NovelStem International Corp. 10-K

Item 9A. Controls and Procedures. Our Principal Executive Officer and Chief Financial Officer conducted an evaluation of our controls and procedures. We have identified material weaknesses in our internal control and procedures and internal control over financial reporting. If not remediated, our failure to establish and maintain effective disclosure controls and procedures and internal control over financial reporting could result in material misstatements in our financial statements and a failure to meet our reporting and financial obligations, each of which could have a material adverse effect on our financial condition and the trading price of our common stock. Maintaining effective internal control over financial reporting and effective disclosure controls and procedures are necessary for us to produce reliable financial statements. We have re-evaluated our internal control over financial reporting and our disclosure controls and procedures and concluded that they were not effective as of December 31, 2025 and we concluded there was a material weakness in the design of our 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. A material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Remediation Actions Management continues to focus on strengthening the Company’s internal controls within the parameters of what can be done with limited resources. As resources permit, management will continue to attempt to build the necessary capabilities and infrastructure to implement corrective action. At the current time, financial resources are limited thereby impeding the ability of management to employ personnel to provide proper separation of duties. Changes in Internal Control Over Financial Reporting There was no change in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. None Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 17 PART III Item 10. Directors, Executive Officers and Corporate Governance. Biographical and certain other information concerning the Company’s officers and directors is set forth below. There are no familial relationships among any of our officers or directors. Except as indicated below, none of our directors is a director in any other reporting companies. None of our officers or directors has been affiliated with any company that has filed for bankruptcy within the last ten years. We are not aware of any proceedings to which any of our officers or directors, or any associate of any such officer or director is a party adverse to us or any of our subsidiaries or has a material interest adverse to us or any of our subsidiaries. Unless otherwise indicated, there are no arrangements or understandings between any officer and any other person pursuant to which such person was selected as an officer. Jan Loeb – President and Executive Chairman – 67 Mr. Loeb has more than forty years of business, money management and investment banking experience. He has served as Chairman of our Board since July 2018 and on September 29, 2022 was appointed as Executive Chairman. On January 13, 2023, Mr. Loeb was appointed President of the Company. He has been the Managing Member of Leap Tide Capital Management LLC since 2007 and has served as President and CEO of Acorn Energy, Inc. since January 2016 and as a Director since August 2015. He has been a Director of Keweenaw Land Association, Ltd. From 2005 to 2007, Mr. Loeb was President of Leap Tide’s predecessor, formerly known as AmTrust Capital Management Inc. He served as a Portfolio Manager of Chesapeake Partners from February 2004 to January 2005 and as Managing Director at Jefferies & Company, Inc. from 2002 to 2004. From 1994 to 2001, he served as Managing Director at Dresdner Kleinwort Wasserstein, Inc. (formerly Wasserstein Perella & Co., Inc.). Mr. Loeb was a Lead Director of American Pacific Corporation from 2013 to 2014 and a Director from 1997 to 2014. He also served as an Independent Director of Pernix Therapeutics Holdings Inc. (formerly, Golf Trust of America, Inc.) from 2006 to 2011 and as a Director of TAT Technologies, Ltd. from 2009 to 2016. Christine Jenkins – Vice President and Chief Financial Officer – 62 Ms. Jenkins has over thirty-six years of experience in public accounting, including audit, consulting and corporate tax. Ms. Jenkins is currently serving as a consultant providing audit and accounting consultation to publicly-traded and large privately held companies. From 2010 to 2018 Ms. Jenkins was an audit partner with Cherry Bekaert, LLP. Prior to Cherry Bekaert, from 1995 to 2010, Ms. Jenkins was a partner in a local accounting firm in Atlanta, GA. Prior experience included audit and tax positions in public accounting firms. Mitchell Rubenstein – Director – 71 Mr. Rubenstein co-founded and served as Chairman of HMC from its inception to June 2018, during which period the company returned approximately $37 million to shareholders in the form of dividends and share repurchases, including a tender offer. He founded Syfy Channel and numerous other media and digital businesses. Eric Richman – Director -64 Mr. Richman is a life science executive with significant leadership, operational and strategic experience from over twenty-five 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: ADMA). 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). David Seltzer – Director – 65 Mr. Seltzer is the CEO and Founder of Reliable 1 Laboratories LLC, a distributor of OTC medications and nutritional supplements to independent pharmacies, long-term care pharmacies, hospitals and government organizations. He is also a minority owner and Director at Leading Pharma LLC, a generic manufacturer of prescription drugs, having previously served as President and CEO and later Chairman of Hi-Tech Pharmacal Co., Inc., which was acquired by Akorn, Inc. for $640 million in 2014. Jerry Wolasky – Director – 65 Mr. Wolasky has over thirty-five years’ experience in the wholesale pharmaceutical business, most recently for the past sixteen years in his current role as President of HealthSource Distributors LLC. He previously served in executive positions of increasing responsibility for AmerisourceBergen, and its predecessor company, Bergen Brunswig. Tracy Clifford – Director -57 Ms. Clifford has over twenty years of experience in accounting and finance, including mergers and acquisitions of public companies. Ms. 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. Ms. 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. Ms. Clifford’s prior experience included accounting leadership positions at United Healthcare, the North Broward Hospital District and the audit team of Deloitte & Touche. 18 Audit Committee; Audit Committee Financial Expert The Company’s full board is functioning as our audit committee at the time of this Annual Report. Compensation Committee We 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 2025 and 2024. Nominating Committee We do not have a nominating committee. All directors participate in the nomination and election of directors. Section 16(a) Beneficial Ownership Reporting Compliance; Delinquent Section 16(a) Reports Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires our executive officers and directors, and persons who own more than 10% of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC. These persons are also required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. Further, we have implemented measures to assure timely filing of Section 16(a) reports by our executive officers and directors. Based solely on our review of such forms or written representations from certain reporting persons, we believe that during 2025 our executive officers and directors complied with the filing requirements of Section 16(a). Code of Ethics We 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. Changes in control There are no arrangements which may at a subsequent date result in a change in control of the Company. 19 Item 11. Executive Compensation. Executive and Director Compensation Summary Compensation Table Option All Other Salary Bonus Awards Compensation Total Name and Principal Position Year ($) ($) ($) ($) ($) Jan H. Loeb 2025 - - - - - President and Executive Chairman 2024 - - 5,924 (1) - 5,924 Christine Jenkins 2025 29,940 (2) - - - 29,940 Vice President and Chief Financial Officer 2024 48,275 (3) - - - 48,275 Mitchell Rubenstein 2025 - - - - - Director 2024 - - 5,924 (1) - 5,924 Eric Richman 2025 - - - - - Director 2024 - - 5,924 (1) - 5,924 David Seltzer 2025 - - - - - Director 2024 - - 5,924 (1) - 5,924 Jerry Wolasky 2025 - - - - - Director 2024 - - 5,924 (1) - 5,924 Tracy Clifford 2025 - - - - - Director 2024 - - 5,924 (1) - 5,924 (1) Represents the grant date fair value calculated in accordance with applicable accounting principles with respect to 100,000 options granted per Director and 100,000 options granted to the President and Executive Chairman on April 1, 2024 with an exercise price of $0.06. 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 4.34% (ii) an expected term of 5.09 years (iii) an assumed volatility of 116.9853% and (iv) no dividends. (2) Represents hourly fees due to Ms. Jenkins for the provision of services as Chief Financial Officer of the Company. (3) Represents hourly fees paid to Ms. Jenkins for the provision of services as Chief Financial Officer of the Company. 20 Executive Compensation for 2025 and 2024 Our Chief Financial Officer and Vice President, Ms. Jenkins is paid on an hourly basis. Mr. Loeb, our Executive Chairman and President does not receive any compensation for his role as an officer of the Company. The Company pays compensation to its directors pursuant to the NovelStem International Corp. Equity Incentive Plan (the “Plan”). The Plan provides for the grant to officers, directors, third party contractors and other future key employees of options to purchase shares of common stock. Under the Plan, the Company is authorized to issue up to 7,000,000 shares of common stock as equity awards under the Plan. Awards may be made in the form of options, stock appreciation rights (“SARs”), restricted stock or restricted stock units, or stock bonus awards in respect of the Company’s common stock of the Company. Grants to any single participant or non-executive director during any calendar year may not exceed 1,000,000 shares. The purchase price may be paid in cash or at the end of the option term, if the option is “in-the-money”, it is automatically exercised “net”. In a net exercise of an option, the Company does not require a payment of the exercise price of the option from the optionee but reduces the number of shares of common stock issued upon the exercise of the option by the smallest number of whole shares that has an aggregate fair market value equal to or in excess of the aggregate exercise price for the option shares covered by the option exercised. Each option is exercisable to one share of the Company’s common stock. Options awarded under the Plan shall be awarded at an exercise price of not less than the fair market value of a share of our common stock as of the grant date and shall vest and become exercisable after a period not to exceed seven (7) years. SARs awarded under the Plan shall have a strike price per share of common stock of not less than the fair market value of a share of our common stock, provided that, in the case of a SAR granted in tandem with an option, the strike price shall not be less than the exercise price of the related option. A SAR granted in tandem with an option shall become exercisable and shall expire according to the same vesting schedule and expiration provisions as the corresponding option, such date not to exceed seven (7) years of the grant date. In the event of the termination of an employee, third party service provider, officer or Director’s service on the Board of the Company for any reason other than for cause, all of the options which are then vested may be exercised within 18 months of such termination, provided that, in no event shall this extension period continue beyond the expiration of the term of the option(s). In addition, any such extension shall be applicable only to the extent that such option or options are vested and exercisable according to the terms of the Plan and any applicable option agreement. Any unvested options are immediately terminated on the effective date of the termination. In the event of termination of an employee, third party service provider, officer or Director’s service for cause, all options are forfeited and deemed cancelled and no longer exercisable as of the date of termination. 21 Outstanding Equity Awards at 2025 Fiscal Year End The following tables set forth all outstanding equity awards made to each of the Executives and Directors that were outstanding at December 31, 2025. Options to Purchase NovelStem International Corp. Stock Name Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Option Exercise Price ($) Option Expiration Date Jan H. Loeb 50,000 0.10 November 26, 2026 1,000,000 0.10 November 24, 2027 100,000 0.29 January 31, 2029 100,000 0.20 March 23, 2030 100,000 0.06 April 1, 2031 Mitchell Rubenstein 50,000 0.10 November 26, 2026 1,000,000 0.10 November 24, 2027 100,000 0.29 January 31, 2029 50,000 0.20 March 23, 2030 100,000 0.06 April 1, 2031 Eric Richman 50,000 0.10 November 26, 2026 50,000 0.10 November 24, 2027 100,000 0.29 January 31, 2029 50,000 0.20 March 23, 2030 100,000 0.06 April 1, 2031 David Seltzer 50,000 0.10 November 26, 2026 50,000 0.10 November 24, 2027 100.000 0.29 January 31, 2029 50,000 0.20 March 23, 2030 100,000 0.06 April 1, 2031 Jerry Wolasky 50,000 0.10 November 26, 2026 50,000 0.10 November 24, 2027 100,000 0.29 January 31, 2029 50,000 0.20 March 23, 2030 100,000 0.06 April 1, 2031 Tracy Clifford 50,000 0.10 November 26, 2026 1,000,000 0.10 November 24, 2027 100,000 0.29 January 31, 2029 50,000 0.20 March 23, 2030 100,000 0.06 April 1, 2031 Christine Jenkins 10,000 0.20 March 23, 2030 22 Option and Warrant Exercises None Non-qualified Deferred Compensation The Company has no deferred compensation plan in place during the years ended December 31, 2025 and 2024. Payments and Benefits Upon Termination or Change in Control There are no agreements in place with any Executive or Director that would provide for any amounts due under any termination scenario at December 31, 2025. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The following table sets forth certain information with respect to the beneficial ownership of our common stock, as of December 31, 2025, 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 and all directors as a group. The Company has no executive officers. Except as indicated in footnotes to this table, we believe that the shareholders named in this table will have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them, based on information provided to us by such shareholders. Security Ownership of Certain Beneficial Owners and Management Name and Address of beneficial owner (6) Amount and nature of beneficial ownership Percent of total common equity (1) Christine Jenkins 10,000 0.0 % Michael Sosnowik 2,770,270 5.2 % Stephen Gans 7,034,172 13.3 % Jan Loeb 5,470,673 (2)(4) 10.35 % Jerry Wolasky 10,322,973 (3)(4) 19.5 % Tracy Clifford 1,300,000 (4)(5) 2.5 % Eric Richman 904,054 (3)(4) 1.7 % Mitchell Rubenstein 2,408,108 (4)(5) 4.5 % David Seltzer 3,674,324 (3)(4) 6.9 % All directors and officers as a group (seven persons) 24,190,132 45.7 % (1) Applicable percentage ownership is based on 46,881,475 shares of common stock outstanding as of December 31, 2025, together with securities exercisable or convertible into shares of common stock within 60 days of December 31, 2025. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock that a person has the right to acquire beneficial ownership of upon the exercise or conversion of options, convertible stock, warrants or other securities that are currently exercisable or convertible or that will become exercisable or convertible within 60 days of December 31, 2025, 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 computing the percentage ownership of any other person. (2) Includes 1,108,108 held in an IRA and 874,528 held as Trustee for the Steinberg Family Trust. Includes options to purchase 1,050,000 million shares of common stock at an exercise price of $0.10 per share, options to purchase 100,000 shares of common stock at an exercise price of $0.29 per share, options to purchase 100,000 shares of common stock at an exercise price of $0.20 per share, and options to purchase 100,000 shares of common stock at an exercise price of $0.06 per share. (3) Includes options to purchase 100,000 shares of common stock at an exercise price of $0.10 per share, options to purchase 100,000 shares of common stock at an exercise price of $0.29 per share, options to purchase 50,000 shares of common stock at an exercise price of $0.20 per share, and options to purchase 100,000 shares of common stock at an exercise price of $0.06 per share. (4) Director. (5) Includes options to purchase 1,050,000 shares of common stock at an exercise price of $0.10 per share, options to purchase 100,000 shares of common stock at an exercise price of $0.29 per share, options to purchase 50,000 shares of common stock at an exercise price of $0.20 per share, and options to purchase 100,000 shares of common stock at an exercise price of $0.06 per share. (6) The address of each person is c/o NovelStem International Corp. 7740 Cavern Lane, Suite 100 Parkland FL 33067. 23 Securities authorized for issuance under equity compensation plans Equity Compensation Plan Information 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)) (a) (b) (c) Equity compensation plans approved by security holders - - - Equity compensation plans not approved by security holders 6,060,000 $ 0.1365 940,000 Total 6,060,000 $ 0.1365 940,000 Item 13. Certain Relationships and Related Transactions, and Director Independence. Jan Loeb, our President and Executive Chairman of the Board, was also the Chairman of the Board of NewStem until its liquidation. During 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 note agreements were refinanced in August 2024 providing for total borrowings of $750,000. The agreements provide for interest at a rate of 10% per annum and mature December 31, 2025. As of the date of this Annual Report, the full amount of $750,000 has been funded pursuant to these agreements and the maturity date has been extended to June 30, 2026. On 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 bore interest at zero percent (0%) and matured on May 5, 2025. This note agreement was restructured during 2025 to provide for a fixed amount of interest in lieu of the guarantee and beginning October 1, 2025, the note began to bear interest at a rate of 10% per annum. The note matures on December 31, 2026. In February 2025, our Executive Chairman began advancing funds to the Company for operating expenses in the form of an interim bridge loan until alternate funding sources can be found. The bridge loan matured December 31, 2025 and has been extended to June 30, 2026. The total advanced during the year ended December 31, 2025 was $161,867. Except 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 amount involved in the transaction exceeds the lesser of $120,000 or one percent of the average of our total assets at the year-end for the last two completed fiscal years. 24 Review, Approval or Ratification of Transactions with Related Persons The Board conducts an appropriate review of and oversees all related party transactions on a continuing basis and reviews potential conflict of interest situations where appropriate. The Board has adopted formal standards to apply when it reviews, approves or ratifies any related party transaction. In addition, the Board applies the following standards to such reviews: (i) all related party transactions must be fair and reasonable and on terms comparable to those reasonably expected to be agreed to with independent third parties for the same goods and/or services at the time they are authorized by the Board and (ii) all related party transactions should be authorized, approved or ratified by the affirmative vote of a majority of the directors who have no interest, either directly or indirectly, in any such related party transaction. Director Independence We have determined that, under the criteria established by NASDAQ and by our board of directors, Tracy Clifford, Eric Richman, Mitchell Rubenstein and David Seltzer are independent. Item 14. Principal Accountant Fees and Services. Accounting Fees Kreit & Chiu CPA LLP The following table summarizes the fees accrued and paid by NovelStem for professional services rendered by Kreit & Chiu CPA LLP for the years ended December 31, 2025 and 2024. 2025 2024 Audit fees $ 102,090 $ 113,030 Tax Fees - - All other fees - - Total $ 102,090 $ 113,030 Pre-Approval Policies and Procedures The Audit Committee’s current policy is to pre-approve all audit and non-audit services that are to be performed and fees to be charged by our independent auditor to assure that the provision of these services does not impair the independence of the auditor. The Audit Committee pre-approved all audit and non-audit services rendered by our principal accountant in 2025 and 2024. 25 PART IV Item 15. Exhibit and Financial Statement Schedules. (a) Financial Statements. The following financial statements are filed as part of this registration statement: NOVELSTEM INTERNATIONAL CORP. Years Ended December 31, 2025 and 2024 Index to Audited Financial Statements Page Audited Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID: 6651 ) F-1 Balance Sheets F-2 Statements of Operations F-3 Statements of Changes in Shareholders’ Equity (Deficit) F-4 Statements of Cash Flows F-5 Notes to Financial Statements F-6 26 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Shareholders of NovelStem International Corp. Opinion on the Financial Statements We have audited the accompanying balance sheets of NovelStem International Corp. as of December 31, 2025 and 2024, and the related statements of operations, shareholders’ equity (deficit), and cash flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of NovelStem International Corp. as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Going Concern The 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 an accumulated deficit of approximately $294 million and $296 million at December 31, 2025 and 2024, respectively, and 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. Basis for Opinion These financial statements are the responsibility of the entity’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to NovelStem International Corp. in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. NovelStem 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 audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ Kreit & Chiu CPA LLP We have served as NovelStem International Corp.'s auditor since 2024. Los Angeles, California March 25, 2026 F- 1 NOVELSTEM INTERNATIONAL CORP. BALANCE SHEETS 2025 2024 As of December 31, 2025 2024 ASSETS Current assets: Cash $ 333 $ 6,099 Accounts receivable, administrative fees - 10,500 Prepaid expenses 15,453 15,272 Total current assets 15,786 31,871 Investment in NetCo - 128,240 Total assets $ 15,786 $ 160,111 LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) Current liabilities: Accounts payable $ 215,958 $ 167,898 Accrued expenses 37,673 68,576 Notes payable, including accrued interest 317,734 250,000 Current portion of long-term notes payable, including accrued interest 1,295,405 4,059,366 Bridge loan payable, related party, including accrued interest 171,857 - Convertible debt, including accrued interest 118,814 108,646 Derivative liability, guarantee - 650,000 Total liabilities 2,157,441 5,304,486 Commitments and contingencies (see Note 7) - - Shareholders’ equity (deficit): Common stock, $ .01 par value, 100,000,000 shares authorized, 50,316,672 shares issued at December 31, 2025 and 2024 and 46,881,475 shares outstanding at December 31, 2025 and 2024 468,815 468,815 Additional paid-in capital 291,570,255 290,947,417 Accumulated deficit ( 293,980,971 ) ( 296,360,853 ) Treasury stock, at cost, 3,435,197 shares at December 31, 2025 and 2024 ( 199,754 ) ( 199,754 ) Total shareholders’ equity (deficit) ( 2,141,655 ) ( 5,144,375 ) Total liabilities and shareholders’ equity (deficit) $ 15,786 $ 160,111 The accompanying notes are an integral part of these financial statements. F- 2 NOVELSTEM INTERNATIONAL CORP. STATEMENTS OF OPERATIONS 2025 2024 Years Ended December 31, 2025 2024 Administrative fee income $ - $ 12,000 Operating expenses: General and administrative expenses 238,755 880,947 Litigation expenses (Note 7) - 58,975 Total operating expenses 238,755 939,922 Loss from operations ( 238,755 ) ( 927,922 ) Other (income) expenses: Loss on derivative instrument - 90,000 Gain on disposal of equity method investment ( 1,171,760 ) - Relief of indebtedness income ( 1,697,024 ) - Interest expense 256,219 425,417 Total other (income) expenses ( 2,612,565 ) 515,417 Income (loss) before income taxes 2,373,810 ( 1,443,339 ) Provision for income tax - - Net income (loss) before equity in net loss of equity method investees 2,373,810 ( 1,443,339 ) Equity in net income (loss) of equity method investees 640 ( 161,046 ) Income from (impairment of) equity method investee, NewStem 5,432 ( 1,628,657 ) Net income (loss) $ 2,379,882 $ ( 3,233,042 ) Basic and diluted net income (loss) per share: Net income (loss) per share - basic $ 0.05 $ ( 0.07 ) Weighted average number of shares outstanding – basic $ 46,881,475 $ 46,881,475 Net income (loss) per share - diluted $ 0.05 $ ( 0.07 ) Weighted average number of shares outstanding - diluted $ 47,795,437 $ 46,881,475 The accompanying notes are an integral part of these financial statements. F- 3 NOVELSTEM INTERNATIONAL CORP. STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT) Shares Stock Capital Deficit Shares Stock Equity Number Additional of Total Number of Common Paid-In Accumulated Treasury Treasury Shareholders’ Shares Stock Capital Deficit Shares Stock Equity Balance, December 31, 2023 46,881,475 $ 468,815 $ 290,907,217 $ ( 293,127,811 ) 3,435,197 $ ( 199,754 ) $ ( 1,951,533 ) Net loss - - - ( 3,233,042 ) - - ( 3,233,042 ) Stock issued - - - - - - - Stock-based compensation - - 40,200 - 40,200 Balance, December 31, 2024 46,881,475 468,815 290,947,417 ( 296,360,853 ) 3,435,197 ( 199,754 ) ( 5,144,375 ) Balance 46,881,475 468,815 290,947,417 ( 296,360,853 ) 3,435,197 ( 199,754 ) ( 5,144,375 ) Net income - - - 2,379,882 - - 2,379,882 Net income (loss) - - - 2,379,882 - - 2,379,882 Debt restructuring 614,000 614,000 Stock-based compensation - - 8,838 - - - 8,838 Balance, December 31, 2025 46,881,475 $ 468,815 $ 291,570,255 $ ( 293,980,971 ) 3,435,197 $ ( 199,754 ) $ ( 2,141,655 ) Balance 46,881,475 $ 468,815 $ 291,570,255 $ ( 293,980,971 ) 3,435,197 $ ( 199,754 ) $ ( 2,141,655 ) The accompanying notes are an integral part of these financial statements. F- 4 NOVELSTEM INTERNATIONAL CORP. STATEMENTS OF CASH FLOWS 2025 2024 Years Ended December 31, 2025 2024 Cash flows from operating activities: Net income (loss) $ 2,379,882 $ ( 3,233,042 ) Adjustments to reconcile net income (loss) to cash used in operating activities: Equity in net loss of equity method investees - 161,046 Impairment loss, NewStem - 1,628,657 Bad debt expense - 500,000 Accretion of discount on note payable 60,417 177,768 Loss on derivative instrument - 90,000 Gain on disposal of equity method investment ( 1,171,760 ) - Relief of indebtedness income ( 1,697,024 ) - Accrued interest added to short term notes payable 36,830 - Accrued interest added to long-term notes payable 136,647 206,999 Accrued interest added to bridge loan payable 9,990 - Accrued interest added to convertible debt 10,168 8,646 Stock-based compensation 8,838 40,200 Change in operating assets and liabilities: Accounts receivable, administrative fees 10,500 ( 10,500 ) Prepaid expenses ( 181 ) 18,268 Accounts payable 48,060 113,641 Accrued expenses - 26,353 Net cash used in operating activities ( 167,633 ) ( 271,964 ) Cash flows from investing activities: Loans made - ( 250,000 ) Net cash used in investing activities - ( 250,000 ) Cash flows from financing activities: Proceeds from convertible debt $ - $ 100,000 Proceeds from note payable, current - 375,000 Proceeds from bridge loan payable 161,867 - Net cash provided by financing activities 161,867 475,000 Net change in cash ( 5,766 ) ( 46,964 ) Cash at the beginning of the year 6,099 53,063 Cash at the end of the year $ 333 $ 6,099 Supplemental cash flow information: Cash paid during the period for: Interest $ 2,166 $ 1,922 Supplemental Non-Cash Investing and Financing Activities: Interest capitalized to notes payable $ 36,000 $ - Settlement of long term notes payable $ 2,997,025 $ - Settlement of derivative liability, net of interest $ 614,000 $ - The accompanying notes are an integral part of these financial statements. F- 5 NOVELSTEM INTERNATIONAL CORP. Notes to Financial Statements NOTE 1— NATURE OF OPERATIONS Description of Business NovelStem International Corp. (“NovelStem” or the “Company”) is a holding company whose principal assets consisted of an approximate 31 % equity interest in NewStem Ltd, an Israeli biotech company (“NewStem”) and its developed technology, and a 50 % equity interest in NetCo Partners (“NetCo”). The interest in NetCo was sold in May 2025 in a noncash transaction which settled significant debt of the Company in the form of a litigation funding agreement. NovelStem was formerly known as Hollywood Media Corp. The Company was incorporated in the State of Florida on January 22, 1993 and changed its name to NovelStem International Corp. in September 2018. NewStem focused on the development and commercialization of diagnostic technology that can predict patients’ anti-cancer drug resistance, allowing for targeted cancer treatments and the potential to reduce resistance to chemotherapy. NetCo is a legacy media business interest which owns “Net Force”, a book publishing franchise. Going Concern, Liquidity and Management’s Plans Since inception, the Company has accumulated a deficit of approximately $ 294,000,000 . The accumulated deficit of the Company subsequent to its business focus shift and name change in September 2018 is approximately $ 7,300,000 which is comprised primarily of allocated losses from equity method investments and general and administrative costs incurred by the Company. The Company will need to obtain additional funds to continue its operations. Management’s plans with regard to these matters include additional financing and fundraising as well as monetization of assets held related to equity method investments as well as potential merger or buyout transactions. Specifically, the Company sold its interest in NetCo to its joint venture partner in a transaction that satisfied the related debt (litigation funding agreement). Also, the Company is working with former NewStem management to monetize the technology of NewStem and has an agreement in place to receive up to $ 3,750,000 of any monetization of these licenses and related intangible assets. 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 the Company will realize any value from the retained interest in intangible assets or technology of NewStem, which was liquidated in August 2025 (see Note 3). The Company has in place a finance agreement with two individuals who are shareholders and directors under which it borrowed $ 750,000 and an additional finance agreement with a shareholder under which it borrowed $ 300,000 for working capital needs (see Note 4). Additionally, the Company entered into additional finance agreements with unrelated parties in December 2023 and April 2024 under which it borrowed an additional $ 450,000 for working capital needs and to fund NewStem (see Note 4). All funds available pursuant to these agreements have been received. During the year ended December 31, 2025, the Company’s executive chairman advanced $ 161,867 to the Company as an interim bridge loan to fund ongoing expenses. The Company will need to obtain additional funds to continue operations for the next 12 months. On May 9, 2025, the Company entered into a Settlement Agreement and Release whereby the investment in NetCo was monetized to settle the litigation funding liability to Omni Bridgeway in full. See Note 8. In 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 the intangible assets of NewStem. 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. F- 6 NOVELSTEM INTERNATIONAL CORP. Notes to Financial Statements NOTE 2— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Financial Accounting Standards Board (“FASB”) has established the FASB Accounting Standards Codification (“ASC”) as the single source of authoritative GAAP. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents include certain investments in highly liquid debt instruments with original maturities of three months or less at the date of purchase. The Company had no cash equivalents as of either year end. Equity Investments Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Whether or not the Company exercises significant influence with respect to an Investee depends on an evaluation of several factors, including, among others, representation on the Investee company’s board of directors and ownership level, which is generally a 20% to 50% interest in the voting securities of the Investee company. Under the equity method of accounting, an Investee company’s accounts are not reflected within the Company’s Balance Sheets or Statements of Operations; however, the Company’s share of the earnings or losses of the Investee company is reflected in the caption “Equity in net income (loss) of equity method investees” in the Statements of Operations. The Company’s carrying value in an equity method Investee company is reflected in the caption “Investment in Investee company” in the Company’s Balance Sheets. When the Company’s carrying value in an equity method Investee company is reduced to zero, no further losses are recorded in the Company’s financial statements unless the Company guaranteed obligations of the Investee company or has committed additional funding. When the Investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. The Company reviews equity investments for impairment on an annual basis, or earlier if events or changes in circumstances indicate that the carrying amounts might not be recoverable. The Company held a minority investment in an entity, NewStem, which was accounted for pursuant to the equity method of accounting until its dissolution in August 2025. Additionally, until May 9, 2025 the Company was a 50 % joint venture partner in NetCo which was accounted for pursuant to the equity method of accounting. See Note 3. Reclassifications Accrued interest of $ 30,903 has been reclassified from accrued expenses on the balance sheet to be presented as part of the related notes payable balance as of December 31, 2025. F- 7 NOVELSTEM INTERNATIONAL CORP. Notes to Financial Statements Derivative Financial Instruments The Company had in place a financial instrument, in the form of a note payable, which included an identified embedded derivative in the form of a guarantee. The identified embedded derivative was 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 arm’s 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, 2024, the Company recognized a loss on derivative financial instruments of $ 90,000 . 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 years ended December 31, 2025 and 2024. The financial instrument was amended on May 16, 2025 to remove the guarantee and replace the guarantee with fixed interest of $ 36,000 through September 30, 2025. This amendment terminated the embedded derivative and pursuant to ASC 470 for troubled debt restructuring with a related party. The Company recognized a gain on derivative financial instruments of $ 650,000 net of interest expense of $ 36,000 as an equity transaction for troubled debt restructuring during the year ended December 31, 2025. Treasury Stock Shares of common stock repurchased are recorded at cost as treasury stock. Stock-Based Compensation The Company accounts for stock-based awards in accordance with applicable accounting principles, which require compensation expense related to share-based transactions to be measured and recognized in the financial statements based on a determination of the fair value of the stock options. The grant date fair value is determined using the Black-Scholes-Merton (“Black-Scholes”) pricing model. For all stock options, the Company recognizes expense on an accelerated basis over the requisite service period (generally the vesting period of the equity grant). The Company’s option pricing model requires the input of highly subjective assumptions, including the expected stock price volatility, expected term, and forfeiture rate. Any changes in these highly subjective assumptions significantly impact stock-based compensation expense. Options awarded to purchase shares of common stock issued to non-employees in exchange for services are accounted for as variable awards in accordance with applicable accounting principles. Such options are valued using the Black-Scholes option pricing model. In the event of the termination of an employee, third party service provider, officer or Director’s service on the Board of the Company for any reason other than for cause, all of the options which are then vested may be exercised within 18 months of such termination, provided that, in no event shall this extension period continue beyond the expiration of the term of the option(s). In addition, any such extension shall be applicable only to the extent that such option or options are vested and exercisable according to the terms of the Plan and this Agreement. Any unvested options are immediately terminated on the effective date of the termination. In the event of termination of an employee, third party service provider, officer or Director’s service for cause, all options are forfeited and deemed cancelled and no longer exercisable on the date of termination. See Note 5 for the assumptions used to calculate the fair value of stock-based compensation. Upon the exercise of options, it is the Company’s policy to issue new shares rather than utilizing treasury shares. F- 8 NOVELSTEM INTERNATIONAL CORP. Notes to Financial Statements Income Taxes Deferred income taxes are determined using the asset and liability method in accordance with Accounting Standards Codification (“ASC”) Topic 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income taxes are measured using enacted tax rates expected to apply to taxable income in years in which such temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred income taxes is recognized in the statement of operations of the period that includes the enactment date. In addition, a valuation allowance is established to reduce any deferred tax asset for which it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized. Basic and Diluted Net Income (Loss) Per Share Basic net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares outstanding during the period, excluding treasury stock. Diluted net income (loss) per share is computed by dividing the net income (loss) 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. The dilutive effects of stock options and warrants are excluded from the computation of diluted net income (loss) per share if the effect of doing so would be antidilutive. The following data represents the amounts used in computing earnings per share and the effect on net income (loss) and the weighted average number of shares of dilutive potential common stock: SCHEDULE OF AMOUNTS USED IN COMPUTING EARNINGS PER SHARE AND EFFECT ON INCOME (LOSS) AND WEIGHTED AVERAGE NUMBER OF SHARES 2025 2024 Year Ended December 31, 2025 2024 Net income (loss) available to common shareholders $ 2,379,882 $ ( 3,233,042 ) Weighted average shares outstanding: -Basic 46,881,475 46,881,475 Basic net income (loss) per share $ 0.05 $ ( 0.07 ) Net income (loss) attributable to common shareholders $ 2,379,882 $ ( 3,233,042 ) Effect of dilutive securities: Convertible debt, interest 10,169 - Net income (loss) attributable to common shareholders $ 2,390,051 $ ( 3,233,042 ) Weighted average shares outstanding: -Basic 46,881,475 46,881,475 Add: Convertible Debt 913,962 - Add: Stock options - - -Diluted 47,795,437 46,881,475 Diluted net income (loss) per share $ 0.05 $ ( 0.07 ) F- 9 NOVELSTEM INTERNATIONAL CORP. Notes to Financial Statements Common stock equivalents excluded from the computation of earnings per share for the years ended: SCHEDULE OF OPTIONS AND WARRANTS EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE 2025 2024 Year Ended December 31, 2025 2024 Warrants - 3,000,000 Stock options 6,060,000 6,210,411 Convertible debt - 827,323 Anti-dilutive securities - 827,323 Recently Adopted Accounting Standards In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disaggregated information about a reporting entity’s effective tax rate reconciliation, as well as information related to income taxes paid to enhance the transparency and decision usefulness of income tax disclosures. The Company adopted ASU 2023-09 for the current year and has elected to apply the standard on a prospective basis. NOTE 3— EQUITY METHOD INVESTMENTS Investment in NewStem In 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 NewStem’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 resulting in an ownership interest of 30.51 % as of December 31, 2024 and until its liquidation in August 2025. The Company accounted for its investment in NewStem under the equity method. NewStem was a development stage company which incurred losses since its inception and generated only minimal revenues under a licensing agreement. NewStem was liquidated in August 2025. During the year ended December 31, 2024, the Company signed an agreement (the “Purchase Agreement”) to acquire the remainder of NewStem in exchange for shares of Company stock as well as funding for NewStem operations. 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 bore no interest and was payable on December 30, 2024. The agreement provided for discharge of the note upon the closing of the anticipated acquisition transaction. The Purchase Agreement was not fully consummated, and no Company shares were issued to NewStem shareholders in exchange for NewStem shares, therefore the note was not discharged. The Company determined that collection of the note was unlikely due to NewStem’s liquidation status and lack of assets. As such, the Company wrote the note off as a bad debt during the year ended December 31, 2024. The Company assessed its investment in NewStem for impairment on an annual basis or more frequently if indicators of impairment exist. During the year ended December 31, 2024, indicators of impairment became evident due to the inability of NewStem to raise funds. Due to the inability to raise funds, NewStem was unable to continue operations and dissolved in August 2025. The intangible assets of NewStem, including license agreements, have reverted to the licensor, Yissum (the commercial division of Hebrew University). The Company has reached an agreement with Yissum regarding the potential monetization of these intangible assets which provides for the Company to receive up to $ 3,750,000 in the event of re-licensing or monetizing the licenses or related technology developed by NewStem. Due to the current uncertainty of the timing of recovery of any value from these intangible assets and the liquidation status of NewStem, the Company fully impaired the investment in NewStem and reduced the carrying value to zero ($ 0 ) at December 31, 2024. On August 14, 2025, the Company received $ 5,432 from NewStem upon the final closing of their accounts which was recorded as a reduction of the previously recognized impairment loss in the condensed statements of operations for the year ended December 31, 2025. In October 2025, the Company wrote off all asset accounts and the related impairment and ceased accounting for NewStem. F- 10 NOVELSTEM INTERNATIONAL CORP. Notes to Financial Statements During the year ended December 31, 2024, the Company recorded a reimbursement due to NewStem of approximately $ 42,000 for audit and accounting related costs which was offset against the note receivable from NewStem. No such reimbursements were made during the year ended December 31, 2025. The following table represents the Company’s investment in NewStem: SCHEDULE OF INVESTMENTS 2025 2024 Year Ended December 31, 2025 2024 Investment in NewStem, beginning $ - $ 1,784,234 Allocation of net loss from NewStem - ( 155,577 ) Investment in NewStem before impairment - 1,628,657 Impairment loss recorded - ( 1,628,657 ) Investment in NewStem, ending $ - $ - The results of operations and financial position of the Company’s investment in NewStem are summarized below: SCHEDULE OF OPERATIONS AND FINANCIAL POSITION INVESTMENT 2025 2024 Year Ended December 31, 2025 2024 Condensed income statement information: Net revenues $ - $ - Gross margin $ - $ - Net loss $ - $ ( 510,000 ) Company’s allocation of net loss from NewStem $ - $ ( 155,577 ) 2025 2024 As of December 31, 2025 2024 Condensed balance sheet information: Current assets $ - $ 100,000 Non-current assets $ - $ 2,000 Current liabilities $ - $ 548,000 Non-current liabilities $ - $ - Investment in NetCo As of December 31, 2024, NovelStem owned a 50 % interest in NetCo, a joint venture that owns the Net Force publishing franchise. On May 9, 2025, the Company entered into a Settlement Agreement and Release whereby the investment in NetCo was sold to the Company’s JV partner for $ 1,300,000 to settle the related litigation funding liability to Omni Bridgeway in full. This transaction was fully consummated as funds were received by Omni Bridgeway from CP Partners pursuant to the terms of the agreement. F- 11 NOVELSTEM INTERNATIONAL CORP. Notes to Financial Statements The Company accounted for its investment in NetCo under the equity method and recognized nominal royalties and administrative fees from this arrangement. The Company assessed its investment in NetCo for impairment on an annual basis or more frequently if indicators of impairment existed. The following table represents the Company’s investment in NetCo: SCHEDULE OF INVESTMENTS 2025 2024 Year Ended December 31, 2025 2024 Investment in NetCo, beginning $ 128,240 $ 133,709 Allocation of net income (loss) from Netco 640 ( 5,469 ) Distribution from NetCo ( 640 ) - Sale of ownership interest in NetCo ( 128,240 ) - Investment in NetCo, ending $ - $ 128,240 The results of operations and financial position of the Company’s investment in NetCo are summarized below: SCHEDULE OF OPERATIONS AND FINANCIAL POSITION INVESTMENT 2025 2024 Year Ended December 31, 2025 2024 Condensed income statement information: Net sales $ 1,280 $ 1,479 Gross margin $ 1,280 $ 1,362 Net income (loss) $ 1,280 $ ( 10,938 ) Company’s allocation of net income (loss) from NetCo $ 640 $ ( 5,469 ) 2025 2024 As of December 31, 2025 2024 Condensed balance sheet information: Current assets $ - $ 1,305 Non-current assets $ - $ 272,799 Current liabilities $ - $ 10,748 Non-current liabilities $ - $ - F- 12 NOVELSTEM INTERNATIONAL CORP. Notes to Financial Statements NOTE 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 originally matured on December 21, 2024. The maturity date for both notes has been extended until June 30, 2026 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 $ 36,830 and $ 30,082 , respectively, for the years ended December 31, 2025 and 2024. Long-term notes payable are summarized as follows: SCHEDULE OF LONG TERM NOTES PAYABLE As of December 31, 2025 2024 Notes payable related parties: Notes payable director and Executive Chairman $ 821,766 $ 821,766 Accrued interest added to note balance 129,208 38,392 Total notes payable director and Executive Chairman 950,974 860,158 Note payable shareholder, principal amount 300,000 300,000 Accrued interest added to note balance 44,431 - Less unamortized discount - ( 60,417 ) Total note payable shareholder 344,431 239,583 Note payable, litigation funding agreement: Note payable Omni Bridgeway (Fund 4) Invt. 3 L.P. - 2,819,196 Accrued interest added to agreement balance - 140,429 Total note payable, litigation funding agreement - 2,959,625 Total notes payable 1,295,405 4,059,366 Less current portion ( 1,295,405 ) ( 4,059,366 ) Long-term notes payable $ - $ - During 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 note agreements were refinanced in August 2024 providing for total borrowings of $ 750,000 . The agreements provide for interest at a rate of 10 % per annum and matured December 31, 2025. As of the date of financial statements, the full amount of $ 750,000 has been funded pursuant to these agreements and the maturity date has been extended to June 30, 2026 . Interest expense related to these notes was $ 90,816 and $ 66,570 , respectively, for the years ended December 31, 2025 and 2024. On 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 bore interest at zero percent ( 0 %) and originally 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 which is reported separately on the balance sheet. The fair value of the note exceeded the proceeds, and the note was discounted at inception so that the net liability was the fair value of the derivative. Accretion of the note discount of $ 60,417 and $ 177,768 , respectively, is included in interest expense in the statement of operations for the years ended December 31, 2025 and 2024. This note agreement was restructured during 2025 to provide for a fixed amount of interest in lieu of the guarantee. This amendment, which was determined to be accounted for pursuant to the provisions of ASC 470 for troubled debt restructurings with related parties, ended the discounting of the note and the separate recording of an embedded derivative, as the note now bears interest and contains no identifiable embedded derivative. As such, the relief of the guarantee was recorded as an adjustment to equity in the accompanying financial statements and interest expense of $ 36,000 was accrued and treated as a reduction to equity. Beginning October 1, 2025, the note began to bear interest at a rate of 10 % per annum and $ 8,431 of interest expense was accrued during the year ended December 31, 2025. The note matures December 31, 2026 . F- 13 NOVELSTEM INTERNATIONAL CORP. Notes to Financial Statements Note Payable, Litigation Funding Agreement On February 11, 2022, the Company entered into a nonrecourse litigation funding agreement (the “Agreement”) with Omni Bridgeway (Fund 4) Invt. 3 L.P. (“Omni”) related to an arbitration proceeding disclosed in Note 7. The Agreement provided 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 provided 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 provided 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 July 2023, the arbitration was settled. As a result of the ruling disclosed in Note 7, the liability became probable and reasonably estimable, and the Company recorded the full liability due to Omni as of December 31, 2023. This liability consists of expenses funded by Omni of $ 933,065 , including $ 310,000 advanced for working capital, and related fees to Omni calculated as contractual multiples of funding totaling $ 1,886,131 for a total liability of $ 2,819,196 . This agreement bore interest at 5 % per annum beginning January 2024 and was payable in full on January 10, 2025. The Company accrued interest related to the Agreement of $ 37,400 and $ 140,429 , respectively, during the years ended December 31, 2025 and 2024. The Company began negotiations for settlement of this Agreement during 2024 and on May 9, 2025, the Company entered into a Settlement Agreement and Release with our JV partner in NetCo, C.P. Group, and Omni whereby our interest in NetCo was sold in exchange for funds of $ 1,300,000 which were paid directly to Omni by CP Group in full settlement and release of all liabilities related to the Litigation Funding Agreement. This transaction resulted in relief of indebtedness income of $ 1,697,024 during the year ended December 31, 2025. Bridge Loan In February 2025, Jan Loeb, Executive Chairman, began advancing funds to the Company for operating expenses in the form of an interim bridge loan until alternate funding sources can be found. The bridge loan matured December 31, 2025 and has been extended to June 30, 2026 . The Company is accruing interest at 10 % per annum for these advances. The total advanced during the year ended December 31, 2025 was $ 161,867 . Interest expense related to these advances was $ 9,990 , during the year ended December 31, 2025. Convertible Debt In April 2024, the Company borrowed $ 100,000 from unrelated parties pursuant to convertible debt agreements accounted for as debt. These agreements bear interest at 10 % per annum and matured December 30, 2025 . The maturity dates have been extended to June 30, 2026 . The unpaid principal balance of these notes and any accrued interest may be converted into shares of the Company’s common stock at a conversion price of $ 0.13 per share. Interest accrued related to these agreements was $ 17,595 and $ 8,646 , respectively, during the years ended December 31, 2025 and 2024. NOTE 5— EQUITY (a) General At December 31, 2025 and 2024, the Company had issued 50,316,672 shares and had 46,881,475 shares of its common stock outstanding with a par value of $ 0.01 per share. Holders 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 liquidation, dissolution or winding up of the Company. F- 14 NOVELSTEM INTERNATIONAL CORP. Notes to Financial Statements (b) Summary Employee Option Information The Company’s stock option plans provide for the grant to officers, directors, third party contractors and other future key employees of options to purchase shares of common stock. The purchase price may be paid in cash or at the end of the option term, if the option is “in-the-money”, it is automatically exercised “net”. In a net exercise of an option, the Company does not require a payment of the exercise price of the option from the optionee but reduces the number of shares of common stock issued upon the exercise of the option by the smallest number of whole shares that has an aggregate fair market value equal to or in excess of the aggregate exercise price for the option shares covered by the option exercised. Each option is exercisable to one share of the Company’s common stock. Most options expire within six years from the date of the grant and generally vest on the first anniversary date of their issuance. Pursuant to the Equity Incentive Plan approved by the Company’s board of directors on November 12, 2018, an aggregate of 6,360,000 options have been issued to directors and investor relations professionals of which 300,000 have expired and 6,060,000 remain outstanding. The Company utilized the Black-Scholes option-pricing model to estimate fair value, utilizing the following assumptions for the options issued (in weighted averages) during the year ended December 31, 2024: SCHEDULE OF FAIR VALUE OF OPTION USING VALUATION ASSUMPTIONS Risk-free interest rate 4.3 % Expected term, in years 5.09 Expected volatility 116.9 % Expected dividend yield 0 % Determined weighted average grant date fair value per option $ 0.06 No options were issued during the year ended December 31, 2025. The expected term of the options represents an estimate of the length of time until the expected date of exercising the options. Options granted have a maximum life of 6 years. With respect to determining expected exercise behavior, the Company has grouped its option grants into certain groups in order to track exercise behavior and establish historical rates. The Company estimated volatility by considering historical stock volatility over the period since the Company’s shift in business focus 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 dividends in the near future. (c) Summary Option Information A summary of the Company’s option plans as of December 31, 2025 and 2024, as well as changes during each of the years then ended, is presented below: SCHEDULE OF STOCK OPTION ACTIVITIES Year Ended December 31, 2025 2024 Number Weighted Number Weighted of Average of Average Options Exercise Options Exercise (in shares) Price (in shares) Price Outstanding at beginning of year 6,360,000 0.135 5,760,000 0.143 Granted - - 600,000 0.060 Forfeited or expired ( 300,000 ) 0.100 - - Outstanding at end of year 6,060,000 0.137 6,360,000 0.135 Exercisable at end of year 6,060,000 0.137 5,760,000 0.135 Stock-based compensation expense was approximately $ 8,800 and $ 40,000 in the years ending December 31, 2025 and 2024, respectively. F- 15 NOVELSTEM INTERNATIONAL CORP. Notes to Financial Statements The total compensation cost related to non-vested awards not yet recognized was approximately $ 9,000 as of December 31, 2024. (d) Warrants The Company had issued warrants at exercise prices equal to or greater than market value of the Company’s common stock at the date of issuance. A summary of warrant activity follows: SUMMARY OF WARRANTS ACTIVITY Year Ended December 31, 2025 2024 Number of Weighted Number Weighted shares Average of Average underlying Exercise Options Exercise warrants Price (in shares) Price Outstanding at beginning of year 3,000,000 0.12 3,000,000 0.12 Granted - - - - Exercised - - - - Forfeited or expired ( 3,000,000 ) 0.12 - - Outstanding at end of year - - 3,000,000 0.12 The warrant agreements were amended on May 12, 2023 to extend the expiration date to June 28, 2025 . The warrants outstanding at December 31, 2024 had a weighted average remaining contractual life of approximately 1.5 six months, all warrants expired on June 28, 2025 . NOTE 6— INCOME TAXES For the years ended December 31, 2025 and 2024, the Company incurred tax basis 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, 2025 and 2024, the Company had approximately $ 41,000,000 and $ 48,000,000 , respectively of net operating losses subject to IRC Section 382 limitations, of which $ 13,600,000 and $ 10,600,000 , 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. The federal and state net operating losses began expiring in 2021. Approximately $ 7,400,000 and $ 1,100,000 , respectively of federal and state losses expired in December 2025, and approximately $ 5,000,000 and $ 300,000 , respectively, of federal and state losses expired in December 2024. The Company has approximately $ 9,032,000 in federal and state losses that do not expire. The remaining losses expire from 2026 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. The composition of income (loss) before income taxes is as follows: SCHEDULE OF INCOME LOSS BEFORE INCOME TAXES 2025 2024 Year Ended December 31, 2025 2024 Domestic $ 2,373,810 ( 1,443,339 ) The Company’s income tax provision differs from the expense that would result from applying statutory rates to income before taxes. Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 2, Recently Adopted Accounting Standards, the reconciliation of taxes at the federal statutory rate to our provision for income tax for the year ended December 31, 2025 was as follows: SCHEDULE OF FEDERAL STATUTORY RATE TO OUR PROVISION FOR INCOME TAX Amount Tax Rate Year Ended December 31, 2025 Amount Tax Rate Computed tax at the federal statutory rate of 21 % $ 498,500 21.00 % Increase (decrease) in income tax rate resulting from: Nondeductible/nontaxable items Stock compensation 1,856 0.00 % Interest, related party, note discount and limitation 53,806 2.00 % Loss on dissolution of equity method investment ( 840,000 ) ( 35.00 )% Other ( 1,148 ) 0.00 % State income taxes, net of federal income tax benefit 103,261 4.00 % Net Operating Loss Expiration 1,545,358 65.00 % Permanent difference - relief of indebtedness income ( 356,375 ) ( 15.00 )% Foreign rate differential Change in federal valuation allowance ( 1,005,258 ) ( 42.00 )% Total provision for income tax $ - 0.00 % As previously disclosed for the year ended December 31, 2024, prior to the adoption of ASU No. 2023-09, reconciliation of the provision (benefit) for income taxes with amounts determined by applying the statutory U.S. federal income tax rate to income before income taxes is as follows: Amount Tax Rate Year Ended December 31, 2024 Amount Tax Rate Computed tax at the federal statutory rate of 21 % ( 303,101 ) 21.00 % State income taxes, net of federal income tax benefit ( 62,785 ) 4.35 % Foreign rate differential ( 24,892 ) 1.72 % Change in federal valuation allowance 390,778 ( 27.07 )% Permanent difference - relief of indebtedness income - 0.00 % Total provision for income tax $ - 0.00 % The Company has changed the calculation of income tax at the statutory rate based on net loss after losses from equity method investments of $ 3,233,042 , as previously shown in our December 31, 2024 financial statements, to calculate income tax at the statutory rate based on net loss before income taxes, prior to the consideration of losses from equity method investments of $ 1,443,339 . F- 16 NOVELSTEM INTERNATIONAL CORP. Notes to Financial Statements Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets as of December 31, 2025 and 2024 consist of the following: SCHEDULE OF DEFERRED TAX ASSETS 2025 2024 As of December 31, 2025 2024 Outside tax basis difference in equity investments $ - $ 1,700,000 Federal and state net operating loss carryforwards available after consideration of IRC Section 382 limitations 3,610,354 2,801,830 General business credit 41,552 41,552 Related party interest and accretion of note discount 55,900 71,666 IRC Sec. 163(j) interest limitation 70,926 - Loss on derivative instrument - 92,750 Stock compensation 267,270 262,560 Total deferred tax assets $ 4,046,002 $ 4,970,358 Federal and state net operating loss carryforwards subject to IRC Section 382 limitations 10,906,631 13,644,005 Less valuation allowance for net operating loss limitations ( 10,906,631 ) ( 13,644,005 ) Valuation allowance ( 4,046,002 ) ( 4,968,553 ) Subtotal deferred tax assets - 1,805 Deferred tax liability, equity method basis difference - ( 1,805 ) Net deferred tax assets $ - $ - Management has evaluated all tax positions that could have a significant effect on the financial statements and determined the Company had no significant uncertain income tax positions at December 31, 2025 and 2024. NOTE 7— COMMITMENTS AND CONTINGENCIES The Company was the claimant in an arbitration proceeding against their 50 % partner in NetCo. Arbitration proceedings concluded during 2022, and the arbitrator rendered a decision in July 2023. The arbitrator ruled against the Company on certain key issues of arbitration and in the Company’s favor on two key issues of arbitration. As a result of this ruling, the costs related to the litigation funding agreement disclosed in Note 4 were recognized and a total liability of $ 2,819,196 was recorded. In May 2025 the Company’s interest in NetCo was sold in exchange for funds of $ 1,300,000 which were paid directly to Omni by CP Group in full settlement and release of all liabilities related to the Litigation Funding Agreement. NOTE 8— SUBSEQUENT EVENTS The Company evaluated subsequent events through the date these financial statements were available to be issued and filed with the SEC. To date in 2026, the Company borrowed additional funds totaling approximately $ 28,000 from the Executive Chairman pursuant to the interim bridge loan disclosed in Note 4. On March 13, 2026, the Company received $ 250,000 in exchange for 2,450,980.39 shares of common stock of the Company from an unrelated party. F- 17 (b) Exhibits. Exhibit Number Description 3.1 Third Amended and Restated Articles of Incorporation December 1999 (1) 3.2 Articles of Amendment to Articles of Incorporation 2004 (1) 3.3 Articles of Amendment to Articles of Incorporation 2018 (1) 3.4 Bylaws (1) 3.5 Articles of Association of NewStem (1) 10.1 Equity Incentive Plan (1) 10.2 Joint Venture Agreement by and between the Company and NetCo (1) 10.3 Financing Agreement dated May 2022 (1) 10.4 Amendment to Financing Agreement dated July 2022 (1) 10.5 Promissory Note issued to Jan Loeb (1) 10.6 Promissory Note issued to Jerry Wolasky (1) 10.7 Form of NovelStem Subscription Agreement (1) 10.8 NewStem Share Purchase Agreement (1) 10.9 Redacted Litigation Funding Agreement with Omni Bridgeway (1) 10.10 Promissory Note issued to Stephen Gans (1) 10.11 1 st Amendment to Promissory Note issued to Jan Loeb (1) 10.12 1 st Amendment to Promissory Note issued to Jerry Wolasky (1) 10.13 1 st Amendment to Promissory Note issued to Stephen Gans (1) 10.14 Bridge Note issued to Jan Loeb (1) 10.15 2 nd Amendment to Promissory Note issued to Stephen Gans (1) 10.16 Certification of Principal Executive Officer and Executive Chairman pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 10.17 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 10.18 Certification of Principal Executive Officer and Executive Chairman pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 10.19 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) (1) Previously filed. Item 16. Form 10–K Summary. Not applicable 27 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 25, 2026. NovelStem International Corp. By: /s/ Jan H Loeb Jan H. Loeb President and Executive Chairman Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Jan H. Loeb President and Executive Chairman March 25, 2026 Jan H. Loeb /s/ Christine Jenkins Vice President and Chief Financial Officer March 25, 2026 Christine Jenkins /s/ Mitchell Rubenstein Director March 25, 2026 Mitchell Rubenstein /s/ Eric Richman Director March 25, 2026 Eric Richman /s/ David Seltzer Director March 25, 2026 David Seltzer /s/ Jerry Wolasky Director March 25, 2026 Jerry Wolasky /s/ Tracy Clifford Director March 25, 2026 Tracy Clifford 28