding to the reasonably certain lease term. If the estimate of the Company’s incremental borrowing rate was changed, the operating lease assets and liabilities could differ materially.
Finance lease assets and liabilities are recognized at the lease commencement date at the present value of the future lease payments not yet paid using the Company’s incremental borrowing rate, Assets acquired under finance lease are included in property and equipment, while finance lease obligations are included in other current liabilities and other long- term liabilities on the consolidated balance sheets.
Income Tax
The Company accounts for income taxes in accordance with ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized using the asset and liability method based on differences between the financial reporting and tax bases of assets and liabilities, using enacted tax rates expected to apply when these differences reverse. A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized.
The Company accounts for uncertain tax positions in accordance with ASC 740-10, recognizing only those tax positions that meet a more-likely-than-not threshold. Interest and penalties related to uncertain tax positions are classified as income tax expense. The Company has not recognized any interest, penalties, or liabilities for uncertain tax positions in the consolidated financial statements as of the current reporting periods.
Business Combinations
The Company allocates the fair value of purchase consideration to the tangible and intangible assets acquired, net of liabilities assumed, based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired customer lists, acquired technology, and trade names from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.
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Fair Value of the Acquired Assets
The Company accounted for the acquisitions discussed in Note 4 as business combinations using the acquisition method of accounting as prescribed in ASC 805 and ASC 820. In accordance with ASC 805 and ASC 820, the Company assigned fair value to the tangible and intangible assets acquired, identifiable intangible assets and liabilities assumed as of the acquisition dates. Goodwill as of the acquisition date is measured as the excess of purchase consideration over the fair value of tangible and identifiable intangible assets acquired and liabilities assumed.
Segment Information
The Company manages its operations in geographic segments for the purpose of assessing performance and making operating decisions including North America (including its subsidiaries in United States and Canada), Latin America (including subsidiaries in Mexico and Ecuador) and Asia (including its subsidiaries in Malaysia and Taiwan).
Recent Accounting Pronouncements
In July 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-03, Presentation of Financial Statement (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718), to amend various SEC paragraphs in the ASC to reflect the issuance of SEC Staff Accounting Bulletin No. 120, among other things. The ASU does not provide any new guidance so there is no transition or effective date associated with it. The Company is currently assessing the impact of adopting ASU 2023-03 on the consolidated financial statements and related disclosures.
In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for the Company’s annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topics 740): Improvements to Income Tax Disclosures to expand the disclosure requirements for income taxes, specifically relating to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for the Company’s annual periods beginning January 1, 2025, with early adoption permitted.
The Company adopted ASU 2023-09 effective January 1, 2025, as required for public business entities. The standard requires disclosure of income tax rate reconciliation information using both dollar amounts and percentages, and disaggregated disclosure of income taxes paid by jurisdiction. For the year ended December 31, 2025, the Company had no income taxes paid to any U.S. federal, U.S. state or local, or foreign jurisdiction ($nil in both FY2025 and FY2024), consistent with the Company’s $nil income tax provision. The rate reconciliation table in Note 13 has been updated to present both dollar amounts and percentages as required. ASU 2023-07 (Segment Reporting) is effective for annual periods beginning after December 15, 2023 and has been adopted; no material changes to the Company’s segment disclosures resulted from adoption.
Basic net loss per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted loss per share includes potentially dilutive securities such as outstanding options and warrants, using various methods such as the treasury stock or modified treasury stock method in the determination of dilutive shares outstanding during each reporting period.
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For the period ended March 31, 2026 and 2025, the dilutive effect of and , respectively, of common stock warrants have not been included in the average shares outstanding for the calculation of net loss per share as the effect would be anti-dilutive as a result of the Company’s net losses in these periods.
Fair Value Measurements
As defined in ASC 820 Fair Value Measurements, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs 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 measurement) and the lowest priority to unobservable inputs (level 3 measurement).
The Company determines the level in the fair value hierarchy within which each fair value measurement falls in its entirety, based on the lowest level input that is significant to the fair value measurement in its entirety. In determining the appropriate levels, the Company performs an analysis of the assets and liabilities at each reporting period end.
The Company’s financial instruments consist of cash, accounts receivable, accounts payable, accrued interest, notes payable and, convertible debentures. The carrying amounts of these financial instruments are of approximate fair value due to either length of maturity or interest rates that approximate prevailing rates unless otherwise disclosed in these financial statements. The Company’s derivative liabilities are valued using option pricing models with Level 3 inputs.
Sequencing
Based upon ASC 815-15-25 Embedded Derivatives, the Company has adopted a sequencing approach regarding the application of ASC 815-40 Contracts in Entity’s Own Equity to its outstanding convertible notes and warrants. Pursuant to the sequencing approach, the Company evaluates its contracts based upon the earliest issuance date.
Note 3 – Inventory
Inventory consists of the following components:
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Finished goods | $ | $ | ||||||
| Raw materials | ||||||||
| Total Inventory | $ | $ | ||||||
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Note 4 – Business Combinations, Intangible Assets and Goodwill
Original Acquisition
On May 7, 2018, the Company purchased the assets of Stemtech International, Inc. (the “Former Parent Company”), out of a Chapter 7 Bankruptcy for $400,000 and the assumption of a $4,000,000 note acquiring 100% of the issued and outstanding capital stock of Canada, Mexico, Stemtech Mexico, Stemtech New Zealand, Taiwan, Korea and Ecuador; and Stemtech Malaysia Holdings that owns two-thirds of its subsidiary Stemtech Malaysia. In addition to the net tangible assets, the Company acquired various intangible assets including patent products, licenses and trademarks and customers and distribution lists. The estimated useful lives of the identifiable intangible assets range from six to fourteen years.
The excess purchase price has been recorded as goodwill
in the amount of $
LFR Acquisition
In March 2023, the Company acquired
The consideration paid was shares of the
Company with a fair value of $
The following table summarizes the allocation of purchase price of the acquisition:
| Tangible Assets Acquired: | Allocation | |||
| Cash and cash equivalents | $ | |||
| Inventory | ||||
| Accounts payable and Accrued liabilities | ( | ) | ||
| Net Tangible Assets Acquired | ( | ) | ||
| Intangible Assets Acquired: | ||||
| Non-compete Agreement | ||||
| Total Fair Value of Assets Acquired | ||||
| Consideration: | ||||
| Common Stock | ||||
| Goodwill | $ | |||
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The components of all acquired intangible assets were as follows at March 31, 2026 and December 31, 2025:
March 31, 2026 | December 31, 2025 | Average Estimated Life (Years) | ||||||||
| Patent products | $ | $ | ||||||||
| Trade names and trademarks | ||||||||||
| Customer/distribution list | ||||||||||
| Non-compete agreement | ||||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||||
| Total | $ | $ | ||||||||
The estimated future amortization as of March 31, 2026 is as follows:
| Year ending December 31, | ||||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| Thereafter | ||||
| Total | $ | |||
Intellectual Property
The Company has two current patents filed in the US and 3 filed internationally, and as our research and development progresses, plan on filing more patents. Our current patent portfolio includes:
| · | Patent US 9, 289, 375 – Skin Care Composition Containing Combinations of Natural Ingredients | |
| · | Patent AU 201127647 – Methods and Composition for Enhancing Stem Cell Mobilization | |
| · | Patent MX 344304 – Metodos y Composiciones para Mejorar las Celulas Madre | |
| · | Patent US 10,159,705 – Methods and Composition for Enhancing Stem Cell Mobilization | |
| · | Patent MX 358857 – Composiciones para el Cuidado de la Piel que Contienen Combinaciones de Ingredientes Naturales | |
| · | Patent MX 358857 (part 1 of 3) - Composiciones para el Cuidado de la Piel que Contienen Combinaciones de Ingredientes Naturales | |
| · | Patent MX 358857 (part 2 of 3) - Composiciones para el Cuidado de la Piel que Contienen Combinaciones de Ingredientes Naturales | |
| · | Patent MX358857 (part 3 of 3) - Composiciones para el Cuidado de la Piel que Contienen Combinaciones de Ingredientes Naturales |
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Note 5 – Operating Lease Commitments
The Company previously leased approximately 5,000 square feet of office space in Miramar, Florida. The lease expired on September 30, 2024, and was not renewed. Following expiration, the Company adopted an asset-light model with administrative staff working remotely. International operations in Malaysia, Taiwan, Mexico, and Ecuador are conducted from employee home offices and shared facilities under short-term arrangements that qualify for the ASC 842 short-term lease practical expedient (terms of 12 months or less at inception). Accordingly, no right-of-use assets or lease liabilities are recognized as of March 31, 2026.
Lease expense related to operating leases was immaterial
for the period ended March 31, 2026. As of December 31, 2025, the Company had
Note 6 – Notes Payable and Convertible Debentures
Schedule of notes payable as of:
| March 31, 2026 | December 31, 2025 | |||||||
| Notes payable (3) | $ | $ | ||||||
| Total Notes payable | ||||||||
| Convertible notes payable, net of discount (4) | ||||||||
| Total notes payable, net of discount of as of March 31, 2026 and December 31, 2025, respectively | $ | $ | ||||||
On May 1, 2023, the Company amended its
convertible promissory note agreement with Sharing Services Global Corporation (“SHRG”), which was subsequently assigned
to American Pacific Bank – DSS. Under the amended agreement, SHRG capitalized accrued interest of $222,556 and waived its
conversion rights under the original agreement. As a result of the amendment, the promissory note was no longer considered
convertible and has been classified as notes payable in the accompanying consolidated balance sheets. As of March 31, 2026 and
December 31, 2025, the outstanding balance related to this note was $
On October 24, 2023, November 20, 2023 and
January 4, 2024, the Company entered into three promissory notes with an investor for aggregate proceeds of $
During 2021 and 2022, the Company issued various convertible promissory notes with maturity dates ranging from nine months to three years and interest rates ranging from 8% to 12% per annum. Certain financing arrangements included the issuance of common stock and warrants, which were recorded at fair value and recognized as debt discounts.
During 2022 and 2023, the Company entered into several debt modification, extension, settlement, and conversion agreements with certain noteholders, including MCUS LLC and Leonite Fund 1, LP. These transactions included amendments to conversion terms, extensions of maturity dates, issuances of common stock and warrants, settlements of outstanding obligations, and conversions of debt into equity. As a result of these transactions, the Company recognized gains and losses on extinguishment of debt and settlement of derivative liabilities, which are included in other income (expense) in the accompanying consolidated statements of operations.
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On March 27, 2023, the Company entered into an investment
agreement with an institutional investor for financing of up to $
As of March 31, 2026, the aggregate outstanding balance
of convertible notes payable, net of unamortized discount, was $
As of March 31, 2026, the Company had outstanding
related-party convertible promissory notes with principal balances of $
Note 7 – Derivative Liabilities
The Company issued debt instruments that consist of the issuance of convertible notes with variable conversion provisions. The conversion terms of the convertible notes are variable based on certain factors, such as the future price of the Company’s common stock, which gives rise to a derivative liability which is a non-cash liability. The number of shares of common stock to be issued is based on the future price of the Company’s common stock. The number of shares of common stock issuable upon conversion of the promissory note is indeterminate. Pursuant to ASC Subtopic 815-15 Embedded Derivatives (“ASC 815-15”), the fair values of the variable conversion options and warrants and shares to be issued were recorded as derivative liabilities on the issuance date and revalued at each reporting period. Based upon ASC 840-15-25, the Company has adopted a sequencing approach regarding the application of ASC 815-40 to its outstanding convertible notes and warrants. Pursuant to the sequencing approach, the Company evaluates its contracts based upon the earliest issuance date.
As of March 31, 2026 and December 31, 2025, the Company
had
Note 8 – Financing Arrangement - Factoring Liability
During the year ended December 31, 2025, the Company
entered into various non-recourse agreements for the sale of future receipts for gross proceeds of $
The Company accounts for these agreements as a financing
arrangement, with the purchase price recorded as a liability and daily repayments made are a reduction of the liability. As of March 31,
2026, there was an outstanding balance of $
Note 9 – Stockholders’ Deficit
During 2025, the Company amended its Articles of Incorporation to increase the number of authorized shares of common stock to shares. As of March 31, 2026, there were shares of common stock issued and outstanding.
Stock Issued for Services and Stock-Based Compensation
During the quarter ended March 31, 2026, the
Company issued an aggregate of
shares of common stock to directors, officers, and service providers in exchange for services rendered during the quarter . The
shares were valued at an aggregate fair value of $
During the years ended December 31, 2025 and 2024, the Company recognized stock-based compensation expense of $ and $, respectively, related to the vesting of common stock awards issued to the Company’s Chairman and Chief Executive Officer.
For additional information regarding common stock issuances during 2023, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
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Note 10 – Related Parties
Notes Payable – Related Parties
During the year ended December 31, 2024, the Company
received a short-term working capital loan of $
On February 20, 2025, Mr. Meyer provided an additional
short-term working capital loan of $
As of December 31, 2025, the Company also had an outstanding
related-party convertible promissory note payable to director Darryl V. Green with a principal balance of $
As of March 31, 2026, the aggregate outstanding balance
of related-party notes payable, including accrued interest, totaled $
Equity-Based Compensation to Executive Officers and Directors
On February 20, 2026, the Company issued an aggregate of restricted shares of common stock to six members of its Board of Directors and executive officers, consisting of shares issued to each individual, as compensation for board and management services rendered. The recipients and their respective titles were as follows: Charles S. Arnold (Chairman and Chief Executive Officer), Darryl V. Green (Director), John “JT” Thatch (Director), Benjamin Kaplan (Director), John W. Meyer (President, Chief Operating Officer, and Director), and David E. Price (Director). The shares were valued at an aggregate fair value of $, based on a grant-date fair value of $ per share, representing the OTC market closing price of the Company’s common stock on February 20, 2026. All shares vested immediately upon issuance with no further service conditions. The full fair value of $ was recognized as stock-based compensation expense in the three months ended March 31, 2026, and is included in general and administrative expenses in the accompanying condensed consolidated statements of operations.
On the same date, the Company issued restricted shares of common stock to CFO Squad, a third-party professional services firm engaged to provide Chief Financial Officer services to the Company. The shares were valued at $, based on a grant-date fair value of $ per share. All shares vested immediately upon issuance. The full fair value of $ was recognized as compensation expense in the three months ended March 31, 2026.
Chairman and Chief Executive Officer — Long-Term Vesting Award
The Company previously granted equity awards to its Chairman and Chief Executive Officer that are being amortized over an 82-month vesting period. During the three months ended March 31, 2026 and 2025, the Company recognized stock-based compensation expense of $ and $, respectively, related to the vesting of these awards. During the years ended December 31, 2025 and 2024, the Company recognized stock-based compensation expense of $ and $, respectively, related to these awards.
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Governance, Approval, and Risk Considerations
All related-party transactions were reviewed and approved by the independent members of the Board of Directors.
Key risks associated with related-party financing include:
| · | Dependence on executives for short-term liquidity | |
| · | Potential conflicts of interest in compensation arrangements | |
| · | Dilution to existing shareholders from non-cash equity awards | |
| · | Concentration of financing from insiders |
Management believes the terms of the above transactions were reasonable given the Company’s financial condition and represent the most practical sources of capital during the periods presented.
Note 11 – Commitments and Contingencies
Legal proceedings
On August 6, 2019, the former CEO (prior to the Company’s bankruptcy proceedings) filed a lawsuit against the Company’s subsidiary, Stemtech HealthSciences Corp., alleging unpaid salary and vacation pay related to a period prior to the current management team assuming control in 2018. The total claim is for approximately $267,000. The Company has filed a counterclaim against the former CEO and considers his claims to be without merit.
As of March 31, 2026 and December 31, 2025, the Company
has accrued $
As of the date of this filing, the Company was in default under certain Merchant Cash Advance (“MCA”) financing agreements. These balances continue to be fully reflected as liabilities within the Company’s condensed consolidated balance sheet as of March 31, 2026.
Note 12 – Subsequent Events
Management of the Company has performed a review of events and transactions occurring after the consolidated balance sheet date to determine if there were any such events or transactions requiring adjustment to or disclosure in the accompanying consolidated financial statements, nothing other than the following:
In April 2026, the Company secured financing to support the production of approximately $2.5 million of inventory intended to improve product availability and support anticipated customer demand.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this quarterly report.
FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws and is subject to the safe-harbor created by such Act and laws. Forward-looking statements may include statements regarding our goals, beliefs, strategies, objectives, plans, including product and technology developments, future financial conditions, results or projections or current expectations These forward-looking statements involve known or unknown risks, uncertainties and other factors that may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “potential,” “continue,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar expressions. These statements are based on our current beliefs, expectations, and assumptions and are subject to a number of risks and uncertainties. Although we believe that the expectations reflected-in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Our actual results may differ materially from those anticipated in these forward-looking statements. These forward-looking statements are made as of the date of this report, and we assume no obligation to update these forward-looking statements whether as a result of new information, future events, or otherwise, other than as required by law. In light of these assumptions, risks, and uncertainties, the forward-looking events discussed in this report might not occur and actual results and events may vary significantly from those discussed in the forward-looking statements.
Implications of Being an Emerging Growth Company
Emerging Growth Company - We are an emerging growth company as defined in Section 2(a)(19) of the Securities Act of 1933, as amended, or the Securities Act. We will continue to be an emerging growth company until: (i) the last day of our fiscal year during which we had total annual gross revenues of at least $1.07 billion; (ii) the last day of our fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement under the Securities Act; (iii) the date on which we have, during the previous 3-year period, issued more than $1.0 billion in nonconvertible debt; or (iv) the date on which we are deemed to be a large accelerated filer, as defined in Section 12b-2 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30.
As an emerging growth company, we are exempt from:
- Sections 14A(a) and (b) of the Exchange Act, which require companies to hold stockholder advisory votes on executive compensation and golden parachute compensation;
- The requirement to provide, in any registration statement, periodic report or other report to be filed with the Securities and Exchange Commission, or the “Commission” or “SEC”, certain modified executive compensation disclosure under Item 402 of Regulation S-K or selected financial data under Item 301 of Regulation S-K for any period before the earliest audited period presented in our initial registration statement;
- Compliance with new or revised accounting standards until those standards are applicable to private companies;
- The requirement under Section 404(b) of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, to provide auditor attestation of our internal controls and procedures; and
- Any Public Company Accounting Oversight Board, or “PCAOB”, rules regarding mandatory audit firm rotation or an expanded auditor report, and any other PCAOB rules subsequently adopted unless the Commission determines the new rules are necessary for protecting the public.
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We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the Jumpstart Our Business Startups Act. We are also a smaller reporting company as defined in Rule 12b-2 of the Exchange Act. As a smaller reporting company, we are not required to provide selected financial data pursuant to Item 301 of Regulation S-K, nor are we required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002. We are also permitted to provide certain modified executive compensation disclosure under Item 402 of Regulation S-K.
Company Overview
Globe Net Wireless Corp was incorporated in the State of Nevada, USA on September 4, 2009 with ticker symbol “GNTW”. On August 19, 2021, Stemtech Corporation (“Stemtech”), a (Delaware corporation), entered into a Merger Agreement (the “Merger Agreement”) with Globe Net Wireless Corp. (“Globe Net” or “GNTW”) in exchange for the issuance of 37,060,000 shares of the Company, approximately 85% of the issued and outstanding shares of the Company. Our corporate name was changed to Stemtech Corporation in the state of Nevada in August 2021. On November 19, 2021, the Company adopted an Amendment to its Articles changing the name of the Corporation to Stemtech Corporation in the state of Nevada, and on April 14, 2022, FINRA gave final approval for said name change. Stemtech has pioneered and patented a whole new category of stem cell dietary supplements.
Stemtech’s patented, advanced Stem Cell Nutrition formulations are one-of-a-kind natural products designed to help support the three most important aspects of stem cell physiology found in our RCM System: 1) Releasing the body’s own stem cells slowing down the bodies aging process; 2) their Circulation in the blood; and 3) Migration into tissues, where they can perform their daily anti-aging and longevity function of renewal and rejuvenation for optimal health. We harness the incredible power of adult stem cells. How does this work? Adult stem cells are released from your body’s own bone marrow into the bloodstream, they then circulate in the bloodstream and flow into the tissues and organs most in need. As they arrive, the adult stem cells migrate into the tissues, reproduce and become new, healthy cells of those tissues. This process takes place every single day, even without tissue damage, as part of the natural renewal system of the body. It is important to understand that Stemtech’s patented products do not contain stem cells. They are composed of all-natural plant-based botanicals and other ingredients that have been clinically documented to support the release and performance of your own adult stem cells essentially allowing the human body to heal itself naturally. Stemtech also offers our all-natural OraStem® toothpaste, which is a tooth whitener, breath freshener, anti-microbial, stem cell attracting and promotes good gum health. OraStem prevents bacteria from further entering the body and spreading germs to vital organs.
In December 2022, our new Cellect One® Rapid Renew Stem Cell Peptide Night Cream. The Night Cream is a Stemtech proprietary formula containing an FDA patented ingredient, Red Oak Bark, which enables deep penetration to promote good skin health. In 2025, we introduced Cellect One® Shield: HOCL (Hypochlorous Acid) skin care mist, which supports healthier skin, kills germs as a disinfectant, supports wound care and odor elimination. Stemtech announced it will introduce StemPets™, a pet supplement like our RCM for humans to our furry family members in April 2025. The global pet industry is a $303 Billion market.
While sales of products obviously create the cash flow, our real business model is not just “sales”, but lateral penetration. We do this through our IBPs - “Independent Business Partners” Sales Force, and we invest much energy in growing our IBPs. Post funding, Stemtech is projecting the addition of 30,000 new independent business partner reps over the next 12 to 24 months, adding to the existing IBPs. IBPs are incentivized to build their network, attracting additional industry leaders. IBPs are a testimonial to our product and business model, lowering our customer acquisition costs. Our IBPs offer highly flexible yet steady income which is most adapted to todays “Laptop & Cellphone Lifestyle”, with structured and organized weekly Corporate training calls, a personalized website, back-office tracking, oversight and management Tools, Reports, Training Materials and Social Sharing. Management conservatively believes we can reinvigorate sales to be more consistent with the company’s previous revenue historically, as Stemtech has been recognized 4 times in the Inc 5000 Magazine’s list of fastest growing companies. Below this IBP level, we plan to have our “DTC” (Direct To Consumer) network marketing Distribution model. This integrative model allows us an immediate global presence and ability to operate in multiple countries on every continent. With a 10% money back guarantee, This method requires no up-front or required buy-in of inventory by customers, with monthly shipments available for known recurring sales. This platform has us now operating at the intersection of the ecommerce economy, social economy and gig economy.
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RESULTS OF OPERATIONS
Our consolidated financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We expect we will require additional capital to meet our long-term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
Three-Month Period Ended March 31, 2026 Compared to the Three-Month Period Ended March 31, 2025.
Net Sales
During the three months ended March 31, 2026 and 2025, net sales were $462,957 and $868,046, respectively, representing a decrease of $405,089. The decline in net sales was primarily attributable to a continued reduction in available inventory across certain key product lines, which constrained the Company’s ability to fulfil distributor orders across its operating markets. The Company is actively working to restore product availability through inventory financing secured subsequent to the period, and management anticipates a gradual recovery in sales volume as inventory levels are replenished. Current macroeconomic conditions, including consumer spending trends and foreign exchange fluctuations across the Company’s geographic markets, may also continue to influence net sales in future periods.
Cost of Goods Sold
During the three months ended March 31, 2026 and 2025, cost of goods sold was $109,304 and $147,782, respectively, representing a decrease of $38,478. The decrease in cost of goods sold is consistent with the corresponding decline in net sales volume during the period. Gross profit was $353,653 for the three months ended March 31, 2026, compared to $720,264 for the same period in 2025, a decrease of $366,611. Gross margin was 76.4% for the three months ended March 31, 2026, compared to 83.0% for the same period in 2025. The compression in gross margin percentage reflects the impact of a less favorable product mix and certain fixed fulfillment and freight costs that do not decline proportionally with revenue.
Operating Expenses
During the three months ended March 31, 2026 and 2025, total operating expenses were $1,447,902 and $1,925,169, respectively, reflecting a favorable decrease of $477,267. The decrease was driven by reductions across all expense categories, as follows:
Commission expense decreased by $140,619, from $185,558 to $44,939, primarily as a direct consequence of the decline in net sales, as commissions are largely variable and paid as a percentage of revenue generated by the Company’s independent distributor network.
Selling and marketing expenses decreased by $8,198, from $12,244 to $4,046, reflecting the Company’s continued focus on cost discipline and reduced expenditure on marketing and promotional activities during the period of constrained product availability.
General and administrative expenses decreased by $328,450 from $1,727,367 to $1,398,917. This reduction reflects management’s ongoing cost management initiatives, including reductions in personnel costs, professional fees, and overhead, partially offset by stock-based compensation expense of $101,068 recognized in the three months ended March 31, 2026, related to restricted shares issued to directors, officers, and service providers.
The resulting operating loss for the three months ended March 31, 2026 was $1,094,249, compared to an operating loss of $1,204,905 for the same period in 2025, representing an improvement of $110,656.
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Other Income and Expense
During the three months ended March 31, 2026 and 2025, total non-operating expenses were $158,631 and $253,821, respectively, reflecting a decrease of $90,798.
Interest expense decreased significantly to $97,659 for the three months ended March 31, 2026, from $245,368 for the same period in 2025, a reduction of $147,709. This decrease reflects the partial extinguishment of outstanding convertible debt through equity conversions completed during the quarter, which reduced the outstanding principal balances on which interest accrues.
During the three months ended March 31, 2026, the Company recognized a loss on extinguishment of debt of $60,972, arising from the conversion of convertible notes payable held by SOHO FO LLC and 1800 Diagonal Lending LLC into shares of common stock at a 30% discount to the OTC market price, as permitted under the terms of the respective loan agreements. No such loss was recognized during the three months ended March 31, 2025.
Net Loss
Our net loss for the three months ended March 31, 2026 was $1,252,880, compared to a net loss of $1,458,726 for the same period in 2025. Despite a significant decline in net sales, the net loss improved by $205,846, or 14.1%, period over period. This improvement was primarily driven by a reduction in total operating expenses of $477,267 and a reduction in interest expense of $147,709, partially offset by the loss on extinguishment of debt of $60,972 recognized in the current period. Net loss available to common stockholders was $1,252,880 for the three months ended March 31, 2026, compared to $1,455,591 for the same period in 2025.
Liquidity and Capital Resources
We are not currently profitable, and we cannot provide any assurance of when we will be profitable. We incurred a net loss of $1,252,880 and $1,458,726 for the three months ended March 31, 2026 and 2025, respectively. During the three months ended March 31, 2026, we met our short-term liquidity requirements primarily through the conversion of outstanding convertible debt obligations into equity and the utilization of our factoring facility.
As of March 31, 2026, our current assets were $602,589, compared to $457,062 as of December 31, 2025. The increase in current assets was primarily attributable to a build-up in inventory of $325,700 as the Company begins to replenish product levels, an increase in prepaid expenses and other current assets of $10,066, and a $9,195 increase in accounts receivable.
As of March 31, 2026, our current liabilities were $11,064,353, compared to $10,587,013 as of December 31, 2025. Current liabilities at March 31, 2026 were comprised of $5,746,706 of accounts payable and accrued expenses, $2,333,815 in notes payable, $1,825,645 in convertible debentures net of discounts, $822,968 in factoring liabilities, and $335,219 of deferred revenues. Our working capital deficit at March 31, 2026 was $10,461,764 compared to a working capital deficit of $10,129,951 at December 31, 2025. The Company continues to carry a significant working capital deficit, which raises substantial doubt about its ability to continue as a going concern. See Note 1 to the accompanying condensed consolidated financial statements.
Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities. For the three months ended March 31, 2026, net cash used in operating activities was $425,883, compared to $710,507 for the same period in 2025, reflecting a decrease in cash used of $284,624.
The primary non-cash adjustments to reconcile net loss to operating cash flows for the three months ended March 31, 2026 included: depreciation and amortization of $41,873; non-cash stock-based compensation of $108,260 related to the vesting of equity awards; non-cash stock issued for services of $243,336; and a non-cash loss on extinguishment of debt of $60,972 arising from the conversion of convertible debt into common stock at a discount to fair value.
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Changes in working capital accounts during the three months ended March 31, 2026 included an increase in inventory of $108,362, reflecting the Company’s ongoing efforts to rebuild product availability across its markets; an increase in prepaid expenses and other current assets of $10,066; a net increase in accounts payable and accrued expenses; and an increase in deferred revenues of $163,734, reflecting advance payments received from customers for unfulfilled orders.
Cash Flows from Financing Activities
We have financed our operations primarily through the issuance of convertible debt and the utilization of factoring arrangements. For the three months ended March 31, 2026, net cash used in financing activities was $22,839, compared to net cash provided by financing activities of $78,754 for the same period in 2025.
During the three months ended March 31, 2026, net cash used in financing activities consisted primarily of net repayments on notes payable of $2,739 and net repayments on factoring arrangements of $20,100.
During the three months ended March 31, 2026, the Company also completed significant non-cash financing transactions: 886,941,043 shares of common stock were issued upon the conversion of $152,516 of outstanding convertible principal and accrued interest by SOHO FO LLC and 1800 Diagonal Lending LLC under the terms of existing convertible note agreements. No cash proceeds were received in connection with these conversions.
Capital Resources and Future Requirements
The Company does not currently have sufficient cash resources to fund its operations beyond the near term without additional financing. The Company expects to raise additional capital through, among other things, continued issuances of equity or debt securities, the utilization of its existing inventory financing facility, and proceeds from factoring arrangements. There can be no assurance that such financing will be available on acceptable terms or at all. The Company’s ability to continue as a going concern is dependent upon its ability to generate sufficient revenues and raise additional capital to fund its operations. See Note 1 to the accompanying condensed consolidated financial statements for additional information regarding the Company’s going concern assessment and management’s plans to address these conditions.
Plan of Operation and Funding
The Company expects to fund its operations over the next twelve months primarily through: (i) the Leviston Resources, LLC senior secured convertible facility (up to $7.0 million aggregate, of which approximately $1.56 million had been funded as of December 31, 2025 — note that funding is at the lender’s sole discretion and the Company cannot guarantee that additional draws will be made available); (ii) continued issuances of equity securities including shares issued pursuant to convertible note conversion agreements; (iii) short-term director loans as a supplemental liquidity backstop; and (iv) proceeds from the factoring arrangement. Investors should note that reliance on the Leviston facility represents a significant risk factor, as the lender retains full discretion over future funding. There is no assurance that the remaining facility capacity will be made available to the Company.
In April 2026, the Company secured financing to support the production of approximately $2.5 million of inventory intended to improve product availability and support anticipated customer demand.
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Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next twelve months. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) acquisition of inventory; (ii) developmental expenses associated with a start-up business; and (iii) marketing expenses. We intend to finance these expenses with further issuances of securities and director loans. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations. We will have to raise additional funds in the next twelve months in order to sustain and expand our operations. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock. We have and will continue to seek to obtain short-term loans from our directors, although no future arrangement for additional loans has been made. We do not have any agreements with our directors concerning these loans. We do not have any arrangements in place for any future equity financing.
Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial statement presentation and in accordance with Form 10-Q. Accordingly, they do not include all of the information and footnotes required in annual financial statements. In the opinion of management, the unaudited financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position and results of operations and cash flows. The results of operations presented are not necessarily indicative of the results to be expected for any other interim period or for the entire year.
Off-Balance Sheet Arrangements
As of the date of this report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Stockholders’ Deficit
Authorized Shares
The Company is authorized to issue up to 5,000,000,000 shares of common stock, $0.001 par value, pursuant to the amendment to the Articles of Incorporation (see Note 9). Each outstanding share of common stock entitles the holder to one vote per share on all matters submitted to a stockholder vote. All shares of common stock are non-assessable and non-cumulative, with no pre-emptive rights.
Commitments and Contingencies
None.
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Financing
On March 27, 2023, the Company entered into a Senior Secured Convertible Promissory Note with Leviston Resources, LLC providing for borrowings of up to an aggregate principal amount of $7,000,000, subject to funding at the lender’s discretion. As of December 31, 2025, Leviston Resources, LLC had funded four tranches totaling $1,561,660, consisting of advances of $1,000,000, $250,000, $250,000, and $61,660, respectively. The remaining $5.4 million funding is at the lender’s sole discretion and the Company cannot guarantee that additional draws will be made available.
The note bears interest at a rate of 7% per annum and is convertible into shares of the Company’s common stock at a conversion price initially equal to 125% of the closing bid price of the Company’s common stock on the applicable funding date, subject to certain adjustments as provided in the agreement.
We anticipate that additional capital may be required to fund future operations and support business growth initiatives. Any future equity financings may be dilutive to existing stockholders, and newly issued securities may provide for rights, preferences, or privileges senior to those of existing stockholders. In addition, future financing arrangements may include the issuance of convertible securities, warrants, or other equity-linked instruments that could result in further dilution.
The Company may incur significant expenses in connection with future financing transactions, including legal, accounting, and advisory fees. Certain financing instruments, such as convertible debt and warrants, may also result in the recognition of substantial non-cash expenses.
Our ability to obtain additional financing will depend on a number of factors, including market conditions, investor demand, our operating performance, and conditions within our industry. There can be no assurance that additional financing will be available on acceptable terms, or at all. If adequate capital is not available when needed, the Company may be required to reduce, delay, or suspend certain operating and strategic initiatives.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
Item 4. Controls and Procedures
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed 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 Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2026. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date, due to material weaknesses in internal control over financial reporting, to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such officer also confirmed that there was no change in our internal control over financial reporting during the three-month period ended March 31, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On August 6, 2019, the former CEO prior to the Company’s Bankruptcy, filed a lawsuit against the Company’s subsidiary Stemtech HealthSciences, alleging unpaid salary and vacation time dating to a period predating the Company’s current management team taking control in 2018. Plaintiff’s claim is in the amount of $267,000. The Company has counter-sued the plaintiff personally and deems this matter non-meritorious. At the same time, the Company has accrued $267,000 which is included in accounts payable and accrued liabilities in the consolidated balance sheets at March 31, 2026, and December 31, 2025. Plaintiff’s request for Summary Judgment was dismissed by the Court on March 3, 2023.
In the opinion of management, the resolution of this matter, if any, will not have a material adverse impact on the Company’s consolidated financial position or consolidated results of operations.
Item 1A. Risk Factors
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 2. Recent Sale of Unregistered Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the quarter ended March 31, 2026, no director
or officer of the Company
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Item 6. Exhibits
| Exhibit No. | Description | |
| Exhibit 31.1* | Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)). | |
| Exhibit 31.2* | Certification by the Principal Financial Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)). | |
| Exhibit 32.1** | Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| Exhibit 32.2** | Certification by the Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
______________________
| * | Filed Herewith. | |
| ** | Furnished Herewith. | |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
| Stemtech Corporation | ||
| Date: June 22, 2026 | By: | /s/ Charles S. Arnold |
| Charles S. Arnold | ||
| Title: |
Chief Executive Officer (Principal Executive Officer) | |
| Date: June 22, 2026 | By: | /s/ Srilakshmi Vadlapatla |
| Srilakshmi Vadlapatla | ||
| Title: |
Chief Financial Officer (Principal Financial Officer) | |
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