What changed in this filing

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Item 1. Financial Statements

2026-08-17 compared with 2026-05-14 · 438 added, 236 removed, 716 unchanged (48% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

OF MARCH 31, 2026 AND DECEMBER 31, 2025

OF JUNE 30, 2026 AND DECEMBER 31, 2025

thousands, except share and per share data)

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Current portion of operating lease liability

Derivative liability, at fair value

Total current liabilities

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Financing lease liability, net of current portion

Convertible notes payable

Convertible notes payable, net of debt discount

Notes payable, net of current portion

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Common stock, par value $ 0.001 per share, 25,000,000 shares authorized;

8,475,693 and 8,143,133 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively

9,700,022 and 8,475,693 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively

Additional paid-in capital

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CONSOLIDATED STATEMENTS OF OPERATIONS

THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025

thousands, except share and per share data)

Three Months Ended

Six Months Ended

Revenues, net

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Interest income (expense), net

Changes in fair value of warrant liability and warrant modification expense

Changes in fair value of derivative liability and warrant modification expense

Loss on issuance of convertible debt

Other expense

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025

thousands, except share data)

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Balance, March 31, 2026

Stock-based compensation - stock options/restricted

Issuance of securities for the conversion of convertible notes payable and accrued interest

Warrants issued in conjunction with the conversion of convertible notes payable

Net income (loss)

Balance, June 30, 2026

Stockholders’

Balance, January 1, 2025

Share-based compensation

Restricted stock issuances

Share-based compensation and restricted stock issuances

Net income (loss)

Balance, March 31, 2025

Share-based compensation and restricted stock issuances

Net income (loss)

Balance, June 30, 2025

accompanying notes are an integral part of these condensed consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

Three Months Ended

THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025

Six Months Ended

Operating Activities

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Share-based compensation and restricted stock vesting

Changes in fair value of warrant liability and warrant modification expense

Amortization of right-of-use asset

Amortization of debt discount

Changes in fair value of warrant liability and warrant modification expense

Loss on issuance of convertible note

Changes in operating assets and liabilities:

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Capital expenditures

Investment in BioNx (License Agreement)

Net Cash Used in Investing Activities

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Principal payment on financing lease liability

Financing costs

Principal payments of notes payable

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Cash and restricted cash – End of period

(*) $ 109 relates to decrease in cash and $ 1,173 relates to increase in restricted cash

(*) $ 175 relates to an increase in cash and $ 473 relates to increase in restricted cash

Supplemental Disclosure of Cash Flows Information

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Supplemental Non-cash Investing and Financing activities

Issuance of securities for the conversion of convertible

notes payable and accrued interest

Issuance of convertible notes and other liabilities in

conjunction with license agreement

Issuance of securities for the conversion of convertible notes payable and accrued interest

Issuance of warrants in conjunction with convertible notes payable

Debt issued at a discount

Derivative liabilities recognized as debt discounts

Initial recognition of ROU asset and operating lease liabilities

accompanying notes are an integral part of these condensed consolidated financial statements.

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and Acquisition of Celularity, Inc.’s Portfolio of Commercial-stage Regenerative Biomaterials

March 6, 2026, the Company entered into an Asset Purchase and Exclusive License Agreement (the “Original License Agreement”)

with Celularity Inc.

(“Celularity”), pursuant to which Celularity agreed to grant to the Company an exclusive license to

Celularity’s commercial-stage regenerative biomaterials portfolio and certain development-stage programs and to sell to the Company

assets related to the portfolio (collectively, the “Celularity Transaction”).

March 6, 2026, the Company entered into an Asset Purchase and Exclusive License Agreement (the “Original License

Agreement”) with Celularity Inc.

(“Celularity”), pursuant to which Celularity agreed to grant to the Company an

exclusive perpetual license to Celularity’s commercial-stage regenerative biomaterials portfolio and certain development-stage

programs and to sell to the Company assets related to the portfolio (collectively, the “Celularity

Transaction”).

April 17, 2026, the Company and Celularity entered into Amendment No.

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Agreement”) and concurrently closed the Celularity Transaction.

to the License Agreement, in full consideration for the grant of rights and the transfer of assets, the Company agreed to pay or deliver

to Celularity aggregate upfront consideration of $ 13,300,000 , consisting of (i) an $ 8,300,000 cash payment, paid at closing, and (ii)

an unsecured convertible promissory note in the original principal amount of $ 5,000,000 (the “Celularity Note”).

The Celularity

Note bears interest at 10 % per annum, matures on the eighteen-month anniversary of issuance and is convertible into shares of common

stock at an initial conversion price of $ 0.60 per share, subject to adjustment, on terms substantially identical to the Notes (as defined

In connection with the Celularity Note, the Company issued warrants to purchase an aggregate of 4,166,667 shares of common stock,

on substantially the same terms as the Warrants (as defined below).

In addition, the Company is obligated to make up to $ 17,500,000 in

contingent milestone payments to Celularity upon the achievement of specified commercial milestones under the License Agreement.

to the License Agreement, in full consideration for the grant of rights and the transfer of assets, the Company agreed to pay or

deliver to Celularity aggregate upfront consideration of $ 13,300

thousand, consisting of (i) $ 8,300

thousand in cash

funded by the Notes (as defined below) and of which $ 6,502 thousand has been paid, and (ii) an unsecured

convertible promissory note in the original principal amount of $ 5,000

thousand (the

“Celularity Note”).

The Celularity Note bears interest at 10 %

per annum, matures on the eighteen-month anniversary of issuance and is convertible into shares of common stock at an initial

conversion price of $ 0.60 per

share, subject to adjustment, on terms substantially identical to the Notes (as defined below).

In connection with the Celularity

Note, the Company issued warrants to purchase an aggregate of 4,166,667 shares

of common stock, on substantially the same terms as the Warrants (as defined below).

In addition, the Company is obligated to make

up to $ 20,000

contingent milestone payments to Celularity upon the achievement of specified commercial milestones under the License

products, technologies, and commercial-stage assets acquired and licensed pursuant to the License Agreement (as defined below) are marketed

and sold by the Company under the brand name “BioNx.” References in these notes and elsewhere in this Quarterly Report on

Form 10-Q to the “BioNx” line of business, “BioNx surgical” revenue, or similar terms refer to revenue and operations

derived from the Celularity Transaction.

and May 2026 Private Placement

or about April 17, 2026, in connection with the closing of the Celularity Transaction, the Company entered into a Securities Purchase

Agreement (the “April Purchase Agreement”) with certain accredited investors and issued (i) unsecured convertible promissory

notes (the “Notes”) in an aggregate original principal amount of $ 7,375,000 and (ii) warrants (the “Warrants”)

to purchase an aggregate of 6,145,833 shares of common stock, for aggregate gross proceeds to the Company of $ 7,375,000 .

or about April 17, 2026, in connection with the closing of the Celularity Transaction, the Company entered into a Securities

Purchase Agreement (the “April Purchase Agreement”) with certain accredited investors and issued (i) unsecured

convertible promissory notes (the “Notes”) in an aggregate original principal amount of $ 7,375

thousand and (ii) warrants (the “Warrants”) to purchase an aggregate of 6,145,833

shares of common stock, for aggregate gross proceeds to the Company of $ 7,375

Notes bear interest at 10 % per annum, mature on the eighteen-month anniversary of issuance and are convertible into shares of common

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The Warrants have an exercise price of $ 0.80 per share, subject to customary adjustments, and expire on the five-year anniversary

or about May 11, 2026, the Company issued additional Notes in an aggregate original principal amount of $ 1,210,000 and additional Warrants

to purchase an aggregate of 1,008,334 shares of common stock, on substantially the same terms as those issued under the April Purchase

Agreement, for aggregate gross proceeds to the Company of $ 1,210,000 .

or about May 11, 2026, the Company issued additional Notes in an aggregate original principal amount of $ 1,210

thousand and additional Warrants to purchase an aggregate of 1,008,334

shares of common stock, on substantially the same terms as those issued under the April Purchase Agreement, for aggregate gross

proceeds to the Company of $ 1,210

Going Concern

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which contemplate continuation of the Company as a going concern.

As of March 31, 2026, the Company had an unrestricted cash balance

of $ 0.2 million.

For the three months ended March 31, 2026, the Company incurred a net loss of $ 927 thousand and had a net usage

of cash in operating activities of $ 504 thousand.

These conditions raise substantial doubt about the Company’s ability to continue

as a going concern.

April of 2026, the Company raised $ 7.0 million to be used for the Celularity Transaction.

We expect this acquired business to contribute

positive operating cash flows, improve liquidity, and support ongoing operations.

addition, management continues to explore new product channel sales in adjacent industries, such as cosmetics, athletic products, and

proprietary medical devices.

The Company has increased focus on sales and developing a sales pipeline for potential customers.

This customer

base expansion will enable us to provide financial stability for the foreseeable future, expand our current processes, and position us

for long-term shareholder value creation.

intend to maintain and attempt to grow our existing contract manufacturing business.

We also plan to continue building and developing

our catalogue of consumer products for sale to branding partners and to use our in-house capabilities to create and test market additional

branded products.

These products will be target marketed and sold online through social media and online advertising and marketplaces.

Furthermore, the Company plans to develop its own proprietary medical devices and explore drug delivery programs for its technology.

Additionally, the Company continues to evaluate strategic initiatives (e.g., acquisitions), and additional capital raises through debt

or equity may be necessary to achieve these objectives.

As of June 30, 2026, the Company had an unrestricted cash balance of

$ 0.5 million.

For the six months ended June 30, 2026, the Company incurred a net loss of $ 4.5

million and had a net usage of cash in operating activities of $ 2,701

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

April and May of 2026, the Company raised $ 8.6

million to be used for the Celularity Transaction.

the license and acquisition of Celularity, Inc.’s portfolio of commercial-stage regenerative biomaterials to contribute positive

operating cash flows, improve liquidity, and support ongoing operations.

expect to continue incurring losses for the near-term future.

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These estimates and assumptions

include allowances for doubtful accounts, inventory reserves, deferred taxes and related valuation allowances, share-based compensation

include allowances for doubtful accounts, inventory reserves, deferred taxes and related valuation allowances, share-based compensation, the valuation of the convertible notes embedded derivative liability

and fair value of long-lived assets.

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NexGel segment is comprised of the manufacturing of ultra-gentle, high-water-content hydrogel products for healthcare and consumer applications,

which is based in Langhorne, Pennsylvania as well as the Kenkoderm and Silly George acquisitions.

which is based in Langhorne, Pennsylvania as well as the Kenkoderm and Silly George acquisitions, as well as from the Celularity Asset

Purchase and License Agreement.

CGN segment is comprised of the CGN JV used for the Company’s converting and packaging business, which is based in Granbury, Texas.

Cash, Cash Equivalents and Restricted Cash

Cash is comprised of cash in banks.

Reclassifications

prior year amounts in the consolidated financial statements and accompanying footnotes have been reclassified to conform to the current

year presentation.

Specifically, deferred revenue was combined with accrued expenses and other current liabilities in the consolidated

balance sheet as of December 31, 2025.

In addition, the Company separately presented the amortization of the right-of-use asset and the

reduction of the operating lease liability within the condensed consolidated statements of cash flows for the six months ended June 30,

These reclassifications had no effect on previously reported total assets, total liabilities, stockholders’ equity, or net

Cash Equivalents and Restricted Cash

is comprised of cash in banks.

The Company considers highly liquid investments, including U.S.

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due to the short maturities of these investments to be cash equivalents.

As of March 31, 2026 and December 31, 2025, the Company had no cash equivalents.

As of June 30, 2026 and December 31, 2025, the Company had no

cash equivalents.

Company also maintains restricted cash under a Partnership Agreement (see Note 16).

As of March 31, 2026, restricted cash totaled $ 1.9

As of June 30, 2026, restricted cash totaled $ 1.2

million, representing funds that are contractually restricted from use for general operating purposes and may be utilized only in accordance

with the terms of the Partnership Agreement.

Restricted cash is included in total cash and restricted cash as presented

in the condensed consolidated statements of cash flows.

with the terms of the Partnership Agreement and funding received in connection with the Series A Convertible Note (see Note 16).

cash is included in total cash and restricted cash as presented in the condensed consolidated statements of cash flows.

Schedule of Cash and Cash Equivalents

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Total cash and restricted cash shown in the statement of cash flows

Reclassifications

prior year amounts in the consolidated financial statements and accompanying footnotes have been reclassified to conform to the

current year presentation.

Specifically, deferred revenue was combined with accrued expenses and other current liabilities in the

consolidated balance sheet as of December 31, 2025.

In addition, the Company separately presented the amortization of the

right-of-use asset and the reduction of the operating lease liability within the condensed consolidated statements of cash flows for

the three months ended March 31, 2025.

These reclassifications had no effect on previously reported total assets, total liabilities,

stockholders’ equity, or net loss.

Receivable, Net

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The allowance for credit

losses was $ 9 thousand as of March 31, 2026 and December 31, 2025.

losses was $ 13 and $ 9 thousand as of June 30, 2026 and December 31, 2025, respectively.

and Cost of Revenues

inventory balance is stated at the lower of cost, the value determined by the first-in, first-out method, or net realizable value.

The Company evaluates inventories for excess quantities, obsolescence, and shelf-life expiration.

This evaluation includes an

analysis of historical sales levels by product, projections of future demand, the risk of technological or competitive obsolescence

for products, general market conditions, and a review of the shelf-life expiration dates for products.

These factors determine when,

and if, the Company adjusts the carrying value of inventory to estimated net realizable value.

The reserve recorded against

inventories was $ 250

thousand and $ 271

thousand as of March 31, 2026 and December 31, 2025, respectively.

Company evaluates inventories for excess quantities, obsolescence, and shelf-life expiration.

This evaluation includes an analysis of

historical sales levels by product, projections of future demand, the risk of technological or competitive obsolescence for products,

general market conditions, and a review of the shelf-life expiration dates for products.

These factors determine when, and if, the Company

adjusts the carrying value of inventory to estimated net realizable value.

The reserve recorded against inventories was $ 352 thousand

and $ 271 thousand as of June 30, 2026 and December 31, 2025, respectively.

Company produces proprietary branded products and white label opportunities in our manufacturing of consumer products.

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Inventory is maintained at the Company’s warehouses,

third party warehouses and at fulfilment centers owned by Amazon, Walmart and CVS.

third party warehouses and at fulfilment centers owned by Amazon.

“Cost of revenues” line item in the condensed consolidated statements of operations is comprised of the book value of inventory

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expenses and other current assets are recorded at historical cost and are primarily made up of $ 9 thousand and $ 45 thousand of prepaid

insurance, and $ 564 thousand and $ 451 thousand general prepaid expenses and other current assets as of March 31, 2026 and December 31,

insurance, and $ 1,073 thousand and $ 451 thousand general prepaid expenses and other current assets as of June 30, 2026 and December 31,

2025, respectively.

assets are recorded at historical costs, and as of March 31, 2026 and December 31, 2025, the balance is primarily comprised of spare

parts for manufacturing equipment.

The Company maintains spare parts for either repair and maintenance, which is expensed as incurred,

or replacement of capitalized equipment.

Capitalized equipment spare parts are not subject to depreciation until such time that they

are placed into service and the part that is being replaced is disposed.

assets are recorded at historical costs, and as of June 30, 2026 and December 31, 2025, the balance is primarily comprised of spare parts

for manufacturing equipment.

The Company maintains spare parts for either repair and maintenance, which is expensed as incurred, or replacement

of capitalized equipment.

Capitalized equipment spare parts are not subject to depreciation until such time that they are placed into

service and the part that is being replaced is disposed.

Value Measurements

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or similar investments.

to purchase common stock were issued in connection with equity financing raises, which occurred during 2019 through 2025.

The fair values

of the warrants are estimated as of the date of issuance and again at each reporting period using a Black-Scholes option valuation model.

At issuance, the fair values of the warrant are recognized as an equity issuance cost within additional paid-in-capital.

Fair value adjustments

to the warrant liability are recognized in other income (expense) in the consolidated statements of operations.

The Company had no warrant liabilities as of March 31, 2026 or December 31, 2025.

Notes Derivative Liabilities

Company measures certain liabilities at fair value on a recurring basis.

These liabilities consist primarily of derivative liabilities

associated with convertible notes (see Note 13).

These instruments are valued using significant unobservable inputs and are classified

within Level 3 of the fair value hierarchy.

The fair value of these instruments was updated as of June 30, 2026 in accordance with ASC

820, Fair Value Measurement , reflecting all relevant market inputs and valuation considerations as of the reporting date.

derivative liabilities relate to embedded features within the Company’s convertible notes, including variable conversion pricing.

Because these features are not considered indexed to the Company’s own stock and may require net-cash settlement, they are accounted

for as derivative liabilities under ASC 815, Derivatives and Hedging—Contracts in Entity’s Own Equity .

Company engaged an independent valuation specialist to estimate the fair value of the derivative liabilities using a Monte Carlo simulation

model, which incorporates assumptions regarding expected volatility, risk-free interest rates, expected term, and probability-weighted

assessments of contingent events.

Management concluded the derivative liability was estimated based on Level 3 inputs.

Value Hierarchy

of Fair Value of Derivative Liabilities

Derivative liability as of June 30, 2026 ($ in thousands)

3 Roll-forward

of Level 3 Roll-forward for Derivative Liabilities

Amount ($ in thousands)

Balance at January 1, 2026

Initial recognition of derivative liability

Changes in fair value

Balance at June 30, 2026

Classified Warrants

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Medical devices/other

Company has four distinct lines of business;

Contract Manufacturing, Custom and White Label, Consumer Branded Products, and Medical

Devices/Other.

Biomaterial products

Six Months Ended

Contract manufacturing

Custom and white label finished goods manufacturing

Consumer branded products

Medical devices/other

Biomaterial products

Company has five distinct lines of business;

Contract Manufacturing, Custom and White Label, Consumer Branded Products, Biomaterial products

and Medical Devices/Other.

Manufacturing

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The rollstock is shipped to our customers, which they package into finished goods.

Historically, this has been the Company’s primary source of revenue.

Historically,

this has been the Company’s primary source of revenue.

and White Label

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to look for additional potential acquisitions as part of our consumer product “roll-up” strategy.

finished goods products are licensed as a result of the Celularity transaction, disclosed in Note 1, and establishes the Company as an

emerging platform in regenerative medicine through the formation of BioNX Surgical, a dedicated division focused on advanced biomaterials

for tendon repair, soft tissue reconstruction, and bone regeneration.

The acquired portfolio includes 6 established products with over

a decade of clinical use and existing reimbursement coverage We are responsible for sales, marketing and distribution.

Devices/Other

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details regarding the 2019 Plan.

2019 Plan provides certain employees, contractors, and outside directors with share-based compensation in the form of incentive stock

options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend

equivalent rights and other awards.

The fair values of incentive stock option award grants are estimated as of the date of grant using

a Black-Scholes option valuation model.

Compensation expense is recognized in the consolidated statements of operations on a straight-line

basis over the requisite service period, which is generally the vesting period.

2019 Plan provides certain employees, contractors, and outside directors with share-based compensation in the form of incentive

stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards,

dividend equivalent rights and other awards.

The fair values of incentive stock option award grants are estimated as of the date of

grant using a Black-Scholes option valuation model.

Compensation expense is recognized in the condensed consolidated statements of

operations on a straight-line basis over the requisite service period, which is generally the vesting period.

taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for

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operating leases longer than twelve months.

The ROU assets were adjusted per ASC 842 transition guidance for existing lease-related balances

The ROU assets were adjusted pursuant to ASC 842 transition guidance for existing lease-related balances

of accrued and prepaid rent, and unamortized lease incentives provided by lessors.

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Financing lease ROU assets are included in property and equipment, net, and the

related lease liabilities are included within current and long-term debt, as applicable.

related lease liabilities are included within current and long-term liabilities, as applicable.

Interest Entity

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(loss) are not reported by segment, since they are excluded from the single measure of segment profitability reviewed by the CODM.

financial information concerning the Company’s reportable segments for each of the quarters ended March 31, 2026 and 2025 is presented

financial information concerning the Company’s reportable segments for each of the quarters ended June 30, 2026 and 2025 is presented

Schedule of Reportable Segments

Quarter Ended March 31, 2026 ($ in thousands)

Months Ended June 30, 2026 ($ in thousands)

Revenues, net

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Income (loss) from operations

Quarter Ended March 31, 2025 ($ in thousands)

Months Ended June 30, 2025 ($ in thousands)

Revenues, net

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Income (loss) from operations

Summarized total assets for the Company’s reportable segments as of March 31, 2026 and December 31, 2025 are presented below:

of March 31, 2026 ($ in thousands)

Months Ended June 30, 2026 ($ in thousands)

Revenues, net

Cost of revenues

Advertising, marketing and amazon fees

General and administrative

Total Selling, general and administrative

Research and development

Operating expenses

Income (loss) from operations

Months Ended June 30, 2025 ($ in thousands)

Revenues, net

Cost of revenues

Advertising, marketing and amazon fees

General and administrative

Total Selling, general and administrative

Research and development

Operating expenses

Income (loss) from operations

total assets for the Company’s reportable segments as of June 30, 2026 and December 31, 2025 are presented below:

of June 30, 2026 ($ in thousands)

of December 31, 2025 ($ in thousands)

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power and the economics criteria.

following table presents the assets and liabilities of the CGN JV, included in the condensed consolidated balance sheet as of March 31,

following table presents the assets and liabilities of the CGN JV, included in the condensed consolidated balance sheet as of June 30,

2026 and December 31, 2025.

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VIE and excludes any intercompany balances, which were eliminated upon consolidation.

Schedule of Consolidated Variable Interest Entities

of Consolidated Variable Interest Entities

Current Assets:

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All of the liabilities are non-recourse to us as of

March 31, 2026 and December 31, 2025.

June 30, 2026 and December 31, 2025.

Operating Leases

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the lease agreement through July 2035.

April 17, 2026, in conjunction with the Celularity License Agreement, the Company entered into a five-year sublease with Celularity,

for approximately 7,843 square feet of office space in Florham Park, New Jersey.

The sublease incorporates the applicable terms

and conditions of the underlying master lease, as amended on September 24, 2023.

following table presents information about the amount and timing of the liability arising from the Company’s operating lease as

of March 31, 2026 ($ in thousands):

of June 30, 2026 ($ in thousands):

Schedule of Future Minimum Operating Lease Payments

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Present value of operating lease liability

operating lease expense for the three months ended March 31, 2026, and 2025, was $ 86 thousand and $ 71 thousand, respectively, and is

recorded in cost of goods sold and selling, general, and administrative expenses in the accompanying condensed consolidated statements

of operations.

The weighted average discount rate was 2.6 % and 2.6 % and the weighted average remaining lease term was 6.7 years and 6.2

years at March 31, 2026 and 2025, respectively.

operating lease expense for the six months ended June 30, 2026, and 2025, was $ 86 thousand and $ 71 thousand, respectively, and is recorded

in cost of goods sold and selling, general, and administrative expenses in the accompanying condensed consolidated statements of operations.

The weighted average discount rate was 5.0 % and 2.6 % and the weighted average remaining lease term was 5.7 years and 6.2 years at June

30, 2026 and 2025, respectively.

cash flows information related to leases was as follows:

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and are secured by the assets under the lease.

As of March 31, 2026, $ 419 thousand is included in the property and equipment on the balance

As of June 30, 2026, $ 419 thousand is included in the property and equipment on the balance

The weighted average interest rate was 9.1 % and 9.1 % and the weighted average remaining lease term was 3.8 years and 4.8 years

at March 31, 2026 and December 31, 2025, respectively.

at June 30, 2026 and December 31, 2025, respectively.

following table presents information about the amount and timing of the liability arising from the Company’s financing lease as

of March 31, 2026 ($ in thousands):

Schedule of Future Minimum Financing Lease Payments

of June 30, 2026:

of Future Minimum Financing Lease Payments

Maturity of Lease Liability

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Financing cash flows from financing lease

Inventory, net

consists of the following ($ in thousands):

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Inventory reserve for excess and slow moving inventory

is maintained at the Company’s warehouses and at fulfillment centers owned by Amazon, Walmart and Borderless.

The Company builds

its contract manufacturing products based on customer orders and immediately ships the products upon completion of the production process.

is maintained at the Company’s warehouses and at fulfillment centers owned by Amazon and Borderless.

The Company builds its contract

manufacturing products based on customer orders and immediately ships the products upon completion of the production process.

Property and Equipment, Net

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Property and equipment, net

expense for the three months ended March 31, 2026 and 2025 was $ 73 thousand and $ 82 thousand, respectively.

expense for the six months ended June 30, 2026 and 2025 was $ 130 thousand and $ 82 thousand, respectively.

Intangible Assets

following provides a breakdown of identifiable intangible assets as of March 31, 2026 and December 31, 2025 ($ in thousands):

following provides a breakdown of identifiable intangible assets as of June 30, 2026 and December 31, 2025:

Schedule of Breakdown of Identifiable Intangible Assets

License Agreement

License agreement, gross

Accumulated amortization

Licensee agreement related identifiable intangible assets, net

Product/Technology Related

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Total identifiable intangible assets, net

discussed in Note 1, on April 17, 2026, the Company completed the acquisition of an exclusive license and certain related assets from

Celularity pursuant to the License Agreement.

The Company accounted for the transaction as an asset acquisition and recorded a finite-lived

intangible asset with an initial carrying value of $ 13.3 million, consisting of $ 8.3 million in cash and a $ 5.0 million convertible promissory

The acquired license is being amortized on a straight-line basis over its estimated useful life of three years .

connection with the May 15, 2024 acquisition of Silly George, the Company identified intangible assets of $ 600 thousand representing

trademark related intangibles with indefinite lives.

assets with indefinite lives are tested for impairment within one year of the acquisition date or annually as of December 31, and whenever

indicators of impairment exist.

intangible assets with definite lives are being amortized on a straight-line basis over their weighted average estimated useful life

of 1.5 years and amortization expense amounted to $ 26 and $ 32 thousand for the three months ended March 31, 2026 and 2025, respectively.

of March 31, 2026, the estimated annual amortization expense for each of the next five fiscal years is as follows ($ in thousands):

of 2.8 years and amortization expense amounted to $ 795 and $ 32 thousand for the six months ended June 30, 2026 and 2025, respectively.

of June 30, 2026, the estimated annual amortization expense for each of the next five fiscal years is as follows ($ in thousands):

Schedule of Estimated Annual Amortization Expense

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beginning on March 13, 2024, accrue interest at 8 % and require monthly payments of $ 9 thousand, collectively, until maturity.

principal balance outstanding was $ 297 thousand and $ 321 thousand as of March 31, 2026 and December 31, 2025, respectively.

principal balance outstanding was $ 275 thousand and $ 321 thousand as of June 30, 2026 and December 31, 2025, respectively.

Company has entered into a $ 13 thousand promissory note agreement for certain leasehold improvements.

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Injury Disaster Loan

May 28, 2020, the Company entered into the standard loan documents required for securing a loan (the “EIDL Loan”) from the

SBA under its Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on

the Company’s business.

Pursuant to that certain Loan Authorization and Agreement (the “SBA Loan Agreement”), the principal

amount of the EIDL Loan is up to $ 260,500 , with proceeds to be used for working capital purposes.

May 28, 2020, the Company entered into the standard loan documents required for securing a loan (the “EIDL Loan”) from

the SBA under its Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19

pandemic on the Company’s business.

Pursuant to that certain Loan Authorization and Agreement (the “SBA Loan

Agreement”), the principal amount of the EIDL Loan is up to $ 261

thousand, with proceeds to be used for working capital purposes.

Interest accrues at the rate of 3.75 %

Installment payments, including principal and interest, are due monthly beginning May 28, 2021 (twelve months from the date

of the SBA Note) in the amount of $ 1,270 .

Installment payments, including principal and interest, are due monthly beginning May 28, 2021 (twelve months from the

date of the SBA Note) in the amount of $ 1

The balance of principal and interest is payable thirty years from the date of the SBA Note.

In connection therewith, the Company received an $ 8 thousand advance, which does not have to be repaid.

On March 26, 2021, the SBA announced

that all EIDL loans issued in 2020 will start repayment 24 months from the date of the SBA Note.

The SBA has since extended the repayment

start to 30 months from the date of the SBA Note.

In connection

therewith, the Company received an $ 8

thousand advance, which does not have to be repaid.

On March 26, 2021, the SBA announced that all EIDL loans issued in 2020 will

start repayment 24 months from the date of the SBA Note.

The SBA has since extended the repayment start to 30 months from the date

of the SBA Note.

The Company made its first payment in December 2022.

The balances of the principal

and accrued interest amounted to $ 265 and $ 267 thousand as of March 31, 2026 and December 31, 2025, respectively.

future annual principal amounts and accrued interest to be paid as of March 31, 2026 are as follows:

Schedule of Debt Instruments

For the year ending December 31 ($ in thousands):

The balances of the principal and accrued interest amounted to

thousand as of June 30, 2026 and December 31, 2025, respectively.

future annual principal amounts and accrued interest to be paid as of June 30, 2026 are as follows:

of Debt Instruments

For the year ending December 31

current portion of notes payable

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Convertible Notes Payable

A Convertible Notes

February 10, 2026, the Company issued $ 1,797 thousand aggregate principal amount of Series A Senior Secured Convertible Note (the “Series

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if certain conditions are met.

Convertible Note was issued at a $ 180

Series A Convertible Note was issued at a $ 180

thousand discount, representing the difference between the principal amount and cash proceeds received.

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amortized to interest expense over the contractual term of the Series A Convertible Note using the effective interest method.

the three month period ended March 31, 2026, the Company recognized contractual coupon interest of $ 23

the six month period ended June 30, 2026, the Company recognized contractual coupon interest of $ 21

thousand and amortization of debt discount of $ 100

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The effective interest rate is approximately 10.5 %.

March 12, 2026, the holder converted $ 350,000 of principal amount and unpaid interest of the note into 312,235 shares of common stock

pursuant to the contractual conversion terms.

The Company accounted for the transaction as a debt conversion and reclassified the carrying

amount of the converted portion of the Series A Convertible Note, including the related unamortized discount, to stockholders’

equity, and no gain or loss was recognized on the conversion.

of March 31, 2026, the Series A Convertible Note, after considering the partial conversion to common shares, had principal outstanding

the six months ending June 30, 2026, the holder converted $ 1,000 thousand of principal amount and unpaid interest of the note into 1,536,564

shares of common stock pursuant to the contractual conversion terms.

The Company accounted for the transaction as a debt conversion and

reclassified the carrying amount of the converted portion of the Series A Convertible Note, including the related unamortized discount,

to stockholders’ equity, and no gain or loss was recognized on the conversion.

of June 30, 2026, the Series A Convertible Note, after considering the partial conversion to common shares, had principal outstanding

of $ 797 thousand and unamortized discount of $ 64 thousand resulting in a net carrying amount of $ 733 thousand.

to March 31, 2026, the holder converted an additional $ 400,000 of principal amount and unpaid interest of the Series A Senior Convertible

to June 30, 2026, the holder converted an additional $ 26 thousand of principal amount and unpaid interest of the Series A Senior Convertible

Note into an additional 47,641 shares of common stock.

of March 31, 2026, the carrying amount of the Series A Convertible Note approximates its fair value.

March 31, 2026, the Company has reserved common stock for issuance in relation to the following:

Schedule of Reserved Common Stock For Issued Securities in Relation

On August 12, 2026, the remaining restricted

cash was applied to the outstanding obligations under the Series A Note.

As a result, the Series A Note has been paid in full and

the Company no longer has any obligation to make payments or issue shares of common stock.

Security Documents have terminated in accordance with their terms, and the related security interests have been released.

of June 30, 2026, the carrying amount of the Series A Convertible Note approximates its fair value.

Promissory Notes

discussed in Footnote 1, in April and May 2026, to fund the license and acquisition of Celularity Inc’s portfolio of

commercial-stage regenerative biomaterials, the Company issued $ 13,885

thousand aggregate principal amount of convertible promissory notes that bear interest at 10 %

per annum, payable quarterly in cash or, at the holder’s election, in shares of the Company’s common stock at the

applicable conversion price.

The notes mature 18 months from their issuance date.

Upon an event of default, interest accrues at the

lesser of 18 %

per annum or the maximum rate permitted by law.

notes are convertible at the option of the holder into shares of the Company’s common stock at an initial conversion price of $ 0.60

per share, subject to customary anti-dilution adjustments, including stock splits, stock dividends, recapitalizations, and full-ratchet

anti-dilution protection for certain dilutive issuances.

In addition, the conversion price is subject to automatic resets on the twelve-month

anniversary of issuance and at maturity based on the lower of the then-current conversion price or the five-day volume-weighted average

market price immediately preceding the applicable measurement date.

notes contain customary events of default, mandatory prepayment provisions from certain financing proceeds, and optional prepayment provisions

requiring payment of a premium.

The financing agreements also include registration rights, rights of first refusal, restrictions on certain

future financing transactions, and other customary investor protections.

The Company is aware that potential events of default

may exist under the Notes issued in April and May 2026, relating to (i) the Company’s not having filed the registration statement required

under the related Registration Rights Agreement within the time period specified therein, (ii) the Company’s not having timely filed a

Current Report on Form 8-K/A containing certain financial statements required under Item 9.01 of Form 8-K in connection with the Celularity

Transaction, and (iii) the sufficiency of the Company’s reserve of authorized and unissued shares of common stock for issuance upon conversion

of the Notes and exercise of the related warrants.

No holder of the Notes has declared an acceleration of the Notes or the amounts payable

The Company is taking steps intended to address these matters, including filing a registration statement on Form S-1 covering

the resale of the shares underlying the Notes and related warrants by August 17, 2026, continuing to work with the staff of the Securities

and Exchange Commission regarding the Form 8-K/A, and seeking stockholder approval of an increase in the Company’s authorized shares of

common stock and a reverse stock split at a special meeting of stockholders expected to be held on or before September 25, 2026.

can be no assurance that these matters will be resolved on terms satisfactory to the Company, or at all.

connection with the issuance of the convertible notes, the Company also issued 11,570,823

of 5 five-year

warrants with an exercise price of $ 0.80

The warrants entitle the holders to purchase shares equal to 50 %

of the shares underlying the principal amount of notes purchased and contain customary anti-dilution adjustments.

The warrants may

be exercised on a cashless basis under certain circumstances.

Company evaluated the warrants under ASC 815-40 and concluded that they meet the requirements for equity classification.

the warrants were recorded in additional paid-in capital and are not subsequently remeasured.

Company evaluated the conversion feature of the notes under ASC 815, Derivatives and Hedging, and determined that the conversion feature

does not qualify for the scope exception in ASC 815-40 due primarily to the full-ratchet anti-dilution provisions and automatic conversion

price reset features, which could result in a settlement amount that is not indexed solely to the Company’s own stock.

the Company bifurcated the embedded conversion feature from the host debt instrument and recorded it as a derivative liability at fair

value on the issuance date.

The initial fair value assigned to the derivative reduced the carrying amount of the host debt and is subsequently

remeasured to fair value at each reporting date, with changes in fair value recognized in the consolidated statements of operations until

the derivative is exercised, expires, or is otherwise extinguished.

Upon initial recognition, the Company recognized a day-one loss of $ 56 thousand, representing the excess of the fair

value of the embedded derivative liabilities over the net proceeds allocated to the host debt instruments.

In connection with the issuance of the convertible

debt, the Company issued a placement agent warrant to purchase 404,248 shares of the Company’s common stock at an exercise

price of $ 0.80 per share.

The warrant has a term of five years and was issued as compensation for placement agent services.

The placement agent warrants were evaluated separately and determined to be equity-classified instruments, and accordingly, the Company

recognized a day-one loss of $184 thousand, with the fair value recorded in additional paid-in capital as a cost of the financing and

$ 182 thousand as a placement fee.

As of June 30, 2026, the Convertible Promissory Notes

had principal outstanding of $ 13,885 thousand, accrued interest of $ 256 thousand and unamortized discount of $ 11,820 thousand resulting

in a net carrying amount of $ 2,321 thousand.

to June 30, 2026 one of the Qualified Note Holders accelerated their commitment to purchase an additional $ 1,000

thousand in Notes.

In consideration for this acceleration the

buyer received a reduction in the purchase price of the principal to $ 938

thousand, warrants to purchase 833,334

shares of Common Stock, being 50% of the number of shares of

Common Stock underlying the $ 1,000

thousand in principal amount of the Additional Notes, on the

same terms and conditions as the Warrants issued at the initial closing, including an exercise price of $ 0.80

per share, and a separate additional warrant to purchase 30,000

shares of Common Stock as additional consideration for the

Buyer’s agreement to accelerate funding.

The Additional Warrant was issued on the same terms and conditions as the original Warrant,

including an exercise price of $ 0.80

components of the Company’s outstanding convertible debt as of June 30, 2026 were as follows ($ in thousands):

of Outstanding Convertible Debt

June 30, 2026

Series A Convertible Note

Convertible Promissory Notes

Total gross principal

Unamortized debt discount – Series A Convertible Notes (OID)

Unamoritzed debt discount – Convertible Promissory Notes

Total principal, net of unamortized debt discount

Accrued interest

Convertible debt, long-term, net of debt discount

June 30, 2026, the Company has reserved common stock for issuance in relation to the following:

of Reserved Common Stock For Issued Securities in Relation

Share-based compensation plan

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December 31, 2024, the Board approved an additional 780,000 shares of common stock to be reserved under the 2019 Plan, bringing the total

number of shares underlying the Plan to 1,651,429 of which 793,735 shares have already been awarded or exercised.

The Company’s

stockholders approved the 780,000 share increase at the Company’s 2025 Annual Meeting of Stockholders held on June 17, 2025.

to adjustments pursuant to the 2019 Plan, the maximum number of shares of common stock with respect to which stock options or SARs may

be granted to an executive officer during any calendar year is 14,286 shares of common stock.

following table contains information about the 2019 Plan as of March 31, 2026:

number of shares underlying the Plan to 1,651,429 of which 793,735 shares have already been awarded or exercised as of that date.

Company’s stockholders approved the 780,000 share increase at the Company’s 2025 Annual Meeting of Stockholders held on June

Subject to adjustments pursuant to the 2019 Plan, the maximum number of shares of common stock with respect to which stock

options or SARs may be granted to an executive officer during any calendar year is 14,286 shares of common stock.

following table contains information about the 2019 Plan as of June 30, 2026:

Schedule of Information about Incentive Plan

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stock options

April 27, 2026, the Company granted options to purchase up to 160,000 shares of the Company’s common stock at a per share exercise

price of $ 0.65 to the current Chief Financial Officer pursuant to the terms of an employment agreement dated April 27, 2026, all of which

vests as follows:

40,000 shares vest on the first anniversary, and the remaining 120,000 shares vest in 36 equal monthly installments

of 3,334 shares (with rounding adjustments) commencing on March 31, 2027 and expires ten years from the date of the grant.

February 12, 2026, the Company granted options to purchase up to 25,000 shares of the Company’s common stock at a per share exercise

1 unchanged sentence

vests immediate and expires three years from the date of the grant.

following table summarizes the Company’s incentive stock option activity and related information for the period ended March 31,

following table summarizes the Company’s incentive stock option activity and related information for the six months ended June 30,

Schedule of Incentive Stock Option Activity

Outstanding at January 1, 2026

Outstanding at March 31, 2026

Exercisable at March 31, 2026

of March 31, 2026, vested outstanding stock options had $ 12 thousand intrinsic value as the exercise price is greater than the estimated

Outstanding at June 30, 2026

Exercisable at June 30, 2026

of June 30, 2026, vested outstanding stock options had $ 1 thousand intrinsic value as the exercise price is greater than the estimated

fair value of the underlying common stock, respectively.

As of March 31, 2026, there was approximately $ 336 thousand of total unrecognized

As of June 30, 2026, there was approximately $ 288 thousand of total unrecognized

share-based compensation related to unvested stock options, which the Company expects to recognize over the next 33 months excluding

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The service period is generally the vesting period.

following assumptions were used to calculate share-based compensation expense for three months ended March 31, 2026 and 2025:

following assumptions were used to calculate the grant date fair value of awards issued during the six months ended June 30, 2026

Schedule of Assumptions used in Share-based Compensation

Risk-free interest rate

Dividend yield

Expected term

76.07 - 80.42

interest rate

Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting

employment termination behavior.

Accordingly, the Company has elected to use the “simplified method” to estimate the expected

employment termination behavior Accordingly, the Company has elected to use the “simplified method” to estimate the expected

term of its share-based awards.

3 unchanged sentences

common stock over a period commensurate with the expected term of the option.

Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award.

The service period is generally the vesting period.

February 12, 2026, the Company granted an aggregate of 20,325

fully vested shares of its common stock to its former Chief

Financial Officer pursuant to the terms of a separation agreement dated February 4, 2026.

An additional 20,325

shares were authorized for issuance under the agreement;

such issuance had not been consummated as of the reporting date.

Under ASC 718, Compensation—Stock Compensation , the Company

has measured the value of the 40,650

shares granted based on the closing price of the Company’s

stock at the grant date of the RSU Grant ($ 0.63

following table summarizes the Company’s restricted stock awards activity for the three months ended March 31, 2026:

February 12, 2026, the Company granted an aggregate of 20,325 fully vested shares of its common stock to its former Chief Financial Officer

pursuant to the terms of a separation agreement dated February 4, 2026.

An additional 20,325 shares were authorized for issuance under

the agreement;

however, such issuance was forfeited.

Under ASC 718, Compensation—Stock Compensation , the Company has measured

the value of the 40,650 shares granted based on the closing price of the Company’s stock at the grant date of the RSU Grant ($ 0.63

following table summarizes the Company’s restricted stock awards activity for the six months ended June 30, 2026:

Schedule of Restricted Stock Units Granted

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Exercised and converted to common shares

Outstanding at March 31, 2026

Exercisable at March 31, 2026

Outstanding at June 30, 2026

Exercisable at June 30, 2026

expense will be recognized ratably over the total vesting schedule.

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in the period the awards are forfeited.

As of March 31, 2026, there was $ 29 thousand unrecognized share-based compensation related to

As of June 30, 2026, there was $ 13 thousand unrecognized share-based compensation related to

unvested RSUs, which the Company expects to recognize through December 2027.

compensation of $ 143 thousand and $ 166 thousand has been recorded for the three months ended March 31, 2026 and 2025, respectively.

following table shows a summary of common stock warrants through March 31, 2026:

compensation of $ 262 thousand and $ 293 thousand has been recorded for the six months ended June 30, 2026 and 2025, respectively.

following table shows a summary of common stock warrants through June 30, 2026:

Schedule of Common Stock Warrants

1 unchanged sentence

Outstanding at January 1, 2026

Outstanding at March 31, 2026

Exercisable at March 31, 2026

of March 31, 2026 and 2025, vested outstanding warrants had $ 0 thousand and $ 2 thousand, respectively, intrinsic value as the exercise

Outstanding at June 30, 2026

Exercisable at June 30, 2026

of June 30, 2026 and 2025, vested outstanding warrants had $ 0 thousand and $ 2 thousand, respectively, intrinsic value as the exercise

price is greater than the estimated fair value of the underlying common stock.

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solutions targeting scars and stretch marks.

As of March 31, 2026 and December 31, 2025, the Company held $ 612 thousand and $ 741 thousand,

As of June 30, 2026 and December 31, 2025, the Company held $ 504 thousand and $ 741 thousand,

respectively, of restricted cash related to advances received under partnership arrangements.

4 unchanged sentences

Agreement, as amended.

License agreement

Under the License Agreement described in Note 1, the Company may be required to make contingent milestone payments

of up to $ 17.5 million to Celularity upon the achievement of specified commercial milestones.

Company may be subject to legal proceedings and claims that arise in the ordinary course of business.

Management is not currently aware

of any matters that will or may have a material effect on the financial position, results of operations, or cash flows of the Company.

connection with the Series A Convertible Note issued on February 10, 2026, the company received a deposit of $ 1,618 million into a restricted

cash account.

The cash is released from the account as the holder of the account converts the debt into common shares of the Company.

At June 30, 2026, $ 710 thousand remains in restricted cash.

the License Agreement described in Note 1, the Company may be required to make contingent milestone payments of up to $ 20.0 million to

Celularity upon the achievement of specified commercial milestones.

No amounts have been recorded due to the uncertainty regarding the achievement of the applicable milestones.

as described below, the Company may be subject to legal proceedings and claims that arise in the ordinary course of business.

is not currently aware of any matters that will or may have a material effect on the financial position, results of operations, or cash

flows of the Company.

April 27, 2026, Bezalel Partners, LLC (“Bezalel”) commenced an arbitration proceeding against the Company before JAMS,

asserting claims for breach of contract and declaratory relief arising from a Finder’s Fee Agreement, dated July 29, 2024, as

Bezalel alleges that it is entitled to a “Transaction Fee” in excess of $ 1,750

thousand , plus interest, attorneys’

fees and costs.

On July 2, 2026, the Company filed its Answer, denying Bezalel’s claims in their entirety and asserting

affirmative defenses.

The Company intends to vigorously defend against this claim.

Given the early stage of this proceeding, the

Company is unable to predict its outcome, hearing or resolution timing or estimate a range of reasonably possible loss, if any, at

Concentrations of Risk

the three months ended March 31, 2026, the Company had no revenue from customers that approximated 10 % of total revenue.

For the three

months ended March 31, 2025, the Company had revenue from one customer that approximated 10 % of total revenue.

Company had three customers with accounts receivable balances that were 18 %, 18 % and 38 % of total accounts receivable as of March 31,

The Company had two customers with accounts receivable balances that were 26 % and 49 % of total accounts receivable as of March

the six months ended June 30, 2026, the Company had no revenue from customers that approximated 10 % of total revenue.

For the six months

ended June 30, 2025, the Company had revenue from one customer that approximated 10 % of total revenue.

Company had three customers with accounts receivable balances that were 20 %, 21 %

of total accounts receivable as of June 30, 2026.

The Company had one customer with an accounts receivable balances that was 50 %

of total accounts receivable as of December 31, 2025.

Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash, cash equivalents,

3 unchanged sentences

by the Federal Deposit Insurance Corporation (“FDIC”) up to regulatory limits.

As of March 31, 2026, there is a $ 361,210

balance exceeding such limit.

As of June 30, 2026, there is a $ 873 balance

exceeding such limit.

The Company has not experienced any credit losses associated with its cash balances in the past.

invests its cash equivalents in U.S.

treasury bills with original maturities of three months or less.

The Company invests

its cash equivalents in U.S.

treasury bills with original maturities of six months or less.

securities are comprised of U.S.

6 unchanged sentences

payable – related party

of March 31, 2026 and December 31, 2025, the Company had outstanding balances of $ 462 thousand and $ 456 thousand, respectively, due to

of June 30, 2026 and December 31, 2025, the Company had outstanding balances of $ 534 thousand and $ 456 thousand, respectively, due to

Laboratories, Inc., a related party.

Additionally, as of March 31, 2026 and December 31, 2025, the Company had an outstanding balance

of $ 17 thousand to the CEO of CG Labs.

These balances primarily relate to transactions for contract manufacturing, packaging, and other

services provided by CG Laboratories, Inc.

of March 31, 2026 and December 31, 2025, the Company had outstanding balances due to Achieving Consulting Excellence, LLC, a company

owned by the Company’s former Interim Chief Financial Officer, of $ 125 thousand and $ 93 thousand, respectively, related to consulting

Additionally, as of June 30, 2026 and December 31, 2025, the Company had an outstanding balance

of $ 24 thousand and $ 17 thousand, respectively, to the CEO of CG Labs.

These balances primarily relate to transactions for contract manufacturing,

packaging, and other services provided by CG Laboratories, Inc.

Kieser is the Chief Executive Officer and indirect sole owner of Sequence LifeScience, Inc.

(“Sequence”).

17, 2026, prior to Mr.

Kieser’s appointment to the Company’s Board of Directors, Sequence purchased an unsecured

convertible promissory note in the original principal amount of $ 5,500

thousand, convertible into up to 9,166,667

shares of common stock, and a warrant to purchase up to 4,583,334

shares of common stock, in each case on the same terms as those issued to the other buyers in the private placement described in

Kieser was appointed to the Company’s Board of Directors on May 6, 2026.

On May 11, 2026, following his

appointment to the Board, Mr.

Kieser personally purchased an additional unsecured convertible promissory note in the original

principal amount of $ 1,000

thousand, convertible into up to 1,666,667

shares of common stock, and a warrant to purchase up to 833,334

shares of common stock, on the same terms as those issued to the other buyers in that offering.

As of June 30, 2026, the aggregate

principal amount outstanding under the notes held by Sequence and Mr.

Kieser was $ 6,500

Subsequent Events

accordance with ASC 855, Subsequent Events , the Company evaluated subsequent events after March 31, 2026, through the date these

accordance with ASC 855, Subsequent Events , the Company evaluated subsequent events after June 30, 2026, through the date these

condensed consolidated financial statements were issued and has determined that, other than already disclosed, no transactions or events

1 unchanged sentence

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-Q

Item 1. Financial Statements