{"url_path":"/sec/prph/10-k/2026/item-8","section_key":"item-8","section_title":"Item 8 Financial Statements and Supplementary Data","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-01","source_url":"https://www.sec.gov/Archives/edgar/data/868278/0000868278-26-000005-index.html","accession_number":"0000868278-26-000005","cik":"0000868278","ticker":"PRPH","issuer_name":"ProPhase Labs, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/868278/0000868278-26-000005-index.html","primary_entity_key":"0000868278","primary_entity_name":"ProPhase Labs, Inc."},"word_count":25598,"has_tables":true,"body_markdown":"Item 8.    Financial Statements and Supplementary Data\n\nINDEX TO FINANCIAL STATEMENTS\n\nPage\n\nReports of Independent Registered Public Accounting Firms (PCAOB ID: 5525)\n62\n\nFinancial Statements:\n\n[Consolidated Balance Sheets](#i488b31e4b35d426dbc5f2bf20556ba36_85)\n69\n\n[Consolidated Statements of Operations and Other Comprehensive Income (Loss)](#i488b31e4b35d426dbc5f2bf20556ba36_91)\n71\n\n[Consolidated Statements of Stockholders’ Equity](#i488b31e4b35d426dbc5f2bf20556ba36_94)\n\n[38](#i488b31e4b35d426dbc5f2bf20556ba36_94)\n\n[Consolidated Statements of Cash Flows](#i488b31e4b35d426dbc5f2bf20556ba36_97)\n\n[39](#i488b31e4b35d426dbc5f2bf20556ba36_97)\n\n[Notes to Consolidated Financial Statements](#i488b31e4b35d426dbc5f2bf20556ba36_100)\n\n[40](#i488b31e4b35d426dbc5f2bf20556ba36_100)\n\nREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM\n\nTo the Board of Directors and Stockholders of ProPhase Labs, Inc.\n\nOpinion on the Financial Statements\n\nWe have audited the accompanying consolidated balance sheets of ProPhase Labs, Inc (“the Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations and other comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.\n\nGoing Concern\n\nThe accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company had minimal cash resources and a significant working capital deficit. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.\n\nBasis for Opinion\n\nThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\nWe conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.\n\nOur audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.\n\nCritical Audit Matters\n\nThe critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex\n\n33\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\njudgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.\n\nEvaluation of Impairment of Assets\n\nAs discussed in Note 2 of the consolidated financial statements, the Company reviews its goodwill, long-lived intangible assets, and equity-method investments annually, or whenever events and circumstances may indicate carrying amounts aren’t recoverable, and to assess whether the carrying value of the assets exceeds the fair value. Auditing management’s analysis includes tests that are complex and highly judgmental due to the estimation required to determine the fair value of the reporting unit. In particular, fair value estimates are sensitive to significant assumptions and factors such as expectations about future market and economic conditions, revenue growth rates, strategic plans, and historical operating results, among others.\n\nHow the Critical Account Matter Was Addressed in the Audit\n\nOur principal audit procedures to evaluate management’s valuation of goodwill consistent of the following, among others:\n\n1.Gaining an understanding of and obtaining management’s analysis and assessing the key indicators.\n\n2.Assessing the reasonableness of the significant inputs, estimates, and assumptions utilized by management in its analysis, including obtaining information from third parties to corroborate those assumptions.\n\nFruci & Associates II, PLLC – PCAOB ID #05525\n\nWe have served as the Company’s auditor since 2024.\n\nSpokane, Washington\n\n6/1/2026\n\n34\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nPROPHASE LABS, INC AND SUBSIDIARIES\n\nCONSOLIDATED BALANCE SHEETS\n\n(in thousands, except share and per share amounts)\n\nDecember 31,\n2025December 31, 2024\n\nASSETS\n\nCurrent assets\n\nCash and cash equivalents$90 $678 \n\nAccounts receivable, net1,536 20,058 \n\nInventory, net70 1,143 \n\nPrepaid expenses and other current assets1,454 2,615 \n\nCurrent assets in discontinued operations— 6,143 \n\nTotal current assets3,150 30,637 \n\nProperty, plant and equipment, net2,032 7,501 \n\nInvestment in unconsolidated affiliates43,491 — \n\nPrepaid expenses, net of current portion61 217 \n\nOperating lease right-of-use asset, net— 4,115 \n\nIntangible assets, net7,167 9,750 \n\nGoodwill3,968 5,231 \n\nOther assets2 310 \n\nNon-current assets in discontinued operations— 5,439 \n\nTOTAL ASSETS$59,871 $63,200 \n\nLIABILITIES AND STOCKHOLDERS’ EQUITY  \n\nCurrent liabilities  \n\nAccounts payable12,961 13,717 \n\nAccounts payable to unconsolidated affiliates27,600 — \n\nAccrued diagnostic services— 31 \n\nAccrued advertising and other allowances50 151 \n\nFinance lease liabilities2,824 2,147 \n\nOperating lease liabilities— 1,214 \n\nShort-term loan payable, net of discount of $451 and $237\n4,418 3,207 \n\nShort-term loan payable to related party, net of discount of $132\n493 — \n\nShort-term convertible notes payable, net of discount of $157\n244 — \n\nDerivative liability50 — \n\nDeferred revenue1,501 1,698 \n\nIncome tax payable281 1,987 \n\nOther current liabilities2,659 2,115 \n\nCurrent liabilities in discontinued operations— 5,867 \n\nTotal current liabilities53,081 32,134 \n\n35\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nPROPHASE LABS, INC AND SUBSIDIARIES\n\nCONSOLIDATED BALANCE SHEETS\n\n(in thousands, except share and per share amounts)\n\nContinued\n\nDecember 31,\n2025December 31,\n2024\n\nNon-current liabilities:\n\nUnsecured promissory notes, net of discount of $0 and $127\n— 9,873 \n\nUnsecured long-term debt, net of discount of $0 and $423\n— 1,779 \n\nDue to sellers (see Note 3)2,000 2,000 \n\nDeferred revenue, net of current portion643 784 \n\nOperating lease liabilities, net of current portion— 3,762 \n\nFinance lease liabilities, net of current portion639 2,591 \n\nNon-current liabilities in discontinued operations— 2,924 \n\nTotal non-current liabilities3,282 23,713 \n\nTotal liabilities56,363 55,847 \n\nCOMMITMENTS AND CONTINGENCIES\n\nPreferred stock authorized 1,000,000, $0.0005 par value, 0 shares issued and outstanding\n— — \n\nCommon stock authorized 1,000,000,000, $0.0005 par value, 8,966,406 and 2,987,402 shares outstanding, respectively\n4 1 \n\nAdditional paid-in capital126,481 129,943 \n\nTreasury stock, at cost, 869,208 (1) and 1,294,105 shares, respectively\n(49,643)(64,000)\n\nAccumulated deficit(73,136)(58,393)\n\nAccumulated other comprehensive loss(198)(198)\n\nTotal stockholders’ equity3,508 7,353 \n\nTOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$59,871 $63,200 \n\n(1) This is net of 600,000 collateral shares, see Note 6.\n\nSee accompanying notes to consolidated financial statements\n\n36\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nPROPHASE LABS, INC & SUBSIDIARIES\n\nCONSOLIDATED STATEMENTS OF OPERATIONS AND\n\nOTHER COMPREHENSIVE INCOME (LOSS)\n\n(in thousands, except per share amounts)\n\nFor the years ended\n\nDecember 31, 2025December 31, 2024\n\nRevenues, net$4,345 $6,770 \n\nCost of revenues2,961 6,920 \n\nGross profit (loss)1,384 (150)\n\nOperating expenses:\n\nGeneral and administration19,324 37,885 \n\nResearch and development107 594 \n\nTotal operating expenses19,431 38,479 \n\nLoss from operations(18,047)(38,629)\n\nLoss from investment in unconsolidated affiliates(166)— \n\nChange in fair value of warrant liability (225)— \n\nChange in fair value of derivative liability 437 — \n\nInterest expense(6,933)(3,350)\n\nDebt extinguishment gain (loss)838 (333)\n\nLoss on issuance of debt (480)— \n\nLoss from disposal of fixed assets (955)— \n\nEmployee retention tax credit income 2,318 — \n\nOther expense(174)(18)\n\nLoss from operations before income taxes(23,387)(42,330)\n\nIncome tax expense— (7,195)\n\nLoss from continuing operations after income taxes(23,387)(49,525)\n\n Discontinued operations:\n\n Loss from discontinued operations, net of tax (102)(3,839)\n\n Gain from disposal of discontinued operations 8,746 — \n\nIncome (loss) from discontinued operations8,644 (3,839)\n\nNet loss$(14,743)$(53,364)\n\nOther comprehensive (loss) income:\n\nUnrealized income (loss) on marketable securities— 102 \n\nTotal comprehensive loss$(14,743)$(53,262)\n\nNet loss per share:\n\n Loss from continuing operations, basic and diluted $(2.75)$(24.76)\n\n Gain/(Loss) from discontinued operations, basic and diluted $1.02 $(1.92)\n\n Net loss per share, basic and diluted $(1.74)$(26.68)\n\nWeighted average common shares outstanding:\n\nBasic8,4892,000\n\nDiluted8,4892,000\n\nSee accompanying notes to consolidated financial statements\n\n37\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nPROPHASE LABS, INC & SUBSIDIARIES\n\nCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY\n\n(in thousands, except share data)\n\nCommon Stock\nShares\nOutstandingPar\nValueAdditional Paid in\nCapitalAccumulated\nDeficitTreasury\nStockAccumulated\nOther\nComprehensive\nLossTotal\n\nBalance as of January 1, 20241,804,502$1 $118,711 $(5,029)$(64,000)$(300)$49,383 \n\nIssuance of common stock for cash, net of offering cost of $577\n582,900— 7,594 — — — 7,594 \n\nIssuance of treasury shares as collateral for a loan600,000— — — — — — \n\nUnrealized gain on marketable debt securities—— — — — 102 102 \n\nStock-based compensation (including $569 in prepaid expense)\n—— 3,638 — — — 3,638 \n\nNet loss—— — (53,364)— — (53,364)\n\nBalance as of December 31, 20242,987,4021 129,943 (58,393)(64,000)(198)7,353 \n\nIssuance of common shares and treasury shares for cash, net of offering cost of $275\n1,131,500— (10,799)— 14,357 — 3,558 \n\nIssuance of common stock as commitment fee for future financing35,218— — — — — — \n\nIssuance of warrants in conjunction with debt issuance—— 1,260 — — — 1,260 \n\nIssuance of common stock to convert outstanding convertible notes and interest3,394,1962 3,610 — — — 3,612 \n\nIssuance of common shares as collateral for a loan1,360,0001 (1)— — — — \n\nReclassification of liability classified warrants to equity—— 575 — — — 575 \n\nStock-based compensation (including $114 in prepaid expense)\n—— 1,893 — — — 1,893 \n\nShares true-up as a result of reverse stock split58,089— — — — — — \n\nNet loss—— — (14,743)— — (14,743)\n\nBalance as of December 31, 20258,966,405$4 $126,481 $(73,136)$(49,643)$(198)$3,508 \n\nSee accompanying notes to consolidated financial statements\n\n38\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nPROPHASE LABS, INC & SUBSIDIARIES\n\nCONSOLIDATED STATEMENTS OF CASH FLOWS\n\n(in thousands)\n\nFor the years ended\n\nDecember 31, 2025December 31, 2024\n\nCash flows from operating activities\n\n Net loss $(14,743)$(53,364)\n\n Less: income (loss) from discontinued operations, net of tax 8,644 (3,839)\n\n Net loss from continuing operations (23,387)(49,525)\n\nAdjustments to reconcile net loss to net cash provided by (used in) operating activities:\n\nRealized loss on marketable debt securities— 18 \n\nDepreciation and amortization4,832 6,187 \n\nAmortization of debt discount5,236 1,485 \n\n Impairment loss 1,263 — \n\nAmortization on right-of-use assets227 457 \n\n Loss from investment in unconsolidated affiliates 166 — \n\n Loss on issuance of debt 480 — \n\n Loss from lease termination 1,357 — \n\n Loss (gain) from disposal of fixed assets 955 (91)\n\n Employee retention tax credit income (1,929)— \n\nStock-based compensation expense1,893 3,638 \n\nAccounts receivable allowances1,005 11,018 \n\nInventory valuation reserve— (212)\n\nInventory write-offs196 — \n\n Change in fair value of warrant liability 225 — \n\n Change in fair value of derivative liability (437)— \n\nDebt extinguishment (gain) loss(838)333 \n\nChanges in operating assets and liabilities:\n\nAccounts receivable736 4,738 \n\nInventory313 1,360 \n\nPrepaid expenses and other current assets 1,147 (45)\n\nDeferred tax asset — 7,150 \n\nOther assets— 853 \n\nAccounts payable and accrued expenses(722)5,066 \n\nAccrued diagnostic services(5)(283)\n\nAccrued advertising and other allowances(101)127 \n\nDeferred revenue(338)(1,000)\n\nDeferred tax liability— — \n\nLease liabilities(233)(1,408)\n\nIncome taxes payable(1,706)(1,292)\n\nOther liabilities724 (377)\n\n Net cash used in operating activities - continuing operations (8,941)(11,803)\n\n Net cash provided by (used in) operating activities - discontinued operations 597 (5,735)\n\n Net cash used in operating activities (8,344)(17,538)\n\nFor the years ended\n\nDecember 31, 2025December 31, 2024\n\nCash flows from investing activities\n\n Proceeds from maturities of marketable securities — 3,374 \n\n Proceeds from dispositions of property and other assets, net 120 229 \n\n Capital expenditures — (906)\n\n Net cash provided by investing activities - continuing operations 120 2,697 \n\n Net cash provided by (used in) investing activities - discontinued operations 800 (275)\n\n Net cash provided by investing activities 920 2,422 \n\nCash flows from financing activities\n\nProceeds from issuance of common stock from public offering, net — 7,594 \n\nProceeds from issuance of note payable 4,074 9,862 \n\nProceeds from issuance of note payable to related party 500 — \n\nProceeds from issuance of convertible notes payable 3,000 — \n\nProceeds from issuance of common shares, net 3,558 — \n\nRepayment of note payable(4,234)(4,249)\n\nRepayment of convertible notes payable (27)— \n\n Net cash provided by financing activities - continuing operations 6,871 13,207 \n\n Net cash (used in) provided by financing activities - discontinued operations (35)978 \n\n Net cash provided by financing activities 6,836 14,185 \n\n Decrease in cash, cash equivalents and restricted cash (588)(931)\n\n Cash and cash equivalents at the beginning of the year 678 1,609 \n\n Cash and cash equivalents at the end of the year $90 $678 \n\nSupplemental disclosures:\n\nCash paid for income taxes$1,645 $1,126 \n\nInterest payment on the promissory notes$1,161 $3,105 \n\nSupplemental disclosure of non-cash investing and financing activities:\n\n Assets obtained in exchange for new finance lease obligations $— $3,783 \n\n Issuance of treasury shares as collateral for a loan $— $3 \n\n Issuance of common shares as collateral for a loan $1 $— \n\n Issuance of common stock as commitment fee for future financing $158 $— \n\n Issuance of common stock to convert outstanding convertible notes and interest $3,612 $— \n\n Issuance of liability classified warrants associated with notes payable $230 $— \n\n Net unrealized loss, investments in marketable securities$— $265 \n\n Deconsolidation of subsidiaries assets and liabilities $(16,003)$— \n\n Recognition investment in nonconsolidated subsidiaries $43,657 $— \n\nSee accompanying notes to consolidated financial statement\n\n39\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nProPhase Labs, Inc. and Subsidiaries\n\nNotes to Consolidated Financial Statements\n\nNote 1 – Organization and Business\n\nProPhase Labs, Inc. (“ProPhase”, “we”, “us”, “our” or the “Company”) is a next-generation biotech, genomics and consumer products company. We are also focused on licensing, developing and commercializing novel drugs, dietary supplements, compounds and diagnostics.\n\nOur wholly-owned subsidiary, ProPhase Diagnostics, Inc., and two indirectly wholly-owned subsidiaries, ProPhase Diagnostics NY, Inc. and ProPhase Diagnostics NJ, Inc. (collectively, the “Debtors”), ceased providing COVID-19 diagnostic testing in May 2025. ProPhase Diagnostics NJ, Inc. continues to lease laboratory space in Old Bridge, New Jersey. On September 22, 2025, the Debtors filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of New Jersey (the “Bankruptcy Court”). On September 30, 2025, the Bankruptcy Court entered an order directing joint administration of the cases. On November 13, 2025, the Bankruptcy Court entered an order authorizing the Debtors to retain Crown Medical Collections, LLC as special counsel for the collection of accounts receivable arising from prior COVID-19 diagnostic testing services. The Debtors are pursuing reorganization under Chapter 11 with the objective of restoring solvency through (i) the orderly collection of accounts receivable owed to the Debtors, prosecuted by their court-appointed special counsel, and (ii) the operational reorganization of the Debtors’ CLIA-certified laboratory infrastructure to support additional diagnostic and testing opportunities once the cases progress and resources permit. The Debtors’ plan development is ongoing and any plan will be subject to Bankruptcy Court approval. As a result of the Chapter 11 filings, the Company is deemed to no longer control the Debtors and has deconsolidated the Debtors from its consolidated financial statements as of September 22, 2025. See Note 18.\n\nIn August 2021, the Company acquired Nebula Genomics, Inc. (“Nebula”), a privately owned personal genomics company, through our wholly-owned subsidiary, ProPhase Precision Medicine Inc. Nebula focuses on genomics sequencing technologies, a comprehensive method for analyzing entire genomes, including the genes and chromosomes in deoxyribonucleic acid (\"DNA\"). The data obtained from genomic sequencing can be used to help identify inherited disorders and tendencies, help predict disease risk, help identify expected drug response, and characterize genetic mutations, including those that drive cancer progression. At this time, the Company is taking steps to grow its genomics businesses while also continuing to explore the potential sole of Nebula.\n\nThe Company’s wholly-owned subsidiary, DNA Complete, Inc. (“DNA Complete”), which was formed on September 24, 2024, for the offering of whole genome sequencing and related services. DNA Complete sequences specimens at Nebula as well as at other laboratories. DNA Complete focuses on genomics testing technologies, a comprehensive method for analyzing entire genomes, including the genes and chromosomes in deoxyribonucleic acid (“DNA”). The data obtained from genomic sequencing may help to identify inherited disorders and tendencies, predict disease risk, identify expected drug response, and characterize genetic mutations, including those that drive cancer progression. DNA Complete currently offers DNA Complete’s whole genome sequencing products direct-to-consumers online with plans to sell in food, drug and mass retail stores and to provide testing for universities conducting genomic research.\n\nThe Company's wholly owned subsidiary, ProPhase BioPharma, Inc. (“PBIO”), was formed in June 2022, for the licensing, development and commercialization of novel drugs, dietary supplements and compounds. Licensed compounds currently include Equivir (a OTC, dietary supplement candidate) and Equivir G (prescription drug (“Rx”) candidate), two broad-based anti-virals, and Linebacker LB-1 and LB-2, two small molecule proviral integration site for moloney murine leukemia virus (“PIM”) kinase inhibitors. The Company also owns the exclusive rights to the BE-Smart™ Esophageal Pre-Cancer Diagnostic Screening test and related intellectual property (“IP”) assets.\n\nIn connection with the activities of PBIO, in January 2023, the Company acquired exclusive rights to BE-Smart™ Esophageal Pre-Cancer Diagnostic Screening test and related IP assets. The BE-Smart™ test is focused on the early detection of esophageal cancer, and is intended to provide health care providers and patients with data to help determine treatment options. The development of these novel drugs and compounds is highly dependent on how each performs during the testing and development stage, the demand for these product and services once entered into the marketplace, our marketing and service capabilities and our ability to comply with applicable regulatory requirements.\n\n40\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nThe Company also owns a dietary supplements business under the TK Supplements® brand. The TK Supplements® product line includes Legendz XL®, a male sexual enhancement and Triple Edge XL®, an energy and stamina support product.\n\nGoing Concern\n\nThe accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As of December 31, 2025, the Company had minimal cash resources and a significant working capital deficit. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. Management’s plans do not alleviate this substantial doubt.\n\nManagement has evaluated the significance of these conditions and has developed plans intended to improve liquidity and support operations. Management’s plans include continuing efforts to reduce operating expenditures and preserve cash resources; focusing operations on its remaining core businesses, including genomics and biotechnology activities; pursuing collection and recovery efforts related to outstanding receivables and other claims; evaluating strategic alternatives including potential asset monetization opportunities, partnerships, licensing arrangements and other financing alternatives; and continuing initiatives intended to improve operating efficiency and revenue generation.\n\nManagement’s plans are subject to numerous uncertainties, many of which are outside the Company’s control, including the timing and availability of external financing, realization of anticipated collections and recovery efforts, and achievement of projected operating results. Accordingly, management has concluded that these plans do not alleviate the substantial doubt regarding the Company’s ability to continue as a going concern.\n\nThe financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result should the Company be unable to continue as a going concern.\n\nNote 2 – Summary of Significant Accounting Policies\n\nBasis of Presentation\n\nThe accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no effect on the reported results of operations.\n\nReverse Stock Split\n\nOn December 2, 2025, the Company filed a Certificate of Amendment (the “Certificate of Amendment”) to its Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a 1-for-10 reverse stock split of the Company’s issued and outstanding shares of common stock, par value $0.0005 per share (the “Common Stock”) (the “Reverse Stock Split”). The Certificate of Amendment became effective on December 2, 2025. The reverse stock split was implemented to increase the per-share trading price of the Company’s common stock to meet continued listing requirements. The Reverse Stock Split became effective as of 8:00 a.m., Eastern Time, on December 22, 2025 (the “Effective Time”).\n\nAt the Effective Time, every 10 shares of Common Stock issued and outstanding immediately prior to the Effective Time were combined into one issued and outstanding share of Common Stock. No fractional shares were issued in connection with the Reverse Stock Split. Instead, any stockholder who otherwise would be entitled to receive a fractional share as a result of the Reverse Stock Split receive one whole share of Common Stock in lieu of such fractional share, with the result that all fractional shares were rounded up to the nearest whole share.\n\nAll share and per share amounts in the Form 10-K have been retroactively adjusted to account for the Reverse Stock Split.\n\nSegments\n\nIn accordance with the Financial Accounting Standards Board's (“FASB”) Accounting Standards Codification (“ASC”) 280, “Segment Reporting” (“ASC 280”), the Company discloses financial and descriptive information about its reportable operating segments. Operating segments are components of an enterprise about which separate financial\n\n41\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\ninformation is available and regularly evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance.\n\nThe Company follows ASC 280, which establishes standards for reporting information about operating segments in annual and interim financial statements, and requires that companies report financial and descriptive information about their reportable segments based on a management approach. ASC 280 also establishes standards for related disclosures about products and services, geographic areas and major customers.\n\nOperating segments are defined as components of an enterprise that engage in business activities for which separate financial information is available and is evaluated by the Chief Operating Decision Maker (“CODM”), which for the Company is its Chief Executive Officer, in deciding how to allocate resources and assess performance. We maintain two operating segments: diagnostic services (which includes our COVID-19 and other diagnostic testing services) and consumer products (which includes our contract manufacturing, retail customers, biopharma and personal genomics products and services). See Note 14 Segment Information.\n\nDeconsolidation of Subsidiary\n\nA subsidiary is deconsolidated from the Company’s financial statements when the Company no longer has a controlling financial interest in the subsidiary. This generally occurs when the Company loses control through a sale, transfer, or other means, including the expiry of a contractual agreement.\n\nUpon deconsolidation, the Company derecognizes the assets and liabilities of the of the subsidiary from the consolidated balance sheet at their carrying amounts at the date when control is lost. Any retained noncontrolling equity investment in the former subsidiary is remeasured to its fair value at the date control is lost. This fair value becomes the initial carrying amount of the retained investment. See Note 18 for discussion regarding the voluntary bankruptcy filing by the Company's fully owned subsidiaries.\n\nDiscontinued Operations\n\nThe Company presents discontinued operations when there is a disposal of a component or a group of components that represents a strategic shift that will have a major effect on operations and financial results. The results of discontinued operations are reported in net income (loss) from discontinued operations in the condensed consolidated statements of operations for all periods presented, commencing in the period in which the business is either disposed of or is classified as held for sale, including any gain or loss recognized on closing or adjustment of the carrying amount to fair value less costs to sell. Assets and liabilities related to a business classified as held for sale or meets the criteria for discontinued operations are segregated in the consolidated balance sheets for the current and prior periods presented. Cash flows for continuing and discontinued operations are segregated in the consolidated statements of cash flows for the current and prior periods.\n\nCertain prior period balances related to the Company's reportable segments and discontinued operations have been reclassified to conform to the current presentation in the consolidated financial statements have been prepared by management without audit and should be read in conjunction with our audited consolidated financial statements, including the accompanying notes appearing in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. In the opinion of management, all adjustments necessary for a fair presentation of the notes to the consolidated financial statements are presented on a continuing operations basis unless otherwise noted.\n\nReclassifications\n\nThe Company has reclassified certain amounts on the consolidated balance sheets, condensed consolidated statements of operations and comprehensive loss and consolidated statements of cash flows to conform to current period presentation.\n\nBusiness and Liquidity Risks and Uncertainties\n\nOur personal genomics business is and will continue to be influenced by demand for our genetic sequencing products and services, our marketing and service capabilities, and our ability to comply with applicable regulatory requirements.\n\nOur consumer sales are and will continue to be impacted by (i) the timing of acceptance of our TK Supplements® consumer products in the marketplace, and (ii) fluctuations in the timing of purchase and the ultimate level of demand for these products.\n\n42\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nFor the year ended December 31, 2025, $8.9 million was used by operating activities. The Company had cash and cash equivalents of $90,000 as of December 31, 2025. Based on management’s current business plans, the Company estimates it will have enough cash and liquidity to finance its operating requirements for at least 12 months from the date of filing these unaudited condensed consolidated financial statements. However, due to the nature of early-stage ventures and accounts receivables collections, there are inherent uncertainties associated with managements’ business plan and cash flow projections, particularly if the Company is unable to grow its business lines, including replacing the revenues from our lab diagnostic services or tests with new business lines, or collect on its accounts receivables in a timely manner or at all. If we were to experience a cash shortfall, we believe our access to existing and other financing sources, including our at-the-market facility, and the established relationships with our investment banks will enable us to continue to meet our obligations and fund ongoing operations.\n\nAs such, the Company’s future capital needs and the adequacy of its available funds will depend on many factors. These include, but not necessarily limited to, the actual cost and time necessary to achieve sustained profitability from diagnostic services, the ability to successfully diversify the diagnostic services revenue streams and the ability to market and grow the personal genomics, biopharma, manufacturing and supplement businesses. The Company may be required to raise additional funds through equity or debt securities offerings or strategic collaboration and/or licensing agreements in order to fund operations until it is able to generate enough revenues. Such financing may not be available on acceptable terms, or at all, and the Company’s failure to raise capital when needed could have a material adverse effect on its strategic objectives, results of operations and financial condition.\n\nUse of Estimates\n\nThe preparation of financial statements and the accompanying notes thereto, in conformity with generally accepted accounting principles in the United States of America (“GAAP”), requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the respective reporting periods. Examples include revenue recognition and the impact of the variable consideration around diagnostic test reimbursement rates, the provision for uncollectible receivables and billing errors, sales returns and allowances, rates, slow moving, dated inventory and associated provisions, the estimated useful lives and potential impairment of long-lived assets, stock based compensation valuation, income tax asset valuations and assumptions related to accrued advertising.\n\nOur estimates and assumptions are based on historical experience, current trends and other factors that management believes to be relevant at the time the financial statements are prepared. Management reviews the accounting policies, assumptions, estimates and judgments on a quarterly basis. Actual results could differ from those estimates.\n\nCash and Cash Equivalents\n\nWe consider all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents include cash on hand and monies invested in money market funds. The carrying amount approximates the fair market value due to the short-term maturity of these securities.\n\nMarketable Securities\n\nWe have classified our investments in marketable equity securities as available-for-sale and as a current asset. Our investments in marketable securities are carried at fair value, with unrealized gains and as a separate component of stockholders’ equity. Realized gains and losses from our marketable securities are recorded as interest income (expense).\n\nThe following is a summary of the components of our marketable securities and the underlying fair value input level tier hierarchy (see fair value of financial instruments) (in thousands):\n\nAs of December 31, 2025\n\nAmortized\nCostUnrealized\nGainsUnrealized\nLosses Fair\nValue\n\nCorporate stock$148 $— $(148)$— \n\n$148 $— $(148)$— \n\n43\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nAs of December 31, 2024\n\nAmortized\nCostUnrealized\nGainsUnrealized\nLosses Fair\nValue\n\nCorporate stock$3,528 $— $(401)$3,127 \n\n$3,528 $— $(401)$3,127 \n\nWe believe that the unrealized gains or losses generally are the result of a change in the risk premiums required by market participants rather than an adverse change in cash flows or a fundamental weakness in the credit quality of the issuer or underlying assets.\n\nAccounts Receivable, net\n\nAccounts receivable consists primarily of amounts due from government agencies and healthcare insurers. Unbilled accounts receivable relates to the delivery of our diagnostic testing services for which the related billings will occur in a future period, after a patient’s insurance information has been validated, and represent amounts we have an unconditional right to receive payment. Unbilled accounts receivable is classified as accounts receivable on the consolidated balance sheet. We carry our accounts receivable at the amount of consideration for which we expect to be entitled less allowances. When estimating the allowances for our diagnostics business, the Company pools its trade receivables based on the following payer types: healthcare insurers and government payers. The Company principally estimates the allowance for credit losses by pool based on historical collection experience, current economic conditions, expectations of future economic conditions, other credits and the period of time that the receivables have been outstanding. To the extent that any individual payers are identified that have deteriorated in credit quality, the Company removes the payers from their respective pools and establishes allowances based on the individual risk characteristics of such payers. On a periodic basis, we evaluate our receivables and establish an allowance, based on a history of past write-offs, government and healthcare insurer payment trends, collections, current credit conditions or generally accepted future trends. Accounts receivable are stated at the net amount expected to be collected, using an expected loss methodology that is referred to as the current expected credit loss (“CECL”) model.\n\nAccounts are written off as uncollectible at the time we determine that collections are unlikely. Accounts receivable, net is comprised of the following (in thousands):\n\nDecember 31, 2025December 31, 2024\n\nTrade accounts receivable$2,558 $34,901 \n\nUnbilled accounts receivable— — \n\n2,558 34,901 \n\nLess allowances(1,022)(14,843)\n\nTotal accounts receivable$1,536 $20,058 \n\nThe table below presents a roll forward of the Company's allowance for credit losses (amount in thousands).\n\nBeginning balance as of January 1, 2024$3,864 \n\nAccounts written off(39)\n\nCurrent period provision for expected credit losses11,018 \n\nBalance as of December 31, 202414,843 \n\nCurrent period provision for expected credit losses1,005 \n\nDeconsolidation of PDX (14,826)\n\nBalance as of December 31, 2025$1,022 \n\nFor Fiscal 2025 and 2024, we recorded $1.0 million and $11.0 million to credit losses in operating expenses, respectively. The credit loss in 2024 representing a write-off of trade receivables (primarily HRSA related) we have determined to be uncollectible and increased the allowance for credit losses as a reduction of revenue and predictability of\n\n44\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\ncollections. The results of these adjustments and our current year allowances, resulted in an allowance of $1.0 million and $14.8 million at December 31, 2025 and 2024, respectively.\n\nInventory, net\n\nInventory is valued at the lower of cost, determined on a first-in, first-out basis (“FIFO”), or net realizable value. Inventory items are analyzed to determine cost and the net realizable value and appropriate valuation adjustments are established.\n\nAt December 31, 2025 and 2024, the components of inventory are as follows (in thousands):\n\nDecember 31,\n2025December 31,\n2024\n\nDiagnostic services testing material$— $564 \n\nRaw materials2 147 \n\nWork in process— 65 \n\nFinished goods68 375 \n\nInventory$70 $1,151 \n\nInventory valuation reserve— (8)\n\nInventory, net$70 $1,143 \n\nProperty, Plant and Equipment\n\nProperty, plant and equipment are recorded at cost. We use the straight-line method in computing depreciation for financial reporting purposes. Depreciation expense is computed in accordance with the following ranges of estimated asset lives: building and improvements - ten to thirty-nine years; leasehold improvements - lesser of lease term or estimated useful life; machinery and equipment including lab equipment - three to seven years; computer equipment and software - three to five years; and furniture and fixtures - five years.\n\nEquity Method Investments\n\nThe Company accounts for investments where we do not control the investment but have the ability to exercise significant influence using the equity method of accounting. Under this method, unconsolidated affiliate investments are initially carried at the acquisition cost, increased by our proportionate share of the investee’s net income and by contributions made, and decreased by our proportionate share of the investee’s net losses and by distributions received.\n\nConcentration of Financial Risks\n\nFinancial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash investments, marketable debt securities, and trade accounts receivable. Our marketable securities are fixed income investments, which are highly liquid and can be readily purchased or sold through established markets.\n\nWe maintain cash and cash equivalents with certain major financial institutions. As of December 31, 2025, our cash and cash equivalents balance was $90,000, which was fully covered by federal depository insurance.\n\nAccounts receivable subject us to credit risk concentrations from time-to-time. We extend credit to our consumer healthcare product customers based upon an evaluation of the customer’s financial condition and credit history and generally do not require collateral. Our diagnostic services receivable credit risk is based on payer reimbursement experience, which includes government agencies and healthcare insurers, the period the receivables have been outstanding and the historical collection rates. The collectability of the diagnostic services receivables is also directly linked to the quality of our billing processes, which depend on information provided and billing services of third parties. These credit concentrations impact our overall exposure to credit risk, which could be further affected by changes in economic, regulatory or other conditions that may impact the timing and collectability of trade receivables and diagnostic test receivables. Additionally, the reimbursement receivables from the diagnostic service business are subject to billing errors and related disputes.\n\nIn addition, see Note 13 - Significant Customers Concentrations.\n\n45\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nLeases\n\nAt the inception of an arrangement, we determine whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Most leases with a term greater than one year are recognized on the balance sheet as right-of-use assets and short-term and long-term lease liabilities, as applicable. We have elected not to recognize on the balance sheet leases with terms of 12 months or less. We typically only include an initial lease term in its assessment of a lease arrangement. Options to renew a lease are not included in our assessment unless there is reasonable certainty that we will renew.\n\nOperating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. Certain adjustments to the right-of-use asset may be required for items such as incentives received. The interest rate implicit in our leases is typically not readily determinable. As a result, we utilize our incremental borrowing rate, which reflects the fixed rate at which we could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term and in a similar economic environment (see Note 12, Leases).\n\nThe components of a lease should be allocated between lease components (e.g., land, building, etc.) and non-lease components (e.g., common area maintenance, consumables, etc.). The fixed and in-substance fixed contract consideration (including any consideration related to non-components) must be allocated based on the respective relative fair values to the lease components and non-lease components.\n\nGoodwill and Intangible Assets\n\nGoodwill represents the excess of the fair value of the consideration transferred over the fair value of the underlying identifiable assets and liabilities acquired in a business combination. Goodwill and intangible assets deemed to have an indefinite life are not amortized, but instead are assessed for impairment annually. Additionally, if an event or change in circumstances occurs that would more likely than not reduce the fair value of the reporting unit below its carrying value, we would evaluate goodwill and other intangibles at that time.\n\nIn testing for goodwill impairment, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, we conclude that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is not required. If we conclude otherwise, we are required to perform the two-step impairment test. The goodwill impairment test is performed at the reporting unit level by comparing the estimated fair value of a reporting unit with its respective carrying value. If the estimated fair value exceeds the carrying value, goodwill at the reporting unit level is not impaired. If the estimated fair value is less than the carrying value, an impairment charge will be recorded to reduce the reporting unit to fair value. The Company incurred a non-cash goodwill impairment loss of $1.3 million during the year ended December 31, 2025, which was related to the Diagnostic services segment.\n\nIntangible assets deemed to have finite lives are amortized on a straight-line basis over their estimated useful lives, where the useful life is the period over which the asset is expected to contribute directly, or indirectly, to our future cash flows.\n\nImpairment of Long-Lived Assets\n\nThe Company reviews long-lived assets, including property and equipment, finite-lived intangible assets and investments, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. An impairment loss is recognized when the asset’s carrying value exceeds the total undiscounted cash flows expected from its use and eventual disposition. The amount of the impairment loss is determined as the excess of the carrying value of the asset over its fair value.\n\nIn addition, the Company evaluates its unconsolidated affiliate investments for potential impairment whenever events or changes in circumstances indicate that the carrying amount of the investments may not be recoverable. The Company recognizes impairments of our investments as a loss from unconsolidated affiliates on our consolidated statements of operations.\n\nFor the fiscal years ended December 31, 2025 and 2024, the Company did not have an impairment of the long-lived assets.\n\n46\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nFair Value of Financial Instruments\n\nWe measure assets and liabilities at fair value based on expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale date of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.\n\nThe following are the hierarchical levels of inputs to measure fair value:\n\n•Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.\n\n•Level 2: Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.\n\n•Level 3: Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.\n\nThe carrying amounts of our financial assets and liabilities, such as cash, accounts receivable, accounts payable, and unsecured note payable, approximate their fair values because of the short-term nature of these instruments.\n\nWe account for our marketable securities at fair value, with the net unrealized gains or losses of marketable debt securities reported as a component of accumulated other comprehensive income or loss and marketable equity securities change in fair value reported on the consolidated statement of operations. We measure the fair value of financial instruments, such as derivatives, on an ongoing basis.\n\nSee Note 19, “Fair Value Measurements” for more information.\n\nRevenue Recognition\n\nWe recognize revenue that represents the transfer of promised goods or services to customers at an amount that reflects the consideration that is expected to be received in exchange for those goods or services. We recognize revenue when performance obligations with our customers have been satisfied. At contract inception, we evaluate the contract to determine if revenue should be recognized using the following five steps: (1) identify the contract with the customer; (2) identify the performance obligations; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations; and (5) recognize revenue when (or as) the entity satisfies a performance obligation.\n\nContract with Customers and Performance Obligations\n\nA performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Sales from product shipments to contract manufacturing and retailer customers are recognized at the time ownership is transferred to the customer. Revenue from diagnostic services is recognized when the results are made available to the customer. Revenue from our personal genomics business is recognized when the genetic testing results are provided to the customer. For subscription services associated with our genomic testing, we recognize revenue ratably over the term of the subscription.\n\nThe Company’s performance obligation for contract manufacturing and retail customers is to provide the goods ordered by the customer. The Company has one performance obligation for its diagnostic services, which is to provide the results of the laboratory test to the customer. Our personal genomics business has separate performance obligations to provide initial testing and genome results and subscriptions services to our customers.\n\nTransaction Price\n\nFor our diagnostic services business, a revenue transaction is initiated when we receive a requisition order to perform a diagnostic test. The information provided on the requisition form is used to determine the party that will be billed\n\n47\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nfor the testing performed and the expected reimbursement. We provide diagnostic services to a range of customers. In many cases, the customer that orders our services is not responsible for paying for these services. Depending on the billing arrangement and applicable law, the payer may be the patient or a third party, such as a health plan, Medicare or Medicaid program and other government reimbursement programs. We bill the providers at standard price and take into consideration negotiated discounts and anticipated reimbursement remittance adjustments based on the payer portfolio, when revenue is recorded. We use the most expected value method to estimate the transaction price for reimbursements that vary from the listed contract price.\n\nFor our personal genomics business, a revenue transaction is initiated by a DNA test kit sale direct to the consumer sales via our website or through online retailers. The kit sales and subscriptions are billed at a standard price and take into consideration any discounts when revenue is recorded. We also contract with third party B2B partners and universities and sell DNA test kits directly to them.\n\nFor contract manufacturing and retail customers, the transaction price is fixed based upon either (i) the terms of a combined master agreement and each related purchase order, or (ii) if there is no master agreement, the price per individual purchase order received from each customer. The customers are invoiced at an agreed upon contractual price for each unit ordered and delivered by the Company.\n\nRevenue from retail customers is reduced for trade promotions, estimated sales returns and other allowances in the same period as the related sales are recorded. No such allowance is applicable to our contract manufacturing customers. We estimate potential future product returns and other allowances related to current period revenue. We analyze historical returns, current trends, and changes in customer and consumer demand when evaluating the adequacy of the sales returns and other allowances.\n\nWe do not accept returns from our contract manufacturing customers. Our return policy for retail customers accommodates returns for (i) discontinued products, (ii) store closings and (iii) products that have reached or exceeded their designated expiration date. We do not impose a period of time during which product may be returned. All requests for product returns must be submitted to us for pre-approval. We will not accept return requests pertaining to customer inventory “Overstocking” or “Resets”. We will accept return requests only for products in their intended package configuration. We reserve the right to terminate shipment of product to customers who have made unauthorized deductions contrary to our return policy or pursue other methods of reimbursement. We compensate the customer for authorized returns by means of a credit applied to amounts owed.\n\nFor our diagnostic services business, a revenue transaction is initiated when we receive a requisition order to perform a diagnostic test. The information provided on the requisition form is used to determine the party that will be billed for the testing performed and the expected reimbursement. We provide diagnostic services to a range of customers. In many cases, the customer that orders our services is not responsible for paying for these services. Depending on the billing arrangement and applicable law, the payer may be the patient or a third party, such as a health plan, Medicare or Medicaid program and other government reimbursement programs. We bill the providers at standard price and take into consideration negotiated discounts and anticipated reimbursement remittance adjustments based on the payer portfolio, when revenue is recorded. We use the most expected value method to estimate the transaction price for reimbursements that vary from the listed contract price.\n\nFor our personal genomics business, a revenue transaction is initiated by a DNA test kit sale direct to the consumer sales via our website or through online retailers. The kit sales and subscriptions are billed at a standard price and take into consideration any discounts when revenue is recorded. We also contract with third party B2B partners and universities and sell DNA test kits directly to them.\n\nRecognize Revenue When the Company Satisfies a Performance Obligation\n\nFor diagnostic services, the Company satisfies its performance obligation at the point in time that the results are made available to the customer, which is when the customer benefits from the information contained in the results and obtains control.\n\nRevenue from genomic testing services is recognized when the Company satisfies its performance obligation by providing sequencing results to the customer. Customers generally pay for testing services at the time a kit is purchased. As a result, amounts received in advance of completion of sequencing services are recorded as deferred revenue until the related performance obligation is satisfied. The period between customer purchase and delivery of sequencing results is generally between 90 and 120 days. For subscriptions services associated with its genomic testing, we satisfy our performance obligation ratably over the subscription period. If the customer does not return the test kit, services cannot be\n\n48\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\ncompleted by us, potentially resulting in unexercised rights (“breakage”) revenue. We estimate breakage for the portion of test kits not expected to be returned using an analysis of historical data and consider other factors that could influence customer test kit return behavior. When breakage revenue is recognized on a kit, we recognize breakage on any associated subscription services ratably over the term of the subscription.\n\nPerformance obligations related to contract manufacturing and retail customers are satisfied at a point in time when the goods are shipped to the customer as (i) we have transferred control of the assets to the customers upon shipping, and (ii) the customer obtains title and assumes the risks and rewards of ownership after the goods are shipped.\n\nContract Balances\n\nAs of December 31, 2025 and December 31, 2024, we have deferred revenue of $2.1 million and $2.5 million, respectively. Our new personal genomics business comprised $1.1 million of the deferred revenue as of December 31, 2025. The remainder of deferred revenue relates to research and development (“R&D”) stability and release testing programs recognized as contract manufacturing revenue. Deferred revenues primarily consist of amounts that have been billed to or received from customers in advance of revenue recognition and prepayments received from customers in advance of services performed for the R&D work. We recognize deferred revenues as revenues when the services are performed and the corresponding revenue recognition criteria are met. Customer prepayments are generally applied against invoices issued to customers when services are performed and billed.\n\nThe amount of revenues recognized during the years ended December 31, 2025 and 2024 that were included in the opening deferred revenue balance as of January 1, 2025 and 2024, respectively, were $1.8 million million and $0.7 million million.\n\nThe following table disaggregates our deferred revenue by recognition period (in thousands):\n\nAs of December 31, 2025As of December 31, 2024\n\nRecognition Period\n\n0-12 Months$1,501 $1,698 \n\n13-24 Months643 784 \n\nTotal$2,144 $2,482 \n\nDisaggregation of Revenue\n\nWe disaggregate revenue from contracts with customers into four categories: contract manufacturing, retail and others, diagnostic services and genomic products and services. We determined that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.\n\nThe following table disaggregates the Company’s revenue by revenue source for Fiscal 2025 and 2024 (in thousands):\n\nFor the years ended\n\nRevenue by Customer TypeDecember 31, 2025December 31, 2024\n\nRetail and others$— $1,492 \n\nGenomic products and services4,345 5,278 \n\nTotal revenue, net$4,345 $6,770 \n\nCustomer Consideration\n\nThe Company makes payments to certain diagnostic services customers for distinct services that approximate fair value for those services. Such services include specimen collection, the collection and delivery of insurance and patient information necessary for billing and collection, and logistics services. Consideration associated with specimen collection\n\n49\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nservices is classified in cost of revenues and the remaining costs are classified as diagnostic expenses within operating expenses in the accompanying statement of operations.\n\nSales Tax Exclusion from the Transaction Price\n\nWe exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from the customer.\n\nShipping and Handling Activities\n\nWe account for shipping and handling activities that we perform as activities to fulfill the promise to transfer the good.\n\nAdvertising and Incentive Promotions\n\nAdvertising and incentive promotion costs are expensed within the period in which they are utilized. Advertising and incentive promotion expense is comprised of (i) media advertising, presented as part of general and administrative expense, (ii) cooperative incentive promotions and coupon program expenses, which are accounted for as part of net revenue, and (iii) free product, which is accounted for as part of cost of revenues. Advertising and incentive promotion expenses incurred from continuing operations for Fiscal 2025 and 2024 were $5,000 and $342,000, respectively.\n\nStock-Based Compensation\n\nThe Company accounts for stock-based compensation in accordance with FASB ASC 718, “Compensation – Stock Compensation.” Under the fair value recognition provision of the ASC, stock-based compensation cost is estimated at the grant date based on the fair value of the award. The Company estimates the fair value of stock options and warrants granted using the Black-Scholes-Merton option pricing model and stock grants at their closing reported market value. We recognize all stock-based payments to employees and directors, including grants of stock options, as compensation expense in the financial statements based on their grant date fair values. The grant date fair values of stock options are determined through the use of the Black-Scholes option pricing model. The compensation cost is recognized as an expense over the requisite service period of the award, which usually coincides with the vesting period. We account for forfeitures as they occur.\n\nStock and stock options to purchase our common stock have been granted to employees pursuant to the terms of certain agreements and stock option plans (see Note 7, Stockholders' Equity). Stock options are exercisable during a period determined by us, but in no event later than seven years from the date granted.\n\nResearch and Development\n\nR&D costs are charged to operations in the period incurred, R&D costs incurred for the years ended December 31, 2025 and 2024 were $107,000 and $594,000, respectively. R&D costs are principally related to personnel expenses and new product development initiatives and costs associated with the OTC health care products, dietary supplements and validation costs associated with the diagnostic services business.\n\nIncome Taxes\n\nThe Company accounts for income taxes in accordance with accounting guidance now codified as FASB ASC 740, “Income Taxes,” which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse.\n\nThe provision for, or benefit from, income taxes includes deferred taxes resulting from the temporary differences in income for financial and tax purposes using the liability method. Such temporary differences result primarily from the differences in the carrying value of assets and liabilities. Future realization of deferred income tax assets requires sufficient taxable income within the carry-back, carryforward period available under tax law. We evaluate, on a quarterly basis whether, based on all available evidence, it is probable that the deferred income tax assets are realizable. Valuation allowances are established when it is more likely than not that the tax benefit of the deferred tax asset will not be realized. The evaluation, as prescribed by ASC 740- 10, “Income Taxes,” includes the consideration of all available evidence, both positive and negative, regarding historical operating results including recent years with reported losses, the estimated\n\n50\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\ntiming of future reversals of existing taxable temporary differences, estimated future taxable income exclusive of reversing temporary differences and carryforwards, and potential tax planning strategies which may be employed to prevent an operating loss or tax credit carryforward from expiring unused.\n\nThe Company accounts for income taxes under ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies various aspects related to accounting for income taxes. This standard became effective for the Company January 1, 2021. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.\n\nThe Company accounts for uncertainties in income taxes under the provisions of FASB ASC 740-10-05 (the “Subtopic”). The Subtopic clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The Subtopic prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Subtopic provides guidance on the de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.\n\nOn July 4, 2025, the “One Big Beautiful Bill Act” was enacted into law. The legislation includes several changes to federal tax law including permanent extension of certain expiring Tax Cuts and Jobs Act provisions. Certain provisions were effective for 2025, while others will be effective for tax years beginning after December 31, 2025. The Company has evaluated the impact of the legislation and incorporated the applicable tax provisions into its consolidated financial statements for the current reporting period.\n\nDiscontinued Operations\n\nThe Company classifies a business that has been disposed of or is classified as held for sale as a discontinued operation when the disposal represents a strategic shift that has (or will have) a major effect on the Company’s operations and financial results. Assets and liabilities of discontinued operations are presented separately in the Consolidated Balance Sheets, and results of discontinued operations are reported as a separate component of net loss in the Consolidated Statements of Operations and Comprehensive Loss.\n\nCollateralized Loan\n\nThe Company enters into loan arrangements under which it borrows cash and pledges shares of the Company’s common stock as collateral. These arrangements are accounted for as borrowings and are recognized as a liability when proceeds are received. Pledged shares continue to be presented within stockholders’ equity because the shares are not sold, retired, or otherwise legally extinguished.\n\nRecently Issued Accounting Standards, Adopted\n\nIn December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. This guidance will be effective for the annual periods beginning the year ended December 31, 2025. Early adoption is permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. The Company adopted this standard as of January 1, 2025. The adoption of this ASU did not have any material impact on the Company’s quarterly condensed consolidated financial statements. The Company applied the new disclosure requirements prospectively. See Note 9, “Income Taxes,” for further detail.\n\nRecently Issued Accounting Standards, Not Yet Adopted\n\nIn November 2024, the FASB issued ASU No. 2024-03 (“ASU 2024-03”), Disaggregation of Income Statement Expenses (DISE) which requires disaggregated disclosure of income statement expenses for public business entities. The standard requires public business entities to disclose disaggregated information about specific natural expense categories underlying certain income statement expense line items that are considered relevant. The FASB also issued ASU No. 2025-01 (“ASU 2025-01”), Clarifying the Effective Date, which clarifies the adoption date of ASU 2024-03 as annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the potential effect of this accounting standard update on its consolidated financial statements and related disclosures.\n\n51\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nIn September 2025, the FASB issued ASU No. 2025 - 06, Intangibles - Goodwill and Other - Internal - Use Software (“ASU 2025 – 06”), which amends the guidance for accounting for software costs to reflect current software development practices, including iterative and agile methodologies, by removing references to development stages. It also clarifies the criteria for capitalization, which begins when both of the following occur: (1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended. ASU 2025 - 06 is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years. Early adoption is permitted. The amendments may be applied either prospectively, retrospectively, or utilizing a modified transition approach. The Company is currently assessing the impact of ASU 2025 - 06 on its condensed consolidated financial statements and disclosures.\n\nIn September 2025, the FASB issued ASU 2025-07. This update clarifies the application of derivative accounting to certain contracts and refines the guidance for share-based noncash consideration received from customers. Specifically, ASU 2025-07 introduces a scope exception for contracts that are not exchange-traded and whose underlying is tied to operations or activities specific to one party. It also clarifies that share-based noncash consideration from a customer should initially be accounted for under Topic 606 until the right to receive or retain such consideration becomes unconditional, at which point financial instruments guidance may apply. The effective date for the standard is for fiscal years beginning after December 15, 2026 and interim periods within those fiscal years. Early adoption is permitted. The amendments in ASU 2025-07 should be applied either prospectively or by utilizing a modified retrospective approach. The Company is currently assessing the impact on the Company's consolidated financial statements and disclosures.\n\nIn December 2025, the FASB issued ASU 2025‑11, Interim Reporting (Topic 270): Narrow‑Scope Improvements. This update clarifies interim disclosure requirements and centralizes such requirements within Topic 270. Among other changes, ASU 2025‑11 introduces a disclosure principle requiring entities to provide information about significant events or changes since the end of the last annual reporting period that have a material impact, clarifies when duplicative annual disclosures may be omitted from interim reports, and aligns interim reporting requirements with applicable SEC guidance for registrants. This guidance is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in ASU 2025‑11 should be applied prospectively. The Company is currently assessing the impact on the Company’s consolidated financial statements and disclosures.\n\nIn December 2025, the FASB issued ASU 2025‑12, Codification Improvements. This update addresses shareholder suggestions on the Accounting Standards Codification and makes other incremental improvements to U.S. GAAP. The amendments make codification updates to a broad range of topics arising from technical corrections, unintended application of the codification, clarifications and other minor improvements. This guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within those annual periods. Early adoption is permitted and may be elected on an issue‑by‑issue basis. The amendments in ASU 2025‑12 are to be applied prospectively. The Company is currently assessing the impact on the Company’s consolidated financial statements and disclosures.\n\nNote 3 – Asset Acquisition\n\nStella Diagnostics - Asset Purchase Agreement\n\nOn December 15, 2022, the Company entered into an Asset Purchase Agreement (the “Stella Purchase Agreement”), with Stella Diagnostics Inc. (“Stella”) and Stella DX, LLC (“Stella DX” and, together with Stella, the “Stella Sellers”), pursuant to which, on January 3, 2023, the Company purchased all of the assets, rights and interests of the Stella Sellers and their affiliates pertaining to the Stella Sellers’ BE-Smart Esophageal Pre-Cancer Diagnostic Screening Test and certain clinical assets, including all intellectual property rights (the “Stella Purchased Assets”). All capitalized terms used in this section to describe this transaction but not defined herein shall have the meanings set forth in the Stella Purchase Agreement,\n\nAs consideration for the Stella Purchased Assets, at closing, the Company (i) paid to the Stella Sellers $3.5 million in cash, minus (a) the Secured Note Amount of $0.5 million, (b) the Liability Payoff Amount of $1.6 million and (c) the Promissory Note Payoff Amount of $400,000, and (ii) issued to Stella DX 10,000 shares of common stock, par value $0.0005 per share, of the Company at a value of $100.00 per share. Total consideration paid was $4.6 million. The Secured Note Amount of $0.5 million and the Promissory Note Payoff of $400,000 were paid in 2022. The balance of the consideration was paid at closing on January 3, 2023.\n\nIn addition to the consideration paid at closing, the Company will issue shares of common stock valued at $2.0 million (the “Milestone Stock”) to the Stella Sellers upon a Commercialization Event (as defined in the Stella Purchase Agreement). The Milestone Stock was recorded at closing as a non-current liability at its fair value of $2.0 million. Also, the Company\n\n52\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nis required to pay to the Stella Sellers for each of the seven calendar years during the seven years period commencing on the first day of the calendar year following the date of the Commercialization Event, a non-refundable, non-creditable royalty of 5% of the Adjusted Gross Margin for such Annual Period. As of December 31, 2025, the Commercialization Event had not occurred\n\nThe asset purchase does not qualify as a business combination under FASB ASC 805, Business Combinations, and has therefore been accounted for as an asset acquisition. In connection with the Stella Purchased Assets, the Company incurred $0.2 million in transaction costs, which were capitalized into the purchase price of the Stella Purchased Assets. The total purchase price for the Stella Purchased Assets was $6.8 million, which was allocated to the proprietary technology intangible asset acquired. The Company is amortizing the acquired intangible asset on a straight-line basis over its estimated useful life of five years.\n\nNote 4 – Intangible Assets, Net\n\nIntangible assets as of December 31, 2025 and 2024 consisted of the following (in thousands):\n\nDecember 31,\n2025December 31,\n2024Estimated Useful\nLife (in years)\n\nTrade names$5,550 $5,550 15\n\nProprietary intellectual property11,064 11,064 5\n\nCustomer relationships1,180 1,180 1\n\nCLIA license— 1,307 3\n\n17,794 19,101 \n\nLess: accumulated amortization(10,627)(9,351)\n\nTotal intangible assets, net$7,167 $9,750 \n\nAmortization expense for acquired intangible assets was $2.6 million and $2.6 million during the years ended December 31, 2025 and 2024, respectively. The estimated future amortization expense of acquired intangible assets as of December 31, 2025 is as follows (in thousands):\n\nYear ended December 31, 2026$2,251 \n\nYear ended December 31, 20271,731 \n\nYear ended December 31, 2028370 \n\nYear ended December 31, 2029370 \n\nYear ended December 31, 2030370 \n\nThereafter2,075 \n\n$7,167 \n\n53\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nNote 5 – Property, Plant and Equipment\n\nThe components of property, plant and equipment are as follows (in thousands):\n\nDecember 31,\n2025December 31,\n2024Estimated Useful Life\n\nLeasehold improvements$— $1,241 Lesser of lease term or estimated useful life\n\nMachinery104 482 \n3-7 years\n\nLab equipment5,102 11,813 \n3-7 years\n\nComputer equipment and software36 2,562 \n3-5 years\n\nFurniture and fixtures151 383 5 years\n\n5,393 16,481 \n\nLess: accumulated depreciation(3,361)(8,980)\n\nTotal property, plant and equipment, net$2,032 $7,501 \n\nDepreciation expense for Fiscal 2025 and 2024 were $2.2 million and $4.2 million, respectively.\n\nIn conjunction with the Company's New York office lease termination in June 2025 (see Note 12, Leases), the Company wrote off approximately $1.4 million fixed assets and leasehold improvements, which was recognized as part of loss from lease termination and was included in general and administrative expenses on the consolidated statement of operations.\n\nNote 6 - Outstanding Debt\n\nSecured Promissory Note\n\nOn December 19, 2024 (the “Closing Date”), PMI entered into a secured promissory note agreement with an individual investor for cash proceeds of $1.0 million (the “PMI Note”). The PMI Note has an annual interest rate of 15%. The PMI Note is due upon the sale of PMI or 12 months from the Closing Date. On January 16, 2025, the PMI Note was extinguished as a result of the disposal of PMI and PREH. The gain was recognized as part of gain from sale of discontinued operations on the consolidated statement of operations.\n\nCollateralized Loan Agreement\n\nOn November 21, 2024 the Company entered into a financing agreement (the “2024 Collateralized Loan Agreement”) with CJEF Capital Partners PTE Ltd. (“CJEF”), to provide the Company with loan funding to be secured by 600,000 shares of common stock (the “2024 Collateralized Loan”). Funding is to be provided in tranches and shall mature 2 years from date of funding. Collateral retained by CJEF will be pledged and utilized to secure each funding and to be retained until all principal and interest have been paid. Interest will accrue on the outstanding principal amount of the 2024 Collateralized Loan at 6% per annum (payable semi-annually in advance) and an arranger fee of 5% will be retained by CJEF from Loan proceeds. As of December 31, 2025, the Company has been provided funding of $500,000 against the 2024 Collateralized Loan agreement, with the entire balance remaining outstanding.\n\nOn October 14, 2025, the Company entered into a Share Financing Agreement (the “2025 Collateralized Loan Agreement”) with Oceanview Consultant Partners Ltd. (“Oceanview”), to provide the Company with loan financing funding to be secured by Company’s common shares (the “2025 Collateralized Loan”). Funding is to be provided in tranches and shall mature 1 year from date of funding. the Company has been provided funding of $900,000 against the 2025 Collateralized Loan, with the entire balance remaining outstanding. As of December 31, 2025, approximately 1,360,000 common shares have been issued to secured the 2025 Collateralized Loan. Collateral retained by Oceanview will be pledged and utilized to secure each funding and is to be retained until all principal and interest have been paid. Interest will accrue on the outstanding principal amount of the Collateralized Loan at 6% per annum, with interest only payable monthly and an arranger fee of 6% will be retained by Oceanview from Loan proceeds.\n\n2024 Term Note Agreement\n\n54\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nOn October 22, 2024, the Company entered into a term note agreement with an individual investor for cash proceeds of $500,000 (the “2024 Term Note”). The 2024 Term Note has an implicit interest rate of 15%. The 2024 Term Note has a term of 12 months and requires the Company to make interest only monthly payments in the amount of $6,250 with a $506,250 balloon payment at the end of the term. There are no warrants or convertible features associated with this note. On June 22, 2025, the 2024 Term Note was extinguished and exchanged for a new loan. See description below under 2025 Loan Agreements with Warrants.\n\n2025 Loan Agreements with Warrants\n\nOn June 22, 2025, the Company entered into two identical loan agreements with Ted Karkus, the Company’s Chief Executive Officer and the Chairman of the Board of Directors (the \"CEO Loan\"), and an unaffiliated investor (the \"Unaffiliated Investor Loan\"), pursuant to which the Company issued two twelve-month non- convertible promissory notes in the principal amount of $625,000 each. Both loans included an original issuance discount of $125,000 and bear an annual interest rate of 10%.\n\nThe Company received net cash proceeds of $500,000 from the CEO Loan. In connection with the issuance of the CEO Loan, the Company also issued 50,000 warrants (the \"CEO Warrants\"), which vested upon the approval by the Company's stockholders of an amendment to the Company’s Amended and Restated Certificate of Incorporation to increase the number of authorized shares of common stock (the “Certificate of Amendment”) at the special meeting of stockholders held on September 9, 2025. The Company assessed the classification of the CEO Warrants and determined that the CEO Warrants are liability classified. The CEO Warrants have an exercise price of $6.00 for a term of 5.0 years. The grant date fair value of the CEO Warrants were valued at $115,000 using the Black-Scholes option pricing model with the following assumptions: no dividend yield, expected volatility of 98.4%, risk free interest rate of 4.0% and expected warrant life of 5.0 years. The fair value of the CEO Warrants was recorded as an additional debt discount to the note payable.\n\nThe Unaffiliated Investor Loan was issued as an exchange to the existing 2024 Term Note (see description of the 2024 Term Note Agreement above). No additional cash proceeds were provided. The Company accounted for the issuance of the Unaffiliated Investor Loan as an extinguishment of the original debt of $500,000 and the recognition of new debt which is initially measured at its fair value of $433,000. In connection with the issuance of the Unaffiliated Investor Loan, the Company also issued 50,000 unvested warrants (the \"Unaffiliated Investor Warrants\") to the Unaffiliated Investor. The Unaffiliated Investor Warrants contain the same terms as the CEO Warrants, and are therefore also liability classified. Accordingly, the Unaffiliated Investor Warrants have a fair value of $115,000 on the issuance date. The fair value of the Unaffiliated Investor Loan and the Unaffiliated Investor Warrants are used to determine the debt extinguishment gain or loss to be recognized. As a result, the Company recognized a debt extinguishment loss of $48,000 during the year ended December 31, 2025.\n\n2025 Short-term Loans\n\nOn May 22, 2025, the Company entered into a note agreement with an individual investor for cash proceeds of $200,000 (the “May 2025 Note”). The May 2025 Note was due on July 11, 2025 and required the Company to make a $250,000 balloon payment at the maturity date. During the year ended December 31, 2025, the Company recognized $46,000 interest expense on the consolidated statement of operations. The May 2025 Note was fully paid on July 23, 2025.\n\nOn August 1, 2025, the Company entered into a note agreement with an individual investor for cash proceeds of $100,000 (the “First August 2025 Note”), which is net of an original issue discount of $15,000. The First August 2025 Note is due on May 30, 2026. Total payments of $126,750 will be made in four monthly installment payments effective on January 30, 2026 in accordance with the payment schedule pursuant to the note agreement. During the year ended December 31, 2025, the Company recognized $10,000 interest expense from the amortization of debt discount using the effective interest rate method on the consolidated statement of operations.\n\nOn August 14, 2025, the Company entered into a note agreement with an individual investor for cash proceeds of $150,000 (the “Second August 2025 Note”). The Second August 2025 Note is due on August 14, 2026 and requires the Company to make interest only quarterly payments in the amount of $9,452 with a $159,452 balloon payment at the end of the term.\n\nOn August 1, 2025 and September 11, 2025, the Company entered into two note agreements (collectively the \"Third August 2025 Notes\") with same individual investor for an aggregate cash proceeds of $400,000, which is net of original issue discount and issuance cost of $76,000. The Third August 2025 Notes has a 10 months term. Total payments of $528,000 will be made in four monthly installment payments, which won't be started until 6 months from the issuance date in accordance with the payment schedule pursuant to the note agreements. During the year ended December 31, 2025,\n\n55\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nthe Company recognized $42,000 interest expense from the amortization of debt discount using the effective interest rate method on the consolidated statement of operations.\n\nOn November 6, 2025, the Company entered into a note agreement ( the \"November 2025 Note\") with an individual investor for an aggregate cash proceeds of $135,000, which is net of original issue discount and issuance cost of $28,000. The November 2025 Notes has a 10 months term. Total payments of $181,000 will be made in four monthly installment payments, which won't be started until 6 months from the issuance date in accordance with the payment schedule pursuant to the note agreements. During the year ended December 31, 2025, the Company recognized $7,000 interest expense from the amortization of debt discount using the effective interest rate method on the consolidated statement of operations.\n\nOn December 22, 2025, the Company entered into a note agreement ( the \"First December 2025 Note\") with an individual investor for an aggregate cash proceeds of $50,000, which is net of original issue discount and issuance cost of $8,000. The First December 2025 Notes has a 10 months term. Total payments of $64,000 will be made in four monthly installment payments, which won't be started until 6 months from the issuance date in accordance with the payment schedule pursuant to the note agreements.\n\nOn December 26, 2025, the Company entered into a note agreement ( the \"Second December 2025 Note\") with an individual investor for an aggregate cash proceeds of $75,000, which is net of original issue discount and issuance cost of $19,000. The Second December 2025 Notes has a 10 months term. Total payments of $105,000 will be made in four monthly installment payments, which won't be started until 6 months from the issuance date in accordance with the payment schedule pursuant to the note agreements.\n\nAugust 2025 Future Receipts Financing Agreements\n\nOn August 22, 2025, the Company entered into two agreements of sale of future receipts (“August Future Receipts Financing Agreements”) with Terrapin Business Funding, LLC (“Terrapin”) by which Terrapin purchased from the Company, its future accounts and contract rights arising from the sale of goods or rendition of services to the Company’s customers. The Company received net cash proceeds of $700,000 on August 25, 2025, which was net of $188,000 origination fee and $553,000 distribution from the flow of funds to pay off the remaining balance pursuant to the Libertas Financing Agreement.\n\nThe August Future Receipts Financing Agreements require twelve monthly payments of $120,083 for a total repayment of $1.4 million over the term of the agreement. No payment has been made as of December 31, 2025.\n\nIn connection with the issuance of the August Future Receipts Financing Agreements, the Company also issued 50,000 warrants (the \"August Warrants\") as an additional issuance cost. The Warrants have an exercise price of $5.00 per share for a term of 5.0 years. The Company assessed the classification of the August Warrants and determined that the August Warrants are liability classified. The grant date fair value of the August Warrants were valued at $120,000 using the Black-Scholes option pricing model with the following assumptions: no dividend yield, expected volatility of 98.3%, risk free interest rate of 3.8% and expected warrant life of 5.0 years. The fair value of the August Warrants was recorded as an additional debt discount to the notes payable.\n\nDuring the year ended December 31, 2025, the Company recognized an aggregate of $131,000 interest expense from the amortization of debt discount using the effective interest rate method. As of December 31, 2025, the outstanding balance under the August Future Financing Agreement was $1.1 million, net of debt discount of $176,000.\n\nSeptember 2025 Future Receipts Financing Agreements\n\nOn September 29, 2025, the Company entered into an agreement of sale of future receipts (“September Future Receipts Financing Agreement”) with Stage Advance, LLC (“Stage Advance”) by which Stage Advance purchased from the Company, its future accounts and contract rights arising from the sale of goods or rendition of services to the Company’s customers. The purchase price was $330,000, which was paid to the Company on September 29, 2025, net of a\n\n56\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\n$6,600 origination fee. The Company also incurred a $77,000 brokerage fee. The September Future Receipts Financing Agreement requires twenty weekly payments of $19,800 for a total repayment of $396,000 over the term of the agreement.\n\nDuring the year ended December 31, 2025, the Company recognized an aggregate of $115,000 interest expense from the amortization of debt discount using the effective interest rate method. As of December 31, 2025, the outstanding balance under the September Future Financing Agreement was $144,000, net of debt discount of $35,000.\n\nJuly 2025 Private Placement\n\nOn July 22, 2025, the Company entered into two security purchase agreements with two investors (the \"Investors\") for the sale and issuance of two senior secured convertible notes (the \"July 2025 Notes\") for an aggregate principal amount of $3.8 million, with cash investment amount of $3.0 million after 20% original issue discount of $750,000. The Company received net cash proceeds of $2.8 million after repayment of certain obligations from the flow of funds.\n\nThe July 2025 Notes mature on July 22, 2026, bear interest at 10% per annum on the original principal face amount and provide for other customary terms and covenants. The July 2025 Notes are not convertible for 4 months after execution and may be prepaid at any time without penalty. After the July 2025 Notes conversion waiting period of 4 months, the July 2025 Notes permit holders to convert outstanding principal and accrued interest into shares of common stock at a conversion price that is the lower of 80% of the trailing ten-day volume weighted average price (\"VWAP\") or a fixed maximum price, but with a floor price and certain caps on conversion pursuant to and limited by the terms of the notes, to prevent excessive dilution. The optional redemption includes an exercise contingency, which fails the equity classification guidance in ASC 815 and is thus precluded from being classified in equity. Therefore, the embedded derivatives are required to be bifurcated from the July 2025 Notes and accounted for at fair value at each reporting date. A fair value of $2.1 million was determined for the embedded derivative liabilities. The embedded derivative liabilities will be re-measured to fair value each reporting period until settlement (see Note 16).\n\nThe Company also issued common stock purchase warrants to acquire up to 525,000 shares of common stock (the \"July Warrants\"). The July Warrants are exercisable at an exercise price of $5.00 per share (subject to adjustment) and expire 5 years from their date of issuance. The Company assessed the classification of the Warrants and determined that the Warrants are equity classified. The relative fair value of the July Warrants on the issuance date was $1.3 million, which was recorded as an additional debt discount to the July 2025 Notes. The relative fair value was derived using the Black-Scholes option pricing model with the following assumptions: no dividend yield, expected volatility of 97.9%, risk free interest rate of 3.9% and expected warrant life of 5.0 years.\n\nDuring the year ended December 31, 2025, the Company converted $3.4 million of July 2025 Notes, including $43,000 accrued interest into approximately 3.4 million shares of the Company's common stock. The aggregate fair value of the common stock issued on the conversion date were $3.6 million, which resulted a debt extinguishment loss of $247,000. The Company also extinguished $1.6 million embedded derivative liability upon the conversion, which was recognized as debt extinguishment gain on the consolidated statement of operations.\n\nDuring the year ended December 31, 2025, the Company recognized an aggregate of $3.6 million interest expense from the amortization of debt discount using the effective interest rate method. As of December 31, 2025, the remaining outstanding balance for the July 2025 Notes were $244,000, net of debt discount of $157,000.\n\nERC Claim and Risk Participation Agreement \n\nIn August 2023, the Company filed for the Employee Retention Credit (“ERC”) for $2.2 million.  The ERC is a refundable tax credit for businesses that continued to pay employees while sustaining a full or partial suspension of operations limiting commerce, travel or group meetings due to COVID-19 pandemic and orders from an appropriate governmental authority or had significant declines in gross receipts from second quarter of 2020 to second quarter of 2021. The Company sustained a partial suspension of operations during this time due to governmental orders.  Eligible employers can claim the ERC on an original or adjusted employment tax return for a period within those dates. \n\nOn September 16, 2024 (\"Agreement Date\"), the Company, as seller, received $1.9 million as a purchase price (the “Purchase Price”) for the sale of the Company’s rights, title and interest per a Risk Participation of ERC Claim Agreement, dated September 13, 2024 (“Agreement”) by and between the Company and 1861 Acquisition LLC (the “Buyer”). The Company also incurred an issuance cost of $154,000.\n\nThe Agreement transferred all of the Company’s rights to receive any and all payments, proceeds or distributions of any kind (without set-off, deduction or withholding of any kind), including interest, from the United States Internal\n\n57\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nRevenue Service (the “IRS”) in respect of the employee retention credits duly and timely claimed by Seller on account of qualified wages paid by Seller and identified as a “Claim for Refund” under Form 941-X Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund for the second (2nd), third (3rd) and fourth (4th) quarters of 2020, and the first (1st) and second (2nd) quarters of 2021 (the “Tax Refund Claim”) in the aggregate amount of $2.2 million (“Transferred Interests”).\n\nThe Company expects the IRS to approve or deny its claim within the 24 months from the Agreement Date. Upon approval and payment of the claim, the Company will settle the outstanding balance in cash to the Buyer. In the event that the IRS disallows all or a portion of the ERC, the Buyer has the demand right to put all or a part of the disallowed portion back to the Company at a price equal to 85% of the impaired amount, plus interest at 10% per annum, calculated from the date of September 13, 2024 until payment is made.\n\nThe Company elected to account for the ERC by analogy to IAS 20 when there was reasonable assurance of receipt, which was determined to be when the approval was received by the IRS. During the year ended December 31, 2025, the Company received approval for all refunds from the IRS in the amount of $2.2 million, of which $1.9 million was passed through to the Buyer and settled a portion of the ERC note and is included in other income on the condensed consolidated statements of operations, and the remaining of $272,000 was offset the Company's outstanding tax liability by the IRS. The offset against the IRS liabilities triggered the Seller's put back right, and therefore the Company is required to repurchase back this portion at 85% at $231,000. As of December 31, 2025, the remaining outstanding balance under the Agreement was approximately $231,000.\n\n2024 Third Future Receipts Financing and Amendment\n\nOn August 1, 2024, the Company entered into an agreement of sale of future receipts (“Third Future Receipts Financing Agreement”) with RDM Capital Funding (“RDM”) by which RDM purchased from the Company, its future accounts and contract rights arising from the sale of goods or rendition of services to the Company’s customers. The purchase price was $500,000, which was paid to the Company on August 2, 2024, net of a $17,500 origination fee. The Company also incurred a $17,500 brokerage fee. The Third Future Receipts Financing Agreement requires thirty two weekly payments of $21,094 for a total repayment of $675,000 over the term of the agreement.\n\nOn January 21, 2025, the Company entered into another agreement of sale of future receipts (the “Amended RDM Financing Agreement”) with RDM pursuant to which RDM restructured the existing Third Future Receipts Financing Agreement as described above by amending the outstanding amount to $514,000 for gross proceeds to the Company of $370,000, less origination fees of $18,500 and the outstanding balance under the Third Future Receipts Financing Agreement of $169,000, resulting in net proceeds to the Company of $183,000. The Company also incurred a $20,000 brokerage fee. The Amended RDM Financing Agreement shall be repaid by the Company in 28 weekly installments of $18,368.\n\nDuring the year ended December 31, 2025 and 2024, the Company recognized $133,000 and $179,000 of interest expense from the amortization of debt discount using the effective interest rate method, respectively. The RDM note was fully paid in August 2025.\n\n2024 Second Future Receipts Financing and Amendments\n\nOn June 27, 2024, the Company entered into an agreement for the sale of future receipts (“Second Future Receipts Financing Agreement”) with Slate Advance (“Slate”) by which Slate purchased from the Company, its future accounts and contract rights arising from the sale of goods or rendition of services to the Company’s customers. The purchase price was approximate $1.5 million, which was paid to the Company on June 28, 2024, net of a $42,000 origination fee. The Company also incurred a $22,000 brokerage fee which was paid subsequently in July 2024. The Second Future Receipts Financing Agreement requires thirty two weekly payments of $60,718 for a total repayment of approximate $1.9 million over the term of the agreement.\n\nOn November 5, 2024, the Company entered into another agreement of sale of future receipts (the “Amended Slate Financing Agreement”) with Slate pursuant to which Slate restructured the existing Second Future Receipts Financing Agreement as described the above by increasing the outstanding amount to $2.1 million for gross proceeds to the Company of $1.5 million, less origination fees of $35,000 and the outstanding balance under the Second Future Receipts Financing Agreement of $1.0 million, resulting in net proceeds to the Company of $527,000. The Amended Second Future Receipts Financing Agreement shall be repaid by the Company in 24 weekly installments of $89,000.\n\nOn January 16, 2025, the Company entered into another agreement of sale of future receipts (the “Second Amended Slate Financing Agreement”) with Slate pursuant to which Slate restructured the existing Amended Slate Financing Agreement as described above by amending the outstanding amount to $1.5 million for gross proceeds to the\n\n58\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nCompany of $1.1 million, less origination fees of $34,500 and the outstanding balance under the Amended Slate Financing Agreement of $1.1 million, resulting in net proceeds to the Company of $59,500. The Second Amended Second Future Slate Receipts Financing Agreement shall be repaid by the Company in 25 weekly installments of $59,500.\n\nOn April 9, 2025, the Company entered into another agreement of sale of future receipts (the “Third Amended Slate Financing Agreement”) with Slate pursuant to which Slate restructured the existing Second Amended Slate Financing Agreement as described the above by amending the outstanding amount to $1.5 million for gross proceeds to the Company of $1.1 million, less origination fees of $30,000 and the outstanding balance under the Second Amended Slate Financing Agreement of $722,000, resulting in net proceeds to the Company of $298,000. The Third Amended Second Future Receipts Financing Agreement is required to be repaid by the Company in 25 weekly installments of $59,500.\n\nDuring the year ended December 31, 2025 and 2024, the Company recognized an aggregate of $550,000 and $542,000 interest expense from the amortization of debt discount using the effective interest rate method, respectively. The Second Amended Slate Financing Agreement was fully paid in August 2025.\n\n2024 Future Receipts Financing\n\nOn February 14, 2024 (the “Commencement Date”), the Company entered into an agreement for the sale of future receipts (“Future Receipts Financing Agreement”) with Libertas Funding, LLC (“Libertas”) by which Libertas purchased from the Company, its future accounts and contract rights arising from the sale of goods or rendition of services to the Company’s customers. The purchase price was approximately $2.5 million, which was paid to the Company on February 16, 2024, net of a $50,000 origination fee. The Future Receipts Financing Agreement requires twelve equal payments of $247,000 to be paid monthly for a total repayment of approximate $3.0 million (“Future Receipts”) over the term of the agreement. On February 14, 2024, the Company and Libertas executed an addendum to the Future Receipts Financing Agreement, pursuant to which the monthly payment term was revised to be $185,000 for the first two months and $259,000 for the remaining ten months. The Company has the right to pay to end this financing transaction early by repurchasing the Future Receipts sold to Libertas but not yet delivered. The repurchase price is equal to the discount factor ranging between 1.075-1.165 each month following the Commencement Date up to six months. This shall be multiplied by the purchase price unless amounts collected prior to the date in which the repurchase price is paid.\n\nDuring the year ended December 31, 2025 and 2024, the Company recognized $18,000 and $484,000 interest expense from the amortization of debt discount using the effective interest rate method, respectively. The Future Receipts Financing Agreement was fully paid in August 2025.\n\n2023 Unsecured Promissory Note Payable\n\nOn January 26, 2023, the Company issued an unsecured promissory note (the “JXVII Note”) and guaranty for an aggregate principal amount of $7.6 million to JXVII Trust (\"JXVII\"). The JXVII Note is due and payable on January 27, 2026, the third anniversary of the date on which the JXVII Note was funded (the “Note Closing Date”), and accrues interest at a rate of 10% per year from the Note Closing Date, payable on a quarterly basis, until the JXVII Note is repaid in full. The Company has the right to prepay the JXVII Note at any time after the Note Closing Date and prior to the maturity date without premium or penalty upon providing seven days’ written notice to the note holder. Repayment of the JXVII Note has been guaranteed by the Company’s wholly-owned subsidiary, PMI.\n\nOn August 15, 2024, the Company and JXVII entered into an amended and restated unsecured promissory note for the JXVII Note (the “Amended JXVII Note”), increasing the principal amount by $2.4 million to $10.0 million, increasing the interest rate to 15% per annum, and extending the maturity date from January 27, 2026 to August 15, 2027. The Company received $2.3 million in cash and exchanged the outstanding interest of $94,000. The amendment was accounted for as a debt modification, and the remaining unamortized debt discount as of the amendment date from the JXVII Note will be amortized over the remaining term of the Amended JXVII Note.\n\nOn January 16, 2025 (the \"Closing Date\"), the Company completed the sale of the Pharmaloz Manufacturing Inc. business and Pharmaloz Real Estate Holdings, Inc. to JL Projects (the \"Pharmaloz Sale\"). In connection with the Pharmaloz Sale transaction, JL Projects assumed the Amended JXVII Note outstanding principal and outstanding interest as of the Closing Date for total amount of $10.3 million, which was recognized as part of the gain from sale of discontinued operations on the consolidated statement of operations.\n\nNote 7 – Stockholders’ Equity\n\nCharter Amendment\n\n59\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nOur authorized capital stock consists of 1,000,000,000 shares of common stock, $0.0005 par value, and 1,000,000 shares of preferred stock, $0.0005 par value.\n\nAt the Special Meeting of Stockholders held on September 9, 2025, the Company's stockholders approved a Certificate of Amendment to its Amended and Restated Certificate of Incorporation (the “Certificate of Amendment”) to increase the number of authorized shares of common stock from 50,000,000 shares to 1,000,000,000 shares. The Certificate of Amendment was filed on September 15, 2025 the Delaware Secretary of State/Division of Corporations and it is effective.\n\nPreferred Stock\n\nThe preferred stock authorized under the Company's certificate of incorporation may be issued from time to time in one or more series. As of December 31, 2025, no shares of preferred stock have been issued. The Company's board of directors have the full authority permitted by law to establish, without further stockholder approval, one or more series of preferred stock and the number of shares constituting each such series and to fix by resolution voting powers, preferences and relative, participating, optional and other special rights of each series of preferred stock, and the qualifications, limitations or restrictions thereof, if any. Subject to the limitation on the total number of shares of preferred stock that the Company has authority to issue under its certificate of incorporation, the board of directors is also authorized to increase or decrease the number of shares of any series, subsequent to the issue of that series, but not below the number of shares of such series then-outstanding. In case the number of shares of any series is so decreased, the shares constituting such decrease will resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series. The Company may, subject to any required stockholder approval, amend from time to time its certificate of incorporation to increase the number of authorized shares of preferred stock or common stock or to make other changes or additions to our capital structure or the terms of our capital stock.\n\nCommon Stock Dividends\n\nNo dividends have been declared during the year ended December 31, 2025.\n\nCommon Stock\n\n2025 Equity Line of Credit - Keystone Capital Partners, LLC\n\nOn January 29, 2025, the Company entered into an Equity Line of Credit (\"Keystone ELOC\") with a purchaser, Keystone Capital Partners, LLC (“Keystone”) whereby the Company has the right to sell up to an aggregate of $7.7 million of shares of the Company’s common stock.\n\nUpon entering into the Keystone ELOC, the Company agreed to issue to Keystone an aggregate of 352,176 common shares (the “Commitment Shares”) as consideration for Keystone’s commitment to purchase common shares upon the Company’s direction under the Keystone ELOC. The fair value of the Commitment Shares at the issuance date was $158,000, which was recognized as a reduction of equity.\n\nDuring the year ended December 31, 2025, the Company received $3.6 million net proceeds on sales of 1,131,500 shares of common stock, including 424,896 shares from the Company’s treasury account to Keystone after deducting commissions and expenses of $433,000, at a weighted-average price of $2.90 per share.\n\nOn August 28, 2025, the Company terminated the Keystone ELOC.\n\n2025 Common ATM Offering\n\nOn December 19, 2025, the Company entered into an Sales Agreement (the “2025 Sales Agreement”) with WestPark Capital, Inc. (the “WestPark”), pursuant to which the Company may offer and sell, from time to time through WestPark, shares of our common stock having an aggregate offering price of up to $5.3 million, subject to the terms and conditions of the Sales Agreement. WestPark is entitled to a commission equal to 3% of the gross sales price per share for\n\n60\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nall shares sold through it as our agent, and the Company will receive the net proceeds after deducting this commission and any offering expenses.\n\nDuring the year ended December 31, 2025, the Company did not issue any shares of common stock pursuant to the 2025 Sales Agreement.\n\n2024 Common ATM Offering\n\nAs previously disclosed, on December 28, 2021, the Company entered into an Sales Agreement (the “Sales Agreement”) with ThinkEquity LLC (the “Sales Agent”), pursuant to which the Company may offer and sell, from time to time through the Sales Agent, shares of our common stock having an aggregate offering price of up to $100 million, subject to the terms and conditions of the Sales Agreement.\n\nDuring the year ended December 31, 2024, the Company sold 1,033,500 shares of common stock pursuant to the Sales Agreement. The Company received cash proceeds of $4.6 million, which is net of $94,000 offering cost incurred by the Sales Agent.\n\nDuring the year ended December 31, 2025, the Company did not sell any shares of common stock pursuant to the 2024 Common ATM Offering.\n\n2024 Public Offering\n\nOn November 12, 2024 (\"Closing Date\"), the Company closed on an underwritten firm commitment public offering whereby the Company sold 479,500 shares of common stock, including 62,500 shares of common stock sold upon full exercise of the underwriters' option to purchase additional shares (the \"Offering\"). Each share of common stock was sold at a public offering price of $7.20 per share for aggregate gross proceeds of $3.5 million. The Company received net cash proceeds of $3.0 million, which is net of $483,000 offering cost. Upon closing of the Offering, the Company issued the Representative warrants (the “Representative’s Warrants”) as compensation to purchase up to 23,978 shares of common stock, which is equal to 5% of the aggregate number of shares of common stock sold in the Offering. The Representative’s Warrants will be exercisable at a per share exercise price of $9.00.\n\nCollateral Shares\n\nDuring the year ended December 31, 2025, the Company issued an aggregate of 1,360,000 common shares pursuant to an agreement entered into on October 14, 2025, based on the terms of the 2025 Collateralized Loan Agreement (See Note 6). Collateral retained by Oceanview will be pledged and utilized to secure each funding and is to be retained until all principal and interest have been paid.\n\nPursuant to an agreement entered into on November 21, 2024, the Company provided CJEF 600,000 common shares transferred from its treasury shares account based on the terms of the Collateralized Loan Agreement (See Note 6). The shares provided are held as collateral retained by CJEF to secure each funding and to be retained until all principal and interest have been paid. CJEF shall return collateral shares upon repayment of the Loan.\n\nThe 2025 Directors’ Equity Compensation Plan\n\nOn September 9, 2025, the stockholders of the Company approved the 2025 Directors’ Equity Compensation Plan (the “2025 Directors’ Plan”) at the 2025 Special Meeting. The 2025 Directors' Plan amended and restated the Company’s Amended and Restated 2022 Directors’ Equity Compensation Plan and provided for an increase in the number of shares reserved for issuance under the plan by 50,000 shares.\n\nDuring the year ended December 31, 2025, no stock options were issued under the 2025 Directors' Plan.\n\nAs of December 31, 2025, the number of shares authorized for issuance under the 2025 Directors Plan was 60,000, which included the number of shares available under the 2022 Directors Plan immediately prior the stockholder approval of the 2025 Directors' Plan as described below.\n\nThe 2022 Directors’ Equity Compensation Plan\n\nOn May 19, 2022, the stockholders of the Company approved the 2022 Directors’ Equity Compensation Plan (the “2022 Directors’ Plan”) at the 2022 Annual Meeting of Stockholders of the Company (the “2022 Annual Meeting”). The 2022 Directors’ Plan amended and restated the Company’s Amended and Restated 2010 Directors’ Equity Compensation\n\n61\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nPlan and provided for an increase in the number of shares reserved for issuance under the plan by 30,000 shares and for the adjustment of the per share exercise price of stock options granted under the 2022 Plan in the event of any change in the outstanding shares of common stock of the Company as a result of, among other things, any distribution or special dividend to stockholders of shares, cash or other property (other than regular cash dividends).\n\nOn June 16, 2023 the stockholders of the Company approved the Amended and Restated 2022 Directors’ Equity Compensation Plan (the “Amended 2022 Directors’ Plan”) at the 2023 Annual Meeting of Stockholders of the Company. The Amended 2022 Directors’ Plan provides for an increase in the number of shares reserved for issuance under such plan by 15,000 shares.\n\nDuring the years ended December 31, 2025 and 2024, there were 20,000 and 21,000 stock options issued under the 2022 Directors' Plan, respectively.\n\nThere were 10,000 shares of common stock available to be issued under the 2022 Directors' Plan immediately prior the stockholder approval of the 2025 Directors' Plan.\n\nThe 2010 Directors’ Equity Compensation Plan\n\nOn May 20, 2021, the stockholders of the Company approved the Amended and Restated 2010 Directors’ Equity Compensation Plan (the “Amended 2010 Directors’ Plan”) at the 2021 Annual Meeting of Stockholders of the Company (the “2021 Annual Meeting”). The Amended 2010 Directors’ Plan authorized the issuance of up to 77,500 shares of common stock. This plan was amended and restated on April 11, 2022 (to become the 2022 Directors' Plan), subject to stockholder approval, which was obtained at the 2022 Annual Meeting.\n\nThe 2025 Equity Compensation Plan\n\nOn September 9, 2025, the stockholders of the Company approved the 2025 Equity Compensation Plan (the “2025 Plan”) at the 2025 Special Meeting. The 2025 Plan amended and restated the Company’s Amended and Restated 2022 Equity Compensation Plan and provided for an increase in the number of shares reserved for issuance under the plan by 300,000 shares.\n\nDuring the years ended December 31, 2025, there were 72,672 stock options issued under the 2025 Plan.\n\nAs of December 31, 2025, the number of shares authorized for issuance under the 2025 Plan was 233,203, which included the number of shares available under the 2022 Plan immediately prior the stockholder approval of the 2025 Plan as described below.\n\nThe 2022 Equity Compensation Plan\n\nOn May 9, 2022, the stockholders of the Company approved the 2022 Equity Compensation Plan (the “2022 Plan”) at the 2022 Annual Meeting. The 2022 Plan amended and restated the Company’s Amended and Restated 2010 Equity Compensation Plan and provided for an increase in the number of shares reserved for issuance under the plan by 100,000 shares and for the adjustment of the per share exercise price of stock options granted under the 2022 Plan in the event of any change in the outstanding shares of common stock of the Company as a result of, among other things, any distribution or special dividend to stockholders of shares, cash or other property (other than regular cash dividends).\n\nDuring the years ended December 31, 2025 and 2024, there were 42,329 and 108,000 stock options issued under the 2022 Plan, respectively.\n\nThere were 3,375 shares of common stock available to be issued under the 2022 Plan immediately prior the stockholder approval of the 2025 Plan.\n\nThe 2010 Equity Compensation Plan\n\nOn May 20, 2021, the stockholders of the Company approved the Amended and Restated 2010 Equity Compensation Plan (the “Amended 2010 Plan”) at the 2021 Annual Meeting. The Amended 2010 Plan authorized the\n\n62\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nissuance of up to shares of common stock. This plan was amended and restated on April 11, 2022 (to become the 2022 Plan), subject to stockholder approval, which was obtained at the 2022 Annual Meeting.\n\nThe 2018 Stock Incentive Plan\n\nOn April 12, 2018, the Company's stockholders approved the 2018 Stock Incentive Plan (the “2018 Stock Plan”). The 2018 Stock Plan provides for the grant of incentive stock options to eligible employees of the Company, and for the grant of non-statutory stock options to eligible employees, directors and consultants. The 2018 Stock Plan provides that the total number of shares that may be issued pursuant to the 2018 Stock Plan is 230,000 shares. At April 12, 2018, all 230,000 shares had been granted in the form of stock options to Ted Karkus (the “CEO Option”), our Chief Executive Officer (\"CEO\").\n\nThe 2018 Stock Plan required certain proportionate adjustments to be made to the stock options granted under the 2018 Stock Plan upon the occurrence of certain events, including a special distribution (whether in the form of cash, shares, other securities, or other property) in order to maintain parity. Accordingly, the Compensation Committee of the board of directors, as required by the terms of the 2018 Stock Plan, adjusted the exercise price of the CEO Option in connection with each special cash dividend paid by the Company proportionately to the amount of the dividend paid. The final exercise price of the CEO Option was $6.00 per share after the latest special cash dividend paid on June 3, 2022.\n\nAll stock options were exercised under the 2018 Stock Plan during 2023. No share based compensation expense will be recognized in forward periods related to the 2018 Stock Plan.\n\nInducement Option Awards\n\nOn February 17, 2025 the Company issued a non-qualified stock option to Stuart Hollenshead, the Company's former Chief Operational Officer (the “COO”), as an inducement to his employment with the Company, effective February 17, 2025 (the “2025 COO Award”). The 2025 COO Award entitled the COO to purchase up to 50,000 shares of the Company’s common stock at an exercise price of $6.00 per share. On July 31, 2025 Stu Hollenshead resigned from his position as COO. The 2025 COO Award vested 25% on the date of grant and the remaining portion was forfeited upon Mr. Hollenshead's resignation. The 2025 COO Award expires on the seventh anniversary of the grant date.\n\nOn January 1, 2024, the Company issued a non-qualified stock option to Jed A. Latkin, the Company's Chief Operational Officer (the “COO”), as an inducement to his employment with the Company, effective January 1, 2024 (the “COO Award”). The COO Award entitles the COO to purchase up to 50,000 shares of the Company’s common stock at an exercise price of $60.00 per share.The COO Award provides for certain proportionate adjustments to be made in the event of any change in the outstanding shares of common stock of the Company as a result of, among other things, any distribution or special dividend to stockholders of shares, cash or other property (other than regular cash dividends) in order to maintain parity. The grant date fair value of the COO Award was approximately $1.3 million. On February 14, 2025 Jed Latkin resigned from his position as COO. The COO Award vested 25% on the date of grant and the remaining portion and the remaining portion was forfeited upon Mr. Latkin’s resignation. The COO Award expires on the seventh anniversary of the grant date.\n\nOn April 15, 2024, the Company issued an inducement award to an employee pursuant to his employment agreement to purchase up to 5,000 shares (the \"April Award\") of the Company’s common stock at an exercise price of $62.00 per share. The April Award will vest 25% per year for the next four years on each of the first four anniversaries of the commencement date of the employment, subject to his continued service on each vesting date. The April Award expires on the seventh anniversary of the grant date. The April Award provides for certain proportionate adjustments to be made in the event of any change in the outstanding shares of common stock of the Company as a result of, among other things, any distribution or special dividend to stockholders of shares, cash or other property (other than regular cash dividends) in order to maintain parity. The grant date fair value of the April Award was approximately $201,000.\n\nAll inducement awards have been granted outside of the Company’s equity compensation plans.\n\n63\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nSummary of all option grants\n\nThe following table summarizes stock options activity during Fiscal 2025 and 2024 (in thousands, except per share data).\n\nNumber of Shares Weighted Average Exercise PriceWeighted Average Remaining Contractual Life (in years)Total Intrinsic Value\n\nOutstanding as of January 1, 2024295$72.95 4.8$693 \n\nGranted18460.05 7.0— \n\nForfeited(91)74.81 — — \n\nOutstanding as of December 31, 202438866.40 4.8693 \n\nGranted1856.00 7.0— \n\nForfeited(93)38.52 — — \n\nExpired(2)31.80 — — \n\nOutstanding as of December 31, 2025478$48.60 4.6$— \n\nOptions vested and exercisable296$55.54 3.9$— \n\nThe aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the closing stock price of $0.45 and $7.57 for the Company’s common stock on December 31, 2025 and 2024, respectively.\n\nDuring the year ended December 31, 2025 and 2024, the Company granted options to purchase 185,000 and 184,000 shares of the Company’s common stock to various employees, directors and consultants, respectively. The options grant date fair value was valued at $480,000 and $5.5 million during the year ended December 31, 2025 and 2024, using the Black-Scholes option pricing model to calculate the grant-date fair value of the options. The fair value of stock options for employees are expensed over the vesting term in accordance with the terms of the related stock option agreements and are expensed over the terms of the consulting agreement for consultants.\n\nThe following table summarizes weighted average assumptions used in determining the fair value of the stock options at the date of grant during Fiscal 2025 and 2024:\n\nFor the years ended\nDecember 31,\n\n20252024\n\nExercise price$6.00 $6.01 \n\nExpected term (years)4.54.5\n\nExpected stock price volatility93 %80 %\n\nRisk-free rate of interest4.0 %4.2 %\n\nExpected dividend yield (per share)0 %0 %\n\nThe expected stock price volatility is based on the Company’s historical common stock trading prices and the expected term is based on the period that the Company’s stock-based awards are expected to be outstanding based on the simplified method.\n\n64\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nCommon Stock Warrants\n\nThe following table summarizes warrant activities during Fiscal 2025 and 2024 (in thousands, except per share data):\n\nNumber of Shares Weighted Average\nExercise\nPriceWeighted Average\nRemaining Contractual\nLife\n(in years)\n\nOutstanding as of January 1, 202483$11.16 1.9\n\nWarrants granted249.00 5.0\n\nWarrants forfeited(45)128.30 \n\nOutstanding as of December 31, 20246259.27 3.8\n\nWarrants granted695 5.17 3.0\n\nOutstanding as of December 31, 2025757$9.58 4.4\n\nWarrants vested and exercisable757$9.58 4.4\n\nDuring the the year ended December 31, 2025, the Company granted warrants to purchase 695,000 shares of the Company’s common stock to various consultants and investors, including the Company's CEO, which was issued in conjunction with his loan agreement (see Note 6). The fair value of warrants for consultants are fully expensed on the issuance date based on the vesting term.\n\nOn November 12, 2024, upon closing of the public offering (the \"Offering\"), the Company issued the Representative warrants (the “Representative’s Warrants”) as compensation to purchase up to 23,978 shares of common stock. The Representative’s Warrants will be exercisable at a per share exercise price of $9.00. The Representative’s Warrants are exercisable, in whole or in part, during the four and one-half year period commencing 180 days from the commencement of sales of the shares of common stock in this offering. The Representative Warrants were valued at $117,000 fair value. There was no net impact recognized by the Company in the accompanying consolidated financial statements as the Representative Warrants were equity-based awards issued for services rendered by the underwriter for the Offering that was offset by the Company recognizing the fair value of the warrants as a direct and incremental costs associated with the offering by reducing paid-in capital for the same amount.\n\nThe following table summarizes weighted average assumptions used in determining the fair value of the warrants at the date of grant during the year ended December 31, 2025 and 2024:\n\nFor the years ended\nDecember 31,\n\n20252024\n\nExercise price$3.95 $9.00 \n\nExpected term (years)3.95.0\n\nExpected stock price volatility76.4 %85.6 %\n\nRisk-free rate of interest3.1 %4.3 %\n\nExpected dividend yield (per share)0 %0 %\n\nThe Company recognized $1.9 million and $3.6 million of share-based compensation expense during the year ended December 31, 2025 and 2024, respectively. The Company will recognize an aggregate of approximately $2.6 million of remaining share-based compensation expense related to outstanding stock options and warrants over a weighted average period of 2.7 years.\n\n65\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nNote 8 – Defined Contribution Plans\n\nThe Company maintains the ProPhase Labs, Inc. 401(k) Savings and Retirement Plan, a defined contribution plan for its employees. The Company's contributions to the plan are based on the amount of the employee plan contributions and compensation. The Company's contributions to the plan for the years ended December 31, 2025 and 2024 were $0.2 million and $0.2 million, respectively.\n\nNote 9 – Income Taxes\n\nThe components of the provision (benefit) for income taxes, in the consolidated statements of operations are as follows (in thousands):\n\nFor the years ended\n\nDecember 31, 2025December 31, 2024\n\nContinuing Operations\n\nCurrent\n\nFederal$— $— \n\nState— 45 \n\n$45 \n\nDeferred\n\nFederal— 5,336 \n\nState— 1,814 \n\n$— $7,150 \n\nIncome taxes provision (benefit) from continuing operations$— $7,195 \n\nThe following reconciles the differences between income taxes computed at the federal statutory rate and the provision for income taxes (in thousands):\n\nYear Ended December 31, 2025Year Ended December 31, 2024\n\nAmountPercent %AmountPercent %\n\nStatutory Rate - federal$(4,911)21.0 %$(7,382)21.0 %\n\nNontaxable or nondeductible items265 (1.1)%— — %\n\nState taxes, net of federal benefit— — %(2,373)6.8 %\n\nPermanent differences and other— — %521 (1.5)%\n\nChange in valuation allowance4,646 (19.9)%16,429 (46.7)%\n\nEffective tax rate$— — %$7,195 (20.4)%\n\n66\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nThe income taxes paid for the year ended December 31, 2025 consisted of the following (in thousands):\n\nU.S. Federal$327 \n\nState and Local Income Taxes\n\nNew Jersey57 \n\nNew York1,033 \n\nNew York City227 \n\nOther States1 \n\nTotal$1,645 \n\nDeferred tax assets and liabilities reflect the net tax effects of net operating loss and tax credit carryforwards and temporary differences between the carrying amount of assets and liabilities for financial reporting and the amounts used for tax purposes. Significant components of the Company's deferred tax assets and liabilities were as follows (in thousands):\n\n For the years ended\n\n December 31, 2025December 31, 2024\n\nNet operating loss and capital loss carryforward$12,200 $12,033 \n\nRight of use asset$(573)$(1,403)\n\nOther5,039 4,944 \n\nCapital lease obligations936 1,403 \n\nDepreciation497 783 \n\nAmortization(195)(997)\n\nTax credit— 350 \n\nValuation allowance(17,904)(17,113)\n\nTotal$— $— \n\nThe Company recognizes tax assets and liabilities for the future tax consequences related to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for net operating loss carryforwards. Management evaluated the deferred tax assets for recoverability using a consistent approach that considers the relative impact of negative and positive evidence, including historical profitability and projections of future reversals of temporary differences and future taxable income. The Company is required to establish a valuation allowance for deferred tax assets if management determines, based on available evidence at the time the determination is made, that it is not more likely than not that some portion or all of the deferred tax assets will be realized.\n\nAs of December 31, 2025, the Company is in a net deferred tax asset position for federal and state jurisdictions. Based on a three-year cumulative income position the Company concluded that the federal and combined state deferred tax assets will not be realized and there is a need for a full valuation allowance at this time. The Company will continue to monitor the need for any valuation allowance changes on a quarterly basis.\n\nAs of December 31, 2025 there is a valuation allowance of $17.9 million compared to $17.1 million as of December 31, 2024. As of December 31, 2025, the Company has state net operating loss (\"NOL\") carryforwards of $1.2 million, which begin to expire in 2025 and federal NOL carryforwards of $10.9 million of which never expire. A portion of the federal NOL is attributable to 2021 Nebula acquisition, and it is Section 382 limited with an annual limitation of $0.3 million.\n\n67\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nThe Company is subject to federal, state and local income tax audits from time to time that could result in proposed assessments. Currently, the Company is under audit for its December 31, 2022 tax return with the Internal Revenue Service. There are no ongoing state or local income tax audits as of December 31, 2025.\n\nThe Company files a consolidated federal income tax return and separate company state returns as well as combined state returns where applicable.\n\nNote 10 - Other Current Liabilities\n\nThe following table sets forth the components of other current liabilities at December 31, 2025 and 2024, respectively (in thousands):\n\nDecember 31, 2025December 31, 2024\n\nAccrued expenses$1,885 $1,945 \n\nAccrued payroll and benefits530 138 \n\nAccrued interest212 — \n\nAccrued returns32 32 \n\nTotal other current liabilities$2,659 $2,115 \n\nNote 11 – Commitments and Contingencies\n\nLicense Agreements\n\nLinebacker LB1 and LB2\n\nIn July 19, 2022, the Company through its wholly-owned subsidiary ProPhase BioPharma entered into a License Agreement (the “Linebacker License Agreement”) with Global BioLife, Inc. (the “Licensor”), with an effective date of July 18, 2022 (the “Linebacker Effective Date”), pursuant to which it acquired from Licensor a worldwide exclusive right and license under certain patents identified in the Linebacker License Agreement (the “Licensed Patents”) and know-how (collectively, the “Licensed IP”) to exploit any compound covered by the Licensed Patents (the “Licensed Compound”), including Linebacker LB1 and LB2, and any product comprising or containing a Licensed Compound (“Licensed Products”) in the treatment of cancer, inflammatory diseases or symptoms, memory-related syndromes, diseases or symptoms including dementia and Alzheimer’s Disease (the “Field”). Under the terms of the Linebacker License Agreement, the Licensor reserves the right, solely for itself and for GRDG Sciences, LLC (“GRDG”) to use the Licensed Compound and Licensed IP solely for research purposes inside the Field and for any purpose outside the Field.\n\nSubject to certain conditions set forth in the Linebacker License Agreement, the Company may grant sublicenses (including the right to grant further sublicenses) to its rights under the Linebacker License Agreement to any of its affiliates or any third party with the prior written consent of Licensor, which consent may not be unreasonably withheld. Either party to the Linebacker License Agreement may assign its rights under the Linebacker License Agreement (i) in connection with the sale or transfer of all or substantially all of its assets to a third party, (b) in the event of a merger or consolidation with a third party or (iii) to an affiliate; in each case contingent upon the assignee assuming in writing all of the obligations of its assignor under the Linebacker License Agreement.\n\nUnder the terms of Linebacker License Agreement, the Company is required to pay to Licensor a one-time upfront license fee of $50,000 within ten days of the Linebacker Effective Date and must pay an additional $900,000 following the achievement of a first Phase 3 study which may be required by FDA for the first Licensed Product and an additional $1.0 million upon the receipt of regulatory approval of a New Drug Application for the first Licensed Product.\n\nDuring the term of the Linebacker License Agreement, the Company is also required to pay to Licensor 3% royalties on Net Revenue (as defined in the Linebacker License Agreement) of each Licensed Product, but no less than the minimum royalty of $250,000 of Net Revenue per year minus any royalty payments for any required third party licenses.\n\nIn connection with the Linebacker License Agreement, the Company has incurred approximately zero and $120,000 in general and administrative expenses that are included in the Consolidated Statements of Operations and Comprehensive Income (Loss) for the year ended December 31, 2025 and 2024, respectively. No clinical studies have begun under this agreement.\n\n68\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nEquivir\n\nIn March 2023, we commenced patient enrollment in a randomized, placebo-controlled clinical trial of Equivir to evaluate its effect on upper respiratory tract infections. Vedic Lifesciences, a leading clinical research organization, is contracted to conduct the combination prophylactic and therapeutic study, which will be conducted at 8 sites. We continue to work towards completing trials and launching Equivir (dietary supplement) in the United States in the future.\n\nIn connection with the license agreement relating to Equivir, for the years ended December 31, 2025 and 2024, the Company has incurred approximately zero and $100,000 in general and administrative expenses that are included in the Consolidated Statements of Operations and Comprehensive Income (Loss)respectively.\n\nBE-Smart Esophageal Pre-Cancer Diagnostics Screening Test\n\nIn March 2023, in connection with the asset acquisition of Stella Diagnostics, Inc., we announced a collaboration for the continued development of our BE-Smart™ Esophageal Pre-Cancer diagnostic screening test. The BE-Smart™ test is designed to detect molecular biomarkers associated with Barrett’s Esophagus and progression to esophageal adenocarcinoma.\n\nOn June 17, 2025, we announced the successful completion of a key validation study for the BE-Smart™ molecular diagnostic test. The study demonstrated a technical success rate greater than 95% using esophageal brush cytology samples, confirming the test’s compatibility and reliability with both traditional forceps biopsy and less invasive brush biopsy techniques. Based on these results, we are continuing commercialization of BE-Smart™ as a Laboratory Developed Test (“LDT”) and Research Use Only (“RUO”) product, with steps towards commercialization planned for the third quarter of 2025 and broader insurance-backed commercialization targeted for 2026. These timelines are forward-looking statements and are subject to various risks and uncertainties, including, but not limited to, regulatory developments, payer coverage decisions, and market adoption rates.\n\nOn March 31, 2025, the U.S. District Court for the Eastern District of Texas vacated the U.S. Food and Drug Administration’s (“FDA”) Final Rule that would have expanded FDA oversight of LDTs, holding that the agency exceeded its statutory authority. The court remanded the matter to the Department of Health and Human Services for reconsideration. The FDA did not appeal within the 60-day period, which ended May 30, 2025, and, as a result, the rule is no longer in effect and compliance deadlines are not enforceable. Oversight of LDTs, including BE-Smart™, currently reverts to the existing Clinical Laboratory Improvement Amendments (“CLIA”) framework administered by the Centers for Medicare & Medicaid Services. Future legislative or regulatory action could alter this framework.\n\nAs a result certain LDTs, including BE-Smart™, are not currently subject to direct FDA oversight, allowing for a faster market entry while maintaining rigorous internal validation and quality control standards. If new requirements were imposed, we could be required to obtain pre-market clearance or approval before commercialization, which could delay our market entry, increase development and regulatory costs, and potentially require changes to the test.\n\nBased on published industry data and internal estimates, the U.S. market for the test is approximately 6 to 7 million endoscopic procedures annually, representing an addressable market opportunity of over $10 billion. The market opportunity estimate reflects management’s judgment, is based on available industry data, and is subject to inherent uncertainties.\n\nIn connection with the license agreement relating to BE-Smart License Agreement, for the years ended December 31, 2025 and 2024, we incurred approximately zero and $170,000, respectively, in general and administrative expenses related to the BE-Smart™ license agreement, as reflected in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). All such expenses were expensed as incurred. No new clinical studies under the BE-Smart™ license agreement were initiated during the the year ended December 31, 2025.\n\nOn August 6, 2025, the United States Patent and Trademark Office issued U.S. Patent No. 12,379,378 B2, covering the BE-Smart™ Esophageal Pre-Cancer Diagnostic Screening Test. This newly issued patent further strengthens our intellectual property position for BE-Smart™ technology and supports our continued efforts to commercialize the test for early detection and risk stratification of Barrett’s esophagus and related esophageal conditions.\n\nWe continue to own the full intellectual property portfolio supporting the BE-Smart™ test, including a foundational patent family covering molecular markers of esophageal disease progression, with issued patents and pending applications expected to provide protection until 2040. We remain positioned to capitalize on favorable regulatory and\n\n69\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nclinical practice trends supporting minimally invasive screening methods, although there can be no assurance that commercialization will occur within the anticipated timeframe or that adoption will meet our expectations.\n\nLitigation\n\nThe Company is involved in various legal proceedings arising in the ordinary course of business, including matters relating to commercial contracts, lease obligations, accounts receivable collections, and bankruptcy-related proceedings associated with ProPhase Diagnostics, Inc. and its subsidiaries. Certain of these matters are described in Item 3, \"Legal Proceedings,\" which disclosure is incorporated herein by reference.\n\nManagement evaluates litigation contingencies on a quarterly basis in accordance with ASC 450, Contingencies. As of December 31, 2025, amounts have been accrued for matters where a loss is considered probable and reasonably estimable. For other matters, management either believes an unfavorable outcome is not probable or cannot reasonably estimate the possible loss or range of loss. Accordingly, no additional accruals have been recorded. The ultimate resolution of these matters could differ from current estimates and may have a material effect on future operating results, cash flows, or financial position.\n\nNote 12 – Leases\n\nOperating Leases\n\nNew Jersey Laboratory Lease\n\nOn October 23, 2020, we completed the acquisition of CPM, which included a 4,000 square foot CLIA accredited laboratory located in Old Bridge, New Jersey, which was owned by CPM (which is now known as ProPhase Diagnostics NJ, Inc.). The lease was renewed in February 2023, for an additional 36 months until February 2026. The monthly base is $5,500 per month. The lease renewal resulted in the recognition of an additional right-of-use asset and operating lease liability of $170,000, respectively in Fiscal 2023.\n\nAs a result of the deconsolidation of PDX (see Note 18), the operating lease liability and right-of-use asset associated with the New Jersey operating lease was derecognized on the Company's consolidated balance sheet as of December 31, 2025.\n\nNew York Second Floor Lease\n\nOn December 8, 2020, the Company entered into a Lease Agreement (the “NY Second Floor Lease”) with BRG Office L.L.C. and Unit 2 Associates L.L.C. (the “Landlord”), pursuant to which the Company leases certain premises located on the second floor (the “Second Floor Leased Premises”) of 711 Stewart Avenue, Garden City, New York (the “Building”). The Second Floor Leased Premises serve as the Company’s second location and corporate headquarters, offering a wide range of laboratory testing services for diagnosis, screening and evaluation of diseases, including COVID-19 and Respiratory Pathogen Panel Molecular tests.\n\nOn June 10, 2022, the Company entered into a First Amendment to the NY Second Floor Lease (the “Second Floor Lease Amendment”). The Second Floor Lease Amendment amends the NY Second Floor Lease to provide that any uncured default by the Company or any of its affiliate under the NY First Floor Lease (defined below) will constitute a default by the Company under the NY Second Floor Lease.\n\nOn March 1, 2025, the Company entered into a Surrender Agreement with the Landlord, pursuant to which the Company agreed to surrender the Second Floor Leased Premises on or before May 30, 2025 (the “Surrender Date”). Under the agreement, the Company will remain responsible for rent and other charges through the Surrender Date and will pay the Landlord a settlement amount of approximately $740,000 in seven equal monthly installments from June 1, 2025 through December 1, 2025. Upon timely performance of the Company’s obligations under the Surrender Agreement, the NY Second Floor Lease will be deemed terminated as of the Surrender Date, and the Company will have no further obligations thereunder, other than as set forth in the Surrender Agreement. As of the date of this report, the Company has made all required payments under the Surrender Agreement. As of the date of this report, the Company has made all required payments under the Surrender Agreement.\n\nNew York First Floor Lease\n\nOn June 10, 2022, the Company entered into a second Lease Agreement (the “NY First Floor Lease”) with Landlord, pursuant to which the Company leases approximately 4,516 sq. feet located on the first floor (the “NY First\n\n70\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nFloor Leased Premises”) of the Building. As described above, the Company currently leases space on the second floor of the Building. The First Floor Leased Premises will be used to expand the Company’s in-house lab capabilities to include traditional clinical testing across multiple specialty areas and Next Generation Sequencing (NGS), Whole Genome Sequencing (WGS) and an array of genetic diagnostic test offerings for both clinical and research purposes. The NY First Floor Lease had an initial term through July 15, 2031, with an early termination option effective July 31, 2027.\n\nThe NY First Floor Lease became effective as of June 10, 2022. On March 1, 2025, the Company entered into a Surrender Agreement with the Landlord for the First Floor Leased Premises. Under the agreement, the Company will surrender the premises on or before May 30, 2025 and will pay the Landlord a settlement amount of approximately $127,000 in seven equal monthly installments from June 1, 2025 through December 1, 2025. Upon timely performance of the Company’s obligations under the Surrender Agreement, the NY First Floor Lease will be deemed terminated as of the Surrender Date, and the Company will have no further obligations thereunder, other than as set forth in the Surrender Agreement.As of the date of this report, the Company has made all required payments under the Surrender Agreement. As of the date of this report, the Company has made all required payments under the Surrender Agreement.\n\nAs a result of NY office lease termination, the Company reduced its operating lease liabilities by approximately $5.1 million and reduced its right-of-use assets by approximately $3.9 million. The Company also wrote off non-refundable security deposit of $308,000, and fixed assets and leasehold improvements of approximately $1.4 million. The Company recognized a loss on lease termination for total $1.4 million during the year ended December 31, 2025, which as included in general and administrative expense on the consolidated statement of operations.\n\nFinance Leases\n\nOn April 19, 2023, the Company entered into a master lease agreement for laboratory equipment (the \"First Equipment Lease\") with a vendor. The First Equipment Lease has a 5-year term and is recognized as a finance lease under ASC 842. The present value of the minimum future obligations of $1.5 million at inception was calculated based on an interest rate of 8.0%, which was recognized in finance lease liabilities in the condensed consolidated balance sheet.\n\nOn July 21, 2023, the Company entered into a master lease agreement for a laboratory equipment (the \"Second Equipment Lease\") with a vendor. The Second Equipment Lease has a 4-year term and is recognized as a finance lease under ASC 842. The present value of the minimum future obligations of $5.1 million at inception was calculated based on an interest rate of 7.4%, which was recognized in finance lease liabilities in the condensed consolidated balance sheet.\n\nAt December 31, 2025 and 2024, the Company had finance lease liabilities of approximately $3.5 million and $4.7 million, respectively, and finance lease assets within property and equipment, net of approximately $2.0 million and $4.2 million, respectively, which were included in the consolidated balance sheets.\n\nThe following summarizes quantitative information about our operating leases (amounts in thousands):\n\nFor the Years Ended\n\nDecember 31, 2025December 31, 2024\n\nOperating leases:\n\nOperating lease cost$422 $956 \n\nTotal operating lease cost$422 $956 \n\nFinance leases:\n\nInterest lease cost$594 $399 \n\nDepreciation expense1,493 1,356 \n\nTotal finance lease expense$2,087 $1,755 \n\nOther information related to the Company’s leases is shown below (dollar amounts in thousands):\n\n71\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nFor the Years Ended\n\nDecember 31, 2025December 31, 2024\n\nOperating cash flows used in operating leases$(1)$(716)\n\nDecember 31, 2025December 31, 2024\n\nWeighted-average remaining lease term – operating leases (in years)NA6.5\n\nWeighted-average remaining lease term – finance leases (in years)2.12.3\n\nWeighted-average discount rate – operating leasesNA10.00 %\n\nWeighted-average discount rate – finance leases7.43 %9.13 %\n\nFinance lease asset (1)\n$1,977 $4,242 \n\nFinance lease asset in discontinued operations (2)\n$— $2,389 \n\n(1) At December 31, 2025 and 2024, the Company had recorded accumulated depreciation of approximately $3.1 million and $2.3 million for the finance lease asset, respectively. Finance lease assets are recorded within property and equipment, net on the Company’s Consolidated Balance Sheets.\n\n(2) As of December 31, 2024, the Company had recorded accumulated depreciation of approximately $1.4 million for the finance lease asset in discontinued operations. Finance lease assets in discontinued operations are recorded within other assets in discontinued operations on the Company’s Consolidated Balance Sheets.\n\nMaturities of the Company’s remaining finance lease are as follows (in thousands):\n\nFinance Lease\n\nYear Ended December 31, 2026$2,774 \n\nYear Ended December 31, 2027824 \n\nTotal lease payments3,598 \n\nLess present value discount(135)\n\nTotal $3,463 \n\nNote 13 – Significant Customers Concentrations\n\nRevenue for years ended December 31, 2025 and 2024 was $4.3 million and $6.8 million, respectively. The Company had no Diagnostic Services for the year ended December 31, 2025 and 2024. For the year ended December 31, 2025 and 2024, there were no consumer products customers that accounted for 10% or more of our total revenues.\n\nThe Company is subject to account receivable credit concentrations from time-to-time as a result of the timing, payment pattern and ultimate purchase volumes or shipping schedules with our customers. These concentrations may impact its overall exposure to credit risk, either positively or negatively, in that our customers may be similarly affected by changes in economic, regulatory or other conditions that may impact the timing and collectability of amounts due to the Company.\n\nCurrently, the Company relies on a sole supplier to manufacture its saliva collection kits used by customers who purchase its personal genomics services. Change in the supplier or design of certain of the materials that the Company relies on, in particular the saliva collection kit, could result in a requirement for additional premarket review from the FDA before making such a change.\n\nNote 14 – Segment Information\n\nThe Company has identified two operating segments, diagnostic services and consumer products, based on the manner in which the Company’s CEO as CODM assesses performance and allocates resources across the organization. The operating segments are organized in a manner that depicts the difference in revenue generating synergies that include the separate processes, profit generation and growth of each segment. The diagnostic services segment provides COVID-19 diagnostic information services to a broad range of customers in the United States, including health plans, third party\n\n72\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\npayers and government organizations. The consumer products segment is engaged in the research, development, manufacture, distribution, marketing and sale of OTC consumer healthcare products and dietary supplements in the United States and also provides personal genomics products and services. The unallocated corporate expenses mainly included professional fees, interest expenses associated with the outstanding debt associated with the Company.\n\nThe following table is a summary of segment information for Fiscal 2025 and 2024 (in thousands):\n\nFor the years ended\n\nDecember 31, 2025December 31, 2024\n\nNet revenues\n\nDiagnostic services$— $— \n\nConsumer products4,345 6,770 \n\nConsolidated net revenue4,345 6,770 \n\nCost of revenue  \n\nDiagnostic services351 2,329 \n\nConsumer products2,610 4,591 \n\nConsolidated cost of revenue2,961 6,920 \n\nDepreciation and amortization expense  \n\nDiagnostic services614 1,604 \n\nConsumer products1,636 4,583 \n\nTotal Depreciation and amortization expense2,250 6,187 \n\nOperating and other expenses\n\n Diagnostic services 2,891 15,928 \n\n Consumer products 5,587 4,484 \n\n Unallocated corporate 14,043 15,581 \n\n Total operating and other expenses 22,521 35,993 \n\nLoss from operations, before income taxes  \n\nDiagnostic services(3,856)(19,861)\n\nConsumer products(5,488)(6,888)\n\nUnallocated corporate(14,043)(15,581)\n\n Total loss from operations, before income taxes (23,387)(42,330)\n\nIncome tax expense— (7,195)\n\n Net loss from continuing operations $(23,387)$(49,525)\n\nThe following table is a summary of segment information for Fiscal 2025 and Fiscal 2024 (in thousands):\n\nDecember 31,\n2025December 31,\n2024\n\nASSETS \n\nDiagnostic services$— $26,069 \n\nConsumer products11,614 19,745 \n\nUnallocated corporate48,257 5,804 \n\n Assets held-for-sale — 11,582 \n\nTotal assets$59,871 $63,200 \n\nNote 15 – Net Loss Per Share\n\nBasic loss per share excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted loss per share reflects the potential\n\n73\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\ndilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or otherwise result in the issuance of common stock that shared in the earnings of the entity. Diluted loss per share also utilizes the treasury stock method which prescribes a theoretical buy back of shares from the theoretical proceeds of all options outstanding during the period, and the if-converted method for convertible debt.\n\nThe following is a reconciliation of the weighted average number of common shares outstanding used in calculating basic and diluted net loss per share (in thousands):\n\nFor the years ended\n\nDecember 31, 2025December 31, 2024\n\n Loss from continuing operations after income taxes $(23,387)$(49,525)\n\n Income (loss) from discontinued operations, net of tax 8,644 (3,839)\n\n Net loss $(14,743)$(53,364)\n\n Weighted average common shares outstanding:\n\n Basic 8,489 2,000\n\n Diluted 8,489 2,000\n\nNet earnings ( loss) per share:\n\n Loss from continuing operations, basic and diluted $(2.75)$(24.76)\n\n Loss from discontinued operations, basic and diluted $1.02 $(1.92)\n\n Net loss per share, basic and diluted $(1.74)$(26.68)\n\nThe following table represents the number of securities excluded from the income per share computation as a result of their anti-dilutive effect (in thousands):\n\nFor the years ended\n\nAnti-dilutive securitiesDecember 31, 2025December 31, 2024\n\nCommon stock purchase warrants757 62 \n\nStock Options478 388 \n\nConvertible promissory note526 — \n\nAnti-dilutive securities1,761 450 \n\nNote 16 – Related Parties\n\nThe Company's Executive Vice President and Co-Chief Operations Officer of ProPhase Diagnostics, and President of Nebula Genomics, is a related party to the Company's Chairman and Chief Executive Officer. For the years ended December 31, 2025 and 2024, there were no payments made to the Executive Vice President outside compensation and benefits for the position held at the Company.\n\nOn February 18, 2025 announced that Stuart Hollenshead has been appointed to serve as Chief Operating Officer of the Company, effective on February 17, 2025 and held this position until his resignation on July 31, 2025. Currently, Mr. Hollenshead serves as CEO of 10PM Curfew. The Company received consulting services from 10PM Curfew on an ongoing basis. During the year ended December 31, 2025 and 2024, consulting services from 10pm Curfew totaled $167,000 and $165,000, respectively. Amounts payable 10PM Curfew as of December 31, 2025 and 2024 was zero and $10,000, respectively. The Company continues to utilize 10PM Curfew for consulting services.\n\nOn June 22, 2025, the Company entered into a loan agreement with Ted Karkus, the Company’s Chief Executive Officer and the Chairman of the Board of Directors, pursuant to which the Company issued a twelve-month non-convertible promissory note in the principal amount of 625,000. The Company also issued 50,000 unvested warrants in conjunction with the note agreement. See Note 6 for detail description regarding the CEO Loan and the CEO Warrants.\n\n74\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nNote 17 – Discontinued Operations\n\nOn January 16, 2025, the Company entered into a Stock Purchase Agreement (the “Agreement”) with JL Projects, Inc., a Delaware corporation (“JL Projects”), pursuant to which JL Projects purchased from the Company all of the right, title, and interest in and to all of the issued and outstanding shares of capital stock of Pharmaloz Manufacturing, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company (“PMI”), and Pharmaloz Real Estate Holdings, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company (“PREH”). The transaction closed concurrently with the execution of the Agreement on January 16, 2025.\n\nAs part of the transaction, JL Projects provided approximately $2 million in cash payments to the Company and extinguished approximately $10 million of the Company’s debt. Additionally, JL Projects assumed (i) the existing $3.3 million mortgage on PMI's manufacturing facility, (ii) nearly $2 million in capital leases, and (iii) approximately $3 million in current and accrued payables, and paid down $200,000 on an existing loan from affiliates of JL Projects. The transaction also resulted in the cancellation of approximately $300,000 in accrued interest related to the retired debt. Furthermore, the Company avoided approximately $3 million of upcoming capital expenditures that JL Projects will now be responsible for. The transaction also transferred over $600,000 in employee annual overhead from the Company to PMI. As a result, the Company recognized a gain on sale of PMI and PREH of approximately $8.7 million for the year ended December 31, 2025.\n\nThe Company has reported the results of the discontinued operations as a separate component of income below the income (loss) from continuing operations in each period presented.\n\nThe following table presents a reconciliation of discontinued operations for the year ended December 31, 2025 and 2024 (amount in thousands):\n\nFor the Years Ended\n\nDecember 31, 2025December 31, 2024\n\n Revenues, net $— $6,442 \n\n Cost of revenues — 7,364 \n\n Gross profit (loss)— (922)\n\n Operating expenses:\n\n General and administration 102 2,569 \n\n Research and development — — \n\n Total operating expenses 102 2,569 \n\n Loss from operations (102)(3,491)\n\n Interest expense — (378)\n\n Other income — 30 \n\n Loss from discontinued operations, net of tax $(102)$(3,839)\n\n75\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nThe assets and liabilities classified in discontinued operations as of December 31, 2025 and 2024 (amount in thousands):\n\nDecember 31, 2025December 31, 2024\n\nRestricted cash$— $627 \n\nAccounts receivable, net— 605 \n\nInventory, net— 1,487 \n\nPrepaid expenses and other current assets— 3,424 \n\nTotal current assets in discontinued operations— 6,143 \n\nProperty, plant and equipment, net— 4,895 \n\nOther assets— 544 \n\nTotal non-current assets in discontinued operations— 5,439 \n\nTotal assets in discontinued operations— 11,582 \n\nAccounts payable$— $2,432 \n\nSecured promissory note payable$— $1,000 \n\nFinance lease liability— 2,356 \n\nOther current liabilities— 79 \n\nTotal current liabilities in discontinued operations— 5,867 \n\nSecured long-term debt, net of discount of $318\n— 2,924 \n\nTotal non-current liabilities in discontinued operations— 2,924 \n\nTotal liabilities in discontinued operations— 8,791 \n\nNote 18 – Voluntary Bankruptcy Filing and Deconsolidation\n\nOn September 22, 2025 (the \"Petition Date\"), the Company's wholly-owned subsidiary, ProPhase Diagnostics, Inc., and two indirectly wholly-owned subsidiaries, ProPhase Diagnostics NY, Inc. and ProPhase Diagnostics NJ, Inc. (collectively the \"PDX\") filed for a Chapter 11 reorganization in United States Bankruptcy Court for the District of New Jersey (the \"Chapter 11 case\"). On September 30, 2025, the Court granted the motion for joint administration. During the Chapter 11 Case, the Company is deemed to no longer control PDX as its activities are subject to review and oversight by the Bankruptcy Court. Therefore, PDX was deconsolidated from the Company’s condensed consolidated financial statements prospectively as of September 22, 2025.\n\nStatus of the Chapter 11 Cases and Plan Development. The Chapter 11 cases are pending in the Bankruptcy Court and are being jointly administered. On November 13, 2025, the Bankruptcy Court entered an order authorizing the Debtors to retain Crown Medical Collections, LLC as special counsel for the collection of accounts receivable arising from prior COVID-19 diagnostic testing services. The Debtors are pursuing a plan of reorganization under Chapter 11. The Debtors’ plan, as currently contemplated, is intended to be funded by multiple sources including, without limitation, recoveries from the receivables collection program, recoveries from preserved estate causes of action, third-party financing made available to the Debtors in the Chapter 11 cases on terms approved by the Bankruptcy Court, and operational cash flow generated by the Debtors from the operational reorganization of their CLIA-certified laboratory infrastructure in support of additional diagnostic and testing opportunities. Specific terms of any financing arrangements and of the Debtors’ plan will be set forth in the Debtors’ filings with the Bankruptcy Court. The development, filing, and confirmation of a plan are subject to Bankruptcy Court approval and to a number of factors that are uncertain and outside the Company’s control. The Company is no longer deemed to control the Debtors; developments in the Chapter 11 cases are reflected in the Debtors’ filings with the Bankruptcy Court rather than in the Company’s reports under the Securities Exchange Act of 1934, except to the extent such developments are themselves required to be disclosed by the Company.\n\nDeconsolidation of Bankrupt Subsidiaries\n\nIn order to deconsolidate PDX, the carrying values of the assets and liabilities of PDX were removed from the Company’s consolidated balance sheet as of September 22, 2025, in accordance with ASC 810, Consolidation. The net\n\n76\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nimpact with removing the assets and liabilities held at PDX resulted in the recognition of the investment in unconsolidated affiliates of $43.7 million, and a payable to unconsolidated affiliates of $27.7 million on the Company’s consolidated balance sheet as of September 22, 2025. Subsequent to the deconsolidation, the Company will account for the equity interest in PDX under the equity method of accounting as the Company is deemed to still have significant influence over PDX. For the period between September 22, 2025 and December 31, 2025, the Company recognized approximately $166,000 loss from investment in PDX.\n\nAll post-deconsolidation activities between the Company and PDX are reported as third-party transactions recorded within the Company's Consolidated Statement of Operations. Since the Petition Date, there were no material transactions between the Company and PDX. The intercompany payable to the Company recognized on deconsolidation, and any other amounts owed by the Debtors to the Company, are subject to administration in the Chapter 11 cases and to the priority scheme of the Bankruptcy Code, and recovery of any such amounts is uncertain.\n\nTreatment of Intercompany Balances\n\nThe Company had total payables to PDX of approximately $27.7 million. As a result of the deconsolidation of PDX, the Company recognized $27.7 million payable to the unconsolidated affiliates on the consolidated balance sheet as of September 22, 2025.\n\nNote 19 – Fair Value Measurements\n\nThe following table presents the fair value of the Company’s financial liabilities that are measured at fair value on a recurring basis as of December 31, 2025 (in thousands):\n\nAs of December 31, 2025\n\nLevel 1Level 2Level 3Total\n\nDerivative liability$— $— $50 $50 \n\nThere were no transfers between Level 1, 2 or 3 during the year ended December 31, 2025 and 2024.\n\nThe following table presents changes in Level 3 liabilities measured at fair value for the year ended December 31, 2025. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long- dated volatilities) inputs (in thousands).\n\nWarrant liabilityDerivative liability\n\nBalance at January 1, 2025$— $— \n\nIssuance of unvested warrants in conjunction with loan agreements230 — \n\nIssuance of convertible debt— 2,070 \n\nIssuance of unvested warrants as an additional consideration to the August Future Financing Agreement120 — \n\nConvertible notes redemptions— (1,583)\n\nChange in fair value225 (437)\n\nReclassification of liability classified warrants to equity(575)— \n\nBalance at December 31, 2025$— $50 \n\nA summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in the Black-Scholes option pricing model measuring the Company’s warrant liabilities and derivative liability that are categorized within Level 3 of the fair value hierarchy as of September 9, 2025, the date when the Company increased its\n\n77\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\ntotal authorized shares which resulted the liability classified warrants reclassed to equity, and as of December 31, 2025, are as follows:\n\nWarrant liabilityDerivative liability\n\nSeptember 9, 2025December 31, 2025\n\nExercise price$0.57 $0.76 \n\nExpected term (years)$1.00.6\n\nExpected stock price volatility99.2 %125.0 %\n\nRisk-free rate of interest3.6 %3.5 %\n\nExpected dividend yield (per share)0 %0 %\n\nNote 20 – Subsequent Events\n\nOn January 13, 2026, the Company entered into a securities purchase agreement (the “Agreement”) with an individual investor (the “Holder”) providing for the issuance of a 10% convertible promissory note (the “Note”) in the principal amount of $240,000. The Convertible Note permits the Holder to convert outstanding principal and accrued interest into shares of common stock at a conversion price that is 75% of the trailing five-day volume weighted average price (\"VWAP\") immediately preceding the respective conversion date. The Company received cash proceeds of $190,000, which is net of original issue discount of $40,000 and issuance cost of $10,000. The Note has a maturity date on January 13, 2027. Total payments of $264,000 will be made in four monthly installment payments, which won't be started until July 13, 2026 in accordance with the payment schedule pursuant to the note agreement. In consideration for entering into the Agreement, the Company also issued 80,000 shares of common stock to the Investor in connection with the Note.\n\nOn January 27, 2026 (the “Issue Date”), the Company entered into a securities purchase agreement (the “January Labrys SPA”) with Labrys Fund II, LP (“Labrys”), pursuant to which the Company issued a 10% promissory note (the “January Labrys Note”) with a maturity date of January 27, 2027, in the principal sum of $180,000. The Company received cash proceeds of $140,000, which is net of original issue discount of $30,000 and issuance cost of $10,000. In addition, the Company issued 75,000 shares of its common stock to Labrys as a commitment fee pursuant to the January Labrys SPA. The January Labrys Note is convertible into the Company’s common stock (subject to the beneficial ownership limitations of 4.99% in the January Labrys Note) after 180 days after the Issue Date at a conversion price at 80% of the lowest traded price over the ten prior trading days immediately preceding the respective conversion date.\n\nOn March 10, 2026 (the “Issue Date”), the Company entered into another securities purchase agreement (the “March Labrys SPA”) with Labrys, pursuant to which the Company issued a 10% promissory note (the “March Labrys Note”) with a maturity date of March 10, 2027, in the principal sum of $78,000. The Company received cash proceeds of $55,000, which is net of original issue discount of $13,000 and issuance cost of $10,000. The March Labrys Note is convertible into the Company’s common stock (subject to the beneficial ownership limitations of 4.99% in the March Labrys Note) after 180 days after the Issue Date at a conversion price at 80% of the lowest traded price over the ten prior trading days immediately preceding the respective conversion date.\n\nMarch 2026 Future Receipts Financing Agreements\n\nOn March 16, 2026, the Company entered into an agreement of sale of future receipts (the “First March Future Receipts Financing Agreement”) with Legendary Funding Group (“Legendary”) by which Legendary purchased from the Company, its future accounts and contract rights arising from the sale of goods or rendition of services to the Company’s customers. The purchase price was $77,000, which was net of a $3,000 origination fee and processing fee. The First March Future Receipts Financing Agreement requires 18 weekly payments of $6,444 for a total repayment of $116,000 over the term of the agreement.\n\nOn March 17, 2026, the Company entered into an agreement of sale of future receipts (the “Second March Future Receipts Financing Agreement”) with Immediate Capital Solutions LLC (“Immediate Advances”) by which Immediate Advances purchased from the Company, its future accounts and contract rights arising from the sale of goods or rendition of services to the Company’s customers. The purchase price was $211,200, which was net of a $8,800 origination fee. The Second March Future Receipts Financing Agreement requires 28 weekly payments of $11,236 for a total repayment of $314,600 over the term of the agreement.\n\n2026 Equity Line of Credit – Generating Alpha Ltd.\n\n78\n\n[Table of Contents](#i488b31e4b35d426dbc5f2bf20556ba36_7)\n\nOn January 19, 2026, the Company entered into an Equity Line of Credit (\"Generating ELOC\") with a purchaser, Generating Alpha Ltd. (“Generating”) whereby the Company has the right to sell up to an aggregate of $10.0 million of shares of the Company’s common stock.\n\nIn connection with entering into the Generating ELOC, the Company issued 549,105 shares of common stock and a prefunded common stock purchase warrant to acquire up to 240,369 shares of common stock as a commitment fee. The warrant has an exercise price of $0.00 per share and is exercisable on a cashless basis, subject to customary ownership limitations."}