NovelStem International Corp. 10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31 , 2024 Commission file number: 001-14332 ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 NOVELSTEM INTERNATIONAL CORP. (Exact name of registrant as specified in its charter) Florida 65-0385686 State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) 2255 Glades Road , Suite 221A , Boca Raton , FL 33431 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code (410) 598-9024 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered None Securities registered pursuant to section 12(g) of the Act: Common Stock, par value $0.01 per share (Title of Class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Ex- change Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒ As of the last day of the second fiscal quarter of 2024, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $ 3,282,000 based on the closing sale price on that date as reported on the OTCQB marketplace. As of April 7, 2025, there were 46,881,475 shares of Common Stock, $ 0.01 par value per share, outstanding. DOCUMENTS INCORPORATED BY REFERENCE None TABLE OF CONTENTS PAGE PART I Item 1. BUSINESS 3 Item 1A. RISK FACTORS 8 Item 1B. UNRESOLVED STAFF COMMENTS 12 Item 1C. CYBERSECURITY 12 Item 2. PROPERTIES 12 Item 3. LEGAL PROCEEDINGS 12 Item 4. MINE SAFETY DISCLOSURES 12 PART II Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 13 Item 6. [RESERVED] 13 Item 7. MANAGEMEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 14 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 17 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 17 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 17 Item 9A. CONTROLS AND PROCEDURES 18 Item 9B. OTHER INFORMATION 18 Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 18 PART III Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 19 Item 11. EXECUTIVE COMPENSATION 21 Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 24 Item 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE 25 Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 26 PART IV Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 27 Item 16. FORM 10-K SUMMARY 29 Certain statements contained in this report are forward-looking in nature. These statements can be identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “will”, “should” or “anticipates”, or the negatives thereof, or comparable terminology, or by discussions of strategy. You are cautioned that our business and operations are subject to a variety of risks and uncertainties and, consequently, our actual results may materially differ from those projected by any forward-looking statements. Certain of such risks and uncertainties are discussed below under the heading “Item 1A. Risk Factors.” 2 PART I Item 1. Business. NovelStem International Corp. (“NovelStem” or the “Company”) is a holding company whose principal assets are a 50% equity interest in NetCo Partners (“NetCo”) and an approximately 31% interest in NewStem Ltd, an Israeli biotech company (“NewStem”). 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. With the purchase of NewStem, the Company expanded its business focus from media to cutting edge biotech. As a significant shareholder in NewStem, and the substantial commitment of our management and financial resources to NewStem, including the fact that our Executive Chairman, Jan Loeb, is also the Chairman of NewStem, we have the ability to exert significant influence over the management and operations of NewStem resulting in NewStem functioning as a minority operating subsidiary of the Company. Since his appointment in July 2018, Mr. Loeb has acted in an executive capacity on behalf of the Company and has served in a de facto leadership role. In September 2022, the Board appointed Mr. Loeb as Executive Chairman of NovelStem in order to ratify Mr. Loeb’s position and clarify his executive role. On January 13, 2023, the Board appointed Mr. Loeb as President. With respect to NewStem, Mr. Loeb, as the Chairman, calls and presides over the meetings of NewStem’s Board of Directors. Additionally, Mr. Loeb leverages his financial expertise by guiding NewStem’s financial and strategic planning, including the raising and deployment of capital, developing and modifying NewStem’s business plan and budget and by participating in the negotiation of NewStem’s material contracts as required. NewStem does not currently have an appointed Chief Financial Officer and, as such, Mr. Loeb serves as the de facto Chief Financial Officer and Chief Strategic Officer of NewStem. Through the second quarter of 2024, the Company was a development stage biotechnology holding company focused on the stem cell-based technology developed by Hebrew University under exclusive license to NewStem. The Company signed an agreement (the “Purchase Agreement”) on June 20, 2024 to acquire the remainder of NewStem in exchange for Company stock as well as funding for NewStem. The Company was unable to obtain funding to proceed and the Purchase Agreement was not fully consummated. As such, no Company shares were issued to NewStem shareholders in exchange for NewStem shares. During the third quarter of 2024, it became evident that NewStem would not be able to raise funds to continue operations consisting of research and development and further development of the technology. In October 2024, NewStem ceased operations and began the process of liquidation under which the current state of the technology reverts back to the original licensor with the Company retaining a financial interest in any future licensing. NovelStem depends entirely on earnings and cash from its investments in NewStem and the NewStem technology and our 50% equity interest in the NetCo joint venture. The Company’s principal operations coincided with those of NewStem. We have not received any dividend payments or other distributions from NewStem in the fiscal years ended December 31, 2024 and 2023. We received distributions of earnings from NetCo of $6,875 during the fiscal year ended December 31, 2023. No such distributions of earnings were received during the fiscal year ended December 31, 2024. NewStem NewStem is a development stage Israeli biotech limited liability company that performed research focused on human Pluripotent Stem Cells (hPSCs) in general, and Haploid human Pluripotent Stem Cells (HhPSCs), in particular. These cells have the potential to change the face of medical research as they play a pivotal role in cancer research, regenerative medicine and disease therapy. NewStem established a discovery bio-platform based on haploid human embryonic stem cell technology for genome-wide screenings and is currently using this platform for the discovery and development of oncology drugs based on synthetic lethal interaction and developing a personalized diagnostic for early detection of chemotherapy resistance. NewStem has incurred losses since inception and has generated minimal revenues from a licensing agreement to date. NewStem filed an FDA Pre-Submission and received a CE Mark from the European Medicines Agency (EMA) for its in vitro diagnostic device (IVDD). NewStem does not have an FDA approved medical device. The NewStem Software Diagnostic Device (NSDD) is CE marked under EU regulation as an “other” IVD under Directive 98/79/EC since March 2022. 3 NewStem performs genome-wide genetic screening to identify synthetic lethal interactions with common cancer-related mutations. The first step in the process is to create a model with relevant cancer-related mutations in HhPSCs, where, subsequently, a library targeting approximately 18,000 coding genes is induced. At the end of this step, each cell has two mutations, one in the cancer related gene and the other in a coding gene. A genome-wide genetic screening is performed, both on normal HhPSCs and genomic modified HhPSCs to which a cancer-related mutation was inserted. The goal of such screens is to identify mutations that in combination with a cancer-related mutation will kill the cells. Following bioinformatic analysis of the genetic screening results, novel targets are identified and validated, first in HhPSCs and then cancer models (tumor organoids and PDX). NewStem has validated several targets in HhPSCs and will move next to validation in cancer models. To identify novel targets for drug development, NewStem performs genome-wide genetic screening. The validation process requires additional experiments that corroborate the results in independent experiments that are performed on haploid human embryonic stem cells and cancer models. For validated targets, artificial intelligence (AI) based drug discovery will be performed following by hit to lead process and ADMET that will support the transition to clinical trials. In reference to AI-based drug discovery, AI can assist in structure-based drug discovery by predicting the 3D protein structure and the chemical environment of the target protein site, thus helping to predict the effect of a compound on the target along with safety considerations before their synthesis or production and, accordingly, accelerates the drug development process. In reference to the hit to lead process- this is the iterative process of lead improvement. It is the stage where a hit, typically a small molecule identified in a high throughput screen, is chemically modified into a lead molecule following improvements in activity against the target. In reference to ADMET, this is the five-letter acronym for absorption, distribution, metabolism, excretion, and toxicity that describes pharmacokinetics. ADMET plays key roles in drug discovery and development. A high-quality drug candidate should not only have sufficient efficacy against the therapeutic target, but also show appropriate ADMET properties at a therapeutic dose. NewStem possesses pioneering intellectual property, reagents and experience related to the isolation and differentiation of HhPSCs and hPSCs, their genetic manipulation, immunogenicity, tumorigenicity and their unique capacity in disease modeling. We believe that NewStem is the only company worldwide to develop products based on this innovative proprietary technology. These products refer to the medical device platform that provides information to oncologists regarding the presence of mutations in the patient’s tumor profile which may confer resistance to different anti-cancer drugs and to anticancer drugs that target tumors with specific mutations based on a synthetic-lethal interaction approach. NewStem’s technology solutions are derived from an exclusive, worldwide license from Yissum Research Development Company, Hebrew University’s technology transfer company (“Yissum”) and The New York Stem Cells Foundation, based on the findings and inventions of Prof. Nissim Benvenisty, Director of the Azrieli Center for Stem Cells and Genetic Research, The Hebrew University of Jerusalem (the “License”). The License provided NewStem an exclusive worldwide license to make commercial use of the License and to develop, manufacture, market, distribute or sell a product in the field of therapeutics, diagnostics, screening, development and testing. In consideration for the grant of the License, NewStem was obligated to pay royalties of up to 3% of net sales and up to 12% of “Sublicense Consideration” (as defined in the License Agreement). As part of the ongoing liquidation of NewStem, the License reverts to the original holders and NovelStem retains a significant financial interest in any future monetization of the License. 4 NovelStem was the original seed investor in NewStem providing $2 million in July 2018 and another $2 million over the next two and a half years. We currently own a 30.51% equity interest in NewStem. The remaining equity interests in NewStem are owned by Yissum and Professor Benvenisty, each of whom owns a 30.51% equity interest, Illumina Cambridge LTD, which owns a 5.31% equity interest, and management and a number of other shareholders who own collectively approximately 3.18%. Currently, our President and Executive Chairman, Jan Loeb, is also the Chairman of the Board of NewStem. Professor Benvenisty and a representative of Yissum occupy the other two Board seats. Competition The technologies underlying future monetization of the License are subject to rapid and profound technological change. Competition intensifies as technical advances in each field are made and become more widely known. We can give no assurance that others will not develop services, products, or processes with significant advantages over the products, services, and processes that can be developed through the License. Any such occurrence could have a material and adverse effect on our business, results of operations and financial condition. Yissum plans to find new users for the technology based on the License. The success of a future licensee to enhance and broaden its product offerings in response to changing customer demands and competitive pressure and technologies will depend on numerous factors, including the ability to: - Properly identify and anticipate physician and patient needs; - Develop and introduce new products or product enhancements in a timely manner; - Adequately protect intellectual property and avoid infringing upon the intellectual property rights of third parties; - Demonstrate the safety and efficacy of new products; and - Obtain the necessary regulatory clearances or approvals for new products or product enhancements. Government Regulation In the United States, pharmaceutical products are subject to extensive regulation by the Federal Food and Drug Administration and Cosmetic Act or the FDA. The FDA and other federal and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling, and import and export of pharmaceutical products. The FDA has very broad enforcement authority and failure to abide by applicable regulatory requirements can result in administrative or judicial sanctions being imposed on NewStem, including warning letters, refusals of government contracts, clinical holds, civil penalties, injunctions, restitution, disgorgement of profits, recall or seizure of products, total or partial suspension of production or distribution, withdrawal of approval, refusal to approve pending applications, and criminal prosecution. FDA Approval Process NewStem’s therapeutic product candidates were expected to be regulated by the FDA as drugs. No manufacturer may market a new drug until it has submitted a New Drug Application, or NDA, to the FDA, and the FDA has approved it. 5 The testing and approval process requires substantial time, effort and financial resources, and any future licensee’s product candidates may not be approved on a timely basis, if at all. The time and expense required to perform the clinical testing necessary to obtain FDA approval for regulated products can frequently exceed the time and expense of the research and development initially required to create the product. The results of preclinical studies and initial clinical trials of NewStem’s product candidates are not necessarily predictive of the results from large-scale clinical trials, and clinical trials may be subject to additional costs, delays or modifications due to a number of factors, including difficulty in obtaining enough patients, investigators or product candidate supply. Failure by any licensee to obtain, or any delay in obtaining, regulatory approvals or in complying with requirements could adversely affect the commercialization of product candidates and the Company’s ability to receive licensing revenues. Other Regulatory Requirements After approval, drug products are subject to extensive continuing regulation by the FDA, which include obligations to manufacture products in accordance with Good Manufacturing Practice, or GMP, maintain and provide to the FDA updated safety and efficacy information, report adverse experiences with the product, keep certain records and submit periodic reports, obtain FDA approval of certain manufacturing or labeling changes, and comply with FDA promotion and advertising requirements and restrictions. Failure by a licensee to meet these obligations can result in various adverse consequences, both voluntary and FDA-imposed, including product recalls, withdrawal of approval, restrictions on marketing, and the imposition of civil fines and criminal penalties against the NDA holder. In addition, later discovery of previously unknown safety or efficacy issues may result in restrictions on the product, manufacturer or NDA holder. Outside the United States, a licensee’s ability to market a product is contingent upon receiving marketing authorization from the appropriate regulatory authorities. The requirements governing marketing authorization, pricing and reimbursement vary widely from jurisdiction to jurisdiction. At present, foreign marketing authorizations are applied for at a national level, although within the European Union registration procedures are available to companies wishing to market a product in more than one European Union member state. NewStem is also subject to various environmental, health and safety regulations including those governing laboratory procedures and the handling, use, storage, treatment, and disposal of hazardous materials. From time to time, and in the future, NewStem’s operations may involve the use of hazardous materials. 6 NetCo In June 1995, we and C.P. Group Inc. (“C.P. Group”), formed the joint venture, NetCo. NetCo owns the entertainment property, “Net Force”, about a division of the FBI investigating crimes and adventures involving the internet and the digital world. NovelStem and C.P. Group each own 50% of the ownership interest in NetCo. NetCo owns all rights in all media to the Net Force property including film, television, and video games. In 1997, NetCo licensed to Putnam Berkley the rights to publish the first six Net Force books in North America, which books were written and published. This agreement was subsequently renewed in December 2001 for four more books that were created and published. There was also a series of books targeted to the young adult market, Net Force Explorer, also published by Putnam Berkley. Net Force books have so far been published in mass market paperback format. The first book in the series was adapted as a four-hour mini-series on the ABC television network. In 2019, NetCo entered into a new publishing agreement with HarperCollins. Three novels and two Net Force novellas have been published under that agreement. Through its interest in NetCo, NovelStem receives distributions of its 50% share of proceeds generated from the rights to Net Force. At the time of this filing, the Company is in final negotiations to sell our interest in NetCo to our joint venture partner in exchange for the settlement of related debt in the form of a litigation funding agreement. Competition Competition in the publishing and video game industries is intense. Many new products and services are regularly introduced in each major industry segment (console, mobile and PC), but only a relatively small number of “hit” titles account for a significant portion of total revenue in each segment. NetCo’s competitors range from established interactive entertainment companies and diversified media companies to emerging start-ups, and we expect new competitors to continue to emerge throughout the world. See Item 3 – Legal Proceedings for information concerning proceedings related to NetCo. Employees We do not currently have any employees; however, the Company relies on consultants to perform the duties that would be performed by employees. Additional Financial Information For additional financial information regarding our operations, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Financial Statements included in this Annual Report. Available Information We file annual, quarterly and current reports and other information with the U.S. Securities and Exchange Commission (the “SEC”). These filings are available to the public over the internet at the SEC’s website at http://www.sec.gov. You may also read and copy any document we file at the SEC’s public reference room located at 100 F Street, NE, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our website can be found at http://novelstem.com. 7 Item 1A. Risk Factors. Our business is subject to certain risks, including those described below. If any of the events described in the following risk factors actually occurs then our business, results of operations and financial condition could be materially adversely affected. More detailed information concerning these risks is contained in other sections of this registration statement, including “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Risks Relating to our Business We are a holding company the principal assets of which are illiquid, ownership interests in NetCo and NewStem. Our Company’s primary assets are equity interests in NetCo and NewStem, including the residual value of relicensing the license formerly held by NewStem. We are a 50% partner in NetCo. Our President and Executive Chairman, Jan Loeb, is also the Chairman of NewStem. We conduct no other business and, as a result, we depend entirely upon earnings and cash flow from NewStem and its technology and NetCo. If we decide in the future to pay dividends, as a holding company, our ability to pay dividends and meet other obligations depends upon the receipt of dividends or other payments from our operating subsidiaries. Our investments in NewStem and NetCo are illiquid. Our shares in NewStem and its technology and our ownership interest in NetCo are illiquid and have extremely limited liquidity rights. The transferability of these interests is restricted under federal and state securities laws and the governing documents of each of NewStem and NetCo. We depend on our executive officers and consultants and other key individuals along with the executive officers and key individuals of NewStem to continue the implementation of our long-term business strategy and could be harmed by the loss of their services and our inability to make up for such loss with qualified replacements. We believe that our continued growth and future success will depend in large part on the skills of our management team and the management teams of NewStem, including subsequent monetization of the License and NetCo, and our partners’ respective abilities to motivate and retain these individuals and other key individuals. The loss of any of their service could reduce our ability to successfully implement our long-term business strategy which may result in a loss of revenue, and the value of our common stock could be materially adversely affected. Leadership changes will occur from time to time and we cannot predict whether significant resignations will occur or whether NewStem will be able to recruit additional qualified personnel. We believe these management teams possess valuable knowledge about our, NewStem’s and NetCo’s respective industries and that their knowledge and relationships would be very difficult to replicate. The loss of key personnel, or the inability to recruit and retain qualified and talented personnel in the future, could have an adverse effect on the respective businesses of NewStem and NetCo, and, consequently, our business, financial condition and/or operating results. We and NewStem have limited operating histories and have generated minimal revenue to date. We and NewStem have a limited operating history and do not have a meaningful historical record of sales and revenues, nor do we or NewStem have an established business track record. While we believe that we have the opportunity to be successful, there can be no assurance that we will be successful in accomplishing our business initiatives, or that we will be able to achieve any significant levels of revenues or net income. 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, 2024 and we concluded there was a material weakness in the design of our internal control over 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. 8 Rapid technological change could cause products to become obsolete, and if NewStem does not enhance its product offerings through research and development efforts, it may be unable to effectively compete. Success from NewStem’s efforts will depend upon Yissum’s ability to relicense the technology supported by the License. The technologies underlying NewStem’s products and the license technology are subject to rapid and profound technological change. Competition intensifies as technical advances in each field are made and become more widely known. We can give no assurance that others will not develop services, products, or processes with significant advantages over the products, services, and processes that has developed. Any such occurrence could have a material and adverse effect on our business, results of operations and financial condition. Yissum plans to find new users for the technology based on the License. The success of a future licensee to enhance and broaden its product offerings in response to changing customer demands and competitive pressure and technologies will depend on numerous factors, including the ability to: - Properly identify and anticipate physician and patient needs; - Develop and introduce new products or product enhancements in a timely manner; - Adequately protect intellectual property and avoid infringing upon the intellectual property rights of third parties; - Demonstrate the safety and efficacy of new products; and - Obtain the necessary regulatory clearances or approvals for new products or product enhancements. The value of our investment in NetCo and our ability to receive distributions may be affected by disputes between the Company and C.P. Group, our partner in NetCo. The Company and C.P. Group each hold a 50% interest in NetCo. The joint venture agreement governing NetCo provides for mutual decision making among the Company and C.P. Group generally (subject to exceptions) and arbitration in the event any controversy or disagreement arises. The Company and C.P. Group were previously in arbitration as to ongoing scope and the operation of NetCo. This arbitration was concluded 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. However, if we are unable proceed in the sale of our interest in NetCo to our Joint Venture partner or the successful utilization of the joint venture assets in a manner favorable to the Company, our investment in NetCo and our ability to continue to receive distributions from our interest in NetCo could have an adverse effect on our business, financial condition or operating results. 9 NetCo’s business is intensely competitive and “hit” driven. NetCo may not deliver “hit” products and services, or consumers may prefer a competitors’ products or services over NetCo. Competition in the publishing and video game industries is intense. Many new products and services are regularly introduced in each major industry segment (console, mobile and PC), but only a relatively small number of “hit” titles account for a significant portion of total revenue in each segment. NetCo’s competitors range from established interactive entertainment companies and diversified media companies to emerging start-ups, and we expect new competitors to continue to emerge throughout the world. If NetCo’s competitors develop and market more successful and engaging products or services, offer competitive products or services at lower price points, or if NetCo does not develop high-quality, well-received and engaging products and services, NetCo and our revenue, margins, and profitability will decline. If NetCo fails to develop relationships with new creative talent, its business could be adversely affected. NetCo’s business, in particular the trade publishing and media portions of the business, is highly dependent on maintaining strong relationships with the authors, illustrators and other creative talent who produce the products and services that are sold to its customers. Any overall weakening of these relationships, or the failure to develop successful new relationships, could have an adverse impact on NetCo and the Company’s business and financial performance. Risks relating to our common stock Because our holding company structure creates restrictions on the payment of dividends, our ability to pay dividends is limited. We are a holding company whose primary assets are our ownership of equity interests in NewStem and NetCo. We conduct no other business and, as a result, we depend entirely upon NewStem’s and NetCo’s earnings and cash flow. If we decide in the future to pay dividends, as a holding company, our ability to pay dividends and meet other obligations depends upon the receipt of dividends or other payments from NewStem or NetCo. NewStem and/or NetCo may be restricted in their ability to pay dividends, make distributions or otherwise transfer funds to us prior to the satisfaction of other obligations, including the payment of operating expenses or debt service, appropriation to reserves prescribed by laws and regulations, covering losses in previous years, restrictions on the conversion of local currency into U.S. dollars or other hard currency, completion of relevant procedures with governmental authorities or banks and other regulatory restrictions. We do not presently have any intention to declare or pay dividends in the future. You should not purchase shares of our common stock in anticipation of receiving dividends in future periods. Because we do not intend to pay any cash dividends on our common stock, our shareholders will not be able to receive a return on their shares unless they sell them. We intend to retain any future earnings to reduce debt. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Unless we pay dividends, our shareholders will not be able to receive a return on their shares unless they sell them. Shareholders may never be able to sell shares when desired. Before you invest in our securities, you should be aware that there are various risks. You should consider carefully these risk factors, together with all of the other information included in this annual report before you decide to purchase our securities. If any of the following risks and uncertainties develop into actual events, our business, financial condition or results of operations could be materially adversely affected. 10 Reporting requirement under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and compliance with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), including establishing and maintaining acceptable internal controls over financial reporting, are costly and may increase substantially. The rules and regulations of the SEC require a public company to prepare and file periodic reports under the Exchange Act, which require that the Company engage legal, accounting, auditing and other professional services. The engagement of such services is costly. Additionally, the Sarbanes-Oxley Act requires, among other things, that we design, implement and maintain adequate internal controls and procedures over financial reporting. The costs of complying with the Sarbanes-Oxley Act and the limited technically qualified personnel we have may make it difficult for us to design, implement and maintain adequate internal controls over financial reporting. In the event that we fail to maintain an effective system of internal controls or discover material weaknesses in our internal controls, we may not be able to produce reliable financial reports or report fraud, which may harm our overall financial condition and result in loss of investor confidence and a decline in our share price. We are working with our legal, accounting and financial advisors to identify those areas in which changes should be made to our financial and management control systems to manage our growth and our obligations as a public company. These areas include corporate governance, corporate control, disclosure controls and procedures and financial reporting and accounting systems. We have made, and will continue to make, changes in these and other areas. However, we anticipate that the expenses that will be required in order to adequately prepare for being a public company could be material. We estimate that the aggregate cost of increased legal services; accounting and audit functions; consultants to design and implement internal controls; and financial printing alone will be a few hundred thousand dollars per year and could be several hundred thousand dollars per year. In addition, we may incur additional expenses related to director compensation and/or premiums for directors’ and officers’ liability insurance, the costs of which we cannot estimate at this time. We may also incur additional expenses associated with investor relations and similar functions, the cost of which we also cannot estimate at this time. However, these additional expenses individually, or in the aggregate, may also be material. The continued increased costs associated with operating as a public company may decrease our net income or increase our net loss and may cause us to reduce costs in other areas of our business. Additionally, if these requirements divert our management’s attention from other business concerns, they could have a material adverse effect on our business, financial condition and results of operations. There is a very limited trading market for our common stock and investors are not assured of the opportunity to sell their stock, should they desire to do so. Our common stock is currently quoted on the OTC Pink Market. However, our stock has traded in very limited quantities in the past. We believe a significant factor in the limited market is our limited capitalization and liquidity, results of operations and the characterization of our stock as a “penny stock.” We hope to remedy our financial condition and results of operation in the future. This, in turn, may assist us in obtaining listing of our stock on other exchanges. However, there is no assurance that any of these objectives will be met or that the market will ever increase to a point where investors could sell their stock at a desirable price, should they desire to do so. The price of our common stock could be highly volatile. Our shares of common stock are quoted on the OTC Pink Market. It is likely that our common stock will be subject to price volatility, low volumes of trades and large spreads in bid and ask prices quoted by market makers. Due to the low volume of shares traded on any trading day, persons buying or selling in relatively small quantities may easily influence prices of our common stock. This low volume of trades could also cause the price of our stock to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of our common stock may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. If high spreads between the bid and ask prices of our common stock exist at the time of a purchase, the stock would have to appreciate substantially on a relative percentage basis for an investor to recoup their investment. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our common stock. No assurance can be given that an active market in our common stock will be sustained. If an active market does not continue, holders of our common stock may be unable to readily sell the shares they hold or may not be able to sell their shares at all. 11 We may be deemed an investment company, which could impose on us burdensome compliance requirements. The Investment Company Act of 1940, as amended (the “Investment Company Act”), requires companies to register as an investment company if they are engaged primarily in the business of investing, reinvesting, owning, holding, or trading securities. Generally, companies may be deemed investment companies under the Investment Company Act if they are viewed as engaging in the business of investing in securities or they own investment securities having a value exceeding 40% of certain assets. We are not in the business of investing, reinvesting, owning, holding or trading securities. However, if the Securities and Exchange Commission deems us to be an investment company, we may have imposed upon us additional burdensome requirements, including having to register as an investment company, adopting a specific form of corporation structure and having to comply with certain reporting, record keeping, voting, proxy, and disclosure requirements. Such additional requirements would require us to incur additional costs and have an adverse effect on our results of operations and our ability to effectively carry out our business plan. Item 1B. Unresolved Staff Comments. None Item 1C. Cybersecurity Risk Management and Strategy We focus on a comprehensive approach to identifying, preventing, and mitigating cybersecurity threats and incidents, as such term is defined in Item 106(a) of Regulation S-K, and have integrated these processes into our overall risk management systems and processes. As the Company has no operations and no employees, we have no operating procedures related to cybersecurity. We do design and monitor reasonable technical safeguards to minimize any identified risks with our financial reporting. Our risk management strategy also considers cybersecurity risks associated with the use of our third-party vendors and service providers. Governance Our Board of Directors oversees our cybersecurity risk management as part of its general oversight and management is responsible for the day-to-day management of material cybersecurity risks. Item 2. Properties . Our corporate office is located at 2255 Glades Road, Boca Raton, FL 33431. We believe that our facilities are adequate for current operations. Item 3. Legal Proceedings. As noted above, NetCo owns all rights to the “Tom Clancy’s Net Force” intellectual property in all media, including film, television, and video games. As part of the joint venture, NetCo has published more than a dozen books and had an ABC miniseries. After Tom Clancy passed away in 2013, his estate and business partners refused to cooperate in exploiting the intellectual property. After trying to amicably resolve the dispute, the Company initiated arbitration proceedings with the American Arbitration Association. The Company’s arbitration demand asserts claims for breach of the joint venture agreement and breach of fiduciary duty. Both claims arise from C.P. Group’s failure to make reasonable, good faith efforts to exploit the full array of media rights relating to Net Force. The Company’s goal is to maximize the total potential value of the NetCo intellectual property across video games, streaming, digital media, merchandising and other ancillary markets. The Company believes that the value of the intellectual property is significant. The arbitration evidentiary hearing concluded on October 20, 2022, and the arbitrator ordered the parties to submit post-hearing briefs. Final briefs were filed in January 2023. The Arbitrator ruled in the Company’s favor on two key issues of the arbitration and ruled against the Company in other key issues. The 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 Net Force). However, the arbitrator did not award any damages to the Company and did not cede operating control of the joint venture to the Company as requested. As such, the Company continues to struggle to maximize the potential of the NetCo asset. To fund efforts to maximize the value of NetCo, NovelStem has secured non-recourse litigation funding. As a result of this ruling, costs of approximately $2.900,000 related to the litigation funding agreement were recognized during the year ended December 31, 2023. Item 4. Mine Safety Disclosures. Not applicable 12 PART II [See General Instruction G2] Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market information There is no established public trading market in our common stock, and a regular trading market may not develop, or if developed, may not be sustained. Our securities are currently quoted on the OTC Markets Pink under the symbol “NSTM”. The following reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. High Low Fiscal 2025 Quarter ended 3/31/2025 $ 0.01 $ 0.01 Fiscal 2024 Quarter ended 12/31/2024 $ 0.04 $ 0.01 Quarter ended 9/30/2024 $ 0.07 $ 0.04 Quarter ended 6/30/2024 $ 0.07 $ 0.06 Quarter ended 3/31/2024 $ 0.08 $ 0.06 Fiscal 2023 Quarter ended 12/31/2023 $ 0.18 $ 0.06 Quarter ended 9/30/2023 $ 0.25 $ 0.13 Quarter ended 6/30/2023 $ 0.28 $ 0.14 Quarter ended 3/31/2023 $ 0.20 $ 0.15 Fiscal 2022 Quarter ended 12/31/2022 $ 0.21 $ 0.11 Quarter ended 9/30/2022 $ 0.28 $ 0.12 Quarter ended 6/30/2022 $ 0.33 $ 0.06 Quarter ended 3/31/2022 $ 0.30 $ 0.13 Fiscal 2021 Quarter ended 12/31/2021 $ 0.31 $ 0.20 Quarter ended 9/30/2021 $ 0.35 $ 0.19 Quarter ended 6/30/2021 $ 0.35 $ 0.23 Quarter ended 3/31/2021 $ 0.30 $ 0.16 Fiscal 2020 Quarter ended 12/31/2020 $ 0.20 $ 0.05 Quarter ended 9/30/2020 $ 0.09 $ 0.05 Quarter ended 6/30/2020 $ 0.13 $ 0.07 Quarter ended 3/31/2020 $ 0.13 $ 0.08 Holders As of April 7, 2025 there were 46,881,475 shares of common stock outstanding held by approximately 80 record holders. Dividends We have not paid cash dividends on any of our capital stock since our name change and business focus shift in 2018 and currently intend to retain our future earnings, if any, to fund the development and growth of our business. We do not expect to pay any dividends on any of our capital stock in the foreseeable future. Item 6. [Reserved] 13 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion includes statements that are forward-looking in nature. Whether such statements ultimately prove to be accurate depends on a variety of factors that may affect our business and operations. Certain of these factors are discussed in “Item 1A. Risk Factors.” The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes thereto and other financial information appearing elsewhere in this report. Overview We are a development stage company and reported net losses of approximately $3,233,000 and $4,187,000 for the years ended December 31, 2024 and 2023, respectively. We had current assets of approximately $32,000 and current liabilities of approximately $5,304,000 as of December 31, 2024. As of December 31, 2023, our current assets and current liabilities were approximately $87,000 and $346,000, respectively. We have prepared our financial statements for the years ended December 31, 2024 and 2023 assuming that we will continue as a going concern. Our continuation as a going concern is dependent upon improving our profitability and the continuing financial support from our shareholders as well as Yissum’s ability to successfully commercialize the License. Our sources of capital in the past have included the sale of equity securities, which include common stock sold in private transactions, and short-term debt. During the current year, we continued to borrow on existing finance agreements with two related party individuals and a shareholder to fund current operating expenses. Additionally, we entered into two convertible debt instruments to fund advances to NewStem. NewStem is a development stage Israeli biotech limited liability company focused on pioneering intellectual property related to haploid human embryonic stem cells for the development of personalized diagnostics and therapeutics for genetic and epigenetic diseases. NewStem has incurred losses related to in process research and development since inception and the Company records our percentage allocation of these net losses as incurred. In many cases, the accounting treatment of a particular transaction is specifically dictated by generally accepted accounting principles, with no need for management’s judgement in their application. There are also areas in which the selection of an available alternative policy would not produce a materially different result. Critical Accounting Policies The SEC defines “critical accounting policies” as those that require application of management’s most difficult, subjective or complex judgements, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and my change in subsequent periods. The following discussion of critical accounting policies represents our attempt to report on these accounting policies which we believe are critical to our financial statements and other financial disclosure. It is not intended to be a comprehensive list of all of our significant accounting policies, which are more fully described in Note 2 of the Notes to the Financial Statements included in this Annual Report. We have identified our accounting policies for stock-based compensation and accounting for derivative liabilities as critical accounting policies. We recognize stock-based compensation expense based on the fair value recognition provision of applicable accounting principles, using the Black-Scholes option valuation method. Accordingly, we are required to measure the cost of services received in exchange for an award of equity instruments based on the grant-date fair value of the award and to recognize that cost over the period during which services are provided in exchange for the award. Under the Black-Scholes method, we make assumptions with respect to the expected lives of the options that have been granted and are outstanding, the expected volatility, the dividend yield percentage of our common stock and the risk-free interest rate at the respective dates of grant. The expected volatility factor used to value stock options in 2024 was based on the historical volatility of the market price of our common stock over the period from our change to a biotechnology company, September 2018, through December 2024. For the expected term of the option, we used an estimate of the expected option life based on historical experience. The risk-free interest rate used is based upon U.S. Treasury yields for a period consistent with the expected term of the options. We assumed no quarterly dividend rate. Due to the numerous assumptions involved in calculating stock-based compensation expense, the expense recognized in our financial statements may differ significantly from the value realized by option holders on exercise of the share-based instruments. In accordance with the prescribed methodology, we do not adjust our recognized compensation expense to reflect these differences. For the years ended December 31, 2024 and 2023, we incurred stock compensation expense with respect to options and warrants of approximately $40,000 and $303,000, respectively. See Note 5 to the financial statements for the assumptions used to calculate the fair value of stock-based compensation. In accordance with Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging, we identify and, if applicable, bifurcate embedded derivatives in financial instrument instruments. Those embedded features that are identified, bifurcated and accounted for separately are measured at fair value continuously 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 we record the embedded derivative at fair value with the excess of fair value over proceeds recognized as a loss in earnings. 14 Results of Operations. The selected statement of operations data for the years ended December 31, 2024 and 2023 and balance sheet data as of December 31, 2024 and 2023 has been derived from our audited financial statements included in this Annual Report. This data should be read in conjunction with our financial statements and related notes included herein. Selected Statement of Operations Data: Years Ended December 31, 2024 2023 Change Administrative fee income $ 12,000 $ 12,000 $ - Operating expenses: G&A expenses $ 880,947 $ 665,277 $ 215,670 Litigation expenses 58,975 2,872,522 (2,813,547 ) Total operating expenses 939,922 3,537,799 (2,597,877 ) Loss from operations (927,922 ) (3,525,799 ) 2,597,877 Other expenses: Loss on derivative instrument 90,000 260,000 (170,000 ) Impairment loss on equity method investee 1,628,657 - 1,628,657 Interest expense 425,417 99,023 326,394 Total other expenses 2,144,074 359,023 1,785,051 Net loss before equity in net loss of equity method investees (3,071,996 ) (3,884,822 ) 812,826 Equity in net loss of equity method investees (161,046 ) (338,618 ) 177,572 Gain on dilution of equity method investment - 36,139 (36,139 ) Net loss $ (3,233,042 ) $ (4,187,301 ) $ 954,259 2024 Compared to 2023 We are a holding company whose primary assets are our ownership of equity interests in NetCo and NewStem including the technology of NewStem. We conduct no other business and as a result, we have no operating revenue or cost of revenue. We do charge annual administrative fees to an affiliated entity. The Company incurs general and administrative (“G&A”) expenses primarily related to professional fees, insurance and stock based compensation. We incurred G&A expenses of approximately $881,000 and $665,000 for the years ended December 31, 2024 and 2023, respectively. Our increase in G&A expenses relates primarily to bad debt incurred with the write off of notes receivable from NewStem, stock-based compensation and professional fees incurred in the audit of our financial statements for the years ended December 31, 2024 and 2023, preparation of our quarterly reports for 2024 and 2023, and for documents and advice related to our attempt to purchase the remaining shares of NewStem. Specifically, we wrote off as bad debt the net balance due from NewStem of $458,000 in the year ended December 31, 2024, and professional fees increased by approximately $40,000 in the year ended December 31, 2024 as compared to the year ended December 31, 2023. Insurance costs decreased by approximately $14,000 in the year ended December 31, 2024 as compared to the year ended December 31, 2023. Total stock compensation expense, included in G&A expenses, decreased by approximately $263,000 in the year ended December 31, 2024 as compared to the year ended December 31, 2023 due to a smaller number of options awarded in the current period as compared to the prior period as well as by the recognition of $243,000 in stock compensation expense in the year ended December 31, 2023 related to the increased value of our outstanding warrants due to the amendment of the agreements to extend the due date by two years. The remaining decrease in G&A expenses of approximately $5,000 during the year ended December 31, 2024 consists primarily of Decreases in expenses related to investor relations and information technology. We incurred costs related to litigation and the related litigation funding agreement involving our arbitration with our NetCo joint venture partner of approximately $59,000 and $2,873,000, respectively, for years ended December 31, 2024 and 2023. Specifically, the decrease of approximately $2,814,000 for the year ended December 31, 2024 as compared to 2023 is comprised of legal fees related to our NetCo arbitration including litigation funding fees due to Omni Bridgeway pursuant to the litigation funding agreement incurred in the year ended December 31, 2023 as compared to a lower amount incurred in the year ended December 31, 2024 related to final expenses not funded by Omni Bridgeway. 15 The Company has recorded a loss on derivative instrument of $90,000 and $260,000, respectively, for the years ended December 31, 2024 and 2023 related to a guarantee included in the note payable shareholder entered into in May 2023. The loss recorded in the year ended December 31, 2024 brings the derivative instrument to its highest contractual liability. The Company has recorded an impairment loss of approximately $1,629,000 during the year ended December 31, 2024 related to its investment in NewStem. This loss reduces our investment in NewStem to zero ($0.00) as of December 31, 2024. This adjustment was made in response to the fact that NewStem ceased operations and is in the process of liquidation. The technology and license held by NewStem reverted to the original licensee, Yissum, and the Company retains a right to a share of future licensing or monetization of the technology and license. The Company does expect to recover some value from the license, however, as of December 31, 2024, the realization of this value is not certain, therefore has not been recorded by the Company. No such adjustment was made during the year ended December 31, 2023. Interest expense increased by approximately $326,000 in the year ended December 31, 2024 as compared to the year ended December 31, 2023. The increases in interest expense are related to increased debt incurred for operations, the accrual of interest on the litigation funding agreement and the funding of NewStem. The Company has recorded no income tax expense as we have incurred operating losses and all deferred tax assets are fully offset by an income tax valuation allowance. We reported net losses from equity method investees during the years ended December 31, 2024 and 2023. The net losses reported for the year ended December 31, 2024 included net loss of approximately $5,000 from NetCo combined with net loss of approximately $156,000 from NewStem. Net losses reported for the year ended December 31, 2023 included net income of approximately $3,000 from NetCo which was offset by net loss of approximately $342,000 from NewStem. We reported a gain on dilution of our equity method investment related to stock issuances made to third parties by NewStem of approximately $36,000 during the year ended December 31, 2023. We incurred no such gain or loss during the year ended December 31, 2024. Liquidity and Capital Resources We have not paid dividends on our common stock since our name change and business focus shift in 2018. Our present policy is to apply cash to investments in product development at NewStem, acquisitions or expansion; consequently, we do not expect to pay dividends on common stock in the foreseeable future. The Company will need to obtain additional funds to continue its operations. Management’s plans with regard to these matters include the potential sale of our interest in NetCo to settle our liability related to the litigation funding agreement and additional financing and fundraising until our interest in NewStem’s technology is profitable. Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient cash from financing on terms acceptable to the Company, or that NewStem’s technology will be monetized and become profitable. During the year ended December 31, 2022, the Company entered into note agreements with Jan Loeb, our Executive Chairman and Jerry Wolasky, a member of the Board, to borrow up to an aggregate of $600,000 for working capital needs. The note agreements were amended in March 2024 to increase the total borrowing to $650,000 and extend the maturity date. The agreements provide for interest at a rate of 10% per annum. As of the date of this Annual Report, the full amount of $650,000 has been funded pursuant to these agreements. During the year ended December 31, 2023, the Company entered into a note agreement with a shareholder to borrow $300,000 for continued working capital. This note 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 $650,000 and $535,000 at December 31, 2024 and 2023, respectively. In December 2023, the Company entered into two short term notes payable with unrelated parties for a total of $250,000 in borrowings utilized for the funding of NewStem. The notes bear interest at 12% per annum and matured December 21, 2024, at which time all principal and accrued interest are due and payable. Prior to the filing of this Annual Report, the maturity date of these notes was extended to December 21, 2025. The note agreements include a provision whereby, in the event of a capital raise transaction by the Company, the note holders would be entitled to participate in the transaction in an amount equal to 133% of the amounts owed on the note agreements at the closing of the transaction. In April 2024, the Company borrowed $100,000 from unrelated parties pursuant to convertible debt agreements accounted for as debt. Net Cash Used In Operating Activities. For the year ended December 31, 2024, net cash used in operating activities was approximately $272,000, which consisted primarily of a net loss of approximately $3,233,000, offset by noncash equity in loss of equity method investees of approximately $161,000, impairment of equity method investees of approximately $1,629,000, bad debt expense of $500,000, and stock-based compensation of approximately $40,000. Further offset by loss on derivative instrument of $90,000, accretion of discount on notes payable of $178,000 and interest added to notes payable and convertible debt of approximately $215,000. Additionally, cash was used in operations related to an increase in current assets of approximately $8,000 and an increase in accrued liabilities and other payables of approximately $140,000. For the year ended December 31, 2023, net cash used in operating activities was approximately $348,000, which consisted primarily of a net loss of approximately $4,187,000, offset by noncash equity in loss of equity method investees of approximately $339,000 and distributions from equity method investees of $7,000, netted with gain on dilution of approximately $36,000 and stock-based compensation of approximately $303,000. Further offset by approximately $2,819,000 in cumulative noncash litigation expenses funded directly by the litigation funding agreement, loss on derivative instrument of $260,000, accretion of discount on notes payable of $62,000 and interest added to related party notes payable of $35,138. Additionally, cash was used in operations related to a decrease in current assets of approximately $19,000 and an increase in accrued liabilities and other payables of approximately $31,000. 16 Net Cash Used In Investing Activities. During the years ended December 31, 2024 and 2023, the Company loaned a total of $500,000, consisting of $250,000 per year to NewStem in anticipation of a purchase transaction. This transaction was not consummated and NewStem ceased operations and began liquidation proceedings in October 2024, resulting in the loan becoming uncollectible. As such, the Company determined the note was uncollectible and wrote the balance off as a bad debt during the year ended December 31, 2024. Net Cash Provided By Financing Activities. For the year ended December 31, 2024, net cash provided by financing activities was $475,000, consisting of long-term borrowings from two directors and a stockholder totaling $375,000 and borrowings from convertible debt with unrelated parties of $100,000. For the year ended December 31, 2023, net cash provided by financing activities was $645,000, consisting of long-term borrowings from two directors and a stockholder totaling $395,000 and short term borrowings from unrelated parties of $250,000. Off-Balance Sheet Arrangements We are not party to any off-balance sheet transactions. With the exception of a guarantee related to long term borrowings from a stockholder which is accounted for as a derivative, we have no guarantees or obligations other than those which arise out of normal business operations. Contractual Obligations and Commercial Commitments As of December 31, 2024, we had a contractual obligation related to our directors’ and officers’ insurance providing for 10 monthly installments of $5,127 payable through June 2025. As of December 31, 2023, we had a contractual obligation related to our directors’ and officers’ insurance providing for 10 monthly installments of $4,943 payable through June 2024. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. This section is not applicable. Item 8. Financial Statements and Supplementary Data. Furnished at the end of this Annual Report, commencing on page F-1. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None. 17 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, 2024 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. 18 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 – 66 Mr. Loeb has more than 40 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 – 61 Ms. Jenkins has over thirty-five 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 – 70 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 -63 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: 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 – 64 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 – 64 Mr. Wolasky has over 35 years’ experience in the wholesale pharmaceutical business, most recently for the past 15 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 -56 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. 19 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 2024 and 2023. 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 2024 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. 20 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 2024 - - 5,924 (1) - 5,924 President and Executive Chairman 2023 - - 16,573 (2) - 16,573 Christine Jenkins 2024 48,275 (3) - - - 48,275 Vice President and Chief Financial Officer 2023 54,000 (3) - 1,657 (1) - 55,675 Mitchell Rubenstein 2024 - - 5,924 (1) - 5,924 Director 2023 - - 8,286 (2) - 8,286 Eric Richman 2024 - - 5,924 (1) - 5,924 Director 2023 - - 8,286 (2) - 8,286 David Seltzer 2024 - - 5,924 (1) - 5,924 Director 2023 - - 8,286 (2) - 8,286 Jerry Wolasky 2024 - - 5,924 (1) - 5,924 Director 2023 - - 8,286 (2) - 8,286 Tracy Clifford 2024 - - 5,924 (1) - 5,924 Director 2023 - - 8,286 (2) - 8,286 (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 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. (3) Represents hourly fees paid to Ms. Jenkins for the provision of services as Chief Financial Officer of the Company. 21 Executive Compensation for 2023 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. 22 Outstanding Equity Awards at 2024 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, 2024. 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 12, 2025 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 12, 2025 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 12, 2025 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 12, 2025 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 12, 2025 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 12, 2025 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 Warrants to Purchase NovelStem International Corp. Stock Name Number of Securities Underlying Unexercised Warrants (#) Exercisable Number of Securities Underlying Unexercised Warrants (#) Unexercisable Warrant Exercise Price ($) Warrant Expiration Date Jan H. Loeb 2,250,000 - 0.13 June 28, 2025 Mitchell Rubenstein 750,000 - 0.10 June 28, 2025 Eric Richman - - - - David Seltzer - - - - Jerry Wolasky - - - - Tracy Clifford - - - - Christine Jenkins - - - - 23 Option and Warrant Exercises None Non-qualified Deferred Compensation The Company has no deferred compensation plan in place during the years ended December 31, 2024 and 2023. 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, 2024. 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, 2024, 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 5.0 % Stephen Gans 7,034,172 12.6 % Jan Loeb 7,770,673 (2)(4) 14.0 % Jerry Wolasky 10,272,973 (3)(4) 18.5 % Tracy Clifford 1,250,000 (3)(4) 2.2 % Eric Richman 854,054 (3)(4) 1.5 % Mitchell Rubenstein 3,108,108 (4)(5) 5.6 % David Seltzer 3,624,324 (3)(4) 6.5 % All directors and officers as a group (seven persons) 26,890,132 48.3 % (1) Applicable percentage ownership is based on 46,881,475 shares of common stock outstanding as of December 31, 2024, together with securities exercisable or convertible into shares of common stock within 60 days of December 31, 2024. 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, 2024, 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 warrants to purchase 2,250,000 million shares of common stock at an exercise price of $0.13 per share, options to purchase 1,100,000 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, and options to purchase 100,000 shares of common stock at an exercise price of $0.20 per share. (3) Includes options to purchase 150,000 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, and options to purchase 50,000 shares of common stock at an exercise price of $0.20 per share. (4) Director. (5) Includes options and warrants to purchase 1,850,000 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, and options to purchase 50,000 shares of common stock at an exercise price of $0.20 per share. (6) The address of each person is c/o NovelStem International Corp. 2255 Glades Road, Suite 221A, Boca Raton, FL 33431. 24 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 9,360,000 $ 0.1347 640,000 Total 9,360,000 $ 0.1347 640,000 Item 13. Certain Relationships and Related Transactions, and Director Independence. Jan Loeb, our President and Executive Chairman of the Board, is also the Chairman of the Board of NewStem. 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. 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 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 $650,000 at December 31, 2024. 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. 25 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 and Cherry Bekaert LLP for the years ended December 31, 2024 and 2023. 2024 2023 Audit fees $ 113,030 $ 111,605 Tax Fees - 6,400 All other fees - - Total $ 113,030 $ 118,005 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 2024 and 2023. 26 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, 2024 and 2023 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 27 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, 2024 and 2023, and the related statements of operations, shareholders’ equity (deficit), and cash flows for the two years 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, 2024 and 2023, and the results of its operations and its cash flows for each of the two years then ended, 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 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 April 7, 2025 F- 1 NOVELSTEM INTERNATIONAL CORP. BALANCE SHEETS 2024 2023 As of December 31, 2024 2023 ASSETS Current assets: Cash $ 6,099 $ 53,063 Accounts receivable, administrative fees 10,500 - Prepaid expenses 15,272 33,540 Total current assets 31,871 86,603 Investment in Netco 128,240 133,709 Note receivable, NewStem - 250,000 Investment in NewStem - 1,784,234 Total assets $ 160,111 $ 2,254,546 LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) Current liabilities: Accounts payable $ 167,898 $ 54,257 Accrued expenses 68,576 42,223 Notes payable 250,000 250,000 Current portion of long-term notes payable, including accrued interest 4,059,366 - Convertible debt, including accrued interest 108,646 Derivative liability, guarantee 650,000 - Total current liabilities 5,304,486 346,480 Long-term liabilities: Long-term notes payable, including accrued interest, net - 3,324,599 Derivative liability, guarantee - 535,000 Total long-term liabilities - 3,859,599 Total liabilities 5,304,486 4,206,079 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, 2024 and 2023 and 46,881,475 shares outstanding at December 31, 2024 and 2023 468,815 468,815 Additional paid-in capital 290,947,417 290,907,217 Accumulated deficit ( 296,360,853 ) ( 293,127,811 ) Treasury stock, at cost, 3,435,197 shares at December 31, 2024 and 2023 ( 199,754 ) ( 199,754 ) Total shareholders’ equity (deficit) ( 5,144,375 ) ( 1,951,533 ) Total liabilities and shareholders’ equity (deficit) $ 160,111 $ 2,254,546 The accompanying notes are an integral part of these financial statements. F- 2 NOVELSTEM INTERNATIONAL CORP. STATEMENTS OF OPERATIONS 2024 2023 Year Ended December 31, 2024 2023 Administrative fee income $ 12,000 $ 12,000 Operating expenses: General and administrative expenses 880,947 665,277 Litigation expenses 58,975 2,872,522 Total operating expenses 939,922 3,537,799 Loss from operations ( 927,922 ) ( 3,525,799 ) Other expenses: Loss on derivative instrument 90,000 260,000 Impairment loss on equity method investee 1,628,657 - Interest expense 425,417 99,023 Total other expenses 2,144,074 359,023 Loss before income taxes ( 3,071,996 ) ( 3,884,822 ) Provision for income tax - - Net loss before equity in net loss of equity method investees ( 3,071,996 ) ( 3,884,822 ) Equity in net loss of equity method investees ( 161,046 ) ( 338,618 ) Gain on dilution of equity method investment - 36,139 Net loss $ ( 3,233,042 ) $ ( 4,187,301 ) Basic and diluted net loss per share: Net loss per share - basic and diluted $ ( 0.07 ) $ ( 0.09 ) Weighted average number of shares outstanding – basic 46,881,475 46,881,475 Weighted average number of shares outstanding – diluted 46,881,475 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, 2022 46,881,475 $ 468,815 $ 290,604,327 $ ( 288,940,510 ) 3,435,197 $ ( 199,754 ) $ 1,932,878 Net loss - - - ( 4,187,301 ) - - ( 4,187,301 ) Stock-based compensation - - 302,890 - 302,890 Balance, December 31, 2023 46,881,475 468,815 290,907,217 ( 293,127,811 ) 3,435,197 ( 199,754 ) ( 1,951,533 ) Balance 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-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 ) The accompanying notes are an integral part of these financial statements. F- 4 NOVELSTEM INTERNATIONAL CORP. STATEMENTS OF CASH FLOWS 2024 2023 Year Ended December 31, 2024 2023 Cash flows from operating activities: Net loss $ ( 3,233,042 ) $ ( 4,187,301 ) Equity in net loss of equity method investees 161,046 338,618 Impairment loss, NewStem 1,628,657 - Gain on dilution of equity method investment - ( 36,139 ) Distribution from NetCo - 6,875 Bad debt expense 500,000 - Accretion of discount on note payable 177,768 61,815 Loss on derivative instrument 90,000 260,000 Legal fees and litigation funding fees funded by litigation funding agreement - 2,819,196 Accrued interest added to long-term note payable 206,999 35,138 Accrued interest added to convertible debt 8,646 - Stock-based compensation 40,200 302,890 Change in operating assets and liabilities: Accounts receivable, administrative fees ( 10,500 ) 12,000 Prepaid expenses 18,268 7,021 Accounts payable 113,641 33,054 Accrued expenses 26,353 ( 1,450 ) Net cash used in operating activities ( 271,964 ) ( 348,283 ) Cash flows from investing activities: Loans made ( 250,000 ) ( 250,000 ) Net cash used in investing activities ( 250,000 ) ( 250,000 ) Cash flows from financing activities: Proceeds from convertible debt $ 100,000 $ - Proceeds from note payable, current 375,000 250,000 Proceeds from long-term note payable - 395,000 Net cash provided by financing activities 475,000 645,000 Net (decrease) increase in cash ( 46,964 ) 46,717 Cash at the beginning of the year 53,063 6,346 Cash at the end of the year $ 6,099 $ 53,063 Supplemental cash flow information: Cash paid during the year for: Interest $ 1,922 $ 1,248 Supplemental Non-Cash Investing and Financing Activities: Interest added to notes payable and convertible debt $ 215,645 $ 35,138 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 are 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”). 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 $ 296,000,000 . The accumulated deficit of the Company subsequent to its business focus shift and name change in September 2018 is approximately $ 9,680,000 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. Specifically, the Company is in the final stages of the process of selling NetCo to its joint venture partner in a transaction that satisfies the related debt (litigation funding agreement). 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 intangible assets or technology of NewStem, which is currently in the process of liquidation due to its inability to raise funds for continued operations (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. The Company will need to obtain additional funds to continue operations for the next 12 months. 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 its investment in NetCo, along with monetizing 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. 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. F- 6 NOVELSTEM INTERNATIONAL CORP. Notes to Financial Statements 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 guarantied 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 holds a minority investment in an entity, NewStem, which is accounted for pursuant to the equity method of accounting. Additionally, the Company is a 50 % joint venture partner in NetCo which is accounted for pursuant to the equity method of accounting. See Note 3. 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 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 years ended December 31, 2024 and 2023, the Company recognized a loss on derivative financial instruments of $ 90,000 and $ 260,000 , respectively. 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, 2024 and 2023. Treasury Stock Shares of common stock repurchased are recorded at cost as treasury stock. F- 7 NOVELSTEM INTERNATIONAL CORP. Notes to Financial Statements Stock-Based Compensation The Company accounts for stock-based awards in accordance with applicable accounting principles, which requires 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. 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 Loss Per Share Basic 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 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. The dilutive effects of stock options and warrants are excluded from the computation of diluted net income per share if the effect of doing so would be antidilutive. F- 8 NOVELSTEM INTERNATIONAL CORP. Notes to Financial Statements 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 WEIGHTED AVERAGE NUMBER OF SHARES OF DILUTIVE 2024 2023 Year Ended December 31, 2024 2023 Net loss available to common shareholders $ ( 3,233,042 ) $ ( 4,187,301 ) Weighted average shares outstanding: -Basic 46,881,475 46,881,475 Add: Warrants - - Add: Stock options - - -Diluted 46,881,475 46,881,475 Basic and diluted net loss per share $ ( 0.07 ) $ ( 0.09 ) 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 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 resulting in an ownership interest of 30.51 % and 30.58 %, respectively, as of December 31, 2024 and 2023. The Company accounts for its investment in NewStem under the equity method. At December 31, 2023, the carrying value of the investment in NewStem exceeded its portion of the underlying net assets of NewStem by approximately $ 1,800,000 . The excess related to identified intangible assets including license agreements, specialized work force (goodwill) and two separate projects of in process research and development (“IPR&D”). NewStem is a development stage company and has incurred losses since its inception and has generated only minimal revenues under a licensing agreement. The Company assesses 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 has been unable to continue operations and is in the process of liquidation. 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 funds to be received by the Company in the event of re-licensing or monetizing of the licenses or related technology developed by NewStem. Due to the current uncertainty of the recovery of any value from these intangible assets and the liquidation status of NewStem, the Company has fully impaired the investment in NewStem and reduced the carrying value to zero ($ 0 ) at December 31, 2024, recognizing an impairment loss of $ 1,628,657 during the year ended December 31, 2024. F- 9 NOVELSTEM INTERNATIONAL CORP. Notes to Financial Statements 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 bears 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. 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. During the year ended December 31, 2023, the Company reimbursed NewStem for audit and audit related costs of approximately $ 58,000 . The following table represents the Company’s investment in NewStem: SCHEDULE OF INVESTMENTS 2024 2023 Year Ended December 31, 2024 2023 Investment in NewStem, beginning $ 1,784,234 $ 2,090,286 Allocation of net loss from NewStem ( 155,577 ) ( 342,191 ) Gain on dilution of equity method investment - 36,139 Investment in NewStem before impairment 1,628,657 1,784,234 Impairment loss recorded ( 1,628,657 ) - Investment in NewStem, ending $ - $ 1,784,234 The results of operations and financial position of the Company’s investment in NewStem are summarized below: SCHEDULE OF OPERATIONS AND FINANCIAL POSITION INVESTMENT 2024 2023 Year Ended December 31, 2024 2023 Condensed income statement information: License fees $ - $ 95,000 Gross margin $ - $ 84,000 Net loss $ ( 510,000 ) $ ( 1,119,000 ) Company’s allocation of net loss from NewStem $ ( 155,577 ) $ ( 155,577 ) 2024 2023 As of December 31, 2024 2023 Condensed balance sheet information: Current assets $ 100,000 $ 353,000 Non-current assets $ 2,000 $ 9,000 Current liabilities $ 548,000 $ 284,000 Non-current liabilities $ - $ - F- 10 NOVELSTEM INTERNATIONAL CORP. Notes to Financial Statements Investment in NetCo NovelStem 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 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. The following table represents the Company’s investment in NetCo: SCHEDULE OF INVESTMENTS 2024 2023 Year Ended December 31, 2024 2023 Investment in NetCo, beginning $ 133,709 $ 137,011 Allocation of net income (loss) from Netco ( 5,469 ) 3,573 Distribution from NetCo - ( 6,875 ) Investment in NetCo, ending $ 128,240 $ 133,709 The results of operations and financial position of the Company’s investment in NetCo are summarized below: SCHEDULE OF OPERATIONS AND FINANCIAL POSITION INVESTMENT 2024 2023 Year Ended December 31, 2024 2023 Condensed income statement information: Net sales $ 1,479 $ 25,789 Gross margin $ 1,362 $ 19,422 Net income (loss) $ ( 10,938 ) $ 7,146 Company’s allocation of net income from NetCo $ ( 5,469 ) $ 3,573 2024 2023 As of December 31, 2024 2023 Condensed balance sheet information: Current assets $ 1,305 $ 13,473 Non-current assets $ 272,799 $ 272,799 Current liabilities $ 10,748 $ 12,250 Non-current liabilities $ - $ - 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 December 21, 2025 at which time all principal and accrued interest are due and payable. The note agreements include a provision whereby, in the event of a capital raise transaction by the Company, the note holders would be entitled to participate in the transaction in an amount equal to 133% of the amounts owed on the note agreements at the closing of the transaction. Interest expense related to these notes was $ 30,082 and $ 822 , respectively, for the years ended December 31, 2024 and 2023. F- 11 NOVELSTEM INTERNATIONAL CORP. Notes to Financial Statements Long-term notes payable are summarized as follows: SCHEDULE OF LONG TERM NOTES PAYABLE As of December 31, 2024 2023 Notes payable related parties: Notes payable director and Executive Chairman $ 821,766 $ 400,000 Accrued interest added to note balance 38,392 43,588 Total notes payable director and Executive Chairman 860,158 443,588 Note payable shareholder, principal amount 300,000 275,000 Less unamortized discount ( 60,417 ) ( 213,185 ) Total note payable shareholder 239,583 61,815 Note payable, litigation funding agreement: Note payable Omni Bridgeway (Fund 4) Invt. 3 L.P. 2,819,196 2,819,196 Accrued interest added to agreement balance 140,429 - Total note payable, litigation funding agreement 2,959,625 2,819,196 Total notes payable 4,059,366 3,324,599 Less current portion ( 4,059,366 ) - Long-term notes payable $ - $ 3,324,599 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 financial statements, the full amount of $ 750,000 has been funded pursuant to these agreements. 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 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 $ 650,000 and $ 535,000 at December 31, 2024 and 2023, respectively, 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 $ 66,570 and $ 61,815 , respectively, has been reflected as part of interest expense in the statement of operations for year ended December 31, 2024 and 2023. F- 12 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 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 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 or investment return to Omni calculated as contractual multiples of funding totaling $ 1,886,131 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 is payable on January 10, 2025 . The Company accrued interest related to the Agreement of $ 140,428 during the year ended December 31, 2024. 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 mature December 30, 2025 . 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 $ 8,646 during the year ended December 31, 2024. NOTE 5— EQUITY (a) General At December 31, 2024 and 2023 the Company had issued 50,316,672 shares and had issued 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, $ 0.01 par value, in treasury at December 31, 2024 and 2023. 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. (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. F- 13 NOVELSTEM INTERNATIONAL CORP. Notes to Financial Statements The 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 Year Ended December 31, 2024 2023 Risk-free interest rate 4.3 % 3.4 % Expected term, in years 5.09 4.98 Expected volatility 116.9 % 118.3 % Expected dividend yield 0 % 0 % Determined weighted average grant date fair value per option $ 0.06 $ 0.17 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 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. (c) Summary Option Information A summary of the Company’s option plans as of December 31, 2024 and 2023, as well as changes during each of the years then ended, is presented below: SCHEDULE OF STOCK OPTION ACTIVITIES Year Ended December 31, 2024 2023 Number Weighted Number Weighted of Average of Average Options Exercise Options Exercise (in shares) Price (in shares) Price Outstanding at beginning of year 5,760,000 0.14 5,400,000 0.14 Granted 600,000 0.06 360,000 0.20 Outstanding at end of year 6,360,000 0.13 5,760,000 0.14 Exercisable at end of year 5,760,000 0.14 5,400,000 0.14 Stock-based compensation expense was approximately $ 40,000 and $ 303,000 in the years ending December 31, 2024 and 2023, respectively. The total compensation cost related to non-vested awards not yet recognized was approximately $ 9,000 and $ 13,000 , respectively, as of December 31, 2024 and 2023. F- 14 NOVELSTEM INTERNATIONAL CORP. Notes to Financial Statements (d) Warrants The Company has 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, 2024 2023 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 - - - - Outstanding at end of year 3,000,000 0.12 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 have a weighted average remaining contractual life of approximately one 1.5 half year. 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, 2024. NOTE 6— INCOME TAXES For the years ended December 31, 2024 and 2023, 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, 2024 and 2023, the Company had approximately $ 48,000,000 and $ 54,000,000 , respectively of net operating losses subject to IRC Section 382 limitations, of which $ 10,600,000 and $ 9,600,000 , 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 $ 5,000,000 and $ 300,000 , respectively of federal and state losses expired in December 2024, and approximately $ 8,000,000 and $ 4,000,000 , respectively, of federal and state losses expired in December 2023. The Company has approximately $ 6,063,000 in federal and state losses that do not expire. The remaining losses expire from 2025 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 Company’s income tax provision differs from the expense that would result from applying statutory rates to income before taxes. A 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: SCHEDULE OF INCOME BEFORE INCOME TAX 2024 2023 Year Ended December 31, 2024 2023 Computed tax at the federal statutory rate of 21 % $ ( 645,119 ) $ ( 815,813 ) State income taxes, net of federal income tax benefit ( 133,478 ) ( 168,796 ) Foreign rate differential ( 24,892 ) ( 48,968 ) Change in federal valuation allowance 803,489 1,033,577 Total provision for income tax $ - $ - F- 15 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, 2024 and 2023 consist of the following: SCHEDULE OF DEFERRED TAX ASSETS 2024 2023 As of December 31, 2024 2023 Outside tax basis difference in equity investments $ 1,700,000 $ 1,700,000 Federal and state net operating loss carryforwards available after consideration of IRC Section 382 limitations 2,801,830 2,540,308 General business credit 41,552 41,551 Related party interest and accretion of note discount 71,666 25,691 Loss on derivative instrument 92,750 68,900 Stock compensation 262,560 254,275 Total deferred tax assets $ 4,970,358 $ 4,630,725 Federal and state net operating loss carryforwards subject to IRC Section 382 limitations 13,644,005 13,644,005 Less valuation allowance for net operating loss limitations ( 13,644,005 ) ( 13,644,005 ) Valuation allowance ( 4,968,553 ) ( 4,130,103 ) Subtotal deferred tax assets 1,805 500,622 Deferred tax liability, equity method basis difference ( 1,805 ) ( 500,622 ) Net deferred tax assets $ - $ - Management has evaluated all tax positions that could have a significant effect on the combined financial statements and determined the Company had no significant uncertain income tax positions at December 31, 2024 and 2023. NOTE 7— COMMITMENTS AND CONTINGENCIES The Company was the claimant in an arbitration proceeding against their 50 % partner in NetCo. The Company initiated the arbitration proceeding in an effort to maximize the total potential value to be derived from fully utilizing the NetCo intellectual property across publishing, entertainment, digital media, merchandising and other ancillary markets. Arbitration hearings were held at the end of July 2022. Arbitration 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. The 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 Net Force). As 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 $ 2,799,196 , 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. 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. In February 2025, the Company reached an agreement with C.P. Group, Inc. (“CP”), our NetCo joint venture partner, and Omni Bridgeway (‘Omni”), the holder of the litigation funding agreement, to sell our interest in NetCo to CP for $ 1,300,000 in a transaction where the sales proceeds would be provided to Omni in exchange for a full release of our liability to Omni. A Settlement Agreement and Release has been prepared and approved by all parties, however is still in the process of being circulated and reviewed for final execution as of the date of these financial statements. F- 16 (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 10.11 1 st Amendment to Promissory Note issued to Jan Loeb 10.12 1 st Amendment to Promissory Note issued to Jerry Wolasky 10.13 Certification of Principal Executive Officer and Executive Chairman pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 10.14 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 10.15 Certification of Principal Executive Officer and Executive Chairman pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 10.16 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. 28 Item 16. Form 10–K Summary. Not applicable 29 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 April 7, 2025. 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 April 7, 2025 Jan H. Loeb /s/ Christine Jenkins Vice President and Chief Financial Officer April 7, 2025 Christine Jenkins /s/ Mitchell Rubenstein Director April 7, 2025 Mitchell Rubenstein /s/ Eric Richman Director April 7, 2025 Eric Richman /s/ David Seltzer Director April 7, 2025 David Seltzer /s/ Jerry Wolasky Director April 7, 2025 Jerry Wolasky /s/ Tracy Clifford Director April 7, 2025 Tracy Clifford 30