Search cutoffs
Search companies, layoffs, filings, signals, and visa data
Search companies, layoffs, filings, signals, and visa data
Search companies, layoffs, filings, signals, and visa data
Search companies, layoffs, filings, signals, and visa data
Search companies, layoffs, filings, signals, and visa data
Current report (Form 8-K) · Jun 1, 2026 · Financial statements
Z Squared Inc.
13
Financial statements
Jun 1, 2026
EX-99.1 · zsquared_ex9901.htm iXBRL
EX-99.1
zsquared_ex9901.htm
| Document text |
|---|
EX-99.1 · zsquared_ex9901.htm iXBRL 0001759186 2026-04-24 2026-04-24 0001759186 2025-12-31 0001759186 2024-12-31 0001759186 2025-01-01 2025-12-31 0001759186 2024-01-01 2024-12-31 0001759186 us-gaap:CommonStockMember 2024-12-31 0001759186 us-gaap:AdditionalPaidInCapitalMember 2024-12-31 0001759186 us-gaap:RetainedEarningsMember 2024-12-31 0001759186 us-gaap:CommonStockMember 2023-12-31 0001759186 us-gaap:AdditionalPaidInCapitalMember 2023-12-31 0001759186 us-gaap:RetainedEarningsMember 2023-12-31 0001759186 2023-12-31 0001759186 us-gaap:CommonStockMember 2025-01-01 2025-12-31 0001759186 us-gaap:AdditionalPaidInCapitalMember 2025-01-01 2025-12-31 0001759186 us-gaap:RetainedEarningsMember 2025-01-01 2025-12-31 0001759186 us-gaap:CommonStockMember 2024-01-01 2024-12-31 0001759186 us-gaap:AdditionalPaidInCapitalMember 2024-01-01 2024-12-31 0001759186 us-gaap:RetainedEarningsMember 2024-01-01 2024-12-31 0001759186 us-gaap:CommonStockMember 2025-12-31 0001759186 us-gaap:AdditionalPaidInCapitalMember 2025-12-31 0001759186 us-gaap:RetainedEarningsMember 2025-12-31 0001759186 srt:ChiefExecutiveOfficerMember 2025-01-01 2025-12-31 0001759186 srt:AffiliatedEntityMember 2025-01-01 2025-12-31 0001759186 srt:AffiliatedEntityMember 2024-01-01 2024-12-31 iso4217:USD xbrli:shares iso4217:USD xbrli:shares ZSQR:Integer xbrli:pure Exhibit 99.1 Z SQUARED, INC. AUDITED FINANCIAL STATEMENTS For the Years Ended December 31, 2025 and 2024 INDEX TO FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID 03523) 3 Balance Sheets as of December 31, 2025 and 2024 4 Statements of Operations for the years ended December 31, 2025 and 2024 5 Statements of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2025 and 2024 6 Statements of Cash Flows for the years ended December 31, 2025 and 2024 7 Notes to the Financial Statements 8 2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholder and Board of Directors of Z Squared, Inc. Miami, Florida Opinion on the Financial Statements We have audited the accompanying balance sheets of Z Squared, Inc. (the “Company”) as of December 31, 2025 and 2024, the related statement of operations, changes in stockholders’ equity (deficit) and cash flows for each of the years in the two-year period ended December 31, 2025 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025 , in conformity with accounting principles generally accepted in the United States of America. Substantial Doubt About its Ability to Continue as a Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has experienced negative cash flows from operations for the years ended December 31, 2025 and 2024, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. 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 Company’s management. Our responsibility is to express an opinion on the Company’s 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 the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company 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 Company’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 audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Stephano Slack LLC We have served as the Company’s auditor since 2024. Wayne, Pennsylvania February 19, 2026 3 Z SQUARED INC. BALANCE SHEETS December 31, December 31, 2025 2024 ASSETS Current assets: Cash and cash equivalents $ 1,402 $ – Total current assets 1,402 – Total assets $ 1,402 $ – LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) Current liabilities: Advance from affiliate $ 120 $ 120 Total current liabilities 120 120 Total liabilities 120 120 Stockholders’ equity (deficit): Common stock, no par value, 1,000,000 shares authorized and no shares outstanding at December 31, 2025 and 2024 – – Additional paid-in capital 1,725 – Accumulated deficit ( 443 ) ( 120 ) Total stockholders’ equity (deficit) 1,282 ( 120 ) Total liabilities and stockholders’ equity (deficit) $ 1,402 $ – The accompanying notes are an integral part of these financial statements. 4 Z SQUARED INC. STATEMENTS OF OPERATIONS For the Years ended December 31, 2025 and 2024 2025 2024 Revenues, net $ – $ – Cost of revenues – – Gross profit – – Operating expenses: Selling, general and administrative expenses 323 60 Total operating expenses 323 60 Operating loss ( 323 ) ( 60 ) Net loss before income tax expense ( 323 ) ( 60 ) Income tax expense – – Net loss $ ( 323 ) $ ( 60 ) Net loss per share – basic and diluted $ – $ – Weight average number of common shares outstanding – basic and diluted – – The accompanying notes are an integral part of these financial statements. 5 Z SQUARED INC. STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) For the Years ended December 31, 2025 and 2024 Additional Common Stock Paid-in Accumulated Shares Amount Capital Deficit Total Balances, January 1, 2025 – $ – $ – $ ( 120 ) $ ( 120 ) Capital contribution – – 1,725 – 1,725 Net loss – – – ( 323 ) ( 323 ) Balances, December 31, 2025 – $ – $ 1,725 $ ( 443 ) $ 1,282 Balances, January 1, 2024 – $ – $ – $ ( 60 ) $ ( 60 ) Net loss – – – ( 60 ) ( 60 ) Balances, December 31, 2024 – $ – $ – $ ( 120 ) $ ( 120 ) The accompanying notes are an integral part of these financial statements. 6 Z SQUARED INC. STATEMENTS OF CASH FLOWS For the Years ended December 31, 2025 and 2024 2025 2024 Cash flows from operating activities: Net loss $ ( 323 ) $ ( 60 ) Adjustments to reconcile net loss to net cash used in operating activities: Expenses paid by officer on behalf of Company 225 – Advance from affiliate – 60 Net cash used in operating activities ( 98 ) – Cash flows from investing activities: – – Net cash used in investing activities – – Cash flows from financing activities: Capital contribution 1,500 – Net cash provided by financing activities 1,500 – Net increase in cash and cash equivalents 1,402 – Cash and cash equivalents, beginning of the year – – Cash and cash equivalents, end of the year $ 1,402 $ – Supplemental disclosure of cash flow information: Cash paid for interest $ – $ – Cash paid for income taxes $ – $ – Supplemental disclosure of non-cash investing and financing activities: Expenses paid by officer on behalf of Company treated as additional paid-in capital $ 225 $ – The accompanying notes are an integral part of these financial statements. 7 Z SQUARED INC. NOTES TO FINANCIAL STATEMENTS For the Years ended December 31, 2025 and 2024 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION Z Squared Inc. (the “Company”), formerly known as Preferred Asset Holdings, Inc., was incorporated in the State of Wyoming on December 21, 2022. The Company changed its name to Z Squared Inc. on April 3, 2025, and is headquartered in Fort Lauderdale, Florida. As of December 31, 2025, the Company had not issued any shares of common stock, and therefore had no stockholders of record. The Company is a development-stage enterprise currently focused on establishing operations in the cryptocurrency mining industry. As of December 31, 2025, the Company had not commenced principal operations and had not generated any revenues. As of December 31, 2025, the Company had no subsidiaries. On April 25, 2025, the Company entered into an Asset-for-Share Exchange Agreement (the “Exchange Agreement”) with BSG Series CM LLC (“Transferor”), a South Carolina limited liability company. Pursuant to the terms of the Exchange Agreement, Transferor agreed to contribute certain computer equipment consisting of cryptocurrency mining machines (the “Assets”) to the Company in exchange for 40,446,956 shares of the Company’s common stock (the “Shares”). The Shares will be issued pursuant to an exemption from registration under the Securities Act of 1933 and will be subject to customary restrictive legends and transfer limitations. The transfer of the Assets and the issuance of the Shares is contingent upon satisfaction of certain closing conditions, including the concurrent closing of the Merger Transaction (see below) and satisfaction of conditions set forth in the SEC litigation matter described below, and compliance with a court order issued in the matter Securities and Exchange Commission v. David Feingold, et al., Case No. 1:25-cv-20436-DPG (S.D. Fla.), dated April 21, 2025. That order requires Transferor to make a court-appointed monitor aware of all material business decisions prior to effecting such transfer. Transferor must provide financial statements, contractual agreements, any records reflecting the valuation of assets, communications with investors, and other relevant records to the monitor, and the Transferor must comply with any determinations or recommendations for action issued by the monitor. The Exchange Agreement includes the following resale restrictions on the Shares: · Lock-Up: No sales are permitted unless the 10-day volume-weighted average price (“VWAP”) of common stock exceeds $16.00 per share. · Leak-Out: Transferor may sell no more than 1/18th of its holdings per calendar month for 18 months following the Company becoming publicly traded, subject to: o Daily volume cap of 5% of the average daily trading volume over the prior 10 trading days; o Prohibition on short sales or below-ask trades; o Aggregation of sales across affiliated entities. · Suspension/Reinstatement: If the closing price exceeds $35.00 for two consecutive trading days, restrictions are suspended. If it subsequently falls below $35.00 for two consecutive days, restrictions are reinstated. The assets to be delivered by Transferor are expected to consist of approximately 9,000 cryptocurrency mining machines. Given the contribution of the mining machines in exchange for shares of Z Squared, and the related-party nature of the relationship with BSG Series CM, the value of the cryptocurrency machines was determined based on the historical carrying amount recognized in the accounts of BSG Series CM. The Company considered the requirements of ASC 850-10-50-5, which presumes that transactions between related parties are not necessarily consummated on an arm’s-length basis, and ASC 805-50-30-5, which requires that transfers of assets or exchanges of shares between entities under common control be recognized at the historical carrying amounts in the accounts of the transferring entity. As of the date these unaudited financial statements were issued, no assets or consideration have been exchanged. 1 Z SQUARED INC. NOTES TO FINANCIAL STATEMENTS For the Years ended December 31, 2025 and 2024 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION (continued) Merger Agreement On the same date as the Exchange Agreement, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Coeptis Therapeutics Holdings, Inc. (“Coeptis”) and CP Merger Sub Inc., a wholly-owned subsidiary of Coeptis. Under the Merger Agreement, CP Merger Sub Inc. will merge with and into the Company, with the Company continuing as the surviving corporation and becoming a wholly-owned subsidiary of Coeptis. The closing of the merger is subject to customary conditions including shareholder approval, SEC effectiveness of a registration statement, delivery of the Assets under the Exchange Agreement, and satisfaction of the SEC order noted above. Following the closing of the Merger (as described in Note 8), the Company will become the operating entity for the combined company’s cryptocurrency mining business. As of December 31, 2025 and through the date these financial statements were issued, the Merger had not yet closed, and these audited financial statements do not reflect the effects of the proposed transactions. Basis of Presentation . The accompanying audited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates . The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates. Cash and Cash Equivalents . The Company considers all highly liquid, short-term investments with original maturities of three months or less when purchased to be cash equivalents. As of December 31, 2025, the Company held $ 1,402 of cash or cash equivalents. Contingent Liabilities . The Company, from time to time, may be involved in certain legal proceedings. Based upon consultation with outside counsel handling its defense in these matters and the Company’s analysis of potential outcomes, if the Company determines that a loss arising from such matters is probable and can be reasonably estimated, an estimate of the contingent liability is recorded in its financial statements. If only a range of estimated loss can be determined, an amount within the range that, based on estimates, assumptions and judgments, reflects the most likely outcome, is recorded as a contingent liability in the financial statements. In situations where none of the estimates within the estimated range is a better estimate of probable loss than any other amount, the Company records the low end of the range. Any such accrual would be charged to expense in the appropriate period. Litigation expenses for these types of contingencies are recognized in the period in which the litigation services were provided. 2 Z SQUARED INC. NOTES TO FINANCIAL STATEMENTS For the Years ended December 31, 2025 and 2024 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Revenue Recognition . The Company has not recognized any revenues for the years ended December 31, 2025 and 2024. The Company has adopted Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers, which establishes principles for recognizing revenue from customer contracts. Under ASC 606, revenue is recognized when control of a promised good or service is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Although the Company has not commenced revenue-generating activities as of December 31, 2025, it is in the process of preparing to commence cryptocurrency mining operations. Upon commencement, the Company expects to generate revenue primarily through the validation of blockchain transactions and the subsequent receipt of cryptocurrency rewards. The Company’s future revenue recognition model will evaluate each blockchain protocol to determine whether revenue is earned through a contract with a customer under ASC 606 or through other guidance, such as ASC 610, depending on the nature of the consideration. To the extent that mining rewards are deemed to arise from arrangements that fall under ASC 606, the Company will apply the following five-step model: 1. Identify the contract(s) with a customer 2. Identify the performance obligations in the contract 3. Determine the transaction price 4. Allocate the transaction price to the performance obligations 5. Recognize revenue when or as the entity satisfies a performance obligation The Company will also assess whether it is acting as a principal or agent in its arrangements and whether variable consideration (e.g., mining rewards subject to network difficulty and block confirmation) is constrained. In periods when the Company receives digital assets, those assets will be measured at fair value on the date received and recognized as revenue if they meet the criteria under ASC 606. As of December 31, 2025, the Company had not yet acquired or deployed any mining equipment and has not commenced any mining operations. Cost of Revenues. Cost of revenues will include the direct costs associated with cryptocurrency mining operations, including electricity and power usage, depreciation of mining equipment, mining pool fees, and other costs directly attributable to the generation of cryptocurrency rewards. Comprehensive income . The Company follows Accounting Standards Codification (“ASC”) 220 in reporting comprehensive income. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. For the years ended December 31, 2025 and 2024, the Company had no items of other comprehensive income. As such, comprehensive loss equals net loss for each period presented. Earnings Per Share . The Company follows ASC 260 when reporting Earnings Per Share (“EPS”) resulting in the presentation of basic and diluted earnings per share. Basic net (loss) income per common share is computed by dividing net (loss) income by the weighted average number of common shares outstanding during the period. Diluted net (loss) income per common share is computed by dividing net income by the weighted average number of common shares outstanding, plus the effect of potentially dilutive securities, if any, using the treasury stock method. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. The Company did no t have any potentially dilutive securities outstanding as of December 31, 2025 and 2024. Because the Company had no common shares outstanding during the years ended December 31, 2025 and 2024, net (loss) income per share has not been presented as it is not meaningful. 3 Z SQUARED INC. NOTES TO FINANCIAL STATEMENTS For the Years ended December 31, 2025 and 2024 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Income Taxes . The Company accounts for income taxes under the provisions of the FASB ASC Topic 740 “Income Taxes” (“ASC Topic 740”). The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included or excluded in the financial statements or tax returns. Deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. The Company utilizes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s financial statements as of December 31, 2025 and 2024. The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as general and administrative expenses in the statements of comprehensive income. The Company is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. Fair Value Measurements . The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 — quoted prices in active markets for identical assets or liabilities Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions) Recent Accounting Pronouncements . In December 2023, the FASB issued ASU 2023-08, Intangibles—Goodwill and Other – Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. The new guidance requires entities to measure certain crypto assets at fair value, with changes in fair value recognized in net income. The amendments are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this guidance and will apply it upon commencement of cryptocurrency mining operations. Segment Reporting . The Company follows ASC 280, Segment Reporting, and uses the management approach to identify operating segments. The Company’s Chief Executive Officer is the chief operating decision maker. As of December 31, 2025, the Company operated in a single reportable segment focused on the development of cryptocurrency mining operations. 4 Z SQUARED INC. NOTES TO FINANCIAL STATEMENTS For the Years ended December 31, 2025 and 2024 3. GOING CONCERN The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has negative cash flows from operations, incurred a loss since inception resulting in an accumulated deficit of $ 443 and $ 120 as of December 31, 2025 and 2024, respectively, and additional losses are expected as the Company develops its operations. These factors raise substantial doubts about the Company’s ability to continue as a going concern for a period of 12 months from the date of this annual report. As of December 31, 2025 and 2024, the Company had approximately $ 1,402 and $ 0 in cash and cash equivalents, respectively. The Company expects that its current cash and cash equivalents as of the date of this annual report, will not be sufficient to support its projected operating requirements for at least the next 12 months from this date. The Company expects to need additional capital in order to generate revenues. Any additional equity financing, if available, may not be on favorable terms and would likely be significantly dilutive to the Company’s current stockholders, and debt financing, if available, may involve restrictive covenants. The Company’s ability to access capital when needed is not assured and, if not achieved on a timely basis, will likely have a materially adverse effect on its business, financial condition and results of operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. 4. INCOME TAXES As discussed in Note 2, the Company utilizes the asset and liability method of accounting for income taxes in accordance with FASB ASC 740. The income tax provision (benefit) consists of the following: Schedule of income tax provision 2025 2024 Current $ ( 82 ) $ – Deferred – – Change in valuation allowance 82 – Total income tax provision (benefit) $ – $ – A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows: Schedule of income tax reconciliation 2025 2024 U.S. federal income tax benefit at federal statutory rate 21.0 % 0.0 % State tax, net of federal tax effect 4.0 % – % Change in valuation allowance ( 25.0 % ) 0.0 % Total income tax provision 0.0 % 0.0 % 5 Z SQUARED INC. NOTES TO FINANCIAL STATEMENTS For the Years ended December 31, 2025 and 2024 4. INCOME TAXES (continued) The tax effects of temporary differences that give rise to deferred tax assets or liabilities are presented below: Schedule of deferred taxes 2025 2024 Deferred tax assets: Net operating loss carryforwards $ 82 $ – Less: valuation allowance ( 82 ) – Net deferred tax assets $ – $ – The valuation allowance for deferred tax assets as of December 31, 2025 and 2024 was $82 and $0. The change in the total valuation for the year ended December 31, 2025 was an increase of $82. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the net operating losses and temporary differences become deductible. Management considered projected future taxable income and tax planning strategies in making this assessment. The value of the deferred tax assets was offset by a valuation allowance, due to the current uncertainty of the future realization of the deferred tax assets. The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the statement of operations. As of January 1, 2025, the Company had no unrecognized tax benefits and no charges during 2025, and accordingly, the Company did not recognize any interest or penalties during 2025 related to unrecognized tax benefits. There is no accrual for uncertain tax positions as of December 31, 2025. The Company was not subject to federal or state income taxes during the period it was a Wyoming shelf company, which was from December 21, 2022 (date of inception) through March 18, 2025, date of change of control. Thus, there was no income tax benefit for the net loss for the year ended December 31, 2024. In addition, there no net operating losses were generated from inception through March 18, 2025. The Company is subject to U.S. federal and Florida income taxes in 2025. As of December 31, 2025, the Company had a net operating loss carryforward for U.S. federal income tax purposes and Florida income taxes of approximately $ These carryforwards were generated in 2025 and, under current tax law, do not expire but are limited to offsetting a maximum of 80% of taxable income in future periods, subject to Section 382 and similar state limitations. Under Section 382 of the Internal Revenue Code, as amended, changes in the Company’s ownership may limit the amount of its net operating loss carryforwards that could be utilized annually to offset future taxable income, if any. This limitation would generally apply in the event of a cumulative change in ownership of the Company of more than 50% within a three-year period. The Company believes that operating loss carryforwards may be limited under Section 382 limitations, although Section 382 studies have not been conducted to determine the actual limitations. 5. STOCKHOLDERS’ EQUITY Common Stock. The Company has authorized capital of 1,000,000 shares of no -par common stock. During 2025, our Chief Executive Officer contributed $ 1,500 to fund operating costs. No shares were issued in connection with this contribution. Also during 2025, our Chief Executive Officer paid $ 225 of corporate costs related to a legal name change on behalf of the Company. The Company recorded the expense within selling, general and administrative expenses with a corresponding increase to additional paid-in capital. As of December 31, 2025 and 2024, the Company had no shares of common stock issued and outstanding, respectively. 6 Z SQUARED INC. NOTES TO FINANCIAL STATEMENTS For the Years ended December 31, 2025 and 2024 6. COMMITMENTS AND CONTINGENCIES Operating Leases . The Company utilizes office space controlled by an affiliated entity. The arrangement is informal, and the Company does not pay rent or have a lease agreement in place. As such, no lease liability or right-of-use asset has been recorded, and no rent expense was recognized for the years ended December 31, 2025 and 2024, as management believes the estimated fair value of the use of these facilities is not material to the accompanying financial statements. As of December 31, 2025 and 2024, the Company had no lease commitments or material contractual obligations other than the Merger Agreement and Exchange Agreement described in Note 8. In addition, the Company may be subject to contingencies arising from legal or regulatory matters from time to time (see Note 8). The Company may also be subject to contingencies arising from legal or regulatory matters from time to time, including matters that could affect the closing of the transactions described in Note 8. 7. RELATED PARTY TRANSACTIONS During the years ended December 31, 2025 and 2024, an affiliated entity advanced funds of $ 0 and $ 60 to the Company for payment of the filing of its annual reports. As of December 31, 2025 and 2024, the Company owed $ 0 and $ 120 to the affiliated entity. The advance is non-interest bearing, unsecured, and due on demand. The Company entered into the Exchange Agreement with BSG Series CM LLC, which the Company evaluated as a related party arrangement (see Note 8). 8. MERGER AGREEMENT AND ASSET-FOR-SHARE EXCHANGE AGREEMENT Merger Agreement On April 25, 2025, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Coeptis Therapeutics Holdings, Inc. (“Coeptis”) and CP Merger Sub Inc., a wholly-owned subsidiary of Coeptis (“Merger Sub”). Pursuant to the Merger Agreement, Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation and becoming a wholly-owned subsidiary of Coeptis (the “Merger”). On May 30, 2025, the Company entered into a Limited Waiver and First Amendment to the Merger Agreement that modified certain regulatory requirements and deliverables, including extensions related to the filing timeline under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”). The amendment did not materially alter the consideration or structure of the Merger. On June 5, 2025, the Company executed a Limited Waiver and Second Amendment to the Merger Agreement, which further updated certain HSR-related deliverables and clarified specific closing conditions. On June 20, 2025, the Company executed a Limited Waiver and Third Amendment to the Merger Agreement, which further updated matters related to the spin out of subsidiaries and the consideration delivered in connection therewith. 7 Z SQUARED INC. NOTES TO FINANCIAL STATEMENTS For the Years ended December 31, 2025 and 2024 Closing Conditions and Status The closing of the Merger is subject to customary closing conditions, including, among other things, applicable shareholder approvals, effectiveness of a registration statement to be filed with the Securities and Exchange Commission, delivery of assets under the Exchange Agreement described below, and satisfaction of requirements associated with a court order and related monitoring provisions described below. As of December 31, 2025 and through the date these financial statements were issued, the Merger had not been consummated. Accordingly, these financial statements do not reflect the effects of the merger or any related transactions. Following the closing of the Merger, the Company is expected to become the operating entity for the combined company’s cryptocurrency mining business, and Coeptis is expected to change its name accordingly. Asset-for-Share Exchange Agreement (Related Party Transaction) On April 25, 2025, the Company entered into an Asset-for-Share Exchange Agreement (the “Exchange Agreement”) with BSG Series CM LLC (the “Transferor”), pursuant to which the Transferor agreed to contribute certain computer equipment consisting of cryptocurrency mining machines (the “Assets”) to the Company in exchange for 40,446,956 shares of the Company’s common stock (the “Shares”). Closing Conditions and Status The transfer of the Assets and issuance of the Shares are contingent upon satisfaction of certain closing conditions, including the concurrent closing of the Merger and compliance with an order entered on April 21, 2025 in Securities and Exchange Commission v. David Feingold, et al. , Case No. 1:25-cv-20436-DPG (S.D. Fla.) (the “SEC Order”). The SEC Order requires, among other things, that the Transferor make a court-appointed monitor aware of material business decisions prior to effecting the transfer contemplated by the Exchange Agreement and provide specified records to the monitor. As of December 31, 2025 and through the date these financial statements were issued, no assets or consideration have been exchanged and no Shares have been issued. Accordingly, the Company has not recorded the Assets or any related equity issuance in the accompanying financial statements. The Assets to be delivered by the Transferor are expected to consist of approximately 9,000 cryptocurrency mining machines. As of December 31, 2025, the Company had not acquired or deployed any mining equipment and had not commenced mining operations (see Note 2). Transfer Restrictions The Shares to be issued under the Exchange Agreement are expected to be subject to contractual resale restrictions, including (i) a lock-up provision prohibiting sales unless the 10-day volume-weighted average price (“VWAP”) of the Company’s common stock exceeds $16.00 per share, (ii) leak-out limitations restricting monthly sales for a period following the Company becoming publicly traded, subject to specified volume limits and trading restrictions, and (iii) suspension and reinstatement provisions based on the Company’s closing stock price meeting specified thresholds. Related Party - Measurement Considerations The Company has evaluated the Exchange Agreement as a related party arrangement. The Company expects to evaluate the appropriate accounting for the transaction upon consummation, including whether the transaction represents a transfer of assets between entities under common control. Because the transaction has not been consummated as of the issuance date of these financial statements, no amounts have been recognized. 9. SEGMENT REPORTING The Company operates in one operating and reportable segment focused on the development of cryptocurrency mining operations. The Company’s chief operating decision maker, the Company’s Chief Executive Officer, reviews operating results on a consolidated basis. For the years ended December 31, 2025 and 2024, the Company did not recognize revenue and had no customers. Substantially all activities and assets were located in the United States, and the Company had no long-lived assets or deployed mining equipment as of December 31, 2025. 8 |
EX-99.2 · UNAUDITED CONDENSED FINANCIAL STATEMENTS OF Z SQUARED INC. (FORMERLY KNOWN AS CO
EX-99.2
zsquared_ex9902.htm
| Document text |
|---|
EX-99.2 · UNAUDITED CONDENSED FINANCIAL STATEMENTS OF Z SQUARED INC. (FORMERLY KNOWN AS CO EX-99.2
4
zsquared_ex9902.htm
UNAUDITED CONDENSED FINANCIAL STATEMENTS OF Z SQUARED INC. (FORMERLY KNOWN AS COEPTIS THERAPEUTICS HOLDINGS, INC.)
Exhibit 99.2
Z SQUARED INC. (formerly known as Coeptis
Therapeutics Holdings, Inc.)
CONDENSED CONSOLIDATED BALANCE SHEETS
As of
March
31, 2026
(unaudited)
December
31,
2025
ASSETS
CURRENT ASSETS
Cash
$ 5,211,188
$ 5,674,302
Marketable securities
50,551
676,596
Interest receivable
15,287
7,348
Prepaid assets
631,082
991,903
TOTAL CURRENT ASSETS
5,908,108
7,350,149
PROPERTY AND EQUIPMENT
Furniture and fixtures, net
9,727
9,873
OTHER ASSETS
Investments
13,159,346
7,860,083
Intangible assets, net
316,094
361,250
Co-development rights, net
304,167
554,167
Right of use asset, net of accumulated
amortization
89,251
18,399
Total other assets
13,868,858
8,793,899
TOTAL ASSETS
$ 19,786,693
$ 16,153,921
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable
$ 1,011,172
$ 888,755
Accrued expenses
60,140
41,054
Convertible notes payable, in default
100,000
100,000
Right of use liability, current portion
40,323
18,875
Customer deposit
485,684
599,455
Other current liabilities
120,000
120,000
TOTAL CURRENT LIABILITIES
1,817,319
1,768,139
LONG TERM LIABILITIES
SBA loan payable
150,000
150,000
Derivative liability warrants
187,500
167,625
Right of use liability, non-current
portion
53,030
–
TOTAL LONG TERM LIABILITIES
390,530
317,625
TOTAL LIABILITIES
2,207,849
2,085,764
COMMITMENTS AND CONTINGENCIES (NOTE 10)
–
–
STOCKHOLDERS’ EQUITY
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, 10,000
designated as Series A, zero shares issued and outstanding
–
–
Common stock, $0.0001 par value,
150,000,000 shares authorized, 6,553,996 and 5,746,948 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively
656
575
Additional paid-in capital
134,700,105
127,201,691
Subscription receivable
(3,653,456 )
(3,686,544 )
Accumulated deficit
(113,870,346 )
(109,953,728 )
TOTAL STOCKHOLDERS’ EQUITY - CONTROLLING INTERESTS
17,176,959
13,561,994
TOTAL STOCKHOLDERS’ EQUITY - NONCONTROLLING
INTERESTS
401,885
506,163
TOTAL STOCKHOLDERS’ EQUITY
17,578,844
14,068,157
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$ 19,786,693
$ 16,153,921
The accompanying notes are an integral part
of the condensed consolidated unaudited financial statements.
1
Z SQUARED INC. (formerly known as Coeptis
Therapeutics Holdings, Inc.)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31, 2026
March 31, 2025
SALES
Sales
$ 113,771
$ 62,874
Total sales
113,771
62,874
Cost of goods
45,156
45,156
Gross profit
68,615
17,718
COST OF OPERATIONS
Research and development expense
235,529
86,659
Salary expense
422,705
439,173
Amortization expense
250,000
250,000
Professional services expense
1,014,144
2,325,567
Stock based compensation expense
1,416,178
597,731
General and administrative expenses
644,703
269,072
Selling and marketing expense
–
106,500
Total cost of operations
3,983,259
4,074,702
LOSS FROM OPERATIONS
(3,914,644 )
(4,056,984 )
OTHER (EXPENSE) INCOME
Interest expense
(5,257 )
(71,491 )
Other income, net
32,206
111,414
Unrealized loss on marketable securities
(176,045 )
–
Unrealized loss on investments
(22,688 )
–
Realized gain on sale of marketable securities
85,407
–
Change in fair value of derivative liabilities
(19,875 )
596,120
TOTAL OTHER (EXPENSE) INCOME, net
(106,252 )
636,043
LOSS BEFORE INCOME TAXES
(4,020,896 )
(3,420,941 )
PROVISION FOR INCOME TAXES (BENEFIT)
–
–
NET LOSS
(4,020,896 )
(3,420,941 )
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
(3,916,618 )
(3,356,538 )
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS
(104,278 )
(64,403 )
NET LOSS
$ (4,020,896 )
$ (3,420,941 )
LOSS PER SHARE
Loss per share, basic and fully diluted
$ (0.65 )
$ (1.10 )
Weighted average number of common shares outstanding
6,032,193
3,073,074
The accompanying notes are an integral part
of the condensed consolidated unaudited financial statements.
2
Z SQUARED INC. (formerly known as Coeptis Therapeutics
Holdings, Inc.)
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’
EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND
2025
(Unaudited)
ADDITIONAL
COMMON
PREFERRED STOCK
COMMON STOCK
PAID-IN
STOCK
SHARES
AMOUNT
SHARES
AMOUNT
CAPITAL
SUBSCRIBED
BALANCE AT DECEMBER 31, 2024
6,520
$ 2
2,116,191
$ 212
$ 102,976,748
$ 541,875
Series A preferred stock offering
3,480
–
–
–
2,875,524
–
Pre-funded warrants exercise
–
–
200,000
20
380
–
Preferred share conversion
(6,200 )
(1 )
775,000
78
(77 )
–
Shares issued for services
–
–
4,371
–
25,000
–
Shares issued for SEPA
–
–
81,877
8
239,195
–
Asset purchase agreement
–
–
187,500
19
541,856
(541,875 )
Stock based compensation
–
–
–
–
597,731
–
Warrants issued for services
–
–
–
–
824,295
–
Net loss
–
–
–
–
–
–
BALANCE AT MARCH 31, 2025
3,800
$ 1
3,364,939
$ 337
$ 108,080,652
$ –
BALANCE AT DECEMBER 31, 2025
–
$ –
5,746,948
$ 575
$ 127,201,691
$ –
Shares issued for SEPA
–
–
39,273
4
504,250
–
Shares issued for services
–
–
–
–
–
–
Shares issued for investment
–
–
330,775
33
3,658,338
–
Stock option exercised
–
–
437,000
44
1,919,648
–
Stock based compensation
–
–
–
–
1,416,178
–
Net loss
–
–
–
–
–
–
BALANCE AT MARCH 31, 2026
–
$ –
6,553,996
$ 656
$ 134,700,105
$ –
(continued)
3
Z SQUARED INC. (formerly known as Coeptis Therapeutics
Holdings, Inc.)
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’
EQUITY (continued)
FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND
2025
(Unaudited)
TOTAL
NON-
SUBSCRIPTION
ACCUMULATED
CONTROLLING
CONTROLLING
TOTAL
RECEIVABLE
DEFICIT
INTEREST
INTEREST
EQUITY
BALANCE AT DECEMBER 31, 2024
$ (2,100,000 )
$ (98,036,713 )
$ 3,382,124
$ 485,102
$ 3,867,226
Series A preferred stock offering
1,850,000
–
4,725,524
302,238
5,027,762
Pre-funded warrants exercise
–
–
400
–
400
Preferred share conversion
–
–
–
–
–
Shares issued for services
–
–
25,000
–
25,000
Shares issued for SEPA
–
–
239,203
–
239,203
Asset purchase agreement
–
–
–
–
–
Stock based compensation
–
–
597,731
–
597,731
Warrants issued for services
–
–
824,295
–
824,295
Net loss
–
(3,356,538 )
(3,356,538 )
(64,403 )
(3,420,941 )
BALANCE AT MARCH 31, 2025
$ (250,000 )
$ (101,393,251 )
$ 6,437,739
$ 722,937
$ 7,160,676
BALANCE AT DECEMBER 31, 2025
$ (3,686,544 )
$ (109,953,728 )
$ 13,561,994
$ 506,163
$ 14,068,157
Shares issued for SEPA
–
–
504,254
–
504,254
Shares issued for services
33,088
–
33,088
–
33,088
Shares issued for investment
–
–
3,658,371
–
3,658,371
Stock option exercised
–
–
1,919,692
–
1,919,692
Stock based compensation
–
–
1,416,178
–
1,416,178
Net loss
–
(3,916,618 )
(3,916,618 )
(104,278 )
(4,020,896 )
BALANCE AT MARCH 31, 2026
$ (3,653,456 )
$ (113,870,346 )
$ 17,176,959
$ 401,885
$ 17,578,844
The accompanying notes are an integral part
of the condensed consolidated unaudited financial statements.
4
Z SQUARED INC. (formerly known as Coeptis
Therapeutics Holdings, Inc.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31, 2026
March 31, 2025
OPERATING ACTIVITIES
Net loss
$ (4,020,896 )
$ (3,420,941 )
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization
295,302
295,303
Right of use asset amortization
15,206
9,994
Amortization of debt discount
–
99,879
Non-cash revenue
(113,771 )
(62,874 )
Stock based compensation
1,416,178
597,731
Shares issued for non-employee services
33,088
25,000
Warrants issued for services
–
824,295
Change in fair value of derivative liability
–
(405,995 )
Change in fair value of derivative liability warrants
19,875
(190,125 )
Realized gain on sale of marketable securities
(85,407 )
–
Forgiveness of interest
–
19,447
Unrealized loss on investments
22,688
–
Unrealized loss on marketable securities
176,045
–
(Increase) decrease in:
Interest receivable
(7,939 )
–
Prepaid assets
360,821
135,778
Increase (decrease) in:
Accounts payable
122,418
(149,107 )
Accrued expenses
19,086
–
Customer deposit
–
–
Right of use liability
(11,581 )
(10,115 )
Other current liabilities
–
(134,437 )
NET CASH USED IN OPERATING ACTIVITIES
(1,758,887 )
(2,366,167 )
INVESTING ACTIVITIES
Sale of marketable securities
591,519
–
NET CASH PROVIDED BY INVESTING ACTIVITIES
591,519
–
FINANCING ACTIVITIES
Proceeds from notes payable
–
990,000
Repayment of notes payable
–
(218,750 )
Shares issued for SEPA
504,254
–
Warrants issued for cash
–
400
Stock option exercised
200,000
–
Preferred stock offering
–
5,330,000
NET CASH PROVIDED BY FINANCING ACTIVITIES
704,254
6,101,650
NET (DECREASE) INCREASE IN CASH
(463,114 )
3,735,483
CASH AT BEGINNING OF PERIOD
5,674,302
532,885
CASH AT END OF PERIOD
$ 5,211,188
$ 4,268,368
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid
$ 2,193
$ 2,193
Taxes paid
$ –
$ –
SUPPLEMENTAL NON-CASH DISCLOSURES
Shares issued for investment
$ 3,658,371
$ –
Investments received for stock options exercised
$ 1,719,692
$ –
Increase in right of use assets due to lease renewal
$ 85,080
$ –
The accompanying notes are an integral part
of the condensed consolidated unaudited financial statements.
5
Z SQUARED INC. (formerly
known as Coeptis Therapeutics Holdings, Inc.)
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2026
(unaudited)
NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Description of Business
General. The registrant (the “Company,”
“we” or “our”) was originally incorporated in the British Virgin Islands on November 27, 2018 under the name Bull
Horn Holdings Corp. On October 27, 2022, Bull Horn Holdings Corp. domesticated from the British Virgin Islands to the State of Delaware.
On October 28, 2022, in connection with the closing of a prior business combination, the Company changed its corporate name from Bull
Horn Holdings Corp. to “Coeptis Therapeutics Holdings, Inc.” On April 24, 2026, in connection with the closing of the business
combination described in Notes 16 and 17 (the “Merger”), the Company changed its corporate name from “Coeptis Therapeutics
Holdings, Inc.” to “Z Squared Inc.”
Nature of Business During the Period Covered.
Throughout the three months ended March 31, 2026, and prior to the closing of the Merger and the related Spin-Out described in Notes 16
and 17, the Company operated as a biopharmaceutical and technology company. The Company's biopharmaceutical division focused on developing
innovative cell therapy platforms for cancer, autoimmune, and infectious diseases. The Company's technology division focused on AI-powered
marketing software and robotic process automation tools designed to optimize business processes and improve operational efficiency. The
accompanying condensed consolidated financial statements present the financial position, results of operations, and cash flows of the
Company and its consolidated subsidiaries as they existed during, and as of the end of, the three-month period ended March 31, 2026, reflecting
the biopharmaceutical and technology business as then conducted.
Subsidiaries During the Period Covered.
During the three months ended March 31, 2026, the Company conducted its operations through its direct and indirect subsidiaries SNAP Biosciences,
Inc. and GEAR Therapeutics, Inc. (each majority owned), and Coeptis Therapeutics, Inc., Coeptis Pharmaceuticals, Inc., and Coeptis Pharmaceuticals,
LLC (each wholly owned).
Subsequent Change in Business; Reverse Acquisition
Accounting. On April 24, 2026, the Company completed the Merger with Z Squared Inc., a Wyoming corporation (“Z Squared”),
and effected a related Spin-Out of substantially all of its biopharmaceutical operations other than those conducted through GEAR Therapeutics,
Inc. As a result of the Merger and the Spin-Out, (i) the Company's principal business following the closing is the digital asset mining
operations conducted through Z Squared and its subsidiaries; (ii) the Company's interests in Coeptis Therapeutics, Inc., Coeptis Pharmaceuticals,
Inc., Coeptis Pharmaceuticals, LLC, and SNAP Biosciences, Inc. (collectively, the “Spin-Out Subsidiaries”) are no longer held
by the Company; and (iii) the Company's interest in GEAR Therapeutics, Inc. continues to be held by the Company. The Merger is being accounted
for as a reverse acquisition under ASC 805-40, with Z Squared as the accounting acquirer and the Company as the accounting acquiree, as
disclosed in the Company's Registration Statement on Form S-4 (File No. 333-288329) declared effective on December 23, 2025. Accordingly,
the accompanying condensed consolidated financial statements as of and for the three months ended March 31, 2026 represent the historical
financial statements of the legal acquirer in the Merger; the Company's financial statements for periods ending on or after the closing
date of the Merger will reflect the operations of Z Squared as the accounting acquirer and the net assets of the Company (other than those
of the Spin-Out Subsidiaries) recorded at their acquisition-date fair value. See Notes 16 and 17 for additional information regarding
the Merger, the Spin-Out, and the related accounting treatment.
Basis of Presentation – The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”). In the opinion of management, the accompanying unaudited condensed consolidated
financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly the Company's
financial position, results of operations, and cash flows. The interim results of operations are not necessarily indicative of the results
that may occur for the full fiscal year, and in particular, as further described in Notes 16 and 17 and in the “Recent Business
Combination” and “Basis of MD&A Discussion” sections of Item 2 of this Quarterly Report, the financial position,
results of operations, and cash flows of the Company in future periods will differ materially from those presented herein as a result
of the Merger and the Spin-Out. Certain information and footnote disclosure normally included in the financial statements prepared in
accordance with GAAP have been condensed or omitted pursuant to instructions, rules, and regulations prescribed by the United States Securities
and Exchange Commission (the “SEC”). The condensed interim financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025 that
was filed with the SEC on March 19, 2026.
6
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation –
The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries identified above
under “Subsidiaries During the Period Covered.” All material intercompany accounts, balances, and transactions have been
eliminated. As described under “Subsequent Change in Business; Reverse Acquisition Accounting” above and in Notes 16 and
17, certain of these subsidiaries (the Spin-Out Subsidiaries) were distributed to the Company's stockholders in connection with the Spin-Out,
which occurred subsequent to March 31, 2026 and is therefore not reflected in the accompanying condensed consolidated financial statements
Use of Estimates – The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
Reclassification – The Company reclassified
certain amounts of total stockholders’ equity – noncontrolling interests, net loss attributable to non-controlling interests,
and accumulated deficit from prior periods. These presentation changes did not affect total stockholders’ equity or net loss.
Employee and Non-Employee Share-Based Compensation
– The Company applies Accounting Standards Codification (“ASC”) 718-10, Share-Based Payment , which requires
the measurement and recognition of compensation expenses for all share-based payment awards made to employees and directors including
employee stock options equity awards issued to employees and non-employees based on estimated fair values.
ASC 718-10 requires companies to estimate the
fair value of equity-based option awards on the date of grant using an option-pricing model. The fair value of the award is recognized
as an expense on a straight-line basis over the requisite service periods in the Company’s unaudited condensed consolidated statements
of operations. The Company recognizes share-based award forfeitures as they occur.
The Company estimates the fair value of granted
option equity awards using a Black-Scholes option pricing model. The option-pricing model requires a number of assumptions, of which
the most significant are share price, expected volatility and the expected option term (the time from the grant date until the options
are exercised or expire). Expected volatility is estimated based on volatility of the Company. The Company has historically not paid
dividends and has no foreseeable plans to issue dividends. The risk-free interest rate is based on the yield from governmental zero-coupon
bonds with an equivalent term. The expected option term is calculated for options granted to employees and directors using the “simplified”
method. Changes in the determination of each of the inputs can affect the fair value of the options granted and the results of operations
of the Company.
Recent
Accounting Pronouncements – The following standards have been issued by the Financial Accounting Standards Board ("FASB")
but have not yet been adopted by the Company. The Company is evaluating each standard's applicability to its operations and the potential
impact, if any, on its consolidated financial statements.
ASU 2024-04 – Debt – Debt with
Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments – In November 2024, the
FASB issued ASU 2024-04, which clarifies the requirements for determining whether certain settlements of convertible debt instruments
should be accounted for as an induced conversion rather than a debt extinguishment. The amendments replace the prior requirement that
all equity securities issuable under the original conversion terms must be included in an inducement offer, clarifying that induced conversion
accounting may also apply to certain settlements involving cash conversion features. The assessment of the form and amount of consideration
in an inducement offer is performed as of the date the offer is accepted by the holder. The ASU is applicable for smaller reporting entities
for fiscal years beginning after December 15, 2026 and should be adopted, if applicable, beginning first quarter of 2027.
7
ASU 2025-04 – Compensation – Stock
Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to
a Customer – In May 2025, the FASB issued ASU 2025-04, which clarifies the accounting for share-based payment awards granted
by an entity as consideration payable to a customer in conjunction with the sale of goods or services. The amendments revise the definition
of "performance condition" to explicitly address vesting conditions based on a customer's volume or monetary amount of purchases,
eliminate the policy election to account for forfeitures as they occur for service conditions, and clarify that the variable consideration
constraint under Topic 606 does not apply to share-based consideration payable to a customer measured under Topic 718. The ASU is applicable
for smaller reporting entities for fiscal years beginning after December 15, 2026 and should be adopted, if applicable, beginning first
quarter of 2027.
Revenue Recognition – The Company
recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) to depict the
transfer of control to the Company’s customers in an amount reflecting the consideration to which the Company expects to be entitled.
The Company determines revenue recognition through the following steps:
i.
Identification of the contract, or contracts, with a customer
ii.
Identification of the performance obligations in the contract
iii.
Determination of the transaction price
iv.
Allocation of the transaction price to the performance obligations in the contract
v.
Recognition of revenue, when, or as, the company satisfies the performance obligations.
Under ASC 606, revenue is recognized when control
of promised goods and services is transferred to customers. A performance obligation is a contractual promise to transfer a distinct
good or service to the customer and is the unit of account under ASC 606. The transaction price of a contract is allocated to distinct
performance obligations and recognized as revenue when or as the performance obligations are satisfied.
The Company generates revenue from its customers
by 1) performing data research for its customers and delivering advertising campaigns via cold emails and social media sites, and 2)
providing webinars for its customers to a targeted business-to-business audience. The fee for these services is based on observable prices
explicitly negotiated between the Company and the customer. The Company recognizes revenue at the point in time when the good or service
is delivered to the customer, which occurs upon delivery of the advertising campaign or webinar and there is a transfer of control to
the customer.
During the three months ended March 31, 2026,
revenues from delivering advertising campaigns via cold emails and social media sites were recognized from one customer who accounted
for 100% of this revenue. Revenue was recognized at the point of delivery to the customers in the amount of $113,771, for the three months
ended March 31, 2026. As of March 31, 2026, the Company has recorded customer deposits in the amount of $485,684.
During the three months ended March 31, 2025,
revenues from delivering advertising campaigns via cold emails and social media sites were recognized from two customers who accounted
for 100% of this revenue. Revenue was recognized at the point of delivery to the customers in the amount of $62,874, for the three months
ended March 31, 2025.
8
Investments and Marketable Securities –
The Company classifies its investments and marketable securities in accordance with ASC 320, Investments – Debt and Equity
Securities , and ASC 321, Investments – Equity Securities , as applicable. Investments in equity securities with
readily determinable fair values are measured at fair value, with unrealized gains and losses recognized in net income. For equity securities
without readily determinable fair values, the Company applies the measurement alternative, recording these investments at cost, adjusted
for impairments or observable price changes from transactions involving similar securities.
Marketable securities are categorized as trading
securities and are thus marked to market and stated at fair value. Fair value is determined using the quoted closing bid prices and is
recorded as a Level 1 asset. Realized gains and losses on marketable securities are recognized as incurred in the condensed consolidated
statements of operations. Net changes in unrealized gains and losses are reported in the condensed consolidated statements of operations
in the current period.
Going Concern – The accompanying
unaudited condensed consolidated financial statements have been prepared in conformity with GAAP, which contemplates continuation of
the Company as a going concern, which is dependent upon the Company’s ability to obtain sufficient financials or establish itself
as a profitable business. At March 31, 2026, the Company had an accumulated deficit of $113,870,346, and for the three months ended March
31, 2026, the Company had a net loss of $4,020,896. These conditions raise substantial doubt about the Company’s ability to continue
as a going concern. Management’s plans with respect to operations include raising additional capital through sales of equity or
debt securities as may be necessary to pursue its business plans and sustain operations until such time as the Company can achieve profitability.
Management believes that additional financing as necessary will result in improved operations and cash flow. However, there can be no
assurance that management will be successful in obtaining additional funding or in attaining profitable operations.
NOTE 3 – CO-DEVELOPMENT RIGHTS
In December 2018, the Company entered into an
agreement with Purple Biotech (“Purple”) to market, distribute, and sell the Consensi product (the “Product”)
on an exclusive basis within the United States and Puerto Rico. In September of 2021, the Company executed a license termination agreement
with Purple to cease all efforts for sales and promotion of the Product in the United States and Puerto Rico. The termination included
(i) issuance of $1,500,000 of convertible debt due in February 2023 to satisfy amounts owed for the license, (ii) the issuance of warrants
(See Note 7, Capital Structure) and (iii) transfer of inventory ownership back to Purple. In conjunction with this termination, the Company
also terminated its marketing agreement with a third party for the Product’s sales and promotion. On July 14, 2023, the Company
and Purple executed an amendment to revise the note’s payment schedule, extending the maturity date to March 31, 2024. On June 19,
2024, the Company and Purple executed another amendment to extend the maturity date to August 31, 2024. The outstanding principal balance
due under the convertible note at December 31, 2024 was $218,750. The Company paid the outstanding $218,750 principal balance in full
during the quarter ended March 31, 2025, and the convertible note was considered fully satisfied as of March 31, 2025.
During the year ended December 31, 2021, the Company
and Vy-Gen-Bio, Inc. (“Vy-Gen”) entered into agreements to jointly develop and commercialize two Vy-Gen product candidates,
CD38-GEAR-NK and CD38-Diagnostic (the “CD38 Assets”). The Company paid $1,750,000 and issued promissory notes totaling $3,250,000
to Vy-Gen in accordance with the agreements. The collaboration arrangement provides the right for the Company to participate, under the
direction of a joint steering committee, in the development and commercialization of the CD38 Assets and a 50/50 profit share, with the
profit share subject to contingent automatic downward adjustment up to 25% upon an event of default in connection with the promissory
notes. The Company capitalized $5,000,000 to be amortized over a five-year period in which the CD38 Assets are expected to contribute
to future cash flows. The promissory notes were paid in full in 2022.
9
The Company made certain judgments as the
basis in determining the accounting treatment of these options. The CD38 Assets represent a platform technology and a diagnostic
tool which have multiple applications and uses. Both projects are intended to be used in more than one therapy or diagnostic option.
For example, GEAR-NK is a technology which allows for the gene editing of human natural killer cells, so that these cells can no
longer bind and be destroyed by targeted monoclonal antibody treatments. The GEAR-NK technology can be modified to work
concomitantly with many different monoclonal antibody treatments in which there are currently over 100 approved by the FDA. Anti-
CD38 is only the first class of monoclonal antibody treatments being developed under the GEAR-NK platform. Therefore, the pursuit of
FDA approval for the use of CD38 assets for at least one indication or medical device approval is at least reasonably expected.
Further, as the diagnostic asset may be used as an in vitro technology, it could be classified as a medical device, and therefore
toxicity studies would not be a contingency to be resolved before reasonably establishing future value assumptions. In addition,
there is perceived value in the CD38 assets, based on publicly disclosed current business deals in cell therapies, the developing
market for these innovative technologies, and current interest from third parties in these technologies. The Company may sell or
license its rights to another party, with the written consent of Vy-Gen, which cannot be unreasonably withheld. Furthermore, the
Company believes that any negative results from ongoing development of a single therapy or use, would not result in abandoning the
project. Given these considerations, The Company has determined that these options have alternative future use and should be
recorded as assets pursuant to ASC 730-10-25-2, Research and Development .
Related to the joint development, the Company,
under the direction of the joint steering committee, is assessing market opportunities, intellectual property protection, and potential
regulatory strategies for the CD38 Assets. Vy-Gen is responsible for development activities conducted and overseen by the scientists
at Karolinska Institute. The agreement does not currently require additional payments for research and development costs by the Company
and no additional payments are required upon development or regulatory milestones.
In March 2025, the Company reached an agreement
with Vy-Gen to successfully license the exclusive worldwide development and commercialization rights to the GEAR™ (Gene Edited Antibody
Resistant) Cell Therapy Platform, representing a first-in-class approach to modifying potent cancer-targeting immune cells to optimize
the likelihood of deep remission in patients with hematologic malignancies and other cancers. Coeptis had previously held limited co-development
rights to GEAR. As part of this exclusive GEAR license agreement with VyGen-Bio, Inc., the Company paid a total of $400,000 for license
fees during the year ended December 31, 2025, and committed to pay other performance-based fees, milestone and royalty payments in 2026
and beyond.
The total gross capitalized co-development
rights recorded was $5,291,667,
with accumulated amortization of $4,987,500
and $4,737,500,
resulting in a net carrying amount of $304,167
and $554,167
at March 31, 2026 and December 31, 2025, respectively.
NOTE 4 – CONVERTIBLE NOTES
In September 2021, as part of a termination of
a license agreement with Purple (see Note 3, Co-Development Options), the Company issued a convertible note in the principal amount of
$1,500,000 that was payable on or before the maturity date in February 2023, bearing interest of 5% per annum and convertible
in whole or in part at any time by Purple into shares of common stock of the Company. The conversion price is $5 per share of common
stock, subject to certain adjustments under such terms and conditions as agreed between the parties. The Company may prepay the principal
amount of the note plus accrued and unpaid interest at any time prior to the maturity date. On July 14, 2023, the Company and Purple
executed an amendment to revise the note’s payment schedule, extending the maturity date to March 31, 2024. On June 19, 2024, the
Company and Purple executed another amendment to extend the maturity date to August 31, 2024. The outstanding principal balance due under
the convertible note at December 31, 2024 was $218,750. The Company paid the outstanding $218,750 principal balance in full during the
quarter ended March 31, 2025, and the convertible note is considered satisfied.
In October 2022, in connection with the
Company’s prior business combination, the Company entered into a convertible promissory note agreement with an unrelated third
party in the principal amount of $350,000
with no accruing interest and was due on October 28, 2023 for legal services rendered to the Company. The noteholder may elect, in
its sole discretion upon written notice to the Company, at any time prior to, as of or following the maturity date, to require that
all or any portion of the principal amount not then repaid be converted, without any further action on the part of the noteholder,
into shares of common stock, par value $0.0001 per share. The conversion price as set forth by the note is equal to $10.00 per
share, provided that the conversion price shall be subject to a one-time adjustment on January 3, 2023, with the conversion price
adjustable to a price equal to the thirty-day volume weighted average price of the stock as traded on the Nasdaq. However, the
conversion price following such adjustment shall not be lower than a floor of $5.00 per share nor greater than $10.00 per share.
Upon full conversion of the remaining principal amount due, the note will, for all purposes be deemed cancelled and all obligations
shall be deemed paid in full. On October 27, 2023, a $200,000
payment was made, and on December 15, 2023, another $50,000
payment was made. On June 25, 2024, the Company and the unrelated third party signed an amendment to the note that extended the
maturity date to July 31, 2024. The outstanding balance due under the convertible note at March 31, 2026 and December 31, 2025 was
$100,000.
The note was in default as of March 31, 2026.
10
Yorkville Convertible Notes
On November 1, 2024, the Company entered into
a Standby Equity Purchase Agreement (“SEPA”) pursuant to which the Company has the right to sell Yorkville up to $20,000,000
of its shares of Company Common Stock, subject to certain limitations and conditions set forth in the SEPA, from time to time during the
term of the SEPA (such transaction, the “Yorkville Transaction”). In connection with the SEPA, Yorkville has agreed to advance
to the Company in the form of a convertible promissory note (the “Convertible Note”) an aggregate principal amount of up to
$1,304,758 (the “Pre-Paid Advance”). The Convertible Note bears an interest rate of 8% per annum and is convertible in
whole or in part at any time by Yorkville into shares of common stock of the Company at a conversion price determined based on the lower
of (i) $1.00 per common share (the “Fixed Price”), or (ii) 95% of the lowest daily volume weighted average price during the
five consecutive trading days immediately preceding the conversion date (the “Variable Price”), but which Variable Price shall
not be lower than the floor price of $0.80 (the “Floor Price”). During the three months ended March 31, 2025, the Company
recorded amortization of debt discount in the amount of $76,555 for the Convertible Note.
On January 2, 2025, Yorkville elected to
convert a portion of the outstanding principal balance on YA Note-1, the convertible promissory note with an outstanding principal
balance of $1,304,758. Yorkville converted $219,758
of the principal balance and $19,446
of accrued interest into 81,877
shares of common stock at a conversion price of $2.92
per share. After conversion, the principal balance of the note has a remaining balance of $1,085,000.
During the three months ended June 30, 2025, Yorkville elected to convert the remainder of the note, including $1,085,000
in principal and $33,059
in accrued interest, into 151,623
shares at a conversion price of $7.37
per share.
The SEPA is an equity-linked contract that does
not qualify for equity classification and is accounted for as a derivative liability recognized at fair value. Any changes in fair value
between the carrying amount of the forward issuance contracts and the settlement amounts will be recognized in other (expense) income
in the condensed consolidated statements of operations. As of March 31, 2026 and December 31, 2025, the fair value of the SEPA was $0.
For the three months ended March 31, 2025, the Company recognized a gain on the change in fair value of derivative liability in the amount
of $405,995, in the Company’s condensed consolidated statements of operations.
The derivative liability
is accounted for as a liability in accordance with ASC 480 and is measured at fair value at inception and on a recurring basis, with changes
in fair value presented in the condensed consolidated statements of operations.
The derivative liability
was valued using a binomial lattice model, which is considered to be a Level 3 fair value measurement. The binomial lattice model’s
primary unobservable input utilized in determining the fair value of the derivative liability is the step factors input, assumed price
movement, and probabilities assigned to them.
11
The following table
provides quantitative information regarding Level 3 fair value measurements for the derivative liability:
Schedule of assumptions used for valuation
December 31,
2025
Risk-free interest rate
4.16%
Expected volatility
114.61%
Conversion price
$ 3.71
Stock price
$ 5.50
The following table
presents the changes in the fair value of derivative liability:
Schedule of changes in fair value of derivative liability
Warrant
Liabilities
Fair value as of November 1, 2024 (inception)
$ 501,824
Change in fair value
539,660
Fair value as of December 31, 2024
1,041,484
Change in fair value
(906,429 )
Extinguishment of fair value of liability
(135,055 )
Fair value as of December 31, 2025
$ –
There were no transfers
in or out of Level 3 from other levels in the fair value hierarchy during the year ended December 31, 2025. There were no warrant liabilities
outstanding as of March 31, 2026, and no activity during the three months then ended.
On January 16, 2025, the Company entered into
a convertible promissory note with YA II PN, LTD, a Cayman Islands exempt limited partnership (“Yorkville”), in the original
principal amount of $1,100,000. Interest shall accrue on the outstanding balance of the note at an annual rate equal to 8%, subject
to an increase to 18% upon an event of default as described in the note. The maturity date of the note is December 31, 2025. Yorkville
may convert the note into shares of Common Stock at any time at a conversion price equal to the lower of (i) $20.00 (the “Fixed
Price”) or (ii) a price per share equal to 95% of the lowest daily VWAP during the 5 consecutive trading days immediately prior
to the conversion date of the note (the “Variable Price”), but which Variable Price shall not be lower than a floor price
of $1.00 per share (the “Floor Price”). The Company internally refers to this note as YA Note-2.
Additionally, the Company, at its option, shall
have the right, but not the obligation, to redeem early a portion or all amounts outstanding under the note at a redemption amount equal
to the outstanding principal balance being repaid or redeemed, plus a 5% prepayment premium, plus all accrued and unpaid interest; provided
that (i) the Company provides Yorkville with no less than ten trading days’ prior written notice thereof and (ii) on the date such
notice is issued, the VWAP of the Common Stock is less than the Fixed Price.
An “Amortization Event” will occur
under the terms of the Promissory Note if (i) the daily VWAP is less than the Floor Price for five trading days during a period of seven
consecutive trading days, or (ii) the Company has issued to Yorkville, pursuant to the transactions contemplated in the note and any integrated
transactions, in excess of 99% of the Common Shares available under the Exchange Cap.
In July 2025, Yorkville elected to convert the
entire outstanding principal balance on YA Note-2, $1,100,000,
along with $43,397
of accrued interest into 158,582
shares of common stock at a weighted-average conversion price of $7.21 per share. After conversion, the principal balance of the note
had a remaining balance of $0.
12
NOTE 5 – SBA LOAN PAYABLE
Loans under the CARES Act -- On July 8,
2020, the Company received a loan of $150,000 from the United States Small Business Administration (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. Proceeds are intended to be used for working capital purposes. Interest on the EIDL loan accrues at the rate of 3.75%
per annum and interest payments are due monthly in the amount of $731. Each payment will be applied first to interest accrued to the
date of receipt of each payment, and the balance, if any, will be applied to principal. The Company began making interest payments in
January 2023. The balance of principal and interest is payable thirty years from the date of the promissory note. The balance of the
loan is $150,000 as of March 31, 2026 and December 31, 2025.
NOTE 6 – DERIVATIVE LIABILITY WARRANTS
At March 31, 2026 and December 31, 2025, there
were (i) 375,000 public warrants (the “Public Warrants”) outstanding that were issued as part of Bull Horn’s
November 2020 initial public offering, which warrants are exercisable in the aggregate to acquire 187,500 shares of our common stock at
an exercise price of $230.00 per share, and (ii) 187,500 private warrants (the “Private Placement Warrants”) outstanding
that were issued to our sponsor Bull Horn Holdings Sponsor LC and the underwriters in Bull Horn’s initial public offering in November
2020, which warrants are exercisable in the aggregate to 187,500 shares of our common stock at an exercise price of $230.00 per share.
The amount of warrants and related exercise price were adjusted for the Company’s 20-1 reverse stock split effective December 31,
2024. The Private Placement Warrants became exercisable on the consummation of our Business Combination in October 2022. No Public Warrants
will be exercisable for cash unless the Company has an effective and current registration statement covering the ordinary shares issuable
upon exercise of the Public Warrants and a current prospectus relating to such shares of common stock. With respect to the shares of common
stock issuable upon the exercise of the Public Warrants, the class A warrants and the class B warrants during any period when the Company
shall have failed to maintain an effective registration statement related to the issuance of such shares underlying the applicable warrants,
the holder of any applicable warrants may exercise its warrant on a cashless basis pursuant to an available exemption from registration
under the Securities Act. If an exemption from registration is not available, holders will not be able to exercise their Public Warrants
on a cashless basis. The Public Warrants will expire five years from the consummation of a Business Combination or earlier upon redemption
or liquidation.
The Company may call the Public Warrants for
redemption, in whole and not in part, at a price of $0.01 per warrant:
·
at any time while the Public Warrants are exercisable,
·
upon not less than 30 days’ prior written notice of redemption to each Public Warrant holder,
·
if, and only if, the reported last sale price of the ordinary shares equals or exceeds $16.50 per
share, for any 20 trading days within a 30-trading day period ending on the third trading day prior to the notice of redemption to
Public Warrant holders, and
·
if, and only if, there is a current registration statement in effect with respect to the ordinary
shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing
each day thereafter until the date of redemption.
If the Company calls the Public Warrants for
redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless
basis,” as described in the warrant agreement. The exercise price and number of ordinary shares issuable upon exercise of the warrants
may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization,
merger or consolidation. However, except as described above, the warrants will not be adjusted for issuances of ordinary shares at a
price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. Accordingly,
the warrants may expire worthless.
13
The Private Placement Warrants are identical
to the Public Warrants, except that the Private Placement Warrants only allow the holder thereof to one ordinary share. Additionally,
the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial
purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or
their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the
same basis as the Public Warrants.
Within ASC 815, Derivative and Hedging ,
Section 815-40-15 addresses equity versus liability treatment and classification of equity-linked financial instruments, including warrants,
and states that a warrant may be classified as a component of equity only if, among other things, the warrant is indexed to the issuer’s
ordinary share. Under ASC Section 815-40-15, a warrant is not indexed to the issuer’s ordinary share if the terms of the warrant
require an adjustment to the exercise price upon a specified event and that event is not an input to the fair value of the warrant. Based
on management’s evaluation, the Company’s audit committee, in consultation with management, concluded that the Company’s
Private Placement Warrants and Public Warrants are not indexed to the Company’s ordinary share in the manner contemplated by ASC
Section 815-40-15 because the holder of the instrument is not an input into the pricing of a fixed-for-fixed option on equity shares.
In addition, based on management’s evaluation, the Company’s audit committee, in consultation with management, concluded
that certain warrant provisions preclude equity treatment as by ASC Section 815-10-15.
The Company accounts for its Public Warrants
and Private Placement Warrants as liabilities as set forth in ASC 815-40-15-7D and 7F. See below for details about the methodology and
valuation of the Warrants.
The following table presents information about
the Company’s derivative liability warrant that are measured at fair value on a recurring basis at March 31, 2026 and December
31, 2025, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Schedule of fair value hierarchy
Description
Level
March 31,
2026
December 31,
2025
Warrant Liability – Public Warrants
1
$ 92,250
$ 81,000
Warrant Liability – Private Placement Warrants
3
95,250
86,625
Total
$ 187,500
$ 167,625
The Warrants are accounted for as liabilities
in accordance with ASC 815-40 and are presented within derivative liability warrants in the accompanying condensed consolidated balance
sheets. The derivative liability warrants are measured at fair value at inception and on a recurring basis, with changes in fair value
presented in the condensed consolidated statements of operations.
The Private Placement Warrants were valued using
a binomial lattice model, which is considered to be a Level 3 fair value measurement. The binomial lattice model’s primary unobservable
input utilized in determining the fair value of the Warrants is the expected volatility of the ordinary shares. The expected volatility
as of the Initial Public Offering date was derived from observable public warrant pricing on comparable ‘blank-check’ companies
without an identified target. For periods subsequent to the detachment of the Public Warrants from the Units, the close price of the Public
Warrant price will be used as the fair value as of each relevant date.
The following table provides quantitative information
regarding Level 3 fair value measurements:
Schedule of fair value assumptions
March 31,
2026
December 31,
2025
Risk-free interest rate
3.68%
3.41%
Expected volatility
81.41%
68.58%
Exercise price
$ 230.00
$ 230.00
Stock price
$ 11.22
$ 14.25
14
The following table presents the changes in the
fair value of warrant liabilities:
Schedule of changes in fair value of warrant liabilities
Private
Placement
Public
Warrant
Liabilities
Fair value as of December 31, 2025
$ 86,625
$ 81,000
$ 167,625
Change in valuation inputs
8,625
11,250
19,875
Fair value as of March 31, 2026
$ 95,250
$ 92,250
$ 187,500
There were no transfers in or out of Level 3
from other levels in the fair value hierarchy during the quarter ended March 31, 2026 and year ended December 31, 2025.
NOTE 7 – CAPITAL STRUCTURE
The total number of shares of stock which
the corporation shall have authority to issue is 160,000,000 shares, of which 150,000,000 shares of $0.0001
par value shall be designated as common stock and 10,000,000
shares of $0.0001
shall be designated as preferred stock. The preferred stock authorized by the Company’s Articles of Incorporation may be
issued in one or more series. The Board of Directors of the Corporation is authorized to determine or alter the rights, preferences,
privileges, and restrictions granted or imposed upon any wholly unissued series of preferred stock, and within the limitations or
restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting
any series, to increase or decrease (but not below the number of shares of any such series then outstanding) the number of shares of
any such series subsequent to the issue of shares of that series, to determine the designation and par value of any series and to
fix the numbers of shares of any series.
Common Stock - As of March 31, 2026, the
Company had 6,553,996 shares of its common stock issued and outstanding, and on December 31, 2025, the Company had 5,746,948 shares
of its common stock issued and outstanding.
During the three months ended March 31, 2026 and
the year ended December 31, 2025, there were no capital distributions.
On December 28, 2023, the Company granted pre-funded
warrants exercisable to acquire up to 60,000 shares of our common stock for net proceeds of $1,200,000. The pre-funded common stock purchase
warrants can be exercised at a price of $0.0001 per share, with no expiration date. During the first quarter of 2024, the Company and
the third-party borrower agreed to amend the note as a result of the decline in the publicly traded common stock price. The amount of
pre-funded warrants exercisable to acquire up to 60,000 shares of common stock was amended to 100,000 shares of common stock, and the
total principal balance of the note agreement was increased from $1,000,000 to $1,100,000. The aggregate exercise price of this Warrant
was partially pre-funded in connection with $100,000 and a $1,100,000 subscription receivable at a 6% per annum interest rate due
on November 29, 2024. On August 12, 2024, the third-party assigned shares of common stock in a privately held company for the equivalent
amount of principal and accrued interest owed, which satisfied the subscription receivable in full. See Note 9, Investments, for additional
information.
15
On February 8, 2024, the Company granted pre-funded
warrants exercisable to acquire up to 200,000 shares of our common stock for net proceeds of $2,400,000. The pre-funded common stock purchase
warrants can be exercised at a price of $0.0001 per share, with no expiration date. The aggregate exercise price of this Warrant was partially
pre-funded in connection with $500,000 and a $1,900,000 subscription receivable at a 6% per annum interest rate due on December 31, 2024.
On August 12, 2024, the third-party assigned shares of common stock in a privately held company for the equivalent amount of principal
and accrued interest owed, which satisfied the subscription receivable in full. See Note 9, Investments, for additional information.
During the third quarter of 2025, the Company
completed a private placement offering issuing 436,467 shares of common stock for total proceeds of $5,000,000. In addition to the shares
of common stock of the Company, investors also received 10% aggregate non-voting ownership in the Company’s subsidiary, SNAP Biosciences,
Inc. Of this $5,000,000 raised, $4,500,000 was collected as of December 31, 2025. $500,000 of the subscription receivable is tied to a
promissory note bearing 1% interest annum, with a maturity date of January 18, 2026.
During the fourth quarter of 2025, the Company
completed subscription agreements with two investors, resulting in gross proceeds of $3,120,000 for a total of 260,000 shares of common
stock. The balance of $3,120,000 is tied to promissory notes bearing 1% interest annum, with a maturity date of December 18, 2026.
Treasury Stock – There was no treasury
stock at March 31, 2026 and December 31, 2025.
Preferred Stock – The Company has 10,000,000 shares
of preferred stock authorized, of which 10,000 have been designated as Series A preferred stock. As of March 31, 2026 and December
31, 2025, the Company had 0 shares of Series A preferred stock issued and outstanding.
On June 13, 2024, the Company performed an initial
Series A preferred stock closing and raised $4.3 million in a sale to accredited investors (collectively, the “Series A Investors”)
of 4,300 shares of the Company’s series A preferred stock (the “Series A Preferred Stock”), at a purchase price of $1,000
per share, in a financing led by CJC Investment Trust, an entity controlled by board member Christopher Calise, in a combination of cash
and short- term collateralized promissory notes. The series A investors also received non-voting equity ownership interest in the Company’s
two newly formed subsidiaries, SNAP Biosciences Inc. and GEAR Therapeutics Inc.
On July 31, 2024, the Company performed a second
closing as part of its series A preferred stock offering and raised $1.3 million, at a purchase price of $1,000 per share.
On September 4, 2024, the Company performed a
third closing as part of its series A preferred stock offering and raised $225,000, at a purchase price of $1,000 per share.
On December 23, 2024, the Company performed a
fourth closing as part of its series A preferred stock offering and raised $695,000 at a purchase price of $1,000 per share.
On February 6, 2025, the Company completed its
successful closure of the remaining $3.48 million of its Series A preferred stock offering, completing the total $10.0 million financing
round.
On July 25, 2025, the Company and a holder of
its preferred stock, who is also a party to an existing consulting agreement with the Company, entered into an addendum to amend the terms
of the consulting arrangement. Under the amendment, the Company agreed to prepay the final six months of the consulting agreement by offsetting
the outstanding $125,000 subscription receivable previously recorded from the shareholder. The prepayment will be amortized over the remaining
term of the consulting agreement as services are rendered, thereby reducing the subscription receivable balance over time.
Throughout the year ended December 31, 2025, all
10,000 series A preferred shares were converted to common stock.
The series A investors currently have an aggregate
15% non-voting equity ownership interest in the Company’s two newly formed subsidiaries, SNAP Biosciences Inc. and GEAR Therapeutics
Inc.
16
The key terms of the Series A Preferred Stock
are as follows:
Conversion. Each share of Series A Preferred
Stock is convertible at the option of the holder, subject to the beneficial ownership and, if applicable, the primary market limitations
described below, into such number of shares of the Company’s common stock as is equal to the number of shares of Series A Preferred
Stock to be converted, multiplied by the stated value of $1,000 (the “Stated Value”), divided by the then conversion price.
The initial conversion price is $0.40 per share of common stock, subject to adjustment in the event of stock splits, stock dividends,
and similar transactions. In addition, the Series A Preferred Stock will automatically convert into shares of the Company’s common
stock, subject to the beneficial ownership and, if applicable, the primary market limitations described below upon the consummation of
a fundraising transaction in which the Company raises gross proceeds of at least $20 million.
Rank. The Series A Preferred Stock will
be senior to the Company’s common stock and any other class of the Company’s capital stock that is not by its terms senior
to or pari passu with the Series A Preferred Stock.
Dividends. The holders of Series A Preferred
Stock will be entitled to dividends equal, on an as-if-converted to shares of the Company’s common stock basis (in each case after
applying the beneficial ownership and, if applicable, the primary market limitations described below), to and in the same form as dividends
actually paid on shares of the Company’s common stock when, as, and if such dividends are declared on shares of the Company’s
common stock.
Liquidation. In the event of any voluntary
or involuntary liquidation, dissolution or winding up of the Company, the holders of shares of Series A Preferred Stock then outstanding
will be entitled to be paid out of the assets of the Company available for distribution to its stockholders, before any payment shall
be made to the holders of the Company’s common stock by reason of their ownership thereof, an amount per share equal to the greater
of (i) the Stated Value, plus any dividends accrued but unpaid thereon, or (ii) such amount per share as would have been payable had
all shares of Series A Preferred Stock been converted (in each case after applying the beneficial ownership and, if applicable, the primary
market limitations described below) into the Company’s common stock immediately prior to such event.
Voting. On any matter to be acted upon
or considered by the stockholders of the Company, each holder of Series A Preferred Stock shall be entitled to vote on an “as converted”
basis (after applying the beneficial ownership and primary market limitations described below).
Beneficial Ownership Limitation. The Company
will not affect any conversion of the Series A Preferred Stock, and a holder will not have the right to receive dividends or convert
any portion of its Series A Preferred Stock, to the extent that prior to the conversion such holder (together with such holder’s
affiliates, and any persons acting as a group together with such holder or any of the holder’s affiliates) beneficially owns less
than 20% of the Company’s outstanding common stock and, after giving effect to the receipt of dividends or the conversion, the
holder (together with such holder’s affiliates, and any persons acting as a group together with such holder or any of the holder’s
affiliates) would beneficially own 20% or more of the Company’s outstanding common stock.
Exchange Limitation. Unless the approval
of the Company’s stockholders is not required by the applicable rules of Nasdaq for issuances of the Company’s common stock
in excess of 19.99% of the outstanding common stock as of June 14, 2024 (the “Market Limit”), or unless the Company has obtained
such approval, the Company shall not affect any conversion of the Series A Preferred Stock, including, without limitation, any automatic
conversion, and a holder shall not have the right to receive dividends on or convert any portion of the Series A Preferred Stock, to
the extent that, after giving effect to the receipt of the Company’s common stock in connection with such dividends or conversion,
the holder would have received in excess of its pro rata share of the Market Limit.
Stock Based Compensation –
A summary of the Company’s stock option
activity is as follows:
Schedule of stock option activity
Shares Underlying Options
Weighted Average Exercise Price
Weighted Average Contractual Life (Years)
Intrinsic Value
Outstanding at December 31, 2025
437,000
$ 12.11
6.26
$ 2,215,451
Granted
–
–
–
–
Exercised
(307,375 )
10.52
–
–
Surrendered
(129,625 )
23.58
–
–
Outstanding at March 31, 2026
–
$ –
–
$ –
17
For the three months ended March 31, 2026 and
2025, the Company recorded $1,416,178 and $597,731, respectively, for stock-based compensation expense related to stock options. As of
March 31, 2026, unamortized stock-based compensation for stock options was $0.
There were no options granted during the three
months ended March 31, 2026 and the options granted during the three months ended March 31, 2025 were valued using the Black-Scholes
option pricing model using the following weighted average assumptions:
Schedule of weighted average assumptions
For the three months ended March 31,
2026
2025
Expected term, in years
N/A
5.84
Expected volatility
N/A
94.85%
Risk-free interest rate
N/A
4.06%
Dividend yield
N/A
–
Option Exchange Program
On February 5, 2026, the Company completed an
option exchange program pursuant to which eligible employees were offered the opportunity to exchange certain outstanding stock options
that were out-of-the-money for shares of restricted common stock (the “Exchange”). The Exchange was treated as a modification
of the original awards under ASC 718, Compensation — Stock Compensation .
In connection with the Exchange, the Company
recognized all previously unrecognized compensation expense attributable to the original awards through the modification date of February
5, 2026. Additionally, the vesting conditions applicable to the newly issued restricted common stock were accelerated, with all remaining
vesting requirements deemed satisfied as of the modification date. The Company measured the incremental compensation cost arising from
the modification as the excess of the fair value of the replacement awards over the fair value of the original awards immediately prior
to the modification date and recognized such incremental cost in full as of February 5, 2026, as a result of the accelerated vesting.
For the three months ended March 31, 2026, the
Company recognized total stock-based compensation expense related to the Exchange of approximately $1,079,436, which is included in stock-based
compensation expense in the condensed consolidated statements of operations.
Exercise of Stock Options — Consideration
Received in Cash and Third-Party Public Company Common Stock
On March 2, 2026, certain holders exercised stock
options for shares of the Company’s restricted common stock. In connection with such exercises, the Company received consideration in
the form of a combination of cash and shares of common stock of a publicly traded third party (the “Third-Party Shares”).
As a result of this modification, the Company
recognized additional stock-based compensation expense equal to the difference between (i) the compensation cost based on the initially
expected fair value of the Third-Party Shares and (ii) the compensation cost based on the actual fair value of the Third-Party Shares
received. For the three months ended March 31, 2026, the Company recognized incremental compensation expense of approximately $315,888
related to this modification, which is included in stock-based compensation expense in the condensed consolidated statements of operations.
18
Exercise of Stock Options — Consideration
Received in Private Company Common Stock
During the three months ended March 31, 2026,
certain holders exercised stock options for shares of the Company’s restricted common stock, and the Company received shares of common
stock of a privately held third-party entity (the "Private Company Shares") as the exercise consideration.
Fair value of the Private Company Shares was estimated
using observable inputs and valuation techniques consistent with ASC 820, Fair Value Measurement . The fair value of the Private
Company Shares was determined to be approximately $1,663,580 as of the exercise date. The Company recognized stock-based compensation
expense in connection with this exercise in accordance with ASC 718, with the amount determined based on the grant-date fair value of
the exercised options. The Private Company Shares received are reflected on the Company’s condensed consolidated balance sheets at their
estimated fair value of $1,663,580 as of March 31, 2026 and are classified as investments.
Options/Stock Awards
On March 4, 2025, the Company granted options
to purchase an aggregate of 87,375 shares of our common stock under the 2022 Equity Incentive Plan, to various officers, directors, employees
and consultants, at an average exercise price of $10.52 per share. On January 6, 2025, the Company granted a stand-alone option to a consultant
to purchase 100,000 shares of our common stock at an exercise price of $5.72 per share. The options are fully vested and carry a one-year
term.
Common Stock Warrants
–
All common stock warrants outstanding are listed
in the table below:
Schedule of warrants outstanding
Outstanding at
Reference
Date Issued
Exercise price
Expiration
March 31,
2026
December 31,
2025
Warrant Holder 1
5/28/2021
$ 59.40
5/13/26
8,380
8,380
Warrant Holder 1
5/28/2021
$ 118.80
5/13/26
8,422
8,422
Warrant Holder 1
5/28/2021
$ 296.80
5/13/26
8,422
8,422
Warrant Holder 2
7/30/21
$ 59.40
7/30/26
421
421
Warrant Holder 2
7/30/21
$ 296.80
6/1/26
1,263
1,263
Warrant Holder 5
12/20/21
$ 59.40
12/20/26
2,948
2,948
Warrant Holder 20
1/3/23
$ 50.00
1/2/27
5,000
5,000
Warrant Holder 21
1/20/23
$ 38.00
1/19/27
12,500
12,500
Series A & B Warrants
6/16/23
$ 27.20
12/16/28
306,250
306,250
Series B Warrants
10/23/23
$ 27.20
4/26/29
100,000
100,000
Warrant Holder 22
6/16/23
$ 25.00
12/16/28
6,300
6,300
Warrant Holder 22
10/23/23
$ 28.00
4/26/29
3,300
3,300
Warrant Holder 23
6/16/23
$ 25.00
12/16/28
4,200
4,200
Warrant Holder 23
10/23/23
$ 28.00
4/26/29
2,400
2,400
Warrant Holder 24
10/23/23
$ 28.00
4/26/29
300
300
Warrant Holder 25
1/20/25
$ 12.00
1/20/30
100,000
100,000
Total Warrants outstanding
570,105
570,105
19
Subscription receivable – In
June 2024, in connection with the Company’s series A preferred stock offering, the Company closed on subscription agreements totaling
$2,100,000, which the Company collected in full in February 2025.
During the second quarter of 2025, the Company
collected $125,000 of outstanding subscription receivable resulting from one Series A preferred stock subscription agreement. At June
30, 2025, the Company had recorded subscription receivable of $125,000 resulting from the final Series A preferred stock subscription
agreement where preferred shares have been issued as part of the February 6, 2025 closing. In connection with this subscription receivable,
the Company and the investor agreed to satisfy the subscription as prepayment of the final six months of the consulting contract between
both parties. The subscription receivable is being amortized through the end of June 2026 as professional services expense. The company
recognized $33,088 in professional services expense in connection with the amortization of the subscription receivable during the three
months ended March 31, 2026.
During the third quarter of 2025, in connection
with the Company’s private placement offering, the Company recorded $5,000,000 in subscriptions receivable. As of March 31, 2026,
the Company collected $4,500,000 of the proceeds, resulting in a net $500,000 in subscriptions receivable still to be collected.
During the fourth quarter of 2025, the Company
issued a total of 260,000 shares to two investors, recording subscription receivables in the amount of $3,120,000.
Standby Equity Purchase Agreement –
On November 1, 2024, the Company entered into the SEPA with Yorkville pursuant to which the Company has the right to sell to Yorkville
up to $20,000,000 of common stock, subject to certain limitations and conditions set forth in the SEPA, from time to time during the term
of the SEPA. The Company also entered into a Registration Rights Agreement with Yorkville pursuant to which it will register the resale
of shares of common stock issued to Yorkville pursuant to the SEPA. Sales of common stock to Yorkville under the SEPA, and the timing
of any such sales, are at the Company’s option, and the Company is under no obligation to sell common stock to Yorkville under the
SEPA, except in connection with notices that may be submitted by Yorkville in certain circumstances as described below.
Each advance (each, an “Advance”)
the Company requests in writing to Yorkville under the SEPA (notice of such request, an “Advance Notice”) may be for a number
of shares of common stock up to such amount as is equal to 100% of the average daily volume traded of the common stock during the five
trading days immediately prior to the date the Company requests each Advance. The shares of common stock purchased pursuant to an Advance
delivered by the Company will be purchased at a price equal to 95% of the lowest daily VWAP of the shares of common stock during the
three consecutive trading days commencing on the date of the delivery of the Advance Notice, other than the daily VWAP on a day in which
the daily VWAP is less than a minimum acceptable price as stated by the Company in the Advance Notice or there is no VWAP on the subject
trading day. The Company may establish a minimum acceptable price in each Advance Notice below which the Company will not be obligated
to make any sales to Yorkville. “VWAP” is defined as the daily volume weighted average price of the shares of Common Stock
for such trading day on the Nasdaq Stock Market (“Nasdaq”) during regular trading hours as reported by Bloomberg L.P.
20
The SEPA will automatically terminate on the earliest
to occur of (i) December 1, 2027, provided that the Convertible Note has been fully repaid or (ii) the date on which the Company shall
have made full payment of Advances pursuant to the SEPA. The Company has the right to terminate the SEPA at no cost or penalty upon five
trading days’ prior written notice to Yorkville, provided that there are no outstanding Advance Notices for which shares of common
stock need to be issued and the Company has paid all amounts owed to Yorkville pursuant to the Convertible Note. The Company and Yorkville
may also agree to terminate the SEPA by mutual written consent.
Any purchase under an Advance would be subject
to certain limitations, including that Yorkville shall not purchase or acquire any shares that would result in it and its affiliates beneficially
owning more than 4.99% of the then outstanding voting power or number of shares of common stock or any shares that, aggregated with shares
issued under all other earlier Advances, would exceed 19.99% of all shares of common stock outstanding on the date of the SEPA (the “Exchange
Cap”), unless the Company obtains stockholder approval to issue shares of common stock in excess of the Exchange Cap in accordance
with applicable Nasdaq rules.
In connection with the execution of the SEPA,
the Company agreed to pay a commitment fee of $200,000 to Yorkville, payable as follows: (i) $80,000 payable when the SEPA was
entered into, in the form of the issuance of 20,000 shares of common stock, representing $80,000 divided by the closing price as of the
trading day immediately prior to the date of the SEPA, and (ii) $120,000 payable in cash or by way of an Advance on the date upon
which the Company has first received Advances in the aggregate amount of $5,000,000.
Additionally, Yorkville agreed to advance to the
Company, in exchange for the Convertible Note, an aggregate principal amount of $1,304,758 (see Note 4 for a description of the Convertible
Note). At any time while the SEPA is in place that there is a balance outstanding under the Convertible Note, Yorkville may deliver a
notice (an “Investor Notice”) to the Company to cause an Advance Notice to be deemed delivered to Yorkville and the issuance
and sale of shares of Common Stock to Yorkville pursuant to an Advance. Yorkville may select the amount of the Advance in an amount not
to exceed the balance owed under the Convertible Note outstanding on the date of delivery of such Investor Notice. The shares will be
issued and sold to Yorkville pursuant to an Investor Notice at a per share price equal to the conversion price that would be applicable
to the amount of the Advance selected by Yorkville if such amount were to be converted as of the date of delivery of the Investor Notice.
Yorkville will pay the purchase price for such shares to be issued pursuant to the Investor Notice by offsetting the amount of the purchase
price to be paid by Yorkville against an amount outstanding under the Yorkville Note.
Additionally, the Company, at its option, shall
have the right, but not the obligation, to redeem early a portion or all amounts outstanding under the Convertible Note at a redemption
amount equal to the outstanding principal balance being repaid or redeemed, plus a 5% prepayment premium, plus all accrued and unpaid
interest; provided that (i) the Company provides Yorkville with no less than ten trading days’ prior written notice thereof and
(ii) on the date such notice is issued, the VWAP of the common stock is less than the Fixed Price.
Throughout the three months ended March 31, 2026
and 2025, in connection with the SEPA, the Company issued 39,273 and 81,877 shares of common stock, resulting in gross proceeds of $504,254
and $239,203, respectively.
21
NOTE 8 – NON-CONTROLLING INTEREST
As a result of the series A preferred stock offering
discussed in Note 7, Capital Structure, the Company has consolidated the two subsidiaries, SNAP Biosciences, Inc. and GEAR Therapeutics,
Inc., because we have a controlling interest in both. Therefore, the entities’ financial statements are consolidated in our condensed
consolidated financial statements and the portion of the entities’ equity attributable to external ownership is recorded as a non-controlling
interest. As part of the initial closings, the Series A Investors received in the aggregate a 15% non-voting equity ownership in both
of the newly formed subsidiaries. In addition, investors who participated in the 2025 private placement common stock offering received
an additional 10% aggregate non-voting ownership in SNAP Biosciences, Inc, resulting in an extra $79,000 in equity attributable to non-controlling
interests. The Company contributed the co-development rights to GEAR Therapeutics, Inc. and recorded $1,063,300 of non-controlling interest
at March 31, 2026. The remainder was recorded as additional paid in capital. The Company contributed both the exclusive license and corporate
research agreements with the University of Pittsburgh to SNAP Biosciences, Inc. Net of accumulated losses of $661,415 and $557,137, the
Company recorded $401,885 and $506,163 in equity attributable to non-controlling interests at March 31, 2026 and December 31, 2025, respectively.
NOTE 9 – INVESTMENTS
In August 2024, the Company
satisfied $5.7 million of subscription receivables and related interest receivable in the form of shares of common stock in two privately
held companies. During the year ended December 31, 2025, the Company received 1.25 million shares of common stock in five privately held
companies in connection with master services agreements for access to the NexGenAI Affiliates Network platform. Additionally, to satisfy
outstanding accounts receivables related to webinar services rendered in the master services agreements, the Company received 82,500 shares
of common stock in three of these privately held companies. The shares of common stock are carried as investments on the Company’s
condensed consolidated balance sheets at its initial cost basis of $1.00 per share. As the investments are in privately held companies,
the Company will assess the investments for impairment on an annual basis. As of December 31, 2025, the Company recognized a $163,500
unrealized loss due to impairment of one of these investments. As of March 31, 2026, no further impairment has been recognized.
In November 2025, the
Company issued 66,837 shares of common stock valued at $1,000,000, in exchange for 667,000 shares of a privately held company. The shares
of common stock are carried as investments on the Company’s condensed consolidated balance sheets at its initial cost basis of $1.50
per share. As the investments are in privately held companies, the Company will assess the investments for impairment on an annual basis.
As of March 31, 2026 and December 31, 2025, no impairment has been recorded related to this investment.
During the year ended
December 31, 2025, the Company entered into a one-year agreement with a customer to provide access to the NexGenAI Affiliates Network
platform. The contract fee paid by the customer consisted of 4,255,319 shares in the customer’s publicly traded stock, or $600,000,
which the Company recorded as marketable securities on the condensed consolidated balance sheets. The Company classified this marketable
security as a short-term asset as it is expected to be converted into cash within one year. During the year ended December 31, 2025, the
Company recorded an unrealized gain on marketable securities in the amount of $76,596. In January 2026, the Company sold 2,830,189 shares
of this marketable security and realized a gain on sale in the amount of $94,667. During the three months ended March 31, 2026, the Company
recorded an unrealized loss in the amount of $176,045 on the remaining shares.
During the three months
ended March 31, 2026, the Company accepted 1,663,580 shares of privately held companies and 200,401 shares of a third-party marketable
security, valued at $1,663,580 and $56,112 respectively, as consideration for exercising stock options. Please see Note 7 – Capital
Structure – Stock Based Compensation. The marketable securities were sold for $46,852, realizing a loss of $9,260 on the sale. No
impairment was recognized on the privately held investments.
In March 2026, the Company
exchanged 330,775 shares of its common stock, valued at $3,658,372, for 11,550,000 shares of a privately held company. As of March 31,
2026, the Company recorded a $22,688 unrealized loss due to impairment on this investment. This represents an approximate 35% stake in
this privately held company.
22
NOTE 10 – COMMITMENTS AND CONTINGENCIES
Leases – The Company leases office
space under an operating lease that commenced December 1, 2017 and was extended through multiple lease extensions. The third lease extension
extended the lease for twenty-four months, beginning on June 1, 2022 and ended on May 31, 2024. The fourth lease extension, signed on
January 30, 2024, extended the lease for twenty-four months, beginning June 1, 2024 and ending on May 31, 2026. The monthly rent is $3,805 for
the first year of the extension and increasing to $3,860 for
the second year of the extension. The fifth lease extension, signed on March 12, 2026, extended the lease for twenty-four months, beginning
June 1, 2026 and ending on May 31, 2028. The monthly rent is $3,937
for the first year of the extension and increasing to $4,016
for the second year of the extension. The Company recorded an increase of $85,080
for right of use asset and liability in conjunction with the lease extension in March 2026.
The Company records rent expense associated with
this lease on the straight-line basis in conjunction with the terms of the underlying lease. During the three months ended March 31,
2026, rents paid totaled $11,581. During the three months ended March 31, 2025, rents paid totaled $11,415.
Right of use asset is summarized below:
Schedule of lease information
March 31, 2026
December 31, 2025
Office lease
$ 288,296
$ 243,550
Less: accumulated depreciation
(199,045 )
(225,151 )
Right of use asset, net
$ 89,251
$ 18,399
Operating lease liability is summarized below:
March 31, 2026
December 31, 2025
Office lease
$ 93,353
$ 18,875
Less: current portion
(40,323 )
(18,875 )
Long term portion
$ 53,030
$ –
Future minimum rental payments required under
the lease are as follows:
Schedule of future minimum rental payments
2026
$ 35,282
2027
47,800
2028
20,081
Total minimum lease payments:
103,163
Less amount representing interest
(9,810 )
Present value of minimum lease payments:
$ 93,353
Legal Matters – The Company is currently
not a defendant in any litigation or threatened litigation that could have a material effect on the Company’s condensed consolidated
financial statements.
CAR T License – On August 31, 2022,
the Company entered into an exclusive license agreement with the University of Pittsburgh for certain intellectual property rights related
to the universal self-labeling SynNotch and CARs for programable antigen-targeting technology platform. The Company paid the University
of Pittsburgh a non-refundable fee in the amount of $75,000 for the exclusive patent rights to the licensed technology. Under the terms
of the agreement, the Company has been assigned the worldwide development and commercialization rights to the licensed technology in the
field of human treatment of cancer with antibody or antibody fragments using SNAP-CAR T-cell technology, along with (i) an intellectual
property portfolio consisting of issued and pending patents and (ii) options regarding future add-on technologies and developments. In
consideration of these rights, the Company paid an initial license fee of $75,000, and will have annual maintenance fees ranging
between $15,000 and $25,000, as well as developmental milestone payments (as defined in the agreement) and royalties equal to 3.5% of
net sales. On January 25, 2023, the Company entered into a corporate research agreement with the University of Pittsburgh for the pre-clinical
development of SNAP-CAR T-cells targeting HER2. The Company agreed to pay $716,714 for performance-based milestones over a two-year
term, which was paid in full during the fourth quarter of 2025.
23
To supplement the development work conducted under
the Sponsored Research Agreement (“SRA”), the Company’s subsidiary SNAP Biosciences, in May 2025, entered into a grant
agreement with the Alici Lab at the Karolinska Institute (“KI”). Under the terms of the grant agreement, KI will continue
the pre-clinical and clinical development initially started by Deverra under the terms of the SRA described above. The grant agreement
has an 18-month term which the Company agreed to pay to KI quarterly payments equal to $105,000.
Also in May 2025, the Company’s subsidiary,
SNAP Biosciences, entered into a License Agreement with Monarch Therapeutics. The agreement grants SNAP Biosciences access to Monarch’s
small-molecule adaptor-based technology platform for use with SNAP-CAR. Under the terms of the agreement, SNAP Biosciences agreed to pay
to Monarch a $50,000 upfront payment, a $10,000 annual license fee, and future success-based milestone payments.
In September 2023, the Company expanded its exclusive
license agreement with the University of Pittsburgh to include the SNAP-CAR technology platform in natural killer (NK) cells. The Company
agreed to pay $2,000 to amend the agreement.
Deverra Therapeutics, Inc. – On August
16, 2023, the Company entered into an exclusive licensing arrangement (the “License Agreement”) with Deverra Therapeutics
Inc. (“Deverra”), pursuant to which the Company completed the exclusive license of key patent families and related intellectual
property related to a proprietary allogeneic stem cell expansion and directed differentiation platform for the generation of multiple
distinct immune effector cell types, including natural killer (NK) and monocyte/macrophages. The License Agreement provides the Company
with exclusive rights to use the license patents and related intellectual property in connection with development and commercialization
efforts in the defined field of use (the “Field”) of (a) use of unmodified NK cells as anti-viral therapeutic for viral infections,
and/or as a therapeutic approach for treatment of relapsed/refractory AML and high-risk MDS; (b) use of Deverra’s cell therapy platform
to generate NK cells for the purpose of engineering with Coeptis SNAP-CARs and/or Coeptis GEAR Technology; and (c) use of Deverra’s
cell therapy platform to generate myeloid cells for the purpose of engineering with the Company’s current SNAP-CAR and GEAR technologies.
In support of the exclusive license, the Company also entered into with Deverra (i) an asset purchase agreement (the “APA”)
pursuant to which the Company purchased certain assets from Deverra, including but not limited to two Investigational New Drug (IND) applications
and two Phase 1 clinical trial stage programs (NCT04901416, NCT04900454) investigating infusion of DVX201, an unmodified natural killer
(NK) cell therapy generated from pooled donor CD34+ cells, in hematologic malignancies and viral infections and (ii) a non-exclusive sublicense
agreement (the “Sublicense Agreement”), in support of the assets obtained by the exclusive license, pursuant to which the
Company sublicensed from Deverra certain assets which Deverra has rights to pursuant a license agreement (“FHCRC Agreement”)
by and between Deverra and The Fred Hutchinson Cancer Research Center (“FHCRC”).
In addition, in accordance with the terms of the
Sublicense Agreement, the Company agreed to pay FHCRC certain specified contingent running royalty payments and milestone payments under
the FHCRC Agreement, in each case to the extent such payments are triggered by the Company’s development activities.
Registration Rights – Pursuant to
a registration rights agreement entered into on October 29, 2020, the holders of the founder shares, the Private Placement Warrants and
underlying securities, and any securities issued upon conversion of Working Capital Loans (and underlying securities) would be entitled
to registration rights pursuant to a registration rights agreement. The holders of at least a majority in interest of the then-outstanding
number of these securities were entitled to make up to three demands, excluding short form demands, that the Company register such securities.
In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent
to the consummation of a Business Combination. The registration rights agreement did not contain liquidating damages or other cash settlement
provisions resulting from delays in registering the Company’s securities. The Company would bear the expenses incurred in connection
with the filing of any such registration statements.
24
Finder’s Fee and Indemnity Agreement – The Company
entered into a finder’s fee and indemnity agreement with a third party, pursuant to which the Company has agreed to pay a fee in
connection with the successful introduction and execution of the SEPA. Under the terms of the agreement, the Company was obligated to
pay a 4% fee upon the closing of the net funding amount of $1,350,000, equaling $54,000, and then 6% of the total cash consideration
received by the Company or the Company’s creditors in connection with any follow-on financing, and 0.5% on the amount of any drawdown
made by the Company on the SEPA. The Company also agreed to indemnify and hold harmless the third party from and against any and all
losses, claims, damages, obligations, penalties, judgments, any and all legal and other actions caused by or related to the third party’s
engagement with the Company. As of March 31, 2026, the Company paid a total of $103,500 to the third party in connection with this
finder’s fee and indemnity agreement recorded in professional services expense. $54,000 was paid in January 2024 and $49,500 was
paid in February 2025.
Master Services Agreements – On
December 31, 2024 and during the year ended December 31, 2025, the Company entered into one-year agreements with six customers to
provide access to the NexGenAI Affiliates Network platform. Under the terms of these agreements, the Company is obligated to deliver
platform access and related services over the contract period beginning in 2025. Revenue recognition will commence upon the start of
services in accordance with ASC 606, Revenue from Contracts with Customers . The Company recognized $113,771
and $62,874
in revenue in connection with these contracts during the first quarters of 2026 and 2025, respectively. As of December 31, 2025,
$599,455
remained in customer deposits. As of March 31, 2026, $485,684
remained in customer deposits and is expected to be recognized as revenue throughout the rest of 2026.
GEAR™ Cell Therapy Platform –
In March 2025, the Company reached an agreement with Vy-Gen to successfully license the exclusive worldwide development and commercialization
rights to the GEAR™ Cell Therapy Platform, representing a first-in-class approach to modifying potent cancer-targeting immune cells
to optimize the likelihood of deep remission in patients with hematologic malignancies and other cancers. Coeptis had previously held
limited co-development rights to GEAR. As part of this exclusive GEAR license agreement with VyGen-Bio, Inc., the Company paid a total
of $400,000 for license fees during the year ended December 31, 2025, which the Company recorded as research and development expense,
and committed to pay other performance-based fees, milestone and royalty payments in 2026 and beyond.
NOTE 11 – 401(k) PROFIT-SHARING
PLAN
The Company sponsors a qualified profit-sharing
plan with a 401(k) feature that covers all eligible employees. Participation in the 401(k) feature of the plan is voluntary. Participating
employees may defer up to 100% of their compensation up to the maximum prescribed by the Internal Revenue Code. The plan permits for
employee elective deferrals but has no contribution requirements for the Company. During the three months ended March 31, 2026 and 2025, no employer
contributions were made.
NOTE 12 – INCOME TAXES
For the three months ended March 31, 2026 and
2025, no income tax expense or benefit was recognized. The Company’s deferred tax assets are comprised
primarily of net operating loss carryforwards. The Company maintains a full valuation allowance on its deferred tax assets since it has
not yet achieved sustained profitable operations. As a result, the Company has not recorded any income tax benefit since its inception.
NOTE 13 – RELATED PARTY TRANSACTION
In September 2023, the Company entered into a
transaction with AG Bio Life Capital I LP (“AG”), a Delaware limited partnership, where an employee of the Company is the
general partner. The Company agreed to issue 600,000 shares (pre-reverse stock split) of common stock of the Company (“AG
Shares”) to AG, in exchange for $600,000, consisting of $100,000 payable in cash and the balance payable under a promissory
note (“AG Note”). The principal amount including all interest under the AG Note is due and payable by AG no later than August
30, 2024 (the “AG Maturity Date”). The outstanding unpaid principal balance of the AG Note bears interest commencing as of
the Company’s next registration statement at the rate of six (6%) percent per annum, which interest rate will increase to eighteen
(18%) percent per annum in the event an event of default occurs under the AG Note, computed on the basis of the actual number of days
elapsed and a year of 365 days. AG has the option of repaying the obligations under the AG Note in advance of the AG Maturity Date, in
whole or in part, at any time upon at least thirty (30) days prior written notice delivered to the Company. AG has certain obligations
to contribute the proceeds of the sale of its AG Shares to the Company, in the event that any AG Shares are sold prior to the AG Maturity
Date. On August 12, 2024, AG transferred and assigned $522,667 to the Company, the sum of principal and accrued interest owed, of
shares of common stock in a privately held company. As a result of this assignment agreement, the AG Note is considered paid in full,
and $522,667 is recorded as an investment at March 31, 2026 and December 31, 2025.
25
As of March 31, 2026, the Company holds investments
in certain privately held companies, recorded as investments on the Company’s condensed consolidated balance sheets. The Company’s
Chief Executive Officer and Chief Financial Officer each hold ownership interests in these privately held companies. As of March 31,
2026 and December 31, 2025, the Company’s carrying value of these investments was $12,159,346 and $6,860,083, respectively.
NOTE 14 – INTANGIBLE ASSETS
On December 19, 2024, the Company acquired the
assets of NexGenAI Affiliates Network Platform (“NexGenAI”), from the seller NexGenAI Solutions Group, Inc., which contains
AI-powered marketing software and robotic process automation capabilities. The acquired assets include intellectual property, a domain
name and associated website, and the technology stack as defined in the agreement. As consideration for the purchase, the Company paid
the seller 187,500 shares of common stock, or $541,875. In connection with the purchase, the Company entered into a Master
Services Agreement with the seller, for website development services and for services to enhance the existing technology.
The Company accounted for the NexGenAI transaction
as an asset acquisition in accordance with ASC 805-50, Business Combinations – Asset Acquisitions , and recorded as intangible
assets on the condensed consolidated balance sheets, net of amortization, in the amount of $316,094 and $361,250 as of March 31, 2026
and December 31, 2025, respectively. The Company recorded amortization expense of $45,156 and $45,156 during the three months ended March
31, 2026 and 2025, respectively.
NOTE 15 – SEGMENT REPORTING
Operating segments are components of an enterprise
about which separate financial information is available and is evaluated regularly by management, namely the Chief Operating Decision
Maker (“CODM”) of an organization, in order to determine operating and resource allocation decisions. By this definition,
the Company has identified its Chief Executive Officer as the CODM. Effective in 2024, the Company began operating in two segments: Biotechnology
and Technology. Prior to 2024, the Company did not report operating segments.
Biotechnology Segment: This segment is non-revenue
generating and incurs expenses by developing its biotechnology product pipeline. The Biotechnology Segment had total assets of $18,273,736 and
$13,783,575 as of March 31, 2026 and December 31, 2025, respectively.
Technology Segment: This segment is revenue generating
and incurs expenses by acquiring technology assets to support and enhance operational capabilities through advanced technologies. The
Technology Segment had total assets of $1,512,957 and $2,370,346 as of March 31, 2026 and December 31, 2025, respectively.
The Company believes that this structure reflects
its current operational and financial management, and that it provides the best structure for the Company to focus on growth opportunities
while maintaining financial discipline. The factors used to identify the Biotechnology and Technology operating segments were the difference
in future potential revenue streams and customer base for each segment, the reporting structure for operational and performance information
within the Company, and management’s decision to organize the Company around the different future potential revenue generating
activities of the segments.
Segment information relating to the Company’s two operating segments
for the three months ended March 31, 2026 and 2025 is as follows:
Schedule of segment information
Three Months Ended
March 31, 2026
Biotechnology
Segment
Technology
Segment
Consolidated
Sales
$ –
$ 113,771
$ 113,771
Cost of goods sold
–
45,156
45,156
Total operating expenses
3,870,396
112,683
3,983,259
Net loss from operations
$ (3,870,396 )
$ (44,248 )
$ (3,914,644 )
26
Three Months Ended
March 31, 2025
Biotechnology
Segment
Technology
Segment
Consolidated
Sales
$ –
$ 62,874
$ 62,874
Cost of goods sold
–
45,156
45,156
Total operating expenses
4,014,702
60,000
4,074,702
Net loss from operations
$ (4,014,702 )
$ (42,282 )
$ (4,056,984 )
NOTE 16 – MERGER AGREEMENT
On April 25, 2025, the Company (“Coeptis”
or the “Purchaser”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with CP Merger Sub
Inc., a Wyoming corporation and wholly-owned subsidiary of Coeptis (“Merger Sub”), and Z Squared Inc., a Wyoming corporation
(“Z Squared”).
Pursuant to the Merger Agreement, subject to
the terms and conditions set forth therein, upon the consummation of the transactions contemplated by the Merger Agreement (the “Closing”),
(i) Merger Sub will merge with and into Z Squared (the “Merger”) and (ii) Coeptis will immediately prior to the Merger effect
a spin out of its biotechnology operations (the “Spin Out” and, together with Merger and the other transactions contemplated
by the Merger Agreement, the “Transactions”), with Z squared continuing as the surviving corporation in the Merger and becoming
a wholly-owned subsidiary of Coeptis.
In the Merger, all shares of Z Squared common
stock issued and outstanding immediately prior to the effective time of the Merger (other than those properly exercising any applicable
dissenters rights under Wyoming law), will be converted into the right to receive a portion of the Merger Consideration (as defined below)
and (ii) any other outstanding securities with the right to convert into or acquire equity securities of Z Squared will be terminated.
At the Closing, Coeptis will change its name as mutually agreed upon by the Purchaser and Z Squared. The Merger closed on April 24, 2026,
subsequent to the balance sheet date covered by this Quarterly Report. See Note 17 – Subsequent Events.
In connection with the Spin Out, all of Coeptis’
assets comprising its biotechnology business will be assigned and contributed prior to Closing to one or more Spin Out Subsidiaries,
which will then spin out to Coeptis’ stockholders of record on the record date established for the Coeptis Special Meeting (as
defined below).
The aggregate Merger Consideration received by
Z Squared security holders from Coeptis at the Closing will be a number of shares of Purchaser Common Stock that represents at Closing
the Applicable Percentage of Purchaser’s issued and outstanding shares of Purchaser Common Stock as calculated on a Fully-Diluted
Basis.
NOTE 17 – SUBSEQUENT EVENTS
Management has performed a review of all events
and transactions occurring after March 31, 2026 for items requiring recognition or disclosure in the accompanying condensed consolidated
financial statements, noting the following subsequent events.
Completion of Business Combination.
On April 24, 2026, the Company (then named Coeptis Therapeutics Holdings, Inc.) completed the business combination contemplated by the
Agreement and Plan of Merger, dated as of April 25, 2025 (the “Merger Agreement”), by and among the Company, CP Merger Sub
Inc., a Wyoming corporation and wholly-owned subsidiary of the Company (“Merger Sub”), and Z Squared Inc., a Wyoming corporation
(“Z Squared”). At the effective time of the merger (the “Effective Time”), Merger Sub merged with and into Z Squared,
with Z Squared surviving as a wholly-owned subsidiary of the Company (the “Merger”). In connection with the closing of the
Merger, the Company changed its corporate name from “Coeptis Therapeutics Holdings, Inc.” to “Z Squared Inc.”
27
At the Effective Time, each share of Z Squared
common stock, par value $0.001 per share, outstanding immediately prior to the Effective Time was converted into the right to receive
shares of the Company's common stock, par value $0.0001 per share, in accordance with the share-exchange ratio set forth in the Merger
Agreement. As aggregate consideration for the Merger, the former Z Squared stockholders collectively received 43,877,497 shares of the
Company's common stock, representing the Applicable Percentage (as defined in the Merger Agreement) of the Company's issued and outstanding
common stock calculated on a fully-diluted basis as of the closing.
Commencing on April 27, 2026, the Company's common
stock began trading on the Nasdaq Global Market under the new ticker symbol “ZSQR” (previously “COEP”).
Spin-Out of Certain Biotechnology Operations.
Immediately prior to the Effective Time, and as a condition to the consummation of the Merger, the Company effected a spin-out (the “Spin-Out”)
of certain of its biotechnology operations. The Company contributed substantially all of the assets, liabilities, and equity interests
comprising its biopharmaceutical operations conducted through Coeptis Therapeutics, Inc., Coeptis Pharmaceuticals, Inc., Coeptis Pharmaceuticals,
LLC, and the Company's 73% interest in SNAP Biosciences, Inc. (collectively, the “Spin-Out Subsidiaries”) to one or more newly-formed
spin-out subsidiaries, the equity of which was then distributed to the Company's stockholders of record as of the applicable record date
established for the Spin-Out. As a result of the Spin-Out, the Spin-Out Subsidiaries are no longer part of the Company's consolidated
group. The Company's interest in GEAR Therapeutics, Inc. was not part of the Spin-Out and continues to be held by the Company following
the Merger.
Change in Business. Following the
completion of the Merger and the Spin-Out, the Company's principal business is the digital asset mining operations conducted through Z
Squared and its subsidiaries, including vertically integrated cryptocurrency mining of Dogecoin (DOGE), Litecoin (LTC), and other digital
assets at facilities located in North Carolina, South Carolina, and Iowa. The Company is also pursuing complementary business lines, including
power generation, data center development, and high-performance compute hosting. The Company also continues to hold its interest in GEAR
Therapeutics, Inc., which conducts the residual biopharmaceutical operations retained by the Company following the Spin-Out.
Accounting Treatment. As disclosed
in the “Anticipated Accounting Treatment” section of the Company's Registration Statement on Form S-4 (File No. 333-288329)
declared effective by the Securities and Exchange Commission on December 23, 2025 (the “Registration Statement”), the Merger
is being accounted for as a reverse acquisition under ASC 805-40, with Z Squared treated as the accounting acquirer and the Company treated
as the accounting acquiree for financial reporting purposes. Accordingly, in the Company's financial statements for periods ending on
or after the closing date, the Company expects that: (i) the reported historical operating results will be those of Z Squared; (ii) the
net assets of the Company (other than those of the Spin-Out Subsidiaries) acquired in the Merger will be recorded at their respective
acquisition-date fair values; (iii) the legal capital of the surviving entity will be that of the Company, with the prior-period equity
of Z Squared recast to reflect the share-exchange ratio under the Merger Agreement; and (iv) earnings per share for periods prior to the
Merger will be recast to reflect that share-exchange ratio. The Company is in the process of finalizing the accounting under ASC 805 for
the reverse acquisition, including the related fair value measurements, and that analysis is not yet complete.
Impact on the Financial Statements Presented.
Because each of the Merger, the Spin-Out, the name change, and the ticker change occurred subsequent to the March 31, 2026 balance sheet
date, each constitutes a non-recognized subsequent event under ASC 855-10-25-3 and does not affect the recognition or measurement of any
amounts in the accompanying condensed consolidated balance sheet as of March 31, 2026 or the related condensed consolidated statements
of operations, stockholders' equity, and cash flows for the three months ended March 31, 2026.
The Company's financial statements in subsequent
periods will, however, be materially different from those presented herein as a result of the Merger, the Spin-Out, and the related change
in business. In particular, (i) the operations historically conducted through the Spin-Out Subsidiaries will not be reflected in the Company's
results of operations in subsequent periods; (ii) under the reverse acquisition treatment described above, the operations of Z Squared
(which have not historically been included in the Company's consolidated financial statements) will be reflected in subsequent periods
as those of the accounting acquirer; and (iii) the Company's outstanding shares of common stock increased from 6,553,996 at March 31,
2026 to 51,431,493 at May 12, 2026, primarily as a result of the issuance of the Merger Consideration. Because the Company has not yet
finalized the accounting under ASC 805 for the reverse acquisition or the related fair value measurements, an estimate of the financial
effect of these subsequent events on the Company's results of operations, financial position, and cash flows in future periods, beyond
the foregoing, cannot reasonably be made at the date of issuance of these financial statements.
28
For additional information regarding the Merger,
the Spin-Out, and the resulting change in the Company's business, reference is made to the Registration Statement and to the Company's
Current Report on Form 8-K filed with the Securities and Exchange Commission on April 30, 2026 reporting the completion of the Merger
and related transactions.
On April 29, 2026, Z Squared announced that it
has entered into a binding letter of intent to acquire 100% of the membership interests of Skycore Digital LLC (“Skycore”),
an operating digital infrastructure company with three active sites in North Carolina powered by Duke Energy. Skycore operates approximately
24 megawatts (“MW”) of energized power capacity currently connected to the Duke Energy grid, with an additional 18 MW available
through existing Duke Energy Letters of Authorization. Together, the assets provide Z Squared with a defined path to up to 42 MW of total
potential capacity.
The transaction is structured entirely in Series B Convertible Preferred
Stock, with no cash consideration and no debt financing. Total consideration consists of Series B Convertible Preferred Stock with an
$18 million base aggregate liquidation preference at closing, plus up to an additional $4 million, scaled pro rata based on additional
MW secured prior to closing, with the full $4 million payable upon securement of 18 MW. Maximum aggregate consideration is $22 million.
Key terms of the Series B Convertible Preferred Stock include a $1,000 stated value per share; an 8% cash dividend or 10% payment-in-kind
dividend, at the Company’s election; conversion at a 10% premium to the 20-day VWAP at signing; a seven-year mandatory redemption;
an annual holder put right beginning in year two, capped at 20% per year; and a $500,000 break-up fee payable by Z Squared. The parties
have agreed to a 90-day exclusivity period. The acquisition is expected to close within 60 days following execution of a definitive purchase
agreement, subject to customary closing conditions.
29 |
EX-99.3 · UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
EX-99.3
zsquared_ex9903.htm
| Document text |
|---|
EX-99.3 · UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION EX-99.3 5 zsquared_ex9903.htm UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION Exhibit 99.3 UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION Introduction The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X, as amended, and presents the combination of the historical financial information of Coeptis Therapeutics Holdings, Inc. (“Coeptis” or the “Purchaser”) and Z Squared Inc. (“Z Squared”) adjusted to give effect to the Merger and the other events contemplated by the Merger Agreement, including the Spin Out. The unaudited pro forma condensed combined balance sheet as of March 31, 2026 combines the historical unaudited condensed consolidated balance sheet of Coeptis and the historical unaudited condensed consolidated balance sheet of Z Squared on a pro forma basis as if the Merger and related transactions had been consummated on March 31, 2026. The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2026 combines the historical unaudited condensed consolidated statement of operations of Coeptis for the three months ended March 31, 2026 and the historical unaudited condensed consolidated statement of operations of Z Squared for the three months ended March 31, 2026. The year ended December 31, 2025 combines the historical audited consolidated statements of operations of Coeptis for the year ended December 31, 2025 and the historical audited consolidated statements of operations of Z Squared for the year ended December 31, 2025. The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2026 and for the year ended December 31, 2025 are presented on a pro forma basis as if the Merger and related transactions had been consummated on January 1, 2025, the beginning of the earliest period presented. The unaudited pro forma condensed combined financial information has been presented for illustrative purposes only and is not necessarily indicative of the financial position and results of operations that would have been achieved had the Merger and related transactions occurred on the dates indicated. Further, the unaudited pro forma condensed combined financial information may not be useful in predicting the future financial condition and results of operations of the Company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of the unaudited pro forma condensed combined financial information and are subject to change as additional information becomes available and analyses are performed. This information should be read together with the following: · The accompanying Notes to the unaudited pro forma condensed combined financial statements; · the historical unaudited financial statements of Coeptis as of and for the three months ended March 31, 2026 included in Coeptis’ Quarterly Report on Form 10-Q filed with the SEC on May 15, 2026 and the historical audited financial statements of Coeptis as of the year ended December 31, 2025 on Form 10-K filed with the SEC on March 28, 2025; · the historical audited financial statements of Z Squared as of and for the three months ended March 31, 2026 and the historical audited consolidated financial statements of Z Squared as of and for the year ended December 31, 2025, included in this Form S-4; · the sections titled “ Coeptis Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and “ Z Squared Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and other financial information included elsewhere in this Form S-4, and · other information relating to Coeptis and Z Squared included in this Form S-4, including the Merger Agreement and the description of certain terms thereof set forth under the section entitled “Proposal 1: Merger Proposal” 1 Description of the Merger On April 25, 2025, Coeptis entered into an Agreement and Plan of Merger, as may be amended from time to time (the “Merger Agreement”) with CP Merger Sub Inc., a Wyoming corporation and wholly-owned subsidiary of Coeptis (“Merger Sub”), and Z Squared. Pursuant to the Merger Agreement, subject to the terms and conditions set forth therein, upon the consummation of the transactions contemplated by the Merger Agreement (the “Closing”), (i) Merger Sub will merge with and into Z Squared (the “Merger”) and (ii) Coeptis will immediately prior to the Merger effect a spin out certain of its biopharmaceutical operations (the “Spin Out” and, together with Merger and the other transactions contemplated by the Merger Agreement, the “Transactions”), with Z squared continuing as the surviving corporation in the Merger and becoming a wholly-owned subsidiary of Coeptis. In the Merger, all shares of Z Squared common stock issued and outstanding immediately prior to the effective time of the Merger (other than those properly exercising any applicable dissenters rights under Wyoming law), will be converted into the right to receive a portion of the Merger Consideration (as defined below) and (ii) any other outstanding securities with the right to convert into or acquire equity securities of Z Squared will be terminated. At the Closing, Coeptis will change its name as mutually agreed upon by the Purchaser and Z Squared. In connection with the Spin Out, all of Coeptis’ assets comprising its biopharmaceutical business will be assigned and contributed prior to Closing to one or more Spin Out Subsidiaries, which will then spin out to Coeptis’ stockholders of record on the record date established for the Coeptis Special Meeting (as defined below). GEAR Therapeutics, Inc. will not be included in the Spin Out and will remain a Subsidiary of Purchaser following Closing, and that in consideration of GEAR Therapeutics, Inc. remaining a subsidiary of Purchaser following the Closing the Spin Out Sub will receive 1,000,000 shares of Purchaser Common Stock and an option to acquire GEAR Therapeutics, Inc. in the future for the fair market value of GEAR Therapeutics, Inc. at the time of exercise (if exercised). Merger Consideration As consideration for the Merger, the Z Squared Security Holders collectively shall be entitled to receive from the Purchaser, in the aggregate, a number of shares of Purchaser Common Stock that represents at Closing the Applicable Percentage of Purchaser’s issued and outstanding shares of Purchaser Common Stock as calculated on a Fully-Diluted Basis (the “Merger Consideration”). For purposes hereof, (A) “Applicable Percentage” means (i) if the Company Asset Value (defined below) is equal to or greater than $750 million, such number of shares of common stock as will represent 90% of the post-Merger ownership of Purchaser on a Fully-Diluted Basis, and (ii) if the Company Asset Value is less than $750 million, such number of shares of common stock as will reflect the portion of the $750 million in Company Asset Value as of Closing, and (B) “Company Asset Value” means the value of the mining computer assets (collectively, the “Mining Machines”) owned by Company as of the Closing as determined by a mutually agreeable third-party valuation expert, less the sum of (y) all Company Debt being assumed by the Purchaser post-Merger and (z) Company Transaction Expenses being assumed by Purchaser post-Merger. Each Z Squared stockholder shall receive for its company common stock held a number of shares of Purchaser Common Stock equal to such Company Stockholder’s Pro Rata Share of aggregate number of shares of Purchaser Common Stock comprising the Merger Consideration. In addition, the Purchaser shall not exercise its right to issue or sell Purchaser Common Stock pursuant to the Standby Equity Purchase Agreement if such issuance or sale would result in the Purchaser receiving aggregate proceeds in excess of $3,000,000 (such $3,000,000 amount, the “SEPA Carveout”). In the event the Purchaser exercises its right to issue or sell Purchaser Common Stock pursuant to the Standby Equity Purchase Agreement during the period from the date of the Merger Agreement and continuing until the earlier of the termination of the Merger Agreement or the Closing (the “Interim Period”) with consent and such issuance or sale results in the Purchaser receiving aggregate proceeds in excess of the SEPA Carveout, the excess of such proceeds over the SEPA Carveout shall be solely for the benefit of the Surviving Corporation. In addition, in the event that Purchaser has utilized for its own purposes the Standby Equity Purchase Agreement Carveout amount, an additional 500,000 shares of Purchaser Common Stock shall be added to the Merger Consideration. 2 Accounting Treatment The Merger will be accounted for as a business combination in accordance with U.S. GAAP (pursuant to Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”)), with Z Squared treated as the “accounting acquirer” and Coeptis treated as the “legal acquirer” for financial reporting purposes. Z Squared will control Coeptis as it will beneficially own a majority voting interest of the outstanding shares of Coeptis common stock. The unaudited pro forma condensed combined financial statements were prepared using the acquisition method of accounting. Under the acquisition method of accounting, the purchase price is allocated to the identifiable tangible and intangible assets acquired and liabilities assumed of Coeptis based on their respective estimated fair values with any excess purchase price allocated to goodwill. Significant estimates and assumptions were used in determining the preliminary purchase price and the preliminary purchase price allocation reflected in the unaudited pro forma condensed combined financial statements. The process of valuing the net assets of pre-combination Coeptis immediately prior to the business combination for purposes of presentation within this unaudited pro forma condensed combined financial information is preliminary. As the unaudited pro forma condensed combined financial statements have been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented. Z Squared was determined to be the accounting acquirer based on evaluation of the following facts and circumstances: · Z Squared existing stockholders have the greatest voting interest in post-combination Coeptis; · Z Squared existing stockholders have the ability to control decisions regarding election and removal of directors and officers of post-combination Coeptis; · Z Squared comprises the ongoing operations of post-combination Coeptis; and · Z Squared existing senior management is the senior management of post-combination Coeptis. 3 Z SQUARED INC. (formerly known as Coeptis Therapeutics Holdings, Inc.) Unaudited Pro Forma Condensed Consolidated Balance Sheets As of March 31, 2026 (A) (B) Coeptis (Historical) Spin-Out Adjustments Coeptis (Pro Forma) Z Squared (Historical) Exchange Agreement Adjustment Z Squared (Pro Forma) Transaction Accounting Adjustments Pro Forma Combined CURRENT ASSETS Cash $ 5,211,188 $ (5,211,188 ) (1) $ – $ 1,372 $ – $ 1,372 – $ 1,372 Marketable securities 50,551 – 50,551 – – – – 50,551 Interest receivable 15,287 – 15,287 – – – – 15,287 Prepaid assets 631,082 (631,082 ) (1) – – – – – – Total current assets 5,908,108 (5,842,270 ) 65,838 1,372 – 1,372 – 67,210 PROPERTY AND EQUIPMENT Cryptocurrency mining machines – – – – 35,290,694 (9) 35,290,694 – 35,290,694 Furniture and fixtures, net 9,727 (9,727 ) (1) – – – – – – Total property and equipment 9,727 (9,727 ) – – 35,290,694 35,290,694 – 35,290,694 OTHER ASSETS Investments 13,159,346 (11,909,346 ) (1) 1,250,000 – – – 1,250,000 (3) 2,500,000 Intangible assets, net 316,094 – 316,094 – – – 278,264 (3) 594,358 Co-development rights, net 304,167 – 304,167 – – – 1,350,664 (3) 1,654,831 Right of use assets, net of accumulated amortization 89,251 (89,251 ) (1) – – – – – – Customer list – – – – – – 880,550 (3) 880,550 Goodwill – – – – – – 116,494,022 (3) 116,494,022 Total other assets 13,868,858 (11,998,597 ) 1,870,261 – – – 120,253,499 122,123,760 TOTAL ASSETS $ 19,786,693 $ (17,850,594 ) $ 1,936,099 $ 1,372 $ 35,290,694 $ 35,292,066 120,253,499 $ 157,481,665 CURRENT LIABILITIES Accounts payable $ 1,011,172 $ (821,917 ) (1) $ 189,255 $ – $ – $ – – $ 189,255 Accrued expenses 60,140 (60,140 ) (1) – – – – 85,000 (4) 85,000 Advance from affiliate – – – 120 – 120 – 120 Convertible notes payable, current portion, in default 100,000 (100,000 ) (1) – – – – – – Convertible notes payable, net of debt discount – – – – – – – – Right of use liability, current portion 40,323 (40,323 ) (1) – – – – – – Customer deposit 485,684 – 485,684 – – – – 485,684 Other current liabilities 120,000 (120,000 ) (1) – – – – – – Total current liabilities 1,817,319 (1,142,380 ) 674,939 120 – 120 85,000 760,059 LONG TERM LIABILITIES SBA loan payable, net of current portion 150,000 (150,000 ) (1) – – – – – – Derivative liability warrants 187,500 – 187,500 – – – – 187,500 Right of use liability, non-current portion 53,030 (53,030 ) (1) – – – – – – TOTAL LONG TERM LIABILITIES 390,530 (203,030 ) 187,500 – – – – 187,500 TOTAL LIABILITIES 2,207,849 (1,345,410 ) 862,439 120 – 120 85,000 947,559 STOCKHOLDERS' EQUITY Preferred stock – – – – – – – – Common stock 656 100 (1) 756 – – – 4,387 (5) 5,143 Additional paid-in capital 134,700,105 (16,505,284 ) (1) 118,838,090 1,725 35,290,694 (9) 35,292,419 (113,870,346 ) (6) 160,943,501 643,269 (2) 120,168,499 (7) (4,387 ) (5) 519,226 (8) Subscription receivable (3,653,456 ) – (3,653,456 ) – – – – (3,653,456 ) Common stock subscribed – – – – – – Accumulated deficit (113,870,346 ) – (113,870,346 ) (473 ) – (473 ) 113,870,346 (6) (519,699 ) (519,226 ) (8) TOTAL STOCKHOLDERS' EQUITY - CONTROLLING INTERESTS 17,176,959 (15,861,915 ) 1,315,044 1,252 35,290,694 35,291,946 120,168,499 156,775,489 TOTAL STOCKHOLDERS EQUITY - NONCONTROLLING INTERESTS 401,885 (643,269 ) (2) (241,384 ) – – – – (241,384 ) TOTAL STOCKHOLDERS EQUITY 17,578,844 (16,505,184 ) 1,073,660 1,252 35,290,694 35,291,946 120,168,499 156,534,105 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 19,786,693 $ (17,850,594 ) $ 1,936,099 $ 1,372 $ 35,290,694 $ 35,292,066 120,253,499 $ 157,481,665 4 Z SQUARED INC. (formerly known as Coeptis Therapeutics Holdings, Inc.) Unaudited Pro Forma Condensed Consolidated Statement of Operations As of March 31, 2026 (C) (D) Coeptis (Historical) Spin Out Adjustments Coeptis (Pro Forma) Z Squared (Historical) Exchange Agreement Adjustment Z Squared (Pro Forma) Transaction Accounting Adjustments Pro Forma Combined SALES Sales $ 113,771 $ – $ 113,771 $ – $ – $ – – $ 113,771 Total sales 113,771 – 113,771 – – – – 113,771 Cost of goods 45,156 – 45,156 – – – – 45,156 Gross profit 68,615 – 68,615 – – – – 68,615 OPERATING EXPENSES Research and development expense 235,529 (122,666 ) (10) 112,863 – – – – 112,863 Salary expense 422,705 (295,894 ) (10) 126,812 – – – – 126,812 Amortization expense 250,000 (250,000 ) (10) – – 10,484,506 (12) 10,484,506 460,416 (13) 10,944,922 Professional services expense 1,014,144 (580,053 ) (10) 434,091 – – – – 434,091 Stock based compensation 1,416,178 – 1,416,178 – – – – 1,416,178 Selling and marketing expense – – – – – – – – General and administrative expenses 644,703 (38,366 ) (10) 606,337 30 – 30 – 606,367 Total operating expense 3,983,259 (1,286,979 ) 2,696,280 30 10,484,506 10,484,536 460,416 13,641,232 LOSS FROM OPERATIONS (3,914,644 ) 1,286,979 (2,627,665 ) (30 ) (10,484,506 ) (10,484,536 ) (460,416 ) (13,572,617 ) OTHER INCOME (EXPENSE) Interest expense, net (5,257 ) 5,257 (10) – – – – – – Interest income – – (10) – – – – – – Amortization of debt discount – – (10) – – – – – – Gain on forfeiture of customer deposit – – – – – – – – Other income (expense) 32,206 (32,206 ) (10) – – – – – – Unrealized loss on marketable securities (176,045 ) – (176,045 ) – – – – (176,045 ) Unrealized loss on investments (22,688 ) – (22,688 ) – – – – (22,688 ) Realized gain on sale of marketable securities 85,407 – 85,407 – – – – 85,407 Change in fair value of derivative liabilities (19,875 ) – (19,875 ) – – – – (19,875 ) TOTAL OTHER INCOME (EXPENSE), net (106,252 ) (26,949 ) (133,201 ) – – – – (133,201 ) LOSS BEFORE INCOME TAXES (4,020,896 ) 1,260,030 (2,760,866 ) (30 ) (10,484,506 ) (10,484,536 ) (460,416 ) (13,705,818 ) PROVISION FOR INCOMES TAXES (BENEFIT) – – – – – – – – NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS (104,278 ) 52,139 (11) (52,139 ) – – – – (52,139 ) NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS (3,916,618 ) 1,207,891 (2,708,727 ) (30 ) (10,484,506 ) (10,484,536 ) (460,416 ) (13,653,679 ) NET LOSS $ (4,020,896 ) $ 1,260,030 $ (2,760,866 ) $ (30 ) $ (10,484,506 ) $ (10,484,536 ) (460,416 ) $ (13,705,818 ) LOSS PER SHARE Loss per share, basic and fully diluted $ (0.65 ) $ (0.27 ) Weighted average number of common shares outstanding 6,032,193 44,877,497 (14) 50,909,690 5 NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS 1. Basis of Presentation The unaudited pro forma condensed combined financial information has been adjusted to give effect to transaction accounting adjustments related to the Merger linking the effects of the Merger and the Spin Out to the historical financial information. The Merger will be accounted for as a business combination under the acquisition method of accounting for business combinations pursuant to the provisions of ASC 805. Z Squared has been determined to be the accounting acquirer as Z Squared owners before the Merger will retain a majority financial interest after the Merger. Z Squared will be treated as issuing equity for the net assets of Coeptis. Under the acquisition method of accounting, the estimated purchase price will be allocated to Coeptis’ assets acquired and liabilities assumed based upon their estimated fair values at the date of completion of the Merger. Any excess of merger consideration over the preliminary estimate of the fair value of identified assets acquired and liabilities assumed will be recognized as goodwill. Significant judgment is required in determining the preliminary fair values of identified intangible assets, certain other assets, debt and other assumed liabilities and non-controlling interest. Additionally, the final purchase price allocation will depend on a number of factors that cannot be predicted with certainty at this time. The final valuation may materially change the purchase price and the allocation of the purchase price, which could materially affect the fair values assigned to the assets, liabilities and non-controlling interest and could result in a material change to the unaudited pro forma condensed combined financial information. Under ASC 805, a business combination occurs when an entity obtains control of a “business”. The determination of whether the acquired set of assets and activities constitutes a business is critical because the accounting for a business combination differs significantly from that of an asset acquisition. The Company determined that substantially all the fair value of the gross assets acquired is not concentrated in a single identifiable group of assets, and the set of assets and activities acquired is a business because Z Squared acquired at least one substantive process in addition to an input and output. The Company determined Z Squared acquired a business and will apply the acquisition method of accounting in accordance with ASC 805 and recognize goodwill. The following unaudited pro forma condensed combined financial information presents the combination of the financial information of Coeptis and Z Squared adjusted to give effect to the Merger and other events contemplated by the Merger Agreement as described in this Form S-4. The unaudited pro forma condensed combined balance sheet as of March 31, 2026 combines the historical balance sheets of Coeptis and Z Squared on a pro forma basis assuming the business combination and related transactions had been consummated on March 31, 2026. The unaudited pro forma condensed combined statements of income for the three months ended March 31, 2026 and the year ended December 31, 2025 combines the historical statements of income of Coeptis and Z Squared on a pro forma basis assuming the business combination and related transactions as if they had occurred on January 1, 2025, beginning of the earliest period presented. The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the Transactions taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of Coeptis and they are based on the information available at the time of their preparation. Actual results may differ materially from the assumptions within the unaudited pro forma condensed combined financial information. The unaudited pro forma condensed combined financial statements are intended to provide information about the impact of the Coeptis acquisition as if it had been consummated earlier. In the opinion of management, all adjustments necessary to present fairly the unaudited pro forma condensed combined financial statements have been made. 6 2. Estimated Purchase Price The preliminary estimated purchase price, which represents the consideration transferred to Z Squared stockholders in this acquisition, is calculated based on the aggregate amount of Coeptis common stock that transferred to Z Squared stockholders upon the closing of the Merger. The acquisition will occur between a public company and a private company with Coeptis (the public company) being the legal acquirer and Z Squared (the private company) being the accounting acquirer. The fair value of the legal acquirer’s public stock is more reliably determinable with a quoted and reliable market price than the fair value of the accounting acquirer’s private stock. Z Squared determined the amount of goodwill by using the most recent practical date of Coeptis’ equity interest instead of the equity interests transferred as consideration. The Company determined the most recent practical date of measurement is April 24, 2026 for pro forma purposes. The accompanying unaudited pro forma condensed combined financial information reflects the consideration transferred of $121,468,256 (the “ Merger Consideration ”), which consists of the following: Coeptis’ effective common shares outstanding as of March 31, 2026 (i) 7,553,996 Coeptis’ effective fair value per common share (ii) $ 16.08 Effective Merger Consideration transferred $ 121,468,256 (i) The effective common shares outstanding as of March 31, 2026 is calculated as follows: Common stock issued and outstanding as of March 31, 2026 6,553,996 Common stock issued to Spin Out Sub 1,000,000 Effective common stock issued as of December 31, 2025 7,553,996 (ii) Represents the estimated fair value of Coeptis common stock as of the most recent practical date. As the Coeptis share closing share price reflects the entire Coeptis business prior to the Spin Out, the Company adjusted the share price to reflect only the technology business and the GEAR biopharmaceutical operations that Z Squared is acquiring as follows: Closing share price on April 24, 2026 $ 16.40 Adjustment to reflect Spin Out Sub (0.32 ) Estimated effective fair value per common share $ 16.08 The unaudited pro forma condensed combined financial information reflects the Coeptis share price as of April 24, 2026 in estimating the purchase consideration. The actual purchase price will be based on the Coeptis share price on the closing date of the transaction and may differ materially from the amount reflected herein. To illustrate the potential impact of changes in Coeptis’ stock price on the purchase consideration and resulting goodwill, the following table presents a sensitivity analysis assuming a 10% decrease and a 10% increase in the stock price relative to the base case. Scenario Share Price Implied Consideration Change vs. Base Goodwill Recognized Change in Goodwill vs. Base -10% $ 14.76 $ 109,079,702 $ (12,388,553 ) $ 104,105,468 $ 12,388,553 Base $ 16.40 $ 121,468,256 $ – $ 116,494,023 $ – +10% $ 18.04 $ 133,856,809 $ 12,388,553 $ 128,882,575 $ 12,388,553 7 3. Preliminary Purchase Price Allocation The allocation of the estimated preliminary purchase price with respect to the Merger is based upon management’s estimates of and assumptions related to the fair values of assets to be acquired and liabilities to be assumed as of March 31, 2026, using currently available information. Due to the fact that the unaudited pro forma condensed combined financial statements have been prepared based on these preliminary estimates, the final purchase price allocation and the resulting effect on Coeptis’ financial position and results of operations may differ materially from the pro forma amounts included herein. The following table sets forth a preliminary allocation of the consideration to the identifiable tangible and intangible assets acquired, liabilities assumed and the non-controlling interest with the excess recorded to intangible assets and goodwill as if the Merger occurred on March 31, 2026: Amount Marketable securities $ 50,551 Investments 2,500,000 Intangible assets 594,358 Co-development options 1,654,831 Customer list 880,550 Total assets acquired 5,680,290 Accounts payable and accrued expenses 274,255 Customer deposits 485,684 Derivative liability warrants 187,500 Total liabilities assumed 947,439 Non-controlling interest (241,384 ) Goodwill 116,494,022 Total estimated consideration $ 121,468,257 4. Adjustment to the Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2026 and the Unaudited Pro Forma Condensed Combined Statements of Operations for the Three Months Ended March 31, 2026 (A) Derived from the unaudited condensed consolidated balance sheet of Coeptis Therapeutics Holdings, Inc. as of March 31, 2026. (B) Derived from the unaudited balance sheet of Z Squared Inc. as of March 31, 2026. (1) To reflect the Spin Out of a portion of Coeptis' biopharmaceutical operations. Immediately prior to the closing of the transaction, Coeptis Therapeutics Holdings, Inc. will issue 1,000,000 shares of common stock to the Spin Out Sub. These shares and assets and liabilities will be contributed to the Spin Out Sub and the shares of this subsidiary will be distributed pro rata to all pre-transaction shareholders of Coeptis consistent with The Spin Out Transaction. These asset and liabilities are excluded from the pro forma combined balance sheet, which reflect only the continuing operations of the remaining business. (2) To reflect the elimination of the divested non-controlling interest and recapitalization of the non-controlling interest at fair value. (3) The preliminary intangible assets and goodwill adjustment of $116,494,022 represents the recording of the excess of estimated aggregate Merger Consideration over the preliminary fair value of the underlying assets acquired, liabilities assumed and the non-controlling interest. Goodwill is not amortized but rather is assessed for impairment at least annually or more frequently whenever events or circumstances indicate that goodwill might be impaired. 8 (4) The adjustment to accounts payable reflects transaction-related expenses. (5) To reflect the par value of the common stock issued upon the Merger. (6) To reflect the elimination of historical accumulated deficit of Coeptis Therapeutics Holdings, Inc. (7) To reflect the total consideration issued in excess of the initial net book value of assets acquired, liabilities assumed, and assumed non-controlling interest. (8) To reflect the estimated stock-based compensation incurred upon the one-time replacement option proposal. (9) To reflect the historical carrying value of the 9,800 cryptocurrency mining machines obtained by Z Squared Inc. Immediately prior to the closing of the transaction, Z Squared Inc. will issue 43,877,497 shares of common stock to BSG Series CM in exchange for 9,800 cryptocurrency mining machines to be delivered at closing. In connection with the contribution of mining machines by BSG Series CM in exchange for shares of Z Squared, the Company determined that the transaction represents a transfer of assets between related parties. Accordingly, the pro forma balance sheet reflects the mining machines at their historical carrying amount, rather than the fair value of the consideration transferred. 5. Adjustments to the Unaudited Pro Forma Condensed Combined Statements of Operations for the Three Months Ended March 31, 2026 and for the Year Ended December 31, 2025 (C) Derived from the unaudited condensed consolidated statement of operations of Coeptis Therapeutics Holdings, Inc. for the three months ended March 31, 2026. (D) Derived from the unaudited statement of operations of Z Squared Inc. for the three months ended March 31, 2026. (E) Derived from the audited condensed consolidated statement of operations of Coeptis Therapeutics Holdings, Inc. for the year ended December 31, 2024. (F) Derived from the audited statement of operations of Z Squared Inc. for the year ended December 31, 2025. (10) To reflect the removal of historical expenses associated with the divested operations of the Spin Out. These adjustments are based on historical expense allocations and management’s estimates of costs directly attributable to the divested business. The amounts presented are not necessarily indicative of the results that would have occurred had the divestiture taken place at the beginning of the period presented, nor are they necessarily indicative of future results. (11) Represents the elimination of the divested non-controlling interest. (12) Represents the depreciation of the 9,800 cryptocurrency mining machines. (13) Represents the additional amortization in relation to the increase in fair value of intangible assets. (14) The pro forma basic and diluted weighted average common shares outstanding give effect to the issuance of 44,877,497 shares of common stock in the acquisition as if such shares were issued and outstanding as of January 1, 2024, determined as follows: Shares issued to Z Squared stockholders 43,877,497 Shares issued to Spin Out Sub 1,000,000 Common shares issued upon acquisition 44,877,497 The following tables present the pro forma calculation of the issuance of the 43,877,497 shares of common stock issued as consideration to Z Squared stockholders. Determination of the consideration percentage issuable to Z Squared stockholders is as follows: Consideration percentage issuable calculation: Company Asset Value $ 718,660,000 A Company Asset Value basis $ 750,000,000 B Portion of asset value 95.82% C (A / B) Consideration basis 90% D Consideration percentage issuable 86.24% C x D 9 The following table presents the pro forma number of shares of Coeptis Common Stock issued and outstanding on a fully diluted basis for acquisition purposes to Z Squared stockholders and stockholders of Coeptis: Number of Common Shares Percentage Ownership Z Squared stockholders 43,877,497 85.32% Spin Out Sub 1,000,000 1.94% Coeptis stockholders 6,553,996 12.74% Pro forma fully-diluted common shares 51,431,493 100.00% 6. Range of Potential Share Issuances and Result on Pro Forma Loss Per Share The unaudited pro forma combined financial information has been prepared assuming the Company Asset Value delivered by Z Squared of $718,660,000. The ultimate ownership level of Coeptis immediately following the Merger is dependent on the level of Company Asset Value delivered by Z Squared. The following tables illustrate the range of potential shares issuances and the resulting pro forma loss per share: For the three months ended March 31, 2026 Company Asset Value $ 750,000,000 $ 500,000,000 Numerator: Pro forma net loss $ (13,705,818 ) $ (13,705,818 ) Denominator: Weighted average number of common shares outstanding 6,032,193 6,032,193 Pro forma issuance of common stock 68,985,964 12,330,994 Pro forma weighted average number of common shares outstanding 75,018,157 18,363,187 Pro forma loss per share, basic and fully diluted $ (0.18 ) $ (0.75 ) For the year ended December 31, 2025 Company Asset Value $ 750,000,000 $ 500,000,000 Numerator: Pro forma net loss $ (19,983,281 ) $ (19,983,281 ) Denominator: Weighted average number of common shares outstanding 4,234,787 4,234,787 Pro forma issuance of common stock 68,985,964 12,330,994 Pro forma weighted average number of common shares outstanding 73,220,751 16,565,781 Pro forma loss per share, basic and fully diluted $ (0.27 ) $ (1.21 ) 10 |
EX-99.4 · UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
EX-99.4
zsquared_ex9904.htm
| Document text |
|---|
EX-99.4 · UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION EX-99.4 6 zsquared_ex9904.htm UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION Exhibit 99.4 UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION Introduction The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X, as amended, and presents the combination of the historical financial information of Coeptis Therapeutics Holdings, Inc. (“Coeptis” or the “Purchaser”) and Z Squared Inc. (“Z Squared”) adjusted to give effect to the Merger and the other events contemplated by the Merger Agreement, including the Spin Out. The unaudited pro forma condensed combined balance sheet as of December 31, 2025 combines the historical unaudited condensed consolidated balance sheet of Coeptis and the historical unaudited condensed consolidated balance sheet of Z Squared on a pro forma basis as if the Merger and related transactions had been consummated on December 31, 2025. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2025 combines the historical unaudited condensed consolidated statement of operations of Coeptis for the year ended December 31, 2025 and the historical unaudited condensed consolidated statement of operations of Z Squared for the year ended December 31, 2025. The year ended December 31, 2024 combines the historical audited consolidated statements of operations of Coeptis for the year ended December 31, 2024 and the historical audited consolidated statements of operations of Z Squared for the year ended December 31, 2024. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2025 and for the year ended December 31, 2024 are presented on a pro forma basis as if the Merger and related transactions had been consummated on January 1, 2024, the beginning of the earliest period presented. The unaudited pro forma condensed combined financial information has been presented for illustrative purposes only and is not necessarily indicative of the financial position and results of operations that would have been achieved had the Merger and related transactions occurred on the dates indicated. Further, the unaudited pro forma condensed combined financial information may not be useful in predicting the future financial condition and results of operations of the Company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of the unaudited pro forma condensed combined financial information and are subject to change as additional information becomes available and analyses are performed. This information should be read together with the following: · The accompanying Notes to the unaudited pro forma condensed combined financial statements; · the historical audited financial statements of Coeptis as of and for the year ended December 31, 2025 included in Coeptis’ Annual Report on Form 10-K filed with the SEC on March 19, 2026 and the historical audited financial statements of Coeptis as of the year ended December 31, 2024 on Form 10-K filed with the SEC on March 28, 2025; · the historical audited financial statements of Z Squared as of and for the year ended December 31, 2025 and the historical audited consolidated financial statements of Z Squared as of and for the year ended December 31, 2024, included in this Form S-4; · the sections titled “ Coeptis Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and “ Z Squared Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and other financial information included elsewhere in this Form S-4, and · other information relating to Coeptis and Z Squared included in this Form S-4, including the Merger Agreement and the description of certain terms thereof set forth under the section entitled “Proposal 1: Merger Proposal” 2 Description of the Merger On April 25, 2025, Coeptis entered into an Agreement and Plan of Merger, as may be amended from time to time (the “Merger Agreement”) with CP Merger Sub Inc., a Wyoming corporation and wholly-owned subsidiary of Coeptis (“Merger Sub”), and Z Squared. Pursuant to the Merger Agreement, subject to the terms and conditions set forth therein, upon the consummation of the transactions contemplated by the Merger Agreement (the “Closing”), (i) Merger Sub will merge with and into Z Squared (the “Merger”) and (ii) Coeptis will immediately prior to the Merger effect a spin out certain of its biopharmaceutical operations (the “Spin Out” and, together with Merger and the other transactions contemplated by the Merger Agreement, the “Transactions”), with Z squared continuing as the surviving corporation in the Merger and becoming a wholly-owned subsidiary of Coeptis. In the Merger, all shares of Z Squared common stock issued and outstanding immediately prior to the effective time of the Merger (other than those properly exercising any applicable dissenters rights under Wyoming law), will be converted into the right to receive a portion of the Merger Consideration (as defined below) and (ii) any other outstanding securities with the right to convert into or acquire equity securities of Z Squared will be terminated. At the Closing, Coeptis will change its name as mutually agreed upon by the Purchaser and Z Squared. In connection with the Spin Out, all of Coeptis’ assets comprising its biopharmaceutical business will be assigned and contributed prior to Closing to one or more Spin Out Subsidiaries, which will then spin out to Coeptis’ stockholders of record on the record date established for the Coeptis Special Meeting (as defined below). GEAR Therapeutics, Inc. will not be included in the Spin Out and will remain a Subsidiary of Purchaser following Closing, and that in consideration of GEAR Therapeutics, Inc. remaining a subsidiary of Purchaser following the Closing the Spin Out Sub will receive 1,000,000 shares of Purchaser Common Stock and an option to acquire GEAR Therapeutics, Inc. in the future for the fair market value of GEAR Therapeutics, Inc. at the time of exercise (if exercised). Merger Consideration As consideration for the Merger, the Z Squared Security Holders collectively shall be entitled to receive from the Purchaser, in the aggregate, a number of shares of Purchaser Common Stock that represents at Closing the Applicable Percentage of Purchaser’s issued and outstanding shares of Purchaser Common Stock as calculated on a Fully-Diluted Basis (the “Merger Consideration”). For purposes hereof, (A) “Applicable Percentage” means (i) if the Company Asset Value (defined below) is equal to or greater than $750 million, such number of shares of common stock as will represent 90% of the post-Merger ownership of Purchaser on a Fully-Diluted Basis, and (ii) if the Company Asset Value is less than $750 million, such number of shares of common stock as will reflect the portion of the $750 million in Company Asset Value as of Closing, and (B) “Company Asset Value” means the value of the mining computer assets (collectively, the “Mining Machines”) owned by Company as of the Closing as determined by a mutually agreeable third-party valuation expert, less the sum of (y) all Company Debt being assumed by the Purchaser post-Merger and (z) Company Transaction Expenses being assumed by Purchaser post-Merger. Each Z Squared stockholder shall receive for its company common stock held a number of shares of Purchaser Common Stock equal to such Company Stockholder’s Pro Rata Share of aggregate number of shares of Purchaser Common Stock comprising the Merger Consideration. In addition, the Purchaser shall not exercise its right to issue or sell Purchaser Common Stock pursuant to the Standby Equity Purchase Agreement if such issuance or sale would result in the Purchaser receiving aggregate proceeds in excess of $3,000,000 (such $3,000,000 amount, the “SEPA Carveout”). In the event the Purchaser exercises its right to issue or sell Purchaser Common Stock pursuant to the Standby Equity Purchase Agreement during the period from the date of the Merger Agreement and continuing until the earlier of the termination of the Merger Agreement or the Closing (the “Interim Period”) with consent and such issuance or sale results in the Purchaser receiving aggregate proceeds in excess of the SEPA Carveout, the excess of such proceeds over the SEPA Carveout shall be solely for the benefit of the Surviving Corporation. In addition, in the event that Purchaser has utilized for its own purposes the Standby Equity Purchase Agreement Carveout amount, an additional 500,000 shares of Purchaser Common Stock shall be added to the Merger Consideration. 3 Accounting Treatment The Merger will be accounted for as a business combination in accordance with U.S. GAAP (pursuant to Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”)), with Z Squared treated as the “accounting acquirer” and Coeptis treated as the “legal acquirer” for financial reporting purposes. Z Squared will control Coeptis as it will beneficially own a majority voting interest of the outstanding shares of Coeptis common stock. The unaudited pro forma condensed combined financial statements were prepared using the acquisition method of accounting. Under the acquisition method of accounting, the purchase price is allocated to the identifiable tangible and intangible assets acquired and liabilities assumed of Coeptis based on their respective estimated fair values with any excess purchase price allocated to goodwill. Significant estimates and assumptions were used in determining the preliminary purchase price and the preliminary purchase price allocation reflected in the unaudited pro forma condensed combined financial statements. The process of valuing the net assets of pre-combination Coeptis immediately prior to the business combination for purposes of presentation within this unaudited pro forma condensed combined financial information is preliminary. As the unaudited pro forma condensed combined financial statements have been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented. Z Squared was determined to be the accounting acquirer based on evaluation of the following facts and circumstances: · Z Squared existing stockholders have the greatest voting interest in post-combination Coeptis; · Z Squared existing stockholders have the ability to control decisions regarding election and removal of directors and officers of post-combination Coeptis; · Z Squared comprises the ongoing operations of post-combination Coeptis; and · Z Squared existing senior management is the senior management of post-combination Coeptis. 4 Z SQUARED INC. (formerly known as Coeptis Therapeutics Holdings, Inc.) Unaudited Pro Forma Condensed Consolidated Balance Sheets As of December 31, 2025 (A) (B) Coeptis (Historical) Spin-Out Adjustments Coeptis (Pro Forma) Z Squared (Historical) Exchange Agreement Adjustment Z Squared (Pro Forma) Transaction Accounting Adjustments Pro Forma Combined CURRENT ASSETS Cash $ 5,674,302 $ (5,674,302 ) (1) $ – $ 1,402 $ – $ 1,402 – $ 1,402 Marketable securities 676,596 – 676,596 – – – – 676,596 Interest receivable 7,348 – 7,348 – – – – 7,348 Prepaid assets 991,903 (991,903 ) (1) – – – – – – Total current assets 7,350,149 (6,666,205 ) 683,944 1,402 – 1,402 – 685,346 PROPERTY AND EQUIPMENT Cryptocurrency mining machines – – – – 35,290,694 (9) 35,290,694 – 35,290,694 Furniture and fixtures, net 9,873 (9,873 ) (1) – – – – – – Total property and equipment 9,873 (9,873 ) – – 35,290,694 35,290,694 – 35,290,694 OTHER ASSETS Investments 7,860,083 (6,610,083 ) (1) 1,250,000 – – – 1,250,000 (3) 2,500,000 Intangible assets, net 361,250 – 361,250 – – – 233,108 (3) 594,358 Co-development rights, net 554,167 – 554,167 – – – 1,100,664 (3) 1,654,831 Right of use assets, net of accumulated amortization 18,399 (18,399 ) (1) – – – – – – Customer list – – – – – – 880,550 (3) 880,550 Goodwill – – – – – – 102,616,505 (3) 102,616,505 Total other assets 8,793,899 (6,628,482 ) 2,165,417 – – – 106,080,826 108,246,243 TOTAL ASSETS $ 16,153,921 $ (13,304,560 ) $ 2,849,361 $ 1,402 $ 35,290,694 $ 35,292,096 106,080,826 $ 144,222,284 CURRENT LIABILITIES Accounts payable $ 888,755 $ (834,466 ) (1) $ 54,289 $ – $ – $ – – $ 54,289 Accrued expenses 41,054 (41,054 ) (1) – – – – 85,000 (4) 85,000 Advance from affiliate – – – 120 – 120 – 120 Convertible notes payable, current portion, in default 100,000 (100,000 ) (1) – – – – – – Convertible notes payable, net of debt discount – – – – – – – – Right of use liability, current portion 18,875 (18,875 ) (1) – – – – – – Customer deposit 599,455 – 599,455 – – – – 599,455 Other current liabilities 120,000 (120,000 ) (1) – – – – – – Total current liabilities 1,768,139 (1,114,395 ) 653,744 120 – 120 85,000 738,864 LONG TERM LIABILITIES SBA loan payable, net of current portion 150,000 (150,000 ) (1) – – – – – – Derivative liability warrants 167,625 – 167,625 – – – – 167,625 Right of use liability, non-current portion – – (1) – – – – – – TOTAL LONG TERM LIABILITIES 317,625 (150,000 ) 167,625 – – – – 167,625 TOTAL LIABILITIES 2,085,764 (1,264,395 ) 821,369 120 – 120 85,000 906,489 STOCKHOLDERS' EQUITY Preferred stock – – – – – – – – Common stock 575 100 (1) 675 – – – 2,574 (5) 3,249 Additional paid-in capital 127,201,691 (12,040,265 ) (1) 115,804,695 1,725 35,290,694 (9) 35,292,419 (109,953,728 ) (6) 147,655,864 643,269 (2) 105,995,826 (7) (2,574 ) (5) 519,226 (8) Subscription receivable (3,686,544 ) – (3,686,544 ) – – – – (3,686,544 ) Common stock subscribed – – – – – – Accumulated deficit (109,953,728 ) – (109,953,728 ) (443 ) – (443 ) 109,953,728 (6) (519,669 ) (519,226 ) (8) TOTAL STOCKHOLDERS’ EQUITY - CONTROLLING INTERESTS 13,561,994 (11,396,896 ) 2,165,098 1,282 35,290,694 35,291,976 105,995,826 143,452,900 TOTAL STOCKHOLDERS’ EQUITY - NONCONTROLLING INTERESTS 506,163 (643,269 ) (2) (137,106 ) – – – – (137,106 ) TOTAL STOCKHOLDERS’ EQUITY 14,068,157 (12,040,165 ) 2,027,992 1,282 35,290,694 35,291,976 105,995,826 143,315,794 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 16,153,921 $ (13,304,560 ) $ 2,849,361 $ 1,402 $ 35,290,694 $ 35,292,096 106,080,826 $ 144,222,284 5 Z SQUARED INC. (formerly known as Coeptis Therapeutics Holdings, Inc.) Unaudited Pro Forma Condensed Consolidated Statement of Operations For the year ended December 31, 2025 (C) (D) Coeptis (Historical) Spin Out Adjustments Coeptis (Pro Forma) Z Squared (Historical) Exchange Agreement Adjustment Z Squared (Pro Forma) Transaction Accounting Adjustments Pro Forma Combined SALES Sales $ 1,363,045 $ – $ 1,363,045 $ – $ – $ – – $ 1,363,045 Total sales 1,363,045 – 1,363,045 – – – – 1,363,045 Cost of goods 180,625 – 180,625 – – – – 180,625 Gross profit 1,182,420 – 1,182,420 – – – – 1,182,420 OPERATING EXPENSES Research and development expense 1,277,150 (319,306 ) (10) 957,844 – – – – 957,844 Salary expense 1,687,972 (1,181,580 ) (10) 506,392 – – – – 506,392 Amortization expense 1,000,000 (1,000,000 ) (10) – – 10,484,506 (12) 10,484,506 376,783 (13) 10,861,289 Professional services expense 7,792,100 (370,771 ) (10) 7,421,329 – – – – 7,421,329 Stock based compensation 1,215,692 – 1,215,692 – – – – 1,215,692 Selling and marketing expense 105,000 – 105,000 – – – – 105,000 General and administrative expenses 1,148,004 (131,122 ) (10) 1,016,882 323 – 323 – 1,017,205 Total operating expense 14,225,918 (3,002,779 ) 11,223,139 323 10,484,506 10,484,829 376,783 22,084,751 LOSS FROM OPERATIONS (13,043,498 ) 3,002,779 (10,040,719 ) (323 ) (10,484,506 ) (10,484,829 ) (376,783 ) (20,902,331 ) OTHER INCOME (EXPENSE) Interest expense, net (96,744 ) (269,392 ) (10) (366,136 ) – – – – (366,136 ) Interest income 116,495 (116,495 ) (10) – – – – – – Amortization of debt discount (545,635 ) 545,635 (10) – – – – – – Gain on forfeiture of customer deposit 115,000 – 115,000 – – – – 115,000 Other income (expense) 7,004 (7,004 ) (10) – – – – – – Unrealized gain on marketable securities 76,596 – 76,596 – – – – 76,596 Unrealized loss on investments (163,500 ) – (163,500 ) – – – – (163,500 ) Gain (loss) on extinguishment of debt 159,035 – 159,035 – – – – 159,035 Change in fair value of derivative liabilities 1,098,055 – 1,098,055 – – – – 1,098,055 TOTAL OTHER INCOME (EXPENSE), net 766,306 152,744 919,050 – – – – 919,050 LOSS BEFORE INCOME TAXES (12,277,192 ) 3,155,523 (9,121,669 ) (323 ) (10,484,506 ) (10,484,829 ) (376,783 ) (19,983,281 ) PROVISION FOR INCOMES TAXES (BENEFIT) – – – – – – – – NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS (360,177 ) 180,089 (11) (180,089 ) – – – – (180,089 ) NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS (11,917,015 ) 2,975,435 (8,941,580 ) (323 ) (10,484,506 ) (10,484,829 ) (376,783 ) (19,803,192 ) NET LOSS $ (12,277,192 ) $ 3,155,523 $ (9,121,669 ) $ (323 ) $ (10,484,506 ) $ (10,484,829 ) (376,783 ) $ (19,983,281 ) LOSS PER SHARE Loss per share, basic and fully diluted $ (2.81 ) $ (0.65 ) Weighted average number of common shares outstanding 4,234,787 26,739,857 (14) 30,974,644 6 NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS 1. Basis of Presentation The unaudited pro forma condensed combined financial information has been adjusted to give effect to transaction accounting adjustments related to the Merger linking the effects of the Merger and the Spin Out to the historical financial information. The Merger will be accounted for as a business combination under the acquisition method of accounting for business combinations pursuant to the provisions of ASC 805. Z Squared has been determined to be the accounting acquirer as Z Squared owners before the Merger will retain a majority financial interest after the Merger. Z Squared will be treated as issuing equity for the net assets of Coeptis. Under the acquisition method of accounting, the estimated purchase price will be allocated to Coeptis’ assets acquired and liabilities assumed based upon their estimated fair values at the date of completion of the Merger. Any excess of merger consideration over the preliminary estimate of the fair value of identified assets acquired and liabilities assumed will be recognized as goodwill. Significant judgment is required in determining the preliminary fair values of identified intangible assets, certain other assets, debt and other assumed liabilities and non-controlling interest. Additionally, the final purchase price allocation will depend on a number of factors that cannot be predicted with certainty at this time. The final valuation may materially change the purchase price and the allocation of the purchase price, which could materially affect the fair values assigned to the assets, liabilities and non-controlling interest and could result in a material change to the unaudited pro forma condensed combined financial information. Under ASC 805, a business combination occurs when an entity obtains control of a “business”. The determination of whether the acquired set of assets and activities constitutes a business is critical because the accounting for a business combination differs significantly from that of an asset acquisition. The Company determined that substantially all the fair value of the gross assets acquired is not concentrated in a single identifiable group of assets, and the set of assets and activities acquired is a business because Z Squared acquired at least one substantive process in addition to an input and output. The Company determined Z Squared acquired a business and will apply the acquisition method of accounting in accordance with ASC 805 and recognize goodwill. The following unaudited pro forma condensed combined financial information presents the combination of the financial information of Coeptis and Z Squared adjusted to give effect to the Merger and other events contemplated by the Merger Agreement as described in this Form S-4. The unaudited pro forma condensed combined balance sheet as of December 31, 2025 combines the historical balance sheets of Coeptis and Z Squared on a pro forma basis assuming the business combination and related transactions had been consummated on December 31, 2025. The unaudited pro forma condensed combined statements of income for the year ended December 31, 2025 and the year ended December 31, 2024 combines the historical statements of income of Coeptis and Z Squared on a pro forma basis assuming the business combination and related transactions as if they had occurred on January 1, 2024, beginning of the earliest period presented. The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the Transactions taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of Coeptis and they are based on the information available at the time of their preparation. Actual results may differ materially from the assumptions within the unaudited pro forma condensed combined financial information. The unaudited pro forma condensed combined financial statements are intended to provide information about the impact of the Coeptis acquisition as if it had been consummated earlier. In the opinion of management, all adjustments necessary to present fairly the unaudited pro forma condensed combined financial statements have been made. 7 2. Estimated Purchase Price The preliminary estimated purchase price, which represents the consideration transferred to Z Squared stockholders in this acquisition, is calculated based on the aggregate amount of Coeptis common stock that transferred to Z Squared stockholders upon the closing of the Merger. The acquisition will occur between a public company and a private company with Coeptis (the public company) being the legal acquirer and Z Squared (the private company) being the accounting acquirer. The fair value of the legal acquirer’s public stock is more reliably determinable with a quoted and reliable market price than the fair value of the accounting acquirer’s private stock. Z Squared determined the amount of goodwill by using the most recent practical date of Coeptis’ equity interest instead of the equity interests transferred as consideration. The Company determined the most recent practical date of measurement is April 24, 2026 for pro forma purposes. The accompanying unaudited pro forma condensed combined financial information reflects the consideration transferred of $108,153,576 (the “ Merger Consideration ”), which consists of the following: Coeptis’ effective common shares outstanding as of December 31, 2025 (i) 6,746,948 Coeptis’ effective fair value per common share (ii) $ 16.03 Effective Merger Consideration transferred $ 108,153,576 (i) The effective common shares outstanding as of December 31, 2025 is calculated as follows: Common stock issued and outstanding as of December 31, 2025 5,746,948 Common stock issued to Spin Out Sub 1,000,000 Effective common stock issued as of December 31, 2025 6,746,948 (ii) Represents the estimated fair value of Coeptis common stock as of the most recent practical date. As the Coeptis share closing share price reflects the entire Coeptis business prior to the Spin Out, the Company adjusted the share price to reflect only the technology business and the GEAR biopharmaceutical operations that Z Squared is acquiring as follows: Closing share price on April 24, 2026 $ 16.40 Adjustment to reflect Spin Out Sub (0.37 ) Estimated effective fair value per common share $ 16.03 The unaudited pro forma condensed combined financial information reflects the Coeptis share price as of April 24, 2026 in estimating the purchase consideration. The actual purchase price will be based on the Coeptis share price on the closing date of the transaction and may differ materially from the amount reflected herein. To illustrate the potential impact of changes in Coeptis’ stock price on the purchase consideration and resulting goodwill, the following table presents a sensitivity analysis assuming a 10% decrease and a 10% increase in the stock price relative to the base case. Scenario Share Price Implied Consideration Change vs. Base Goodwill Recognized Change in Goodwill vs. Base -10% $ 14.76 $ 97,088,582 $ (11,064,995 ) $ 91,551,511 $ 11,064,995 Base $ 16.40 $ 108,153,576 $ – $ 102,616,506 $ – +10% $ 18.04 $ 119,218,571 $ 11,064,995 $ 113,681,500 $ 11,064,995 8 3. Preliminary Purchase Price Allocation The allocation of the estimated preliminary purchase price with respect to the Merger is based upon management’s estimates of and assumptions related to the fair values of assets to be acquired and liabilities to be assumed as of December 31, 2025, using currently available information. Due to the fact that the unaudited pro forma condensed combined financial statements have been prepared based on these preliminary estimates, the final purchase price allocation and the resulting effect on Coeptis’ financial position and results of operations may differ materially from the pro forma amounts included herein. The following table sets forth a preliminary allocation of the consideration to the identifiable tangible and intangible assets acquired, liabilities assumed and the non-controlling interest with the excess recorded to intangible assets and goodwill as if the Merger occurred on December 31, 2025: Amount Marketable securities $ 676,596 Investments 2,500,000 Intangible assets 594,358 Co-development options 1,654,831 Customer list 880,550 Total assets acquired 6,306,334 Accounts payable and accrued expenses 139,289 Customer deposits 599,455 Derivative liability warrants 167,625 Total liabilities assumed 906,369 Non-controlling interest (137,106 ) Goodwill 102,616,505 Total estimated consideration $ 108,153,576 4. Adjustment to the Unaudited Pro Forma Condensed Combined Balance Sheet as of December 31, 2025 and the Unaudited Pro Forma Condensed Combined Statements of Operations for the Year Ended December 31, 2025 (A) Derived from the audited condensed consolidated balance sheet of Coeptis Therapeutics Holdings, Inc. as of December 31, 2025. (B) Derived from the audited balance sheet of Z Squared Inc. as of December 31, 2025. (1) To reflect the Spin Out of a portion of Coeptis' biopharmaceutical operations. Immediately prior to the closing of the transaction, Coeptis Therapeutics Holdings, Inc. will issue 1,000,000 shares of common stock to the Spin Out Sub. These shares and assets and liabilities will be contributed to the Spin Out Sub and the shares of this subsidiary will be distributed pro rata to all pre-transaction shareholders of Coeptis consistent with The Spin Out Transaction. These asset and liabilities are excluded from the pro forma combined balance sheet, which reflect only the continuing operations of the remaining business. (2) To reflect the elimination of the divested non-controlling interest and recapitalization of the non-controlling interest at fair value. (3) The preliminary intangible assets and goodwill adjustment of $102,616,505 represents the recording of the excess of estimated aggregate Merger Consideration over the preliminary fair value of the underlying assets acquired, liabilities assumed and the non-controlling interest. Goodwill is not amortized but rather is assessed for impairment at least annually or more frequently whenever events or circumstances indicate that goodwill might be impaired. 9 (4) The adjustment to accounts payable reflects transaction-related expenses. (5) To reflect the par value of the common stock issued upon the Merger. (6) To reflect the elimination of historical accumulated deficit of Coeptis Therapeutics Holdings, Inc. (7) To reflect the total consideration issued in excess of the initial net book value of assets acquired, liabilities assumed, and assumed non-controlling interest. (8) To reflect the estimated stock-based compensation incurred upon the one-time replacement option proposal. (9) To reflect the historical carrying value of the 9,000 cryptocurrency mining machines obtained by Z Squared Inc. Immediately prior to the closing of the transaction, Z Squared Inc. will issue 40,446,956 shares of common stock to BSG Series CM in exchange for 9,000 cryptocurrency mining machines to be delivered at closing. In connection with the contribution of mining machines by BSG Series CM in exchange for shares of Z Squared, the Company determined that the transaction represents a transfer of assets between related parties. Accordingly, the pro forma balance sheet reflects the mining machines at their historical carrying amount, rather than the fair value of the consideration transferred. 5. Adjustments to the Unaudited Pro Forma Condensed Combined Statements of Operations for the Year Ended December 31, 2025 and for the Year Ended December 31, 2024 (C) Derived from the audited condensed consolidated statement of operations of Coeptis Therapeutics Holdings, Inc. for the year ended December 31, 2025. (D) Derived from the audited statement of operations of Z Squared Inc. for the year ended December 31, 2025. (E) Derived from the audited condensed consolidated statement of operations of Coeptis Therapeutics Holdings, Inc. for the year ended December 31, 2024. (F) Derived from the audited statement of operations of Z Squared Inc. for the year ended December 31, 2024. (10) To reflect the removal of historical expenses associated with the divested operations of the Spin Out. These adjustments are based on historical expense allocations and management’s estimates of costs directly attributable to the divested business. The amounts presented are not necessarily indicative of the results that would have occurred had the divestiture taken place at the beginning of the period presented, nor are they necessarily indicative of future results. (11) Represents the elimination of the divested non-controlling interest. (12) Represents the depreciation of the 9,000 cryptocurrency mining machines. (13) Represents the additional amortization in relation to the increase in fair value of intangible assets. (14) The pro forma basic and diluted weighted average common shares outstanding give effect to the issuance of 24,491,514 shares of common stock in the acquisition as if such shares were issued and outstanding as of January 1, 2024, determined as follows: Shares issued to Z Squared stockholders 25,739,857 Shares issued to Spin Out Sub 1,000,000 Common shares issued upon acquisition 26,739,857 The following tables present the pro forma calculation of the issuance of the 25,739,857 shares of common stock issued as consideration to Z Squared stockholders. Determination of the consideration percentage issuable to Z Squared stockholders is as follows: Consideration percentage issuable calculation: Company Asset Value $ 660,264,400 A Company Asset Value basis $ 750,000,000 B Portion of asset value 88.04% C (A / B) Consideration basis 90% D Consideration percentage issuable 79.23% C x D 10 The following table presents the pro forma number of shares of Coeptis Common Stock issued and outstanding on a fully diluted basis for acquisition purposes to Z Squared stockholders and stockholders of Coeptis: Number of Common Shares Percentage Ownership Z Squared stockholders 25,739,857 79.23% Spin Out Sub 1,000,000 3.08% Coeptis stockholders 5,746,948 17.69% Pro forma fully-diluted common shares 32,486,805 100.00% 6. Range of Potential Share Issuances and Result on Pro Forma Loss Per Share The unaudited pro forma combined financial information has been prepared assuming the Company Asset Value delivered by Z Squared of $660,264,400. The ultimate ownership level of Coeptis immediately following the Merger is dependent on the level of Company Asset Value delivered by Z Squared. The following tables illustrate the range of potential shares issuances and the resulting pro forma loss per share: For the nine months ended September 30, 2025 Company Asset Value $ 750,000,000 $ 500,000,000 Numerator: Pro forma net loss $ (19,983,281 ) $ (19,983,281 ) Denominator: Weighted average number of common shares outstanding 4,234,787 4,234,787 Pro forma issuance of common stock 61,722,532 11,120,422 Pro forma weighted average number of common shares outstanding 65,957,319 15,355,209 Pro forma loss per share, basic and fully diluted $ (0.30 ) $ (1.30 ) For the year ended December 31, 2024 Company Asset Value $ 750,000,000 $ 500,000,000 Numerator: Pro forma net loss $ (21,904,125 ) $ (21,904,125 ) Denominator: Weighted average number of common shares outstanding 1,924,639 1,924,639 Pro forma issuance of common stock 61,722,532 11,120,422 Pro forma weighted average number of common shares outstanding 63,647,171 13,045,061 Pro forma loss per share, basic and fully diluted $ (0.34 ) $ (1.68 ) 11 |
