What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-04-01 compared with 2023-03-31 · 755 added, 693 removed, 821 unchanged (64% of the section changed)

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and concluded that they were not effective as of December 31, 2023 and we concluded there was a material weakness in the design of our

internal control over financial reporting.

internal control over financial reporting as it relates to insufficient resources to employ proper segregation of duties over the processing of transactions

and financial reporting.

material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that

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detected on a timely basis.

material weaknesses identified included insufficient resources to employ proper segregation of duties over the processing of transactions

and financial reporting.

intends to focus on strengthening the Company’s internal controls.

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He founded Syfy Channel and numerous other media and digital businesses.

Eric Richman – Director -61

Richman is a life science executive with significant leadership, operational and strategic experience from over 25 years in the

He is currently The CEO of Gain Therapeutics and was a Venture Partner at Brace Pharma Capital and serves on the boards of

LabConnect, F2G (board observer) and previously ADMA Biologics (NASDAQ:

Previously he served as President & CEO of PharmAthene

and prior to that was part of the founding team at MedImmune, responsible for the U.S.

launch of its first commercial product and

an integral part of the global launch teams for other products.

He began his career at HealthCare Ventures, a life-sciences focused

VC firm and formerly was a Director of Lev Pharmaceuticals (sold to Viropharma) and American Bank (sold to Congressional Bancshares)

and served as CEO of Tyrogenex (sold to Betta Pharma).

Richman – Director -62 Mr.

Richman is a life science executive with significant leadership, operational and strategic experience

from over 25 years in the field.

He is currently The CEO of Gain Therapeutics and was a Venture Partner at Brace Pharma Capital and

serves on the boards of LabConnect, F2G (board observer) and previously ADMA Biologics (NASDAQ:

Previously he served as President

& CEO of PharmAthene and prior to that was part of the founding team at MedImmune, responsible for the U.S.

launch of its first

commercial product and an integral part of the global launch teams for other products.

He began his career at HealthCare Ventures,

a life-sciences focused VC firm and formerly was a Director of Lev Pharmaceuticals (sold to Viropharma) and American Bank (sold to

Congressional Bancshares) and served as CEO of Tyrogenex (sold to Betta Pharma).

Seltzer – Director – 63 Mr.

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positions of increasing responsibility for AmerisourceBergen, and its predecessor company, Bergen Brunswig.

Tracy Clifford – Director -54 Ms.

Clifford has over twenty years

of experience in accounting and finance, including mergers and acquisitions of public companies.

Clifford is the CFO of Acorn

Clifford – Director -55 Ms.

Clifford has over twenty years of experience in accounting and finance, including mergers and

acquisitions of public companies.

Clifford is the CFO of Acorn Energy, Inc.

and COO of its operating subsidiary Omnimetrix Inc.

and since 2015 she has served as a contract CFO and COO for several

clients, participated on advisory boards and worked on numerous project engagements.

Clifford previously served as CFO, Principal

Accounting Officer, Corporate Controller and Secretary for a publicly traded pharmaceutical company and a publicly-traded REIT from

1999 to 2015.

Clifford’s prior experience included accounting leadership positions at United Healthcare, the North Broward

Hospital District and the audit team of Deloitte & Touche.

and since 2015 she has served as a contract CFO and COO for several clients, participated on advisory boards and worked on numerous

project engagements.

Clifford previously served as CFO, Principal Accounting Officer, Corporate Controller and Secretary for

a publicly traded pharmaceutical company and a publicly-traded REIT from 1999 to 2015.

Clifford’s prior experience included

accounting leadership positions at United Healthcare, the North Broward Hospital District and the audit team of Deloitte & Touche.

Audit Committee Financial Expert

Company’s full board is functioning as our audit committee at the time of this Annual Report.

do not have a compensation committee or persons participating in deliberations concerning executive officer compensation as there was

no executive officer compensation paid other than hourly payments for Chief Financial Officer services during 2022.

do not have a compensation committee or persons participating in deliberations concerning executive officer compensation as there

was no executive officer compensation paid other than hourly payments for Chief Financial Officer services during 2023 and

do not have a nominating committee.

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with the filing requirements of Section 16(a).

have adopted a Code of Business Conduct and Ethics that applies to all our directors, officers and employees.

This code of ethics is

designed to comply with the NASDAQ marketplace rules related to codes of conduct.

are no arrangements which may at a subsequent date result in a change in control of the Company.

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and Director Compensation

Summary Compensation Table

Name and Principal Position

President and Executive Chairman

Compensation Table

and Principal Position

President and Executive

Christine Jenkins

Vice President and Chief Financial Officer

Vice President and Chief

Financial Officer

Mitchell Rubenstein

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Tracy Clifford

(1) Represents

the grant date fair value calculated in accordance with applicable accounting principles

with respect to 100,000 options granted per Executive/Director on January 31, 2022 with an exercise price of $0.29.

The fair value of the options was determined using the Black-Scholes option pricing model

using the following assumptions:

(i) a risk-free interest rate of 1.505% (ii) an expected

term of 4 years (iii) an assumed volatility of 184.74% and (iv) no dividends.

(2) Represents

the grant date fair value calculated in accordance with applicable accounting principles with respect to 50,000 options granted per

Director, 100,000 options granted to the President and Executive Chairman and 10,000 options granted to the Vice President and Chief

Financial Officer on March 23, 2023 with an exercise price of $0.20.

The fair value of the options was determined using the Black-Scholes

option pricing model using the following assumptions:

(i) a risk-free interest rate of 3.39% (ii) an expected term of 4.98 years

(iii) an assumed volatility of 118.3067% and (iv) no dividends.

the grant date fair value calculated in accordance with applicable accounting principles with respect to 100,000 options granted

per Executive/Director on January 31, 2022 with an exercise price of $0.29.

The fair value of the options was determined using the

Black-Scholes option pricing model using the following assumptions:

(i) a risk-free interest rate of 1.505% (ii) an expected term

of 4 years (iii) an assumed volatility of 184.74% and (iv) no dividends.

hourly fees paid to Ms.

Jenkins for the provision of services as Chief Financial Officer

of the Company.

Jenkins for the provision of services as Chief Financial Officer of the Company.

Compensation for 2022 and 2023

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following tables set forth all outstanding equity awards made to each of the Executives and Directors that were outstanding at December

Options to Purchase NovelStem International Corp.

Number of Securities Underlying Unexercised Options (#) Exercisable

Number of Securities Underlying Unexercised Options (#) Unexercisable

Option Exercise Price ($)

Option Expiration Date

November 12, 2025

November 26, 2026

November 24, 2027

January 31, 2029

to Purchase NovelStem International Corp.

Unexercisable

Option Exercise

Expiration Date

Mitchell Rubenstein

November 12, 2025

November 26, 2026

November 24, 2027

January 31, 2029

November 12, 2025

November 26, 2026

November 24, 2027

January 31, 2029

David Seltzer

November 12, 2025

November 26, 2026

November 24, 2027

January 31, 2029

Jerry Wolasky

November 12, 2025

November 26, 2026

November 24, 2027

January 31, 2029

Tracy Clifford

November 12, 2025

November 26, 2026

November 24, 2027

January 31, 2029

Christine Jenkins

Warrants to Purchase NovelStem International Corp.

Number of Securities Underlying Unexercised Warrants (#) Exercisable

Number of Securities Underlying Unexercised Warrants (#) Unexercisable

to Purchase NovelStem International Corp.

Unexercisable

Warrant Exercise Price ($)

Expiration Date

June 28, 2023

Mitchell Rubenstein

June 28, 2023

David Seltzer

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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

following table sets forth certain information with respect to the beneficial ownership of our common stock, as of January 25, 2023,

following table sets forth certain information with respect to the beneficial ownership of our common stock, as of December 31, 2023,

for each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock, each of our directors

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and nature of beneficial ownership

of total common equity (1)

directors and officers as a group (seven persons)

Applicable percentage ownership is based on 46,881,475 shares of common stock outstanding as of January 25, 2023, together with securities

exercisable or convertible into shares of common stock within 60 days of January 25, 2023.

Christine Jenkins

Michael Sosnowik

7,670,673 (2)(3)(4)

Jerry Wolasky

10,222,973 (3)(4)

Tracy Clifford

1,200,000 (4)

804,054 (3)(4)

Mitchell Rubenstein

3,058,108 (4)(5)

David Seltzer

3,574,324 (3)(4)

All directors and officers as a group (seven

Applicable percentage ownership is based on 46,881,475 shares of common stock outstanding as of December 31, 2023, together with securities

exercisable or convertible into shares of common stock within 60 days of December 31, 2023.

Beneficial ownership is determined in accordance

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stock, warrants or other securities that are currently exercisable or convertible or that will become exercisable or convertible within

60 days of January 25, 2023, are deemed to be beneficially owned by the person holding such securities for the purpose of computing the

60 days of December 31, 2023, are deemed to be beneficially owned by the person holding such securities for the purpose of computing the

number of shares beneficially owned and percentage of ownership of such person, but are not treated as outstanding for the purpose of

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Includes warrants to purchase 2.25 million

shares of common stock at an exercise price of $0.13 per share and options to purchase 1.10 million shares of common stock at an exercise

price of $0.10 per share.

Includes options to purchase 150,000 shares of common stock at an exercise price of $0.10 per share.

Includes options and warrants to purchase 1,850,000 shares of common stock at an exercise price of $0.10 per share.

shares of common stock at an exercise price of $0.13 per share, options to purchase 1.10 million shares of common stock at an exercise

price of $0.10 per share and options to purchase 100,000 shares of common stock at an exercise price of $0.29 per share.

Includes options to purchase 150,000 shares of common stock at an exercise price of $0.10 per share and options to purchase 100,000 shares of common stock at an exercise price of $0.29 per share.

Includes options and warrants to purchase 1,850,000 shares of common stock at an exercise price of $0.10 per share and options to purchase 100,000 shares of common stock at an exercise price of $0.29 per share.

The address of each person is c/o NovelStem International Corp.

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Plan category

Number of securities to be issued upon exercise of outstanding options, warrants and rights

Weighted-average exercise price of outstanding options, warrants and rights

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

Equity compensation plans approved by security holders

Equity compensation plans not approved by security holders

of securities to be issued upon exercise of outstanding options, warrants and rights

Weighted-average

exercise price of outstanding options, warrants and rights

of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

Equity compensation plans approved by security

Equity compensation plans not approved

by security holders

Certain Relationships and Related Transactions, and Director Independence.

Loeb, our President and Executive Chairman of the Board, is also the Chairman of the Board of NewStem.

November 15, 2021, in connection with previous, the Company issued 1,729,729 shares of common stock to directors as a result of certain

contingent assets not being realized, as required by the governing financing documents.

A summary of the shares issued follows:

Mitchell Rubenstein

Jerry Wolasky

David Seltzer

April 12, 2021, the Company entered into a promissory note (the “Note”) with Stephen Gans for $100,000.

The Note accrued

interest at 8% per annum and matured on April 12, 2022.

The proceeds of this Note were used to pay operating expenses of the Company

including directors and officer insurance premiums.

Interest expense accrued related this this Note was $5,752 for the year ended December

The Note and all accrued interest were paid in full on February 16, 2022.

In May 2022, the Company entered into a

finance agreement with Jan Loeb and Jerry Wolasky, shareholders and Board members, which was amended in July 2022, to borrow up to an

aggregate of $600,000 for working capital needs.

This agreement provides for funding through January 31, 2024, provides for interest at

a rate of 8% per annum through November 11, 2022, at which time the interest rate increased to 10% per annum for subsequent advances .

The agreement matures the earlier of January 31, 2024 or 20 months from the date of the first funded amount

unless the lenders agree to extend the due date at that time.

As of the date of this Annual Report, the Company has received advances

of $342,000 under the aforementioned agreement.

as disclosed herein, no director, executive officer, shareholder holding at least 5% of shares of our common stock, or any family member

the year ended December 31, 2022, the Company entered into note agreements with Jan Loeb, our Executive Chairman and Jerry Wolasky, a

shareholder and 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 8% per annum, increased to 10% per annum for advances subsequent to November 11, 2022, and mature September 1, 2025.

As of the date

of this Annual Report, the full amount of $650,000 has been funded pursuant to these agreements.

May 5, 2023, the Company entered into a long term note payable with a shareholder for $300,000 in financing to be funded $150,000 at

inception and $150,000 in October 2023.

This note bears interest at zero percent (0%) and matures on May 5, 2025.

The note includes a

guarantee which has been identified as an embedded derivative with a fair value of a liability of $535,000 at December 31, 2023.

as disclosed herein, no director, executive officer, stockholder holding at least 5% of shares of our common stock, or any family member

thereof, had any material interest, direct or indirect, in any transaction, or proposed transaction since January 1, 2019, in which the

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Principal Accountant Fees and Services.

following table summarizes the fees accrued and paid by NovelStem for professional services rendered by Cherry Bekaert LLP for the

years ended December 31, 2022 and 2021.

following table summarizes the fees accrued and paid by NovelStem for professional services rendered by Cherry Bekaert LLP for the years

ended December 31, 2023 and 2022.

All other fees

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Financial Statements

of Independent Registered Public Accounting Firm (PCAOB ID 677 )

of Operations

of Changes in Shareholders’ Equity

of Cash Flows

to Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID 6651 )

Report of Predecessor Auditor (PCAOB ID 677 )

Balance Sheets

Statements of Operations

of Changes in Shareholders’ Equity (Deficit)

Statements of Cash Flows

Notes to Financial Statements

of Independent Registered Public Accounting Firm

of Directors and Shareholders of

International Corp.

on the Financial Statements

have audited the accompanying balance sheet of NovelStem International Corp.

as of December 31, 2023, and the related statements of operations,

shareholders’ equity (deficit) and cash flows for the year then ended, 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 NovelStem

International Corp.

as of December 31, 2023, and the results of its operations and its cash flows for each of the years then ended, in

conformity with accounting principles generally accepted in the United States of America.

accompanying financial statements have been prepared assuming that the entity will continue as a going concern.

As discussed in Note

1 to the financial statements, the entity has suffered losses from operations that raise substantial doubt about its 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.

financial statements are the responsibility of the entity’s management.

Our responsibility is to express an opinion on these financial

statements based on our audit.

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 NovelStem International Corp.

in accordance with the

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audit 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.

International Corp.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit 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 entity’s internal control over financial reporting.

Accordingly, we express

no such opinion.

audit 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 audit 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 audit provides

a reasonable basis for our opinion.

Kreit & Chiu CPA LLP

have served as NovelStem International Corp.’s auditor since 2024.

York , New York

of Independent Registered Public Accounting Firm

the Board of Directors and Stockholders

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on the Financial Statements

have audited the accompanying balance sheets of NovelStem International Corp.

have audited the accompanying balance sheet of NovelStem International Corp.

(the “Company”) as of December 31, 2022, and

2021, and the related statements of operations, shareholders’ equity, and cash flows for each of the years in the two-year period

ended December 31, 2022, 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, 2022 and 2021, and the

results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2022, in conformity with

accounting principles generally accepted in the United States of America.

the related statements of operations, shareholders’ equity, and cash flows for the year then ended, 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, 2022, and the results of its operations and its cash flows for the year

then ended, in conformity with accounting principles generally accepted in the United States of America.

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.

financial statements based on our audit.

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.

conducted our audits in accordance with the standards of the PCAOB.

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

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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,

As part of our audit,

we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion

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Accordingly, we express no such opinion.

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.

audit 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

Our audit 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.

/s/ Cherry Bekaert LLP

We have served as the Company’s auditor

Fort Lauderdale, Florida

March 31, 2023

We believe that our audit provides

a reasonable basis for our opinion.

Cherry Bekaert LLP

have served as the Company’s auditor from 2021 through 2022.

Lauderdale, Florida

INTERNATIONAL CORP.

As of December 31,

of December 31,

Current assets:

Cash and cash equivalents

Accounts receivable, administrative fees

Prepaid expenses

Other current assets

current assets

Total current assets

Non-current assets

Property and equipment, net

and equipment, net

Investment in Netco

Note receivable, NewStem

Investment in NewStem

LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

Current liabilities:

Accounts payable

Related party

Accrued expenses

Other liabilities

Total current liabilities

Non-current liabilities

Convertible financial instrument

Long-term note payable, including accrued interest

Long-term liabilities:

Long-term notes payable, including accrued interest

financial instrument

Derivative liability, guarantee

Total long-term liabilities

Total liabilities

Commitments and contingencies (see Note 7)

Shareholders’ equity:

Common stock, $ .01 par value, 100,000,000 shares authorized, 50,316,672 shares issued at December 31, 2022 and 2021 and 46,881,475 shares outstanding at December 31, 2022 and 2021

Shareholders’ equity (deficit):

Common stock, $ .01 par value, 100,000,000 shares authorized, 50,316,672 shares issued at December 31, 2023 and 2022 and

46,881,475 shares outstanding at December 31, 2023 and 2022

Additional paid-in capital

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Treasury stock, at cost, 3,435,197 shares at December 31, 2023 and 2022

Total shareholders’ equity

Total liabilities and shareholders’ equity

Total shareholders’ equity (deficit)

( 1,951,533 )

Total liabilities and shareholders’ equity (deficit)

accompanying notes are an integral part of these financial statements.

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OF OPERATIONS

Ended December 31,

Administrative fee income

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Research and development expenses

Less – grants and participations received

Research and development expenses, net

– grants and participations received

and development expenses, net

General and administrative expenses

Contra expenses - legal fees

Litigation expenses (contra expenses) (Note 7)

Total operating expenses

Loss from operations

Financial (income) expenses, net

( 3,525,799 )

Other expenses:

Loss on derivative instrument

Interest expense

Total other expenses

Financial income, net

Loss before income taxes

( 3,884,822 )

Provision for income tax

Net loss before equity in net loss of equity method investees

( 3,884,822 )

Equity in net loss of equity method investees

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INTERNATIONAL CORP.

OF SHAREHOLDERS’ EQUITY

OF SHAREHOLDERS’ EQUITY (DEFICIT)

Shareholders’

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$ ( 199,754 )

Stock-based compensation

Balance, December 31, 2022

( 288,940,510 )

( 4,187,301 )

Stock-based compensation

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$ ( 293,127,811 )

Balance, December 31, 2022

$ ( 199,754 )

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OF CASH FLOWS

Cash flows from operating

Ended December 31,

Cash flows from operating activities:

$ ( 4,187,301 )

required to reconcile loss to net cash used in operating

in loss of equity method investees

Gain on dilution of equity method investment

interest added to long-term note payable

of marketable securities

$ ( 765,730 )

required to reconcile loss to net cash used in operating activities:

of convertible financial instrument

in operating assets and liabilities:

receivable, administrative fees

(decrease) in other current assets

Equity in net loss of equity method investees

Gain on dilution of equity method investment

Distribution from NetCo

Accretion of discount on note payable

Loss on derivative instrument

Legal fees and litigation funding fees funded by litigation funding agreement

Accrued interest added to long-term note payable

Stock-based compensation

Change in operating assets and liabilities:

in other current assets

Decrease in other liabilities

cash used in operating activities

Cash flows from investing

Proceeds from the sale of

marketable securities

Purchase of property and equipment

Net cash provided by investing

Cash flows from financing

from (repayment of) note payable, current

from a convertible financial instrument

of shares, net

from long-term note payable

cash from financing activities

Accounts receivable, administrative fees

Prepaid expenses

Accounts payable

Accrued expenses

Net cash used in operating activities

Cash flows from investing activities:

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from (repayment of) note payable, current

Proceeds from long-term note payable

received from a related party

of ordinary shares, net

Net cash from financing activities

Net change in cash

at the beginning of the year

at the end of the year

Cash at the beginning of the year

Cash at the end of the year

Supplemental cash flow information:

Cash paid during the year

Cash paid during the year for:

accompanying notes are an integral part of these financial statements.

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is a legacy media business interest which owns “Net Force”, a book publishing franchise.

and Management’s Plans

Concern, Liquidity and Management’s Plans

inception, the Company has accumulated a deficit of approximately $ 293,000,000 .

The accumulated deficit of the Company subsequent to its business focus shift and name change in September 2018 is approximately $ 2,260,000 which is comprised primarily of allocated losses from equity method investments and general and administrative costs incurred

by the Company.

The accumulated deficit of the Company subsequent to

its business focus shift and name change in September 2018 is approximately $ 6,447,000 which is comprised primarily of allocated losses

from equity method investments and general and administrative costs incurred by the Company.

Company will need to obtain additional funds to continue its operations.

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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 will become profitable (see Note 3).

May 2022, the Company entered into a finance agreement with two individuals who are shareholders and directors, which was amended in

July 2022, to borrow up to $ 600,000 for working capital needs (see Note 4).

Following this financing, the Company believes that its cash

resources are sufficient for the operations of the next 12 months.

Company, or that NewStem will be able to continue as a going concern and become profitable (see Note 3).

Company has in place a finance agreement with two individuals who are shareholders and directors to borrow $ 650,000 for working capital

needs (see Note 4).

Additionally, the Company entered into an additional finance agreement with a shareholder in 2023 to borrow $ 300,000

for working capital needs (see Note 4).

As of the date of these financial statements, these borrowings have been fully utilized and the

Company will need to obtain additional funds to continue operations for the next 12 months.

view of the matters described above, the Company’s ability to meet financing requirements is dependent upon the ability to complete

additional fundraising or obtain additional financing, and/or monetize its investment in NetCo, along with NewStem continuing as a going

These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

The financial

statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and

classification of liabilities that might be necessary should the Company be unable to continue in existence.

2— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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the date of purchase.

The Company had no cash equivalents as of either year end presented.

The Company had no cash equivalents as of either year end.

companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method

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share of losses not previously recognized.

The Company recognizes a gain or loss on dilution when the equity method

Investee company issues stock to third parties.

Company reviews equity investments for impairment on an annual basis, or earlier if events or changes in circumstances indicate that

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the Company is a 50 % joint venture partner in NetCo which is accounted for pursuant to the equity method of accounting.

Derivative Financial Instruments

The Company has in place a financial

instrument, in the form of a note payable, with an identified embedded derivative in the form of a guarantee.

The identified embedded

derivative has been bifurcated and accounted for separately.

Such derivative financial instruments are measured at fair value at each

financial statement reporting date.

If the fair value of a financial liability (the derivative) exceeds the proceeds received for the

issuance of a hybrid instrument in an arms length transaction with no rights or privileges that require separate accounting recognition

as an asset identified, then the embedded derivative is recorded at fair value with the excess of fair value over proceeds recognized

as a loss in earnings.

During the year ended December 31, 2023, the Company recognized a loss on derivative financial instruments of $ 260,000 .

Proceeds from the note payable are shown as cash from financing instruments and the loss on derivative instrument is included as an adjustment

to reconcile loss to net cash used in operating activities in the statements of cash flows for the year ended December 31, 2023.

of common stock repurchased are recorded at cost as treasury stock.

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The grant date fair value is determined using the Black-Scholes-Merton (“Black-Scholes”) pricing model.

all stock options, the Company recognizes expense over on an accelerated basis over the requisite service period (generally the vesting

all stock options, the Company recognizes expense on an accelerated basis over the requisite service period (generally the vesting

period of the equity grant).

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with applicable accounting principles.

Such options are valued using the Black-Scholes option pricing model.

the event of the termination of an employee, third party service provider, officer or Director’s service on the Board of the Company

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and Diluted Net Loss Per Share

net loss per share is computed by dividing the net loss by the weighted average number of shares outstanding during the year, excluding

net income per share is computed by dividing the net income by the weighted average number of shares outstanding during the year, excluding

treasury stock.

Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares outstanding

Diluted net income per share is computed by dividing the net income by the weighted average number of shares outstanding

plus the dilutive potential of common shares which would result from the exercise of stock options and warrants.

4 unchanged sentences

SCHEDULE OF WEIGHTED AVERAGE NUMBER OF SHARES OF DILUTIVE

Ended December 31,

Year Ended December 31,

Net loss available to common shareholders

$ ( 4,187,301 )

$ ( 765,730 )

Weighted average shares outstanding:

1 unchanged sentence

Basic and diluted net loss per share

Warrants and stock options excluded

from the above calculations are as follows:

SCHEDULE OF WARRANTS AND

STOCK OPTIONS

Year Ended December 31,

Stock options

3— EQUITY METHOD INVESTMENTS

2018, the Company entered into a Share Purchase Agreement with NewStem and other related parties to provide aggregate funding of up

to $ 4,000,000

This funding was to be provided through the sale of up to 50,000

common shares of NewStem to the Company representing 33 %

2018, the Company entered into a Share Purchase Agreement with NewStem and other related parties to provide aggregate funding of up to

$ 4,000,000 to NewStem.

This funding was to be provided through the sale of up to 50,000 common shares of NewStem to the Company representing

33 % of New Stem’s outstanding shares.

In 2018, the Company purchased 25,000

shares of NewStem for $ 2,000,000

acquiring an ownership interest of 20 %.

The Company made additional investments in 2019 and 2020 purchasing 12,500

shares each year for a $ 1,000,000

investment each year.

NewStem sold and issued shares to third party investors in 2021 and 2022 resulting in the Company recognizing

a gain on dilution of equity method investment.

These transactions resulted in the Company having an ownership interest of 30.58 %

respectively, as of December 31, 2022 and 2021.

In 2018, the Company purchased 25,000 shares of NewStem for $ 2,000,000 acquiring an ownership

interest of 20 % .

The Company made additional investments in 2019 and 2020 purchasing 12,500 shares each year for a $ 1,000,000 investment

each year resulting in an ownership interest of 30.51 % and 30.58 % , respectively, as of December 31, 2023 and 2022.

Company accounts for its investment in NewStem under the equity method.

At December 31, 2023 and 2022, the carrying value of the investment

in NewStem exceeded the underlying net assets of NewStem by $ 2,090,286 and $ 2,435,155 , respectively.

The excess relates to identified

intangible assets including license agreements, specialized work force (goodwill) and two separate projects of in process research and

development (“IPR&D”) related to stem cell-based diagnostics and therapeutics for cancer chemotherapies.

in NewStem exceeded its portion of the underlying net assets of NewStem by approximately $ 1,800,000 and $ 1,900,000 , respectively.

excess relates to identified intangible assets including license agreements, specialized work force (goodwill) and two separate projects

of in process research and development (“IPR&D”) related to stem cell-based diagnostics and therapeutics for cancer chemotherapies.

During the years ended December

31, 2023 and 2022, the Company reimbursed NewStem for audit and audit related costs of approximately $ 58,000 and $ 105,000 , respectively.

As disclosed in Note 8, the Company

is in negotiations to acquire the remainder of NewStem in exchange for shares of Company stock.

In anticipation of this transaction, the

Company advanced $ 250,000 to NewStem in December 2023 and an additional $ 250,000 in March 2024.

The related note agreement bears no interest

and is payable on December 30, 2024.

The agreement provides for discharge of the note upon the closing of the anticipated acquisition

This note receivable has been presented as a noncurrent asset along with the investment in NewStem in the balance

Company assesses its investment in NewStem for impairment on an annual basis or more frequently if indicators of impairment exist.

INTERNATIONAL CORP.

to Financial Statements

Company assesses its investment in NewStem for impairment on an annual basis.

is in the development stage and has incurred losses since its inception and has yet to generate any revenues.

NewStem will need to obtain

additional funds to continue its operations.

NewStem management’s plans with regard to these matters include continued development,

marketing and licensing of its products, as well as seeking additional financing arrangements.

Although management continues to pursue

these plans, there is no assurance that the Company will be successful in obtaining sufficient cash from sales of products or financing

on terms acceptable to the Company.

NewStem obtained additional funding of approximately $ 1,450,000 in 2022 through the sale of

shares or ordinary stock.

is in the development stage and has incurred losses since its inception and has generated only minimal revenues related to a licensing agreement.

NewStem will need

to obtain additional funds to continue its operations.

NewStem management’s plans with regard to these matters include

continued development, marketing and licensing of its products, as well as seeking additional financing arrangements.

management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient cash

from sales, licensing or financing on terms acceptable to the Company.

NewStem obtained additional funding of approximately $ 1,450,000

in April 2022 through the sale of shares of ordinary stock.

NewStem’s management has adopted a cost reduction plan in order to

adjust future operation expenses to its cash balance.

In October 2023, the NewStem board of directors unanimously resolved to

dismiss most employees which occurred in December 2023.

aforementioned events indicate significant difficulties to continue as a concern.

Additionally, Israel declared a state of war in October

2023 which resulted in a decrease in Israel’s economic and business activity.

The security situation in Israel led to a disruption

in the chain of supply and production, a decrease in the volume of national transportation, and a shortage in manpower as well as a decrease

in the value of financial assets.

As a result of the movement and work restrictions, NewStem began operating on a limited scale.

Additionally,

the situation has brought further difficulties in management’s efforts to seek additional financing.

following table represents the Company’s investment in NewStem:

SCHEDULE OF INVESTMENTS

Ended December 31,

OF INVESTMENTS

Year Ended December 31,

Investment in NewStem, beginning

1 unchanged sentence

Gain on dilution of equity method investment

Purchase of NewStem shares

Investment in NewStem, ending

1 unchanged sentence

OF OPERATIONS AND FINANCIAL POSITION INVESTMENT

Ended December 31,

Year Ended December 31,

Condensed income statement information:

1 unchanged sentence

$ ( 2,341,000 )

Company’s allocation

of net loss from NewStem

Company’s allocation of net loss from NewStem

$ ( 342,191 )

$ ( 732,393 )

of December 31,

As of December 31,

Condensed balance sheet information:

Current assets

Non-current assets

3 unchanged sentences

to Financial Statements

owns a 50 % interest in NetCo, a joint venture that owns the Net Force publishing franchise.

The Company accounts for its investment in

NetCo under the equity method and recognizes nominal royalties from this arrangement.

The Company assesses its investment in NetCo for

impairment on an annual basis.

interest in NetCo, a joint venture that owns the Net Force publishing franchise.

The Company accounts for its investment in NetCo

under the equity method and recognizes nominal royalties and administrative fees from this arrangement.

The Company assesses its

investment in NetCo for impairment on an annual basis or more frequently if indicators of impairment exist.

following table represents the Company’s investment in NetCo:

SCHEDULE OF INVESTMENTS

Ended December 31,

OF INVESTMENTS

Year Ended December 31,

Investment in NetCo, beginning

4 unchanged sentences

OF OPERATIONS AND FINANCIAL POSITION INVESTMENT

Ended December 31,

Year Ended December 31,

Condensed income statement information:

Net income (loss)

Company’s allocation

of net income from NetCo

of December 31,

Company’s allocation of net income from NetCo

As of December 31,

Condensed balance sheet information:

Current assets

Non-current assets

4 unchanged sentences

4— NOTES PAYABLE

In December 2023, the Company

entered into two short term notes payable with unrelated parties, Hewlett Fund and AIGH Investment Partners, LLC.

The notes are for $ 125,000

each, 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, 2024 , 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 .

Interest expense related to these notes was

$ 822 for the year ended December 31, 2023.

Long-term notes

payable are summarized as follows:

OF LONG TERM NOTES PAYABLE

As of December 31,

Notes payable related parties:

Notes payable director and Executive Chairman

Accrued interest added to note balance

Total notes payable director and Executive Chairman

Note payable shareholder, principal amount

Less unamortized discount

Total note payable shareholder

Note payable, litigation funding agreement:

Note payable Omni Bridgeway (Fund 4) Invt.

Total notes payable

Less current portion

Long-term notes payable

April 12, 2021, the Company entered into a promissory note (the “Note”) with a related party (individual) for $ 100,000 .

2 unchanged sentences

the Company including directors and officer insurance premiums.

Interest expense accrued related this this Note was $ 5,752 for the year

Interest expense accrued related to this Note was $ 1,198 for the year

ended December 31, 2022.

The Note and all accrued interest, totaling $ 6,752 , were paid in full on February 16, 2022.

May 2022, the Company entered into a finance agreement (the “Agreement”) with two individuals who are shareholders and directors,

which was amended in July 2022, to borrow up to $ 600,000 for working capital needs.

This Agreement provides for funding through January

31, 2024 and provides for interest at a rate of 8 % per annum through November 11, 2022, at which time the interest rate increased to

May 2022, the Company entered into note agreements with two individuals who are related parties to borrow up to $ 600,000 for working

capital needs.

The agreements were amended in March 2024 to increase the total borrowing to $ 650,000 and extend the maturity date.

agreements provide for interest at a rate of 8 % per annum through November 11, 2022, at which time the interest rate increased to 10 %

per annum for subsequent advances.

The Agreement matures the earlier of January 31, 2024 or 20 months from the date of the first

funded amount unless the shareholders agree to extend the due date at that time.

The Company received advances of $ 280,000 pursuant to

this agreement through December 31, 2022.

December 31, 2022 and 2021 the Company had issued and outstanding 46,881,475 shares of its common stock, par value $ 0.01 per share.

of outstanding common stock are entitled to receive dividends when, as and if declared by the Board and to share ratably in the assets

of the Company legally available for distribution in the event of a liquidation, dissolution or winding up of the Company.

November 15, 2021, in a noncash transaction, the Company issued approximately 3,000,000 shares of common stock to existing holders of

subscription agreements dated June 2020.

These subscription agreements provided for the issuance of additional shares if certain contingent

assets were not realized.

It was determined during the year ended December 31, 2021 that the contingent asset would not be realized and

the shares were issued.

The agreements mature September 1, 2025 .

The Company received advances of $ 400,000 and $ 280,000 , respectively,

pursuant to these agreements through December 31, 2023 and 2022.

May 5, 2023, the Company entered into a long term note payable with a shareholder for $ 300,000 in financing to be funded $ 150,000 at

inception and $ 150,000 in October 2023.

This note bears interest at zero percent ( 0 % ) and matures on May 5, 2025 .

The note includes a

guarantee which has been identified as an embedded derivative with a fair value of a liability of $ 535,000 at December 31, 2023 which

is reported separately on the balance sheet.

The fair value of the note exceeds the proceeds, and the note has been discounted

at inception so that the net liability is the fair value of the derivative.

Accretion of the note discount of $ 61,815 has been reflected

as part of interest expense in the statement of operations for year ended December 31, 2023.

Payable, Litigation Funding Agreement

February 11, 2022, the Company entered into a nonrecourse litigation funding agreement (the “Agreement”) with Omni Bridgeway

(Fund 4) Invt.

(“Omni”) related to an arbitration proceeding disclosed in Note 7.

The Agreement provides for Omni

to fund all costs related to the arbitration up to $ 1,000,000 in exchange for an assignment of a certain portion of rights to and interest

in claims related to this arbitration.

The agreement provides for specific calculations of the portion of any claims collected to be

received by Omni with the remainder collectible by the Company.

Additionally, the agreement provides for repayment of funded costs pursuant

to the same multiple calculations in the event of a favorable outcome that does not include the collection of claims.

During the year

ended December 31, 2022, the Company received $ 310,000 pursuant to this agreement for the reimbursement of legal costs and working capital

expenditures, including previously incurred general and administrative costs.

INTERNATIONAL CORP.

to Financial Statements

July 2023, the arbitration was settled with a favorable outcome for the Company.

As a result of the ruling disclosed in Note 7, the

liability became probable and reasonably estimable, and the Company has recorded the full liability due to Omni as of December 31,

This liability consists of expenses funded by Omni of $ 933,065 ,

including $ 310,000

advanced for working capital, and related fees or investment return to Omni calculated as contractual multiples of funding totaling

as of December 31, 2023 for a total liability of $ 2,819,196 .

This agreement bears interest at 5 %

per annum beginning January 2024 and on January 10, 2025.

At December 31, 2023 and 2022 the Company had issued 50,316,672 and outstanding

46,881,475 shares of its common stock, par value $ 0.01 per share.

The Company held 3,435,197 shares of its common stock, $ .01 par value,

in treasury at December 31, 2023 and 2022.

Holders of outstanding common stock are entitled to receive dividends when, and if declared

by the Board and to share ratably in the assets of the Company legally available for distribution in the event of a liquidation, dissolution

or winding up of the Company.

Summary Employee Option Information

12 unchanged sentences

of 5,760,000 options have been issued to directors and investor relations professionals.

INTERNATIONAL CORP.

to Financial Statements

Company utilized the Black-Scholes option-pricing model to estimate fair value, utilizing the following assumptions for the respective

years (all in weighted averages):

SCHEDULE OF FAIR VALUE OF OPTION USING VALUATION ASSUMPTIONS

Ended December 31,

OF FAIR VALUE OF OPTION USING VALUATION ASSUMPTIONS

Year Ended December 31,

Risk-free interest rate

8 unchanged sentences

The Company estimated volatility by considering

historical stock volatility over the expected term of the option.

The risk-free interest rates are based on the U.S.

Treasury yields

for a period consistent with the expected term.

The dividend yield of 0 % is based on the Company’s history and expectation of dividend

historical stock volatility over the period since the Company’s business focus shift to biotech.

The risk-free interest rates are

based on the U.S.

Treasury yields for a period consistent with the expected term.

The dividend yield of 0 % is based on the Company’s

history and expectation of dividend payout.

The Company has not paid and does not anticipate paying of dividends in the near future.

INTERNATIONAL CORP.

to Financial Statements

Summary Option Information

1 unchanged sentence

is presented below:

SCHEDULE OF STOCK OPTION ACTIVITIES

Ended December 31,

OF STOCK OPTION ACTIVITIES

Year Ended December 31,

Outstanding at beginning of year

Outstanding at end of

Exercisable at end of

Outstanding at end of year

Exercisable at end of year

compensation expense was approximately $ 303,000 and $ 283,000 in the years ending December 31, 2023 and 2022, respectively.

total compensation cost related to non-vested awards not yet recognized was approximately $ 13,000 as of December 31, 2022.

total compensation cost related to non-vested awards not yet recognized was approximately $ 13,000 and $ 13,000 , respectively, as of December

31, 2023 and 2022.

An award of 500,000 options granted on January 31, 2022 had special vesting provisions whereby the awards fully vested

outstanding as of December 31, 2021 were vested.

INTERNATIONAL CORP.

to Financial Statements

Company has issued warrants at exercise prices equal to or greater than market value of the Company’s common stock at the date

1 unchanged sentence

OF WARRANTS ACTIVITY

Ended December 31,

Year Ended December 31,

Outstanding at beginning of year

Forfeited or expired

Outstanding at end of

warrants outstanding at December 31, 2022 have a weighted average remaining contractual life of approximately six months.

6— INCOME TAXES

the years ended December 31, 2022 and 2021, the Company incurred net operating losses and, accordingly, no provision for income taxes

has been recorded.

In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets.

At December 31, 2022 and 2021, the Company had approximately $ 61,000,000 and $ 118,000,000 , respectively, of net operating losses subject

to IRC Section 382 limitations, of which $ 6,400,000 and $ 6,200,000 , respectively, were available for carryforward after the consideration

of IRC Section 382 limitations.

State of Florida net operating losses available for carryforward approximate the federal net operating

loss carryforward amounts.

federal and state net operating losses expire beginning in 2021.

Approximately $ 55,000,000 and $ 25,000,000 , respectively of federal and

state losses expired in December 2022, and approximately $ 23,000,000 and $ 3,000,000 , respectively, of federal and state losses expired

in December 2021.

The Company has approximately $ 1,775,000 in federal and state losses that do not expire.

The remaining losses expire

from 2023 through 2036.

The majority of these expiring losses are further limited by IRC section 382 as shown in the deferred tax table

All such deferred tax assets have been offset with a full valuation allowance.

Outstanding at end of year

warrant agreements were amended on May 12, 2023 to extend the expiration date to June 28, 2025 .

The warrants outstanding at December

31, 2023 have a weighted average remaining contractual life of approximately one and a half years .

The Company recognized $ 243,000 in

stock-based compensation expense related to the increase in fair value of warrants pursuant to the modification of the warrant term during

the year ended December 31, 2023.

No such expense was recognized related to the warrants during the year ended December 31, 2022.

INTERNATIONAL CORP.

to Financial Statements

6— INCOME TAXES

the years ended December 31, 2023 and 2022, the Company incurred net operating losses and, accordingly, no provision for income

taxes has been recorded.

In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any

At December 31, 2023 and 2022, the Company had approximately $ 54,000,000

and $ 61,000,000 ,

respectively of net operating losses subject to IRC Section 382 limitations, of which $ 9,900,000

and $ 6,400,000 ,

respectively, were available for carryforward after the consideration of IRC Section 382 limitations.

State of Florida net operating

losses available for carryforward approximate the federal net operating loss carryforward amounts.

Company’s federal and state net operating losses began expiring in 2021.

Approximately $ 8,000,000

and $ 4,000,000 ,

respectively of federal and state losses expired in December 2023, and approximately $ 55,000,000

and $ 25,000,000 ,

respectively, of federal and state losses expired in December 2022.

The Company has approximately $ 5,331,000

in federal and state losses that do not expire.

The remaining losses expire from 2024 through 2036.

The majority of these expiring

losses are further limited by IRC section 382 as shown in the deferred tax table below.

All such deferred tax assets have been

offset with a full valuation allowance.

Company’s income tax provision differs from the expense that would result from applying statutory rates to income before taxes.

3 unchanged sentences

OF INCOME BEFORE INCOME TAX

Ended December 31,

Computed tax at the federal statutory

Year Ended December 31,

Computed tax at the federal statutory rate of 21 %

$ ( 879,333 )

State income taxes, net of federal income tax

$ ( 160,803 )

State income taxes, net of federal income tax benefit

Foreign rate differential

Change in federal valuation

provision for income tax

Change in federal valuation allowance

Total provision for income tax

income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial

2 unchanged sentences

SCHEDULE OF DEFERRED TAX

of December 31,

Outside tax basis difference in

equity investments

Federal and state net operating loss carryforwards

available after consideration of IRC Section 382 limitations

As of December 31,

Outside tax basis difference in equity investments

Federal and state net operating loss carryforwards available after consideration of IRC Section 382 limitations

General business credit

Related party

interest and accretion of note discount

Loss on derivative instrument

Stock compensation

Net operating losses

Research and development credit carried forward

Total deferred tax assets

Federal and state net operating loss carryforwards

subject to IRC Section 382 limitations

Less valuation allowance for net operating

loss limitations

Federal and state net operating loss carryforwards subject to IRC Section 382 limitations

Less valuation allowance for net operating loss limitations

( 13,644,005 )

4 unchanged sentences

Subtotal deferred tax assets

Deferred tax liability,

equity method basis difference

( 1,034,941 )

deferred tax assets

Deferred tax liability, equity method basis difference

Net deferred tax assets

has evaluated all tax positions that could have a significant effect on the combined financial statements and determined the Companies

3 unchanged sentences

7— COMMITMENTS AND CONTINGENCIES

Company is the claimant in an arbitration proceeding against their 50 % partner in NetCo.

Company was the claimant in an arbitration proceeding against their 50 % partner in NetCo.

The Company initiated the arbitration proceeding

1 unchanged sentence

entertainment, digital media, merchandising and other ancillary markets.

Arbitration proceedings for the joint owners of NetCo concluded

during 2022 with final briefs being filed in January 2023.

The arbitrator has not rendered a decision as of the date of these financial

February 11, 2022, the Company entered into a nonrecourse litigation funding agreement (the “Agreement”) with Omni Bridgeway

(Fund 4) Invt.

(“Omni”) related to this arbitration proceeding.

The Agreement provides for Omni to fund all costs

related to the arbitration up to $ 1,000,000

in exchange for an assignment of a certain portion

of rights to and interest in claims related to this arbitration.

The agreement provides for specific calculations of the portion of any

claims collected to be received by Omni with the remainder collectible by the Company.

8 – RESTATEMENTS OF PREVIOUSLY ISSUED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

issued unaudited financial statements have been restated to reflect gains on dilution from the Company’s equity method

investment in NewStem.

The previously issued financial statements as of and for the three and six months ended June 30, 2022 and as

of and for the nine months ended September 30, 2022 contained an error whereby the Company did not recognize gains on the dilution

of its equity method investment in NewStem due to the issuance of stock to third parties.

following is a summary of the restatement:

OF ERROR CORRECTIONS AND PRIOR PERIOD ADJUSTMENTS

Originally Reported

September 30, 2022

Originally Reported

Total current assets

Investment in NewStem, Ltd

Total current liabilities

Stockholders’ equity

of Operations:

Originally Reported

Nine Months Ended September 30, 2022

Originally Reported

Loss before income taxes

$ ( 270,283 )

Provision for income tax

Net loss before equity in net loss of equity method investees

Equity in net income (loss) of equity method investees

Balance Sheet:

Originally Reported

June 30, 2022

Originally Reported

Total current assets

Investment in NewStem, Ltd

Total current liabilities

Stockholders’ equity

Statements of Operations:

Originally Reported

Six Months Ended June 30, 2022

Originally Reported

Loss before income taxes

Provision for income tax

Net loss before equity in net loss of equity method investees

Equity in net income (loss) of equity method investees

Statements of Operations:

Originally Reported

Three Months Ended June 30, 2022

Originally Reported

Loss before income taxes

$ ( 229,982 )

Provision for income tax

Net loss before equity in net loss of equity method investees

Equity in net income (loss) of equity method investees

NOTE 9— SUBSEQUENT

Company evaluated subsequent events through the date these financial statements were available to be issued and filed with the SEC.

On March 23, 2023, the board

approved the grant of 360,000 stock options to directors and officers.

Third Amended and Restated Articles of Incorporation December 1999 (1)

Articles of Amendment to Articles of Incorporation 2004 (1)

Articles of Amendment to Articles of Incorporation 2018 (1)

Articles of Association of NewStem (1)

Equity Incentive Plan (1)

Joint Venture Agreement by and between the Company and NetCo (1)

Arbitration hearings were held at the end of July 2022.

proceedings for the joint owners of NetCo concluded during 2022 and the arbitrator rendered a decision in July 2023.

The arbitrator ruled against the Company on certain key issues of the arbitration and in the Company’s favor on two key issues of the arbitration.

Arbitrator ruled in NovelStem’s favor on the issue of contract interpretation of the Netco Partners JV Agreement.

The Arbitrator

also found that the Company’s joint venture partner failed to use “reasonable, good faith efforts” to license and exploit

the Net Force concept, in breach of its contractual obligations under the Netco Partners’ Joint Venture Agreement.

The Arbitrator

confirmed NovelStem’s contractual right to use Tom Clancy’s name as a possessory credit in the Net Force title (Tom Clancy’s

a result of this ruling, the costs related to the litigation funding agreement disclosed in Note 4 were recognized.

Total costs related

to the litigation and the related litigation funding agreement of $ 2,819,196 , including a reversal of the prior period contra expenses,

were recorded during the December 31, 2023 and were separately stated in the statement of operations.

8— SUBSEQUENT EVENTS

The Company evaluated subsequent events through the date these financial statements were available

to be issued and filed with the SEC.

During the fourth quarter of 2023,

the Company entered into negotiations with NewStem stockholders for the acquisition of the shares not held by the Company.

The negotiations

are ongoing for the transaction in which the Company would acquire all outstanding shares in exchange for shares of NovelStem stock.

management anticipates the transaction to conclude in the second quarter of 2024.

In anticipation of the Company acquiring the remaining

ownership of NewStem, the Company has loaned $ 500,000 to NewStem to ensure continuing operations.

The Company advanced $ 250,000 of this

loan to NewStem in December 2023 and the remainder in March 2024.

As disclosed in Note 4, related

party loan agreements were amended in March 2024 to increase the total borrowing to $ 650,000 and extend the maturity date to September

The Company received an advances of $ 250,000 on these agreements which was utilized to fund NewStem in March 2024 fully utilizing

available borrowings.

Amended and Restated Articles of Incorporation December 1999 (1)

of Amendment to Articles of Incorporation 2004 (1)

of Amendment to Articles of Incorporation 2018 (1)

of Association of NewStem (1)

Incentive Plan (1)

Venture Agreement by and between the Company and NetCo (1)

Financing Agreement dated May 2022 (1)

Amendment to Financing Agreement dated July 2022 (1)

to Financing Agreement dated July 2022 (1)

Promissory Note issued to Jan Loeb (1)

Promissory Note issued to Jerry Wolasky (1)

Form of NovelStem Subscription Agreement (1)

NewStem Share Purchase Agreement (1)

Redacted Litigation Funding Agreement with Omni Bridgeway (1)

Note issued to Jerry Wolasky (1)

of NovelStem Subscription Agreement (1)

Share Purchase Agreement (1)

Litigation Funding Agreement with Omni Bridgeway (1)

Promissory Note issued to Stephen Gans

1 st Amendment to Promissory Note issued to Jan Loeb

1 st Amendment to Promissory Note issued to Jerry Wolasky

Certification of Principal Executive Officer and Executive Chairman pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

9 unchanged sentences

Page Interactive Data File (embedded within the Inline XBRL document)

Financial statements of

fifty percent or less owned subsidiaries.

Financial Statements

As of December 31, 2022

Financial Statements as of December 31, 2022

Report of Independent Registered Public Accounting Firm

Balance Sheets

Statements of Operations

Statements of Changes in Shareholders’ Equity

Statements of Cash Flows

Notes to the Financial Statements

statements of fifty percent or less owned subsidiaries.

of December 31, 2023

Statements as of December 31, 2023

of Independent Registered Public Accounting Firm

of Operations

of Changes in Shareholders’ Equity

of Cash Flows

to the Financial Statements

Millennium Tower

12 unchanged sentences

generally accepted accounting principles.

accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note

1C to the financial statements, the Company has suffered recurring losses from operations and has an accumulated deficit that raise substantial

doubt about its ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

financial statements are the responsibility of the Company’s management.

22 unchanged sentences

We determined that there are no critical audit matters.

/s/ Somekh Chaikin

Firm of KPMG International

have served as the Company’s auditor since 2021.

Somekh Chaikin, an Israeli partnership and a member firm of the KPMG global organization of independent member firms affiliated with

Somekh Chaikin, an Israeli partnership and a member firm of the KPMG global organization of independent member

firms affiliated with

KPMG International Limited, a private English company limited by guarantee

Sheets as of December 31,

US$ thousands

and cash equivalents

current assets

Cash and cash equivalents

Prepaid share-based payment

Other current assets

Total current assets

Non-current assets

Property and equipment, net

Liabilities and shareholders’ equity

current assets

and equipment, net

and shareholders’ equity

current liabilities

Accounts payable

Other liabilities

Total Current liabilities

Non-current liabilities

Convertible financial instrument

Total liabilities

Commitments and contingent liabilities

financial instrument

and contingent liabilities

Shareholders’

paid-in capital

shareholders’ equity

Ordinary shares

Additional paid-in capital

Accumulated deficit

Total shareholders’ equity

Total liabilities and shareholders’ equity

Dilion Mashiah

liabilities and shareholders’ equity

of approval of the financial statements:

1 unchanged sentence

* Represents an amount

less than $1 thousands.

less than $1 thousand.

accompanying notes are an integral part of the financial statements.

of Operations for the Year Ended December 31,

US$ thousands

Operating expenses

Research and development expenses

Less – grants and participations received

Research and development expenses, net

General and administrative expenses

Operating loss

Financial (income) expenses, net

Loss for the year

and development expenses

– grants and participations received

and development expenses, net

and administrative expenses, net

accompanying notes are an integral part of the financial statements.

of Changes in Shareholders’ Equity

Ordinary shares

US$ thousands

Balance as of January 1, 2021

Issuance of ordinary shares in exchange

Issuance of ordinary shares in exchange of services

Stock based compensation

Loss for the year

Balance as of December 31, 2021

Issuance of ordinary shares, net

Stock based compensation

Loss for the year

Balance as of December 31, 2022

as of January 1, 2022

of ordinary shares, net

based compensation

as of December 31, 2022

of convertible financial instrument

based compensation

as of December 31, 2023

* Represents an amount

less than $1 thousands.

less than $1 thousand.

accompanying notes are an integral part of the financial statements.

of Cash Flows for the year ended December 31

US$ thousands

Cash flows from operating activities

Loss for the year

Adjustments required to reconcile loss to net cash used in operating

Revaluation of marketable securities

Revaluation of convertible financial instrument

Stock based compensation

Decrease (increase) in other current assets

Increase (decrease) in other liabilities

Increase (decrease) in accounts payable

Net cash used in operating activities

Cash flows from investing activities

Proceeds from the sale of marketable securities

Purchase of property and equipment

Net cash provided by investing activities

Cash flows from financing activities

Proceeds from a convertible financial instrument

Issuance of shares, net

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

flows from operating activities

required to reconcile loss to net cash used in operating activities:

of convertible financial instrument

based compensation

in other current assets

in other liabilities

in accounts payable

cash used in operating activities

flows from financing activities

received from a related party

of ordinary shares, net

cash provided by financing activities

increase (decrease) in cash and cash equivalents

and cash equivalents at the beginning of the year

and cash equivalents at the end of the year

financing activities

of convertible financial instrument

accompanying notes are an integral part of the financial statements.

6 unchanged sentences

therapeutics for genetic and epigenetic diseases.

inception, the Company has accumulated a deficit of $ 7,970 thousand.

Company will need to obtain additional funds to continue its operations.

Management’s plans with regard to these matters include

continued development, marketing and licensing of its products, as well as seeking additional financing arrangements.

Although management

continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient cash from sales, licensing

or financing on terms acceptable to the Company.

The Company’s management has approved a contingent cost reductions in order to

adjust future operation expenses to its cash balance.

Following the fund-raising mentioned in Note 7D, and Note 12, and the Company’s

adjustment of its future operation expenses, the Company believes that its cash resources are sufficient for the operations of the next

inception, the Company has accumulated losses of US$ 9,089 thousand.

During the year ended December 31, 2023, the Company has incurred

losses of US$ 1,119 thousand.

As of December 31, 2023, the Company’s cash and cash equivalents balance is US$ 324 thousand, and the

net cash used in operating activities during 2023, is US$ 804 thousand.

Company will need to obtain additional funds to continue its operations over the next 12 months.

Management’s plans with regard

to these matters include continued development, marketing and licensing of its products, as well as seeking additional financing arrangements.

Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient

cash from sales, licensing or financing on terms acceptable to the Company (see also Note 1D).

The Company’s management has adopted

a cost reduction plan in order to adjust future operation expenses to its cash balance.

On October 23, 2023, the board of directors of

the Company unanimously resolved, due to the financial status of the Company, to hold a hearing for most of the Company’s employees

to be followed by a dismissal notice, which occurred on December 31, 2023.

above-mentioned events incur significant difficulties to continue to operate the Company’s business and there is a substantial

doubt about its ability to continue as a going concern during the look-forward period.

The financial statements do not include any adjustments

to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable

to continue as a going concern.

the brutal attacks on Israel, the mobilization of army reserves, and the Government declaring a state of war (“Iron Swords”

war) in October 2023, there was a decrease in Israel’s economic and business activity.

The security situation has led, inter alia,

to a disruption in the chain of supply and production, a decrease in the volume of national transportation, a shortage in manpower as

well as a decrease in the value of financial assets and a rise in the exchange rate of foreign currencies in relation to the shekel.

a result of the movement and work restrictions, the Company began operating on a limited scale, and most of the employees were instructed

to work from home.

In addition, the situation has brought further difficulties in management’s efforts to seek additional financing

arrangements.

these financial statements –

1 unchanged sentence

Party – Within its meaning in ASC 850, “Related Party Transactions”.

to the Financial Statements for the year ended December 31, 2023

2 - Significant Accounting Policies

3 unchanged sentences

financial statements are prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”).

Presentation of financial information

Functional currency

currency of the primary economic environment in which the Company conducts its operations is the U.S.

1 unchanged sentence

in US dollars and manages its budget in US dollars.

Future revenues are also expected to be generated in US dollars.

Accordingly, the

Company uses the U.S.

Initial revenues recorded in 2023 were generated in US dollars, and future revenues

are also expected to be generated in US dollars.

Accordingly, the Company uses the U.S.

dollar as its functional and reporting currency.

5 unchanged sentences

applicable to these financial statements, the most significant estimates and assumptions relate to stock-based compensation.

to the Financial Statements for the year ended December 31, 2022

2 - Significant Accounting Policies (cont’d)

Cash and cash equivalents

and cash equivalents include short-term bank deposits with an original maturity not exceeding three months, that is not restricted for

and equipment

Property and equipment

and equipment are stated at cost.

1 unchanged sentence

annual depreciation rate for Software and Computers is 33 %.

of the depreciation method, useful life and residual value are reviewed at least at the end of each reporting year and adjusted as

of the depreciation method, useful life and residual value are reviewed at least at the end of each reporting year and adjusted as necessary.

assets held and used by the Company, are reviewed for impairment whenever events or changes in circumstance indicate that the carrying

1 unchanged sentence

No such impairment was recorded in 2023 or 2022.

Concentrations

of credit risk

instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, and

marketable securities.

to the Financial Statements for the year ended December 31, 2023

2 - Significant Accounting Policies (cont’d)

Concentrations of credit risk

instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents.

and cash equivalents are invested in a major bank in Israel.

Management believes that the financial institution that hold the Company’s

investments are financially sound and, accordingly, a minimal credit risk exists with respect to these investments.

Management believes that the financial institution that holds the Company’s

investments is financially sound and, accordingly, a minimal credit risk exists with respect to these investments.

Company has no off-balance-sheet concentration of credit risk such as foreign exchange contracts, option contracts or other foreign hedging

arrangements.

Severance pays

to Section 14 of the Severance Compensation Law, 1963 (“Section 14”), the Company’s employees, covered by this section,

4 unchanged sentences

Deposits under Section 14 are not recorded as an asset in the Company’s balance sheet.

As of December 31, 2022

and 2021, all of the Company’s employees are included under Section 14.

Marketable securities

securities are recorded at fair value.

Changes in fair value of the securities are reported as financial income or expenses in the statement

of operations.

and development costs

All of the Company’s

employees are included under Section 14.

Research and development costs

and development expenses consist mainly of labor costs.

Costs are expensed as incurred.

grant received is presented as an offset from research and development expenses.

grant received is offset from research and development expenses.

What changed 10-K

Item 9A. Controls and Procedures