Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Statements in the following discussion and throughout this Form 10-Q that are not historical in nature are "forward-looking statements." You can identify forward-looking statements by the use of words such as "expect," "anticipate," "estimate," "may," "will," "should," "intend," "believe," and similar expressions. Although we believe the expectations reflected in these forward-looking statements are reasonable, such statements are inherently subject to risk and we can give no assurances that our expectations will prove to be correct. Actual results could differ from those described in this Form 10-Q because of numerous factors, many of which are beyond our control. We undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this Form 10-Q or to reflect actual outcomes.

Overview

We are a development stage company and reported net income (losses) of approximately $2,469,000 and $(3,070,000) for the nine months ended September 30, 2025 and 2024, respectively, and $(77,000) and $(2,464,000), for the three months ended September 30, 2025 and 2024. We had current assets of approximately $15,000 and current liabilities of $2,067,000 as of September 30, 2025. As of December 31, 2024, our current assets and current liabilities were approximately $32,000 and $5,304,000, respectively. The decrease in current liabilities is primarily due to the settlement of our litigation funding agreement with Omni in conjunction with the sale of our JV interest in NetCo.

We have prepared our financial statements for the nine months ended September 30, 2025 assuming that we will continue as a going concern. Our continuation as a going concern is dependent upon our ability to work with Yissum to monetize the former NewStem license agreement and intangible assets and the continuing financial support from our shareholders as well as obtaining additional outside funding. Our sources of capital in the past have included the sale of equity and our equity securities, which include common stock sold in private transactions, large alternative minimum tax refunds, and related party debt as well as debt from unrelated parties.

NewStem was a development stage Israeli biotech limited liability company focused on pioneering intellectual property related to haploid human embryonic stem cells for the development of personalized diagnostics and therapeutics for genetic and epigenetic diseases. NewStem incurred losses related to in process research and development since inception and the Company recorded our percentage allocation of these net losses as incurred. NewStem liquidated in August 2025, and we have recorded a full impairment loss on our investment in NewStem.

RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes thereto and other financial information appearing elsewhere in this Form 10-Q. In the discussion below, general and administrative expenses are referred to as "G&A expenses".

		Nine Months Ended September 30,												Three Months Ended September 30,
		2025				2024				Change				2025				2024				Change
Administrative fee income		$	-			$	9,000			$	(9,000	)		$	-			$	3,000			$	(3,000	)
Operating expenses:
General and administrative expenses			198,007				893,887				(695,880	)			39,469				566,551				(527,082	)
Total operating expenses			198,007				893,887				(695,880	)			39,469				566,551				(527,082	)
Loss from operations			(198,007	)			(884,887	)			686,880				(39,469	)			(563,551	)			524,082
Other (income) expenses:
Gain on derivative instrument			-				90,000				(90,000	)			-				115,000				(115,000	)
Gain on disposal of equity method investment			(1,171,760	)			-				(1,171,760	)			-				-				-
Relief of indebtedness income			(1,697,024	)			-				(1,697,024	)			-				-				-
Interest expense			207,672				306,742				(99,070	)			43,711				105,336				(61,625	)
Total other (income) expenses			(2,661,112	)			396,742				(3,057,854	)			43,711				220,336				(176,625	)
Income (loss) before income taxes			2,463,105				(1,281,629	)			3,744,734				(83,180	)			(783,887	)			700,707
Provision for income tax			-				-				-				-				-				-
Income (loss) before equity in net income (loss) of equity method investees			2,463,105				(1,281,629	)			3,744,734				(83,180	)			(783,887	)			700,707
Equity in net income (loss) of equity method investees			640				(159,741	)			160,381				300				(51,578	)			51,878
Impairment of equity method investee, NewStem			5,432				(1,628,657	)			1,634,089				5,432				(1,628,657	)			1,634,089
Net income (loss)		$	2,469,177			$	(3,070,027	)		$	5,539,204			$	(77,448	)		$	(2,464,122	)		$	2,386,674

We are a holding company whose primary asset currently is our right to the monetization of the former NewStem license now held by Yissum. We currently conduct no other business and as a result, we have no operating revenue or cost of revenue. We did charge annual administrative fees to an affiliated entity through the year ended December 31, 2024.

The Company incurs G&A expenses primarily related to professional fees, insurance and stock-based compensation. We incurred G&A expenses of approximately $198,000 and $894,000 for the nine months ended September 30, 2025 and 2024, respectively. Specifically, professional fees decreased by approximately $169,000 in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to a decrease in legal fees and audit fees for NewStem. We incurred a bad debt expense during the nine months ended September 30, 2025 of approximately $9,500 for the write off of uncollectible administrative fees compared to bad debt expense for the write off of notes receivable from NewStem of $500,000 during the nine months ended September 30, 2024. We had reductions in insurance expense and stock compensation of approximately $15,000 and $22,000, respectively. Other miscellaneous G&A expenses increased by approximately $500.

We incurred G&A expenses of approximately $39,000 and $566,000 for the three months ended September 30, 2025 and 2024, respectively. Specifically, professional fees decreased by approximately $21,000 in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to a decrease in legal fees and audit fees for NewStem. We had reductions in stock compensation of approximately $9,000. We incurred a bad debt expense for the write off of notes receivable from NewStem of $500,000 during the three months ended September 30, 2024. And other miscellaneous G&A expenses increased by approximately $3,000 during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

Interest expense decreased by approximately $99,000 and $62,000 in the nine and three months ended September 30, 2025 as compared to the nine and three months ended September 30, 2024 due to the settlement of the Omni litigation funding agreement.

The Company has recorded no income tax expense as we have incurred operating losses until the current period during which loss carryforwards are being utilized and all deferred tax assets are fully offset by an income tax valuation allowance.

We reported net income from equity method investees during the nine and three months ended September 30, 2025 which consists of income from NetCo of $640 and $300, respectively.

We reported net losses from equity method investees during the nine and three months ended September 30, 2024 which included losses from NetCo of $4,164 and $1,244 and losses from NewStem of $155,577 and $50,334, respectively.

We reported impairment expense of $1,628,657 related to our investment in NewStem in the nine and three months ended September 30, 2024 and a reduction or recovery of impairment expense related to cash received in the liquidation of NewStem of $5,432 in the nine and three months ended September 30, 2025.

Liquidity and Capital Resources

We have not paid dividends on our common stock since our name change and business focus shift in 2018. Our present policy is to apply cash to potential acquisitions; consequently, we do not expect to pay dividends on common stock in the foreseeable future.

The Company will need to obtain additional funds to continue its operations. Management's plans with regard to these matters include fundraising until our interest in NewStem's technology is profitable. Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient cash from financing on terms acceptable to the Company, or that NewStem's technology will be monetized and become profitable.

In May 2022, the Company entered into note agreements with Jan Loeb, our Executive Chairman and Jerry Wolasky, a member of the Board, to borrow up to an aggregate of $600,000 for working capital needs. The note agreements were amended in March 2024 to increase the total borrowing to $650,000 and extend the maturity date. The agreements provide for interest at a rate of 10% per annum and mature September 1, 2025. As of the date of this Quarterly Report, the full amount of $650,000 has been funded pursuant to these agreements.

During the year ended December 31, 2023, the Company entered into a note agreement with a shareholder to borrow $300,000 for continued working capital. This note bore interest at zero percent (0%) and matured on May 5, 2025. The note included a guarantee which was identified as an embedded derivative with a fair value of a liability of $650,000 at December 31, 2024. This note was amended in May 2025 to provide for fixed interest, remove the guarantee and extend the maturity date to September 30, 2025. This note was amended for a second time in October 2025 to extend the maturity date to December 31, 2026.

In December 2023, the Company entered into two short-term notes payable with unrelated parties for a total of $250,000 in borrowings utilized for the funding of NewStem. The notes bear interest at 12% per annum and mature December 21, 2025, at which time all principal and accrued interest are due and payable. The note agreements include a provision whereby, in the event of a capital raise transaction by the Company, the note holders would be entitled to participate in the transaction in an amount equal to 133% of the amounts owed on the note agreements at the closing of the transaction.

In April 2024, the Company borrowed $100,000 from unrelated parties pursuant to convertible debt agreements accounted for as debt.

During the nine months ended September 30, 2025, the Company borrowed $135,980 from the executive chairman in the form of an interim bridge loan until alternate funding sources can be found. The Company is accruing interest at 10% per annum for these advances.

On May 9, 2025 the Company sold its interest in NetCo to its JV partner for $1,300,000 which was paid directly to Omni in full settlement of all liabilities related to the litigation funding agreement totaling $2,959,625.

Net Cash Used In Operating Activities.

For the nine months ended September 30, 2025, net cash used in operating activities was approximately $141,000, which consisted primarily of net income of approximately $2,469,000, offset by noncash disposal of equity method investment of approximately $1,171,000, relief of indebtedness income of approximately $1,697,000, stock-based compensation of approximately $9,000, accretion of discount on notes payable of approximately $60,000 and interest added to notes payable of approximately $146,000. Additionally, cash was used in operations related to decrease in current assets of approximately $11,000 and a net increase in total accrued liabilities and accounts payables of approximately $32,000.

For the nine months ended September 30, 2024, net cash used in operating activities was approximately $233,000, which consisted primarily of a net loss of approximately $3,070,000, offset by noncash equity in loss of equity method investees of approximately $160,000, accretion of discount on notes payable of approximately $133,000, stock based compensation of approximately $31,000 and interest added to notes payable of approximately $78,000 and reduced by gain on derivative instrument of $90,000. Additionally, cash was used in operations related to an increase in current assets of approximately $9,000 and an increase in accrued liabilities and other payables of approximately $207,000.

Net Cash Used In Investing Activities.

During the nine months ended September 30, 2024, $250,000 was loaned to NewStem in an investing activity. For the nine months ended September 30, 2025, no net cash was used in investing activities.

Net Cash Provided By Financing Activities.

For the nine months ended September 30, 2025, net cash provided by financing activities was approximately $136,000, consisting of short-term borrowings from the executive chairman.

For the nine months ended September 30, 2024, net cash provided by financing activities was $375,000, consisting of long-term borrowings from two directors and a significant stockholder totaling $275,000 and short term borrowings of $100,000.