What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-04-07 compared with 2024-04-01 · 130 added, 132 removed, 87 unchanged (75% of the section changed)

11 unchanged sentences

As of December 31, 2023, our current assets and current liabilities were approximately $87,000 and $346,000, respectively.

have prepared our financial statements for the years ended December 31, 2023 and 2022 assuming that we will continue as a going concern.

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 NewStem’s ability to successfully develop and commercialize its products.

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 entered into a long term finance agreement

with a shareholder to fund current operating expenses.

Additionally, we entered into two short term notes to fund advances to NewStem.

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.

is a development stage Israeli biotech limited liability company focused on pioneering intellectual property related to haploid human

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net losses as incurred.

We have included the financial statements of NewStem as an exhibit to this Annual Report.

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.

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.

Accounting Policies

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accounting policies, which are more fully described in Note 2 of the Notes to the Financial Statements included in this Annual Report.

have identified our accounting policies for stock-based compensation and accounting for derivative liabilities as critical

accounting policies.

have identified our accounting policies for stock-based compensation and accounting for derivative liabilities as critical accounting

recognize stock-based compensation expense based on the fair value recognition provision of applicable accounting principles, using the

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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.

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

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.

the years ended December 31, 2023 and 2022, we incurred stock compensation expense with respect to options and warrants of

approximately $303,000 and $283,000, respectively.

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.

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.

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 arms 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.

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.

of Operations.

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operating expenses

expenses (contra expenses)

operating expenses

from operations

Other expenses:

Loss on derivative instrument

on derivative instrument

loss on equity method investee

other expenses

loss before equity in net loss of equity method investees

Equity in net loss of equity method investees

Gain on dilution of

equity method investment

loss before equity in net loss

of equity method investees

in net loss of equity method investees

on dilution of equity method investment

$ (3,233,042 )

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Compared to 2023

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 have no operating revenue or cost of revenue.

We do charge annual administrative

fees to an affiliated entity.

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 $665,000 and $744,000 for the years ended December 31, 2023

and 2022, respectively.

Our decrease in G&A expenses relates primarily to stock-based compensation and professional fees

incurred in the audit of our financial statements for the years ended December 31, 2023 and 2022, preparation of our quarterly

reports for 2023 and 2022, and, in the preparation, and filing of our Form 10 registration statement which was filed in August 2022.

Specifically, professional fees decreased by approximately $93,000 in the year ended December 31, 2023 as compared to the year ended

December 31, 2022.

Insurance costs decreased by approximately $9,000 in the year ended December 31, 2023 as compared to the year

ended December 31, 2022.

The remaining increase in G&A expenses of approximately $3,000 during the year ended December 31, 2023

consists primarily of increases in expenses related to investor relations and information

stock compensation expense, included in G&A expenses, increased by approximately $20,000 in the year ended December 31, 2023 as compared

to the year ended December 31, 2022 due to a smaller number of options awarded in the current period as compared to the prior period

offset by the recognition of $243,000 in stock compensation expense related to the increased value of our outstanding warrants due to

the amendment of the agreements to extend the due date by two years.

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.

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.

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.

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.

incurred costs related to litigation and the related litigation funding agreement involving our arbitration with our NetCo joint venture

partner of approximately $2,873,000 for year ended December 31, 2023.

We recognized contra expenses of $310,000 during the year ended

December 31, 2022 in relation to the same litigation and related litigation funding agreement.

Specifically, the increase of approximately

$3,183,000 for the year ended December 31, 2023 as compared to 2022 is comprised of legal fees related to our NetCo arbitration including

litigation funding fees due to Omni Bridgeway pursuant to the litigation funding agreement combined with the reversal of the contra expenses

recognized in the previous period.

These expenses and contra expenses were funded by the litigation funding agreement.

This agreement

was signed during the first quarter of 2022 with Omni Bridgeway to fund our arbitration against our 50% joint venture partner, C.P.

This is a nonrecourse agreement, and the Company had no obligation to repay any funds received under the agreement unless the NetCo arbitration

resulted in a favorable outcome.

These amounts are included in the note payable to Omni Bridgeway which was recorded in June 2023 as

a result of the arbitration ruling.

Company has recorded a loss on derivative instrument of approximately $260,000 for the year ended December 31, 2023 related to a guarantee

included in the note payable shareholder entered into in May 2023.

No such instrument was in effect in the year ended December 31, 2022.

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.

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.

Company has recorded an impairment loss of approximately $1,629,000 during the year ended December 31, 2024 related to its investment

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

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.

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 and the funding of NewStem.

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.

Company has recorded no income tax expense as we have incurred operating losses and all deferred tax assets are fully offset by an income

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The 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.

Net losses reported for the year ended December 31, 2022 included net income of approximately $13,000 from NetCo which

was offset by net loss of approximately $733,000 from NewStem.

reported a gain on dilution of our equity method investment related to stock issuances made to third parties by NewStem.

approximately $36,000 and $388,000 during the years ended December 31, 2023 and 2022, respectively.

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.

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,

and Capital Resources

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stock in the foreseeable future.

expect to continue to incur greater expenses in the near future as we expand our business, including funding NewStem, or enter into strategic partnerships.

expect our G&A expenses to increase as we expand our administrative staff and add infrastructure.

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

Management’s plans with regard to these matters include

additional financing and fundraising until our equity investment in NewStem 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 will become profitable.

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.

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

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The agreements provide for interest at a rate of 10% per annum.

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

As of the date of this Annual

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

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 $535,000 at December 31, 2023.

In December 2023, the Company entered into two short term notes payable with unrelated parties for a total of $250,000

in borrowings utilized for the funding of NewStem.

The notes bear interest at 12% per annum and mature December 21, 2024, at which time

all principal and accrued interest are due and payable.

The note agreements include a provision whereby, in the event of a capital raise

transaction by the Company, the note holders would be entitled to participate in the transaction in an amount equal to 133% of the amounts

owed on the note agreements at the closing of the transaction.

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

the year ended December 31, 2023, the Company entered into a note agreement with a shareholder to borrow $300,000 for continued working

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.

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,

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.

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

Cash Used In Operating Activities.

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.

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.

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 approximately $13,000, netted with gain on dilution of approximately $388,000 and stock-based compensation

of approximately $283,000.

Additionally, cash was used in operations related to an increase in current assets of approximately $24,000

and a decrease in accrued liabilities and other payables of approximately $28,000.

from equity method investees of $7,000, netted with gain on dilution of approximately $36,000 and stock-based compensation of approximately

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.

Cash Used In Investing Activities.

the year ended December 31, 2023, $250,000 was loaned to NewStem in an investing activity.

For the year ended December 31, 2022, no net

cash was used in investing activities.

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.

Cash Provided By Financing Activities.

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 $395,000 and short term borrowings from unrelated parties of $250,000.

directors and a stockholder totaling $375,000 and borrowings from convertible debt with unrelated parties of $100,000.

the year ended December 31, 2023, net cash provided by financing activities was $645,000, consisting of long-term borrowings from two

directors of $280,000 and repayment of $100,000 in short-term borrowings from a significant stockholder.

directors and a stockholder totaling $395,000 and short term borrowings from unrelated parties of $250,000.

Sheet Arrangements

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section is not applicable.

Financial Statements and Supplementary Data.

at the end of this Annual Report, commencing on page F-1.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis