10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2026


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to____________________________

Commission File Number: 001-42292

BioStem Technologies, Inc.

(Exact Name of Registrant as Specified in its Charter)


Florida	27-0400416
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2836 Center Port Circle Pompano Beach, FL	33064
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (954) 380-8342

Securities registered pursuant to Section 12(b) of the Act:

      Title of each class

      Trading
Symbol(s)

      Name of each exchange on which registered

      Common Stock, $0.001 par value

      BSEM

      The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 11, 2026, the registrant had 19,178,631 shares of common stock, $0.001 par value per share, outstanding.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q for the period ended September 30, 2026 (this “Quarterly Report”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are generally identified by words such as “anticipate,” “plan,” “believe,” “expect,” “estimate” and the like. Forward-looking statements involve future risks and uncertainties, and there are factors that could cause actual results or plans to differ materially from those expressed or implied. These statements are subject to known and unknown risks, uncertainties, and other factors that could cause the actual results to differ materially from those contemplated by the statements. The forward-looking information is based on various factors and is derived using numerous assumptions. A reader should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report. Specifically, this Quarterly Report contains forward-looking statements regarding:

•

our strategy, future operations, financial positions, estimated revenues or expenses and profits/losses, forecasts, projected costs, prospects and plans, including our goal to become a leader in regenerative medicine;

•

our expectations regarding the demand for healing solutions;

•

our ongoing commitment to innovation, quality and superior outcomes through the use of our products;

•

our intention to expand our portfolio of products to address the broader advanced wound care and surgical hospital market;

•

our cost reduction and operational efficiency program, including the timing of reductions in our cash operating expenses and any related charges;

•

any assumptions that we may make regarding the costs associated with the treatment and management of patients with acute and chronic wounds;

•

any projections regarding the growth of the global wound care and surgical hospital markets;

•

our opportunities and strategies for growth, including our expectations with regard to the BioTissue assets and our intention to expand into international markets;

•

any assumptions that we make regarding the data that we may rely on as well as our knowledge of the industry;

•

our expectations regarding competition in the industry, as well as our ability to compete effectively;

•

our ability to attract and retain talent and the effectiveness of our compensation strategies and leadership;

•

our expectations regarding Medicare reimbursement reform involving certain of our products and our ability to secure Medicare reimbursement in the future;

•

our ability to remediate material weaknesses, as well as any impact it may have on our business and financial condition if we are unable to remediate such weaknesses or fail to identify new weaknesses;

•

our expectations regarding our compliance with current laws and regulations and the impact of future laws or regulations on our business;

•

our expectations regarding the expenses that we may incur, as well as our ability to generate revenue and sustain profitability;

•

our ability to maintain effective internal procedures;

•

our expectations regarding our intent to pay dividends;

•

our beliefs regarding the collectability of our outstanding accounts receivable from Venture Medical;

•

our ability to incorporate the Catalyze product into our product offering and commercial strategy;

•

our beliefs regarding our accounting estimates and policies and the effects of any recently issued accounting pronouncements; and

•

our ability to benefit from the expected growth of the global advanced wound care and surgical markets.

These forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and assumptions. We undertake no obligation to update forward-looking statements to reflect events or circumstances after the date hereof, unless otherwise required by law. We wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could cause actual results to differ significantly from those expressed in any forward-looking statement. The most important factors that could prevent us from achieving our goals, and cause the assumptions underlying forward-looking statements and the actual results to differ materially from those expressed in or implied by those forward-looking statements include, but are not limited to, the following:

•

the success or failure of management’s efforts to continue the development, manufacture and sale of our products;

•

our ability to continue as a going concern and to obtain sufficient additional financing, on acceptable terms or at all, to fund our operations and satisfy our obligations;

•

our ability to implement our cost reduction and operational efficiency program and the effect of the program on our operations;

•

our ability to compete with other companies that have a similar business plan;

•

the effect of changing economic conditions impacting our business operations;

•

rapid technological change that could cause our products to become obsolete and if we do not enhance our product offerings through our research and development efforts, we may be unable to effectively compete;

•

to be commercially successful, we must convince clinicians that our products are safe and effective alternatives to existing products;

•

changes to the regulatory environment and oversight, now or in the future, that negatively impact our economics or ability to manufacture and sell our products;

•

our expectations regarding costs relating to compliance with regulatory requirements;

•

our belief in the sufficiency of our intellectual property rights in our products;

•

our expectations regarding government and other third-party coverage and reimbursement for our products;

•

our ability to manufacture our products in conformity with the applicable regulatory requirements and to scale up manufacturing of our products to a commercial scale in order to meet future demand expectations;

•

the rate and degree of market acceptance of our products;

•

the benefits of the use of our products;

•

our ability to identify, develop, acquire and in-license additional products;

•

our ability to successfully establish and successfully maintain appropriate collaborations and derive significant revenue from those collaborations;

•

the accuracy of our estimates regarding our expenses, future revenue, capital requirements and needs for additional financing;

•

the loss of key members of our management team;

•

our ability to expand in existing and new markets;

•

our ability to satisfy public company financial audit requirements;

•

our expectations regarding the growth of the advanced wound care and surgical markets;

•

our ability to pay the $10.0 million Clearance Payment owed to BioTissue, which was due on September 15, 2026, and remains unpaid, and the consequences of any default or exercise of remedies by BioTissue under the asset purchase agreement;

•

dilution to our existing stockholders resulting from sales of our common stock under our Committed Equity Facility with Roth Principal Investments, LLC, the exercise of outstanding warrants and options, or other future equity financings; and

•

volatility in the price of our common stock.

For further discussion of certain of these factors, see the risk factors disclosed in the section entitled “Risk Factors” in this Quarterly Report and in our Registration Statement on Form 10, as amended (File No. 001-42292) (the “Form 10”).

Table of Contents


		Page

PART I.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets (Unaudited)	1
	Condensed Consolidated Statements of Operations (Unaudited)	2
	Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows (Unaudited)	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33

PART II.	OTHER INFORMATION	34

Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	36
Signatures		37

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

BioStem Technologies, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets


	As of September 30, 2026 (Unaudited)			As of December 31, 2025
ASSETS
Current Assets
Cash and cash equivalents	$	971,145		$	29,549,018
Accounts receivable, net of allowance of $9,023,768 as of September 30, 2026 and December 31, 2025, respectively		6,600,028			9,874,468
Inventory		6,451,358			2,877,160
Prepaid expenses and other assets		2,111,205			2,102,803
Total current assets		16,133,736			44,403,449
Long-Term Assets
Property and equipment, net		4,381,460			3,970,513
Construction-in-process		505,307			961,032
Right-of-use asset, net		164,135			327,267
Intangible assets, net		20,860,143			119,765
Goodwill		1,532,635			244,635
Total assets	$	43,577,416		$	50,026,661

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses	$	10,462,057		$	4,441,419
License fees payable		434,775			729,975
Income tax payable		-			31,512
Accrued interest		26,333			2,227,500
Operating lease liabilities		165,823			225,768
Notes payable		1,000,000			3,000,000
Consideration payable		10,000,000			-
Other current liabilities		80,900			127,406
Total current liabilities		22,169,888			10,783,580
Long-Term Liabilities
Operating lease liabilities, less current portion		-			105,262
Warrant liability (Note 11)		3,081,104			-
Total long-term liabilities		3,081,104			105,262
Total liabilities		25,250,992			10,888,842

Commitments and contingencies (Note 13)
Stockholders' Equity
Series A-1 convertible preferred stock, $0.001 par value; authorized 300 shares; issued and outstanding 300 shares as of September 30, 2026 and December 31, 2025.		-			-
Series B-1 convertible preferred stock, $0.001 par value; authorized 500,000 shares; issued and outstanding 5 shares as of September 30, 2026 and December 31, 2025.		-			-
Common stock, $0.001 par value; authorized 975,000,000 shares; issued and outstanding 18,679,490 and 16,825,716 shares as of September 30, 2026 and December 31, 2025, respectively.		18,681			16,827
Additional paid-in capital		68,692,124			60,338,654
Treasury stock, 18,000 shares at cost		(43,346	)		(43,346	)
Accumulated deficit		(50,341,035	)		(21,174,316	)
Total stockholders' equity		18,326,424			39,137,819
Total liabilities and stockholders' equity	$	43,577,416		$	50,026,661

See accompanying notes to condensed consolidated financial statements.

BioStem Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2026			2025			2026			2025
Revenue, net	$	7,640,885		$	10,473,402		$	21,675,664		$	37,403,597
Cost of goods sold		3,346,797			1,204,794			8,781,424			2,743,409
Gross profit		4,294,088			9,268,608			12,894,240			34,660,188

Sales and marketing expenses		5,346,021			1,305,957			14,431,865			3,704,484
General and administrative expenses		7,536,166			4,498,341			21,235,115			18,367,104
Research and development expenses		481,189			1,957,876			2,352,033			5,605,382
Depreciation and amortization expense		706,661			57,644			1,936,415			172,344
Total operating expenses		14,070,037			7,819,818			39,955,428			27,849,314
(Loss) income from operations		(9,775,949	)		1,448,790			(27,061,188	)		6,810,874
Other (expense) income:
Interest income, net		6,359			143,284			93,397			236,616
Other (expense) income		(1,606,064	)		(123,345	)		(2,198,928	)		(120,275	)
Other (expense) income, net		(1,599,705	)		19,939			(2,105,531	)		116,341
Total (loss) income from operations before income taxes		(11,375,654	)		1,468,729			(29,166,719	)		6,927,215
Income tax expense		-			(707,677	)		-			(2,247,428	)
Net (loss) income	$	(11,375,654	)	$	761,052		$	(29,166,719	)	$	4,679,787

Basic net (loss) income per share attributable to common stockholders	$	(0.64	)	$	0.05		$	(1.68	)	$	0.28

Diluted net (loss) income per share attributable to common stockholders	$	(0.64	)	$	0.03		$	(1.68	)	$	0.20

Basic weighted average common shares outstanding		17,864,178			16,749,593			17,351,828			16,771,945

Diluted weighted average common shares outstanding		17,864,178			22,787,934			17,351,828			23,268,317

See accompanying notes to condensed consolidated financial statements.

BioStem Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders' Equity

(Unaudited)


	Series A-1				Series B-1				Common Stock				Additional									Total
Three Months Ended September 30, 2026	Shares		Amount		Shares		Amount		Shares		Amount		Paid-In Capital			Treasury Stock			Accumulated Deficit			Stockholders' Equity
Balance as of June 30, 2026		300	$	-		5	$	-		17,839,467	$	17,841	$	66,605,483		$	(43,346	)	$	(38,965,381	)	$	27,614,597

Stock based compensation- stock options		-		-		-		-		-		-		1,009,258			-			-			1,009,258

Stock based compensation- restricted common stock		-		-		-		-		104,727		105		1,078,118			-			-			1,078,223

Issuance of common stock for cash (Note 11)		-		-		-		-		735,296		735		(735	)		-			-			-

Net loss		-		-		-		-		-		-		-			-			(11,375,654	)		(11,375,654	)
Balance as of September 30, 2026		300	$	-		5	$	-		18,679,490	$	18,681	$	68,692,124		$	(43,346	)	$	(50,341,035	)	$	18,326,424


	Series A-1				Series B-1				Common Stock				Additional								Total
Three Months Ended September 30, 2025	Shares		Amount		Shares		Amount		Shares		Amount		Paid-In Capital		Treasury Stock			Accumulated Deficit			Stockholders' Equity
Balance as of June 30, 2025		300	$	-		5	$	-		16,743,513	$	16,745	$	57,936,031	$	(43,346	)	$	(10,674,669	)	$	47,234,761

Stock based compensation - stock options		-		-		-		-		-		-		504,787		-			-			504,787

Stock based compensation - restricted stock		-		-		-		-		29,549		29		644,172		-			-			644,201

Issuance of common stock for services		-		-		-		-		279		-		3,000		-			-			3,000

Issuance of common stock for warrant exercise										10,000		10		14,990								15,000

Net income		-		-		-		-		-		-		-		-			761,052			761,052
Balance as of September 30, 2025		300	$	-		5	$	-		16,783,341	$	16,784	$	59,102,980	$	(43,346	)	$	(9,913,617	)	$	49,162,801

See accompanying notes to condensed consolidated financial statements.

BioStem Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders' Equity

(Unaudited)


	Series A-1				Series B-1				Common Stock				Additional								Total
Nine Months Ended September 30, 2026	Shares		Amount		Shares		Amount		Shares		Amount		Paid-In Capital		Treasury Stock			Accumulated Deficit			Stockholders' Equity
Balance as of December 31, 2025		300	$	-		5	$	-		16,825,716	$	16,827	$	60,338,654	$	(43,346	)	$	(21,174,316	)	$	39,137,819

Stock based compensation- stock options		-		-		-		-		-		-		2,677,603		-			-			2,677,603

Stock based compensation- restricted common stock		-		-		-		-		371,436		371		3,319,603		-			-			3,319,974

Issuance of common stock for services		-		-		-		-		773		1		3,999		-			-			4,000

Issuance of common stock for cash		-		-		-		-		1,481,565		1,482		2,352,265		-			-			2,353,747

Net loss		-		-		-		-		-		-		-		-			(29,166,719	)		(29,166,719	)
Balance as of September 30, 2026		300	$	-		5	$	-		18,679,490	$	18,681	$	68,692,124	$	(43,346	)	$	(50,341,035	)	$	18,326,424


	Series A-1				Series B-1				Common Stock				Additional								Total
Nine Months Ended September 30, 2025	Shares		Amount		Shares		Amount		Shares		Amount		Paid-In Capital		Treasury Stock			Accumulated Deficit			Stockholders' Equity
Balance as of December 31, 2024		300	$	-		5	$	-		16,661,482	$	16,662	$	54,642,012	$	(43,346	)	$	(14,593,404	)	$	40,021,924

Stock based compensation - stock options		-		-		-		-		-		-		2,732,673		-			-			2,732,673

Stock based compensation - restricted stock		-		-		-		-		94,052		94		1,664,989		-			-			1,665,083

Issuance of common stock for services		-		-		-		-		1,140		1		14,999		-			-			15,000

Issuance of common stock for warrant exercise		-		-		-		-		26,667		27		48,307		-			-			48,334

Net income		-		-		-		-		-		-		-		-			4,679,787			4,679,787

Balance as of September 30, 2025		300	$	-		5	$	-		16,783,341	$	16,784	$	59,102,980	$	(43,346	)	$	(9,913,617	)	$	49,162,801

See accompanying notes to condensed consolidated financial statements.

BioStem Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2026 and 2025

(Unaudited)


	Nine Months Ended September 30
	2026			2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(29,166,719	)	$	4,679,787
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation expense		102,703			84,518
Amortization expense		1,833,712			87,827
Amortization of debt discount		-			63,607
Amortization of right-of-use asset		163,132			110,644
Stock-based compensation expense		6,001,577			6,024,552
Fair value adjustment to consideration payable		1,412,000			-
Gain on extinguishment of debt		(815,250	)		-
Expenses related to the issuance of warrants (Note 11)		81,097
Deferred tax benefit		-			(240,553	)
Changes in operating assets and liabilities:
Accounts receivable		3,274,440			3,002,098
Inventory		(3,574,198	)		(904,980	)
Prepaid expenses and other assets		9,968			(847,831	)
Accounts payable and accrued expenses		5,915,638			(63,036	)
License fees payable		(295,200	)		(1,451,736	)
Income tax payable		(31,512	)		(3,498,045	)
Accrued interest		114,083			197,017
Other current and long-term liabilities		(211,713	)		(109,454	)
Net cash (used in) provided by operating activities		(15,186,242	)		7,134,415
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment and construction-in- process		(57,925	)		(2,935,987	)
Cash paid in business combination		(15,018,371	)		-
Development of internal-use software		(169,090	)		-
Proceeds from repayment on short-term loan receivable		-			1,250,000
Net cash used in investing activities		(15,245,386	)		(1,685,987	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments on notes payable		(3,500,000	)		(1,171,351	)
Proceeds from issuance of common stock		5,500,008			-
Cash paid for costs related to the issuance of common stock		(146,253	)		-
Issuance of common stock for warrant exercise		-			48,334
Net cash provided by (used in) financing activities		1,853,755			(1,123,017	)
Cash and cash equivalents:
Net change during the period		(28,577,873	)		4,325,411
Balance, beginning of period		29,549,018			22,832,706
Balance, end of period	$	971,145		$	27,158,117
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for taxes	$	-		$	4,012,019
Cash paid for interest	$	120,029		$	82,362
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Initial ROU asset and operating lease liability	$	-		$	214,220
Non-cash consideration payable	$	8,588,000		$	-
Development of internal-use software in accounts payable	$	105,000		$	-
Promissory note in conjunction with debt extinguishment (Note 10)	$	1,000,000
Forgiveness of interest payable on debt extinguishment (Note 10)	$	2,315,250		$	-

See accompanying notes to condensed consolidated financial statements.

BioStem Technologies, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1 - Organization, Description of Business, and Liquidity

Organization and Description of Business

BioStem Technologies, Inc. (hereinafter the "Company”), was incorporated as Aladdin & Company Trading in Utah on July 7, 2006. Aladdin & Company Trading later changed its name to Caribbean Casino & Gaming Corporation and re-domiciled in Florida on March 2, 2009. On January 7, 2013, Caribbean Casino & Gaming Corporation changed its name to Caribbean International Holdings, Inc. On August 28, 2014, the Company changed its name to BioStem Technologies, Inc.

The Company’s mission is to create and deliver the most advanced healing technologies in the world. The Company harnesses the natural properties of perinatal tissue through our proprietary manufacturing processing technologies, to deliver clinically effective solutions that promote tissue repair and regeneration.

The Company’s portfolio of products consists primarily of placenta-derived tissue allografts, which are human tissues used as protective barriers or coverings to support the body’s natural healing processes. The Company offers both dry and cryopreserved allografts that are utilized across a broad range of clinical settings, including advanced wound care and surgical applications. The Company intends to continue expanding its portfolio with complementary regenerative therapies and technologies that address unmet needs across wound management and surgical healing.

In January 2026, the Company expanded its portfolio through the purchase and licensing of certain assets from BioTissue Holdings Inc.’s surgical and wound care business. Among the assets the Company acquired and licensed were the Neox® and Clarix® product lines. The Company also acquired direct sales representatives and contracted independent sales agents. The Company believes this acquisition will bolster its commercial capabilities and deepen its presence in both hospital inpatient and outpatient care environments.

The Company’s fiscal year end is December 31.

Liquidity

As of September 30, 2026, the Company had cash and cash equivalents of $971,145. During the three months ended September 30, 2026 and 2025, the Company had a net loss of $11,375,654 and net income of $761,052, respectively. The Company had a net loss of $29,166,719 and net income of $4,679,787 during the nine months ended September 30, 2026 and 2025, respectively. As of September 30, 2026, the Company had an accumulated deficit of $50,341,035. The Company expects to incur net losses and negative cash flows from operations for at least the next twelve months as it adjusts to reduced pricing dictated by the Centers for Medicare & Medicaid Services (CMS) that became effective in 2026 as well as the continued efforts to effectively integrate the recently acquired product lines and new customers from BioTissue into the Company's operations. The Company also has contractual obligations over the next twelve months related to the BioTissue acquisition (Note 3) and a restructured loan (Note 10). The Company will require additional liquidity to continue its operations and meet its obligations over the next 12 months.

The Company plans to finance its operations and development needs with its existing cash and cash equivalents, additional equity and/or debt financing arrangements, and revenue primarily anticipated from its recently acquired product lines. There can be no assurance that the Company will be able to obtain additional financing on terms acceptable to the Company, on a timely basis, or at all. Accordingly, substantial doubt exists about the Company’s ability to continue as a going concern for at least one year from the issuance of these financial statements.

The condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability of assets or the amounts and classifications of liabilities that may be necessary if the Company were unable to continue as a going concern.

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The condensed consolidated statements of the Company are presented in United States dollars and have been prepared in accordance with financial accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information, and include the accounts of BioStem Technologies, Inc. and its wholly-owned subsidiaries, Blue Tech Industries, Inc. (d/b/a BioStem Life Sciences, Inc.), Auxocell Operations Inc., and BioStem Properties, LLC. All intercompany transactions have been eliminated in consolidation. Accordingly, certain information and footnote disclosures required by U.S. GAAP for complete financial statements have been condensed or omitted. In the opinion of the Company, the accompanying condensed consolidated financial statements reflect all normal recurring adjustments that are necessary to present fairly the results for the interim periods presented. The condensed consolidated balance sheet as of December 31, 2025, was derived from the Company’s audited consolidated financial statements as of and for the year ended December 31, 2025. The information included in this Quarterly Report should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Form 10, as amended. Interim results are not necessarily indicative of the results for the full year.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes.

Such estimates and assumptions impact both assets and liabilities, including but not limited to net realizable value of accounts receivable and inventory, estimated useful lives and impairment of long-lived assets, the valuation of intangible assets, goodwill, estimated fair value of service-related stock-based awards, common stock warrants, valuation of contingent consideration, and the valuation of deferred tax assets.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the condensed consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future non-conforming events. Accordingly, actual results could differ significantly from estimates.

Risks and Uncertainties

The Company’s operations are subject to risks and uncertainties including financial, operational, regulatory, and other risks including the potential risk of business failure.

The Company has experienced, and in the future expects to continue to experience, variability in its sales and earnings. The factors expected to contribute to this variability include, among others: (i) the uncertainty associated with the commercialization and ultimate success of the Company’s products; (ii) competition inherent in the markets where products are expected to be sold; (iii) general economic conditions; and (iv) the volatility related to product pricing.

Significant Accounting Policies

There have been no material changes to our significant accounting policies from our Form 10, as amended except as described below:

Warrant Liabilities

The Company accounts for its common stock warrants in accordance with ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity.

The warrants are recorded at fair value on the date of issuance and are remeasured to fair value at each reporting date, with changes in fair value recognized in other (expense) income, net in the consolidated statements of operations, until the warrants are exercised or expire. Upon exercise, a warrant is remeasured to fair value and the liability is reclassified to additional paid-in capital. The warrant liabilities are presented as either current or noncurrent based on whether the Company expects the warrant holder to exercise the warrants within or outside the next twelve months from the reporting date.

The Company estimates the fair value of the warrants using an option pricing model, which requires significant judgment, including expected volatility, expected term, the risk-free interest rate and the dividend yield. Expected volatility is based on the historical volatility of comparable publicly traded companies. The warrants are Level 3 fair value measurements. See Note 11.

Allocation of Proceeds

When common stock and warrants are issued together, the Company allocates the proceeds first to the warrants at their fair value and the residual to the common stock. If the fair value of the warrants exceeds the proceeds, the excess is recognized as a loss on issuance of warrants in other (expense) income, net.

Offering Costs

Costs directly attributable to an offering are allocated between the warrants and the common stock in proportion to the proceeds allocated to each. The amount allocated to the warrants is expensed as incurred and presented in other (expense) income, net. The amount allocated to the common stock is recorded as a reduction of additional paid-in capital. The fair value of warrants issued to the placement agent is treated as an offering cost.

Note 3-Business Combination

Overview

On January 21, 2026 (the “Acquisition Date” or “Closing Date”), BioStem Technologies, Inc. (“BioStem” or the “Company”) completed the acquisition of a defined set of assets constituting the surgical and wound care business (the “Business”) from BioTissue Holdings Inc. and BioTissue Surgical Inc. (collectively, “BioTissue” or the “Seller”) pursuant to an Asset Purchase Agreement dated January 21, 2026 (the “APA”). The Company has integrated the acquired operations into its existing business to expand its product offerings and commercial presence within both chronic and acute wound care markets, including hospital-based settings.

The Company evaluated the acquisition under ASC 805, Business Combinations, and concluded that the acquired set of assets and activities including acquired rights to products, licensed IP, customer list, and workforce, constitutes a business. Accordingly, the acquisition has been accounted for as a business combination using the acquisition method of accounting.

For the three months ended September 30, 2026, the acquired Business generated $6,831,299 in revenue, net. From the date of the acquisition through September 30, 2026, the acquired Business generated $18,907,417 in revenue, net.

Supplemental Unaudited Pro Forma Information

The following unaudited supplemental pro forma information presents the consolidated results of operations of the Company combined with historical results of the Business acquired subsequent to the start of the three and nine month period ended September 30, 2025, on a pro forma basis, as if the acquisition had occurred at the beginning of the most recently completed fiscal year preceding the acquisition:


	Pro Forma (Unaudited)
	Three Months Ended September 30,					Nine Months Ended September 30,
	2026			2025		2026			2025
Revenue, net	$	7,640,885		$	17,836,225	$	23,161,990		$	58,914,208
Net (loss) income	$	(11,375,654	)	$	710,477	$	(28,387,086	)	$	2,829,389

Pro forma information reflects adjustments that are expected to have a continuing impact on the Company's results of operations and are directly attributable to the acquisition. The unaudited supplemental pro forma information above includes adjustments to reflect direct transaction costs relating to the acquisition and the incremental intangible asset amortization to be incurred based on the preliminary values of each identifiable asset. The unaudited supplemental pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of results of operations that would have been achieved had the acquisition taken place on the date indicated, or of the Company's future consolidated statement of operations. The supplemental pro forma information presented above has been derived from the Company's historical condensed consolidated financial statements and from the historical accounting records of the acquired businesses to which it gives effect.

Acquisition-Related Costs

During the nine months ended September 30, 2026, the company incurred $976,428 in transaction-related costs in connection with the acquisition, including advisory, legal, accounting, and valuation fees which have been expensed as incurred in accordance with ASC 805-10-25-23. The Company did not pay any transaction expenses on behalf of the Seller.

Consideration Transferred

Total consideration transferred was measured at acquisition-date fair value as follows:


Total cash consideration	$	15,018,371
Contingent consideration		8,588,000
Total consideration transferred	$	23,606,371

Acquired Assets, Liabilities Assumed, and Goodwill

The following table summarizes cash consideration paid for the identifiable assets acquired, liabilities assumed, and goodwill as of the acquisition date:


Prepaid expenses	$	18,371
Licensed technology		11,700,000
Trade names and trademarks		1,800,000
Customer-related contracts and relationships		8,800,000
Goodwill		1,288,000
Contingent consideration payable		(8,588,000	)
Total net assets acquired	$	15,018,371

The identifiable intangible assets acquired consisted of licensed technology, trade names and trademarks, and customer-related contracts and relationships, with estimated useful lives of ten (10) years, fifteen (15) years, and seven (7) years, respectively. The Company engaged an independent third-party valuation specialist to assist in the determination of the fair value of intangible assets acquired. All key estimates, assumptions, and forecasts were either provided by or reviewed by management. While the third-party specialist provided significant input into the valuation, the final conclusions reflect the judgment of management. The fair value measurements of the intangible assets were based primarily on significant unobservable inputs, which represents a Level 3 measurement, and were determined using an income-based approach,

The fair values of the licensed technology and trade name and trademarks intangible assets in the table above were determined using the relief-from royalty-method. The relief-from-royalty method applies a royalty rate to projected income to quantify the benefit of owning the intangible asset rather than paying a royalty for use of the asset. The discount rate was determined at the time of measurement based on an analysis of the implied internal rate of return of the transaction, weighted-average cost of capital, and weighted-average return on assets. The economic useful life was determined based on the technology cycle related to each developed technology, as well as the cash-flows over the forecast period.

The fair value of the customer-related contracts and relationships intangible asset was valued using the multi-period excess earnings method. The multi-period excess earnings involves isolating the net earnings attributable to the asset being measured based on the present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. The economic useful life was determined based on historical customer turnover rates and the useful life of developed technology.

Goodwill of $1,288,000 represents the excess of consideration transferred over the fair value of net identifiable assets acquired. It primarily reflects the expected synergies from integrating the acquired Business with the Company’s existing product portfolio, expanded Group Purchasing Organization ("GPO") access, and commercial infrastructure Goodwill is not deductible for income tax purposes.

Pursuant to Section 1.8 of the APA, the Company is obligated to pay the Seller a “Clearance Payment” of $10,000,000 upon receipt of Food and Drug Administration (the "FDA") 510(k) clearance for the Catalyze Product (Clarix Flo and Neox Flo) within 12 months following the Closing Date. The Company evaluated the Clearance Payment and concluded it represents contingent consideration in the business combination (ASC 805-10-55-18; 55-25). This contingent consideration liability was recorded at an acquisition-date fair value of $8,588,000. The acquisition-date fair value of the contingent consideration liability was determined based on a probability- weighted assessment of the likelihood of payment within 12 months following the Closing Date. On June 5, 2026, the FDA 510(k) clearance was obtained, and the Company recorded an adjustment to the fair value of the consideration payable in the amount of $1,412,000 recognized in other expenses. As such, the value of the consideration is no longer contingent.

On July 15, 2026, Blue Tech Industries, Inc., a wholly-owned subsidiary of the Company and the Seller entered into Amendment No. 1 to the APA (the "Amendment"), which extended the deadline for payment of the Clearance Payment to August 13, 2026 and, subject to the payment of additional extension amounts, to August 31, 2026 and then to September 15, 2026. In connection with the Amendment, the Company made extension payments to the Seller totaling $1,000,000 ($500,000 on each of July 6, 2026 and August 13, 2026), which were recognized as other expense within the condensed consolidated statement of operations for the three and nine months ended September 30, 2026. As of September 30, 2026, the full amount of the consideration of $10,000,000 is recorded as a consideration payable on the condensed consolidated balance sheet.

Note 4- Inventory

The table below presents the Company’s inventory values, by category, as of September 30, 2026 and December 31, 2025:


	September 30, 2026		December 31, 2025
Raw materials	$	51,582	$	251,911
Finished goods		6,399,776		2,625,249
Total net realizable value	$	6,451,358	$	2,877,160

Note 5- Revenue

Prior to January 1, 2026, the Company primarily distributed its products through a single distributor customer ("Distributor") under a Distribution and Services agreement (the "D&S Agreement"). Throughout all of 2025, the Distributor served as the Company's sole customer for sale and distribution of its products. Effective January 1, 2026, the D&S Agreement was amended to primarily adjust the transfer price from the Company to the Distributor.

As described in Note 3, on January 21, 2026, the Company expanded its product portfolio by acquiring and licensing certain assets from BioTissue's surgical and wound care business. The acquired assets include the Neox® and Clarix® product lines, an established national network of direct and independent sales representatives, and an existing customer base with related customer contracts. The Company sells these products to Group Purchasing Organization ("GPO") members who transact directly with the Company at GPO-agreed pricing. GPOs are funded by administrative fees that are paid by the Company. These fees are set as a percentage of the purchase volume, which is typically about 2-3% of sales made to the GPO, and accounted for as a reduction from revenue.

Customer concentration

During the three months ended September 30, 2026 and 2025, the Company's single distributor customer accounted for approximately 11% and 99% of our unaudited consolidated revenue, respectively. During the nine months ended September 30, 2026 and 2025, the Company's single distributor customer accounted for approximately 12% and 100% of our unaudited consolidated revenue, respectively.

As of September 30, 2026 and December 31, 2025 accounts receivable, net of $8,800,602 in credit losses from the Company's single distributor customer were $1,635,210 and $9,841,476, respectively.

Disaggregation of Revenue

The following table provides information about revenue disaggregated by major sites of service:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Hospital	$	6,831,299	$	-	$	18,907,417	$	-
Physician office		809,586		10,413,402		2,679,687		37,343,597
Other		-		60,000		88,560		60,000
Revenue, net	$	7,640,885	$	10,473,402	$	21,675,664	$	37,403,597

Note 6- Net (Loss) Income Per Share

Basic net (loss) income per share is computed by dividing the net (loss) income by the weighted-average number of common shares outstanding for the period. Diluted net (loss) income per share is computed based on the potential impact of dilutive securities, including outstanding common stock options, restricted stock units, warrants to purchase common stock, convertible preferred stock, and common stock issuable in connection with convertible notes. For periods in which the Company has reported negative net loss, diluted net loss per share is the same as basic net loss per share because common dilutive shares are not assumed to have been issued if their effect is anti-dilutive. Basic and dilutive net (loss) income per share is as follows:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2026			2025		2026			2025
Net (loss) income available to common shareholders (numerator)	$	(11,375,654	)	$	761,052	$	(29,166,719	)	$	4,679,787

Weighted-average number of common shares (denominator)		17,864,178			16,749,593		17,351,828			16,771,945

Basic (loss) income per common share	$	(0.64	)	$	0.05	$	(1.68	)	$	0.28

Weighted-average number of common shares		17,864,178			16,749,593		17,351,828			16,771,945
Potential shares of common stock arising from stock options, warrants, and unvested RSU's		-			6,038,341		-			6,496,372
Total shares-diluted (denominator)		17,864,178			22,787,934		17,351,828			23,268,317

Diluted (loss) income per common share	$	(0.64	)	$	0.03	$	(1.68	)	$	0.20

Anti-dilutive equivalent shares excluded from the calculation of diluted (loss) income per common share		6,286,637			469,015		6,065,751			67,991

Note 7 - Property and Equipment, net

The following table presents property and equipment as of September 30, 2026 and December 31, 2025:


	September 30, 2026			December 31, 2025
Building	$	433,448		$	433,448
Building improvements		1,341,493			827,843
Land		2,367,443			2,367,443
Machinery and equipment		1,361,960			1,361,960
Computer and office equipment		64,702			64,702
Furniture and fixtures		226,802			226,802
Total property and equipment		5,795,848			5,282,198
Less: Accumulated depreciation		(1,414,388	)		(1,311,685	)
Total property and equipment, net	$	4,381,460		$	3,970,513

Construction-in-process	$	505,307		$	961,032

During the three months ended September 30, 2026 and 2025, depreciation expense related to property and equipment, net was $38,103 and $31,551, respectively. During the nine months ended September 30, 2026 and 2025, depreciation expense was $102,703 and $84,518, respectively.

Note 8 - Finite Lived Intangible Assets and Goodwill

Goodwill

The following table presents goodwill as of September 30, 2026:


Goodwill, beginning of period	$	244,635
Additions from acquisition (Note 3)		1,288,000
Goodwill, end of period	$	1,532,635

There were no changes to goodwill during the three months ended September 30, 2025.

Intangible Assets

Amortization of intangible assets with finite lives is calculated on the straight-line method based on the following estimated useful lives:


Website and software development costs		3-5 years
Intellectual property		5-15 years
Customer relationships		7 years

The following table presents intangible assets other than goodwill as of September 30, 2026 and December 31, 2025:


	September 30, 2026
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intellectual property	$	11,852,000	$	934,750	$	10,917,250
Trade names		1,800,000		83,333		1,716,667
Website & software development costs		499,997		200,755		299,242
Customer relationships		9,154,000		1,227,016		7,926,984
Total	$	23,305,997	$	2,445,854	$	20,860,143

	December 31, 2025
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intellectual property	$	152,000	$	106,500	$	45,500
Website & software development costs		225,907		151,642		74,265
Customer relationships		354,000		354,000		-
Total	$	731,907	$	612,142	$	119,765

During the three months ended September 30, 2026 and 2025, amortization expense was $668,558 and $26,093, respectively. During the nine months ended September 30, 2026 and 2025, amortization expense was $1,833,712 and $87,827 respectively.

Note 9 - Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following as of September 30, 2026 and December 31, 2025:


	September 30, 2026		December 31, 2025
Accounts payable	$	5,467,115	$	1,399,998
Accrued liabilities		1,149,518		933,811
Accrued payroll and payroll tax		3,845,424		2,107,610
Total accounts payable and accrued expenses	$	10,462,057	$	4,441,419

Note 10- Notes Payable

The following table presents notes payable as of September 30, 2026 and December 31, 2025:


	September 30, 2026			December 31, 2025
On July 27, 2018, the Company entered into a Bridge Loan Agreement and Promissory Note, with an interest rate of 0.50% per month for the first six months and 0.75% per month through the Maturity Date of July 27, 2019. On April 27, 2026, BioStem Technologies, Inc. entered into a Settlement Agreement and Release to resolve all disputes arising from loan agreements in default.	$	-		$	1,000,000
On October 5, 2018, the Company entered into a Bridge Loan Agreement and Promissory Note, with an interest rate of 0.50%, per month for the first six months and 0.75% per month through the Maturity Date of October 5, 2019. On April 27, 2026, BioStem Technologies, Inc. entered into a Settlement Agreement and Release to resolve all disputes arising from loan agreements in default.		-			2,000,000
On April 27, 2026, the Company entered into a Bridge Loan Agreement and Promissory Note, with an interest rate of 0.50% per month for the first six months and 0.75% per month through the Maturity Date of April 27, 2027.		1,000,000			-
Total notes payable		1,000,000			3,000,000
Less: current portion of notes payable		(1,000,000	)		(3,000,000	)
Notes payable-long-term	$	-		$	-

In August 2019, the Company received notice from GMA Bridge Fund, LLC and GMA Bridge Holdings, LLC (collectively "GMA") that the Company is in default for the loan that matured on July 27, 2019, for non-payment and gave the Company notice that the note which matured on October 5, 2019, was also in default. On April 27, 2026, the Company entered into a settlement and release agreement (the "Agreement") with GMA to resolve all disputes arising from the loan agreements in default. Under the terms of the Agreement, the Company extinguished its total outstanding obligation of $5,315,250, comprised of $3,000,000 in original principal and $2,315,250 in accrued interest through a cash payment of $3,500,000 and the issuance of a new $1,000,000 secured promissory note with a maturity date of April 27, 2027, resulting in an $815,250 gain on extinguishment of debt, which was recognized as other income during the nine months ended September 30, 2026. The new $1,000,000 promissory note is secured by a mortgage on the Company's property located at 2836 Center Port Circle in Pompano Beach, FL.

Note 11 - Stockholders' Equity and Warrants

September 2026 Private Placement

On September 30, 2026 (the "Closing Date"), the Company closed a private placement pursuant to a Securities Purchase Agreement dated September 29, 2026 (the "Purchase Agreement") with certain institutional investors. The Company issued and sold 735,296 shares of common stock at $4.08 per share for gross proceeds of $3,000,008 together with Series A warrants to purchase up to 735,296 shares of common stock (the "Series A Warrants") at an exercise price of $3.83 per share and Series B warrants to purchase up to 735,296 shares of common stock (the "Series B Warrants" and, together with the Series A Warrants, the "Common Warrants") at an exercise price of $3.83 per share. The Company paid a placement agent a cash fee equal to 7.0% of the gross proceeds and reimbursed certain of its expenses, for aggregate cash fees and expenses of $295,001. The Company also issued warrants to the placement agent to purchase 18,382 shares of common stock at an exercise price of $6.12 per share, in substantially the same form as the Common Warrants (the "Placement Agent Warrants" and, together with the Common Warrants, the "Warrants"). The Warrants are exercisable immediately.

The Company allocated the gross proceeds first to the Warrants at their estimated fair value of $3,039,179 as described below, with the residual allocated to the common stock. Since the fair value of the Warrants exceeded the gross proceeds, no proceeds were allocated to the common stock, and the excess of $39,172 was recognized as a loss on issuance of Warrants. Offering costs of $336,926, consisting of $295,001 paid to the placement agent and the $41,925 fair value of the Placement Agent Warrants, were allocated entirely to the Warrants and expensed as warrant issuance costs. Both amounts are included in other income (expense), net, for the three and nine months ended September 30, 2026, and total $376,098.

The Series A and Placement Agent Warrants expire five years from the date they become effective (the "Effective Date"), while the Series B Warrants expire two years from the Effective Date. The Effective Date is the earliest of (i) the effectiveness of a registration statement covering the resale of the shares and the shares issuable upon exercise of the Common Warrants, (ii) the date those shares have been sold, or may be sold pursuant to Rule 144 under the Securities Act without restriction, (iii) the first anniversary of the Closing Date, provided that the holder is not an affiliate of the Company, or (iv) all of such shares may be sold pursuant to Section 4(a)(1) of the Securities Act without restriction and Company counsel has delivered a specified legal opinion to that effect. The Effective Date had not occurred as of September 30, 2026. On October 9, 2026, the registration statement on Form S-1 (File No. 333-299282) covering the resale of such shares was declared effective, and the Effective Date occurred on that date (see Note 16).

Under the Purchase Agreement, the Company may not, subject to certain exceptions, (i) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of common stock or common stock equivalents, or file any registration statement or amendment or supplement thereto (other than as contemplated by the related registration rights agreement or a registration statement on Form S-8), until 30 days after the Effective Date, or (ii) effect or enter into an agreement to effect a “variable rate transaction,” which includes any transaction under an equity line of credit, until six months after the Effective Date.

The Company evaluated the Warrants under ASC 480, Distinguishing Liabilities from Equity, and ASC 815-40, Derivatives and Hedging — Contracts in Entity's Own Equity, and determined the Warrants are classified as liability instruments because in the event of a change of control, the Company or its successor entity must at the holder's option buy the warrant for cash to its Black-Scholes value . The Company estimated the fair value using an option pricing model. The Company will remeasure the fair value of the Warrants at each reporting date, with changes in fair value recognized in earnings until the Warrants are exercised or expire. The warrant liabilities are presented as noncurrent liabilities as the Company does not expect to settle them in cash within twelve months. Since the Closing Date was also the balance sheet date, the fair value at issuance equals the fair value at September 30, 2026.

The Warrants are classified within Level 3 of the fair value hierarchy as the valuation uses significant unobservable inputs. The significant unobservable inputs are expected volatility, expected term and the probability of the Warrants being exercised. The below table represents the significant inputs used by the Company to establish the estimated fair value of the Warrant liabilities.


Input	Series A Warrants			Series B Warrants			Placement Agent Warrants
Share price	$	3.09		$	3.09		$	3.09
Exercise price	$	3.83		$	3.83		$	6.12
Expected term (years)		5.12			2.12			5.12
Expected volatility		109.90	%		108.50	%		109.90	%
Risk-free interest rate		5.10	%		4.89	%		5.10	%
Dividend yield		0	%		0	%		0	%
Probability of a fundamental transaction (per year)		5.0	%		5.0	%		5.0	%

Committed Equity Facility

On September 18, 2026, the Company entered into a common stock purchase agreement (the “CSPA”) and a related registration rights agreement with Roth Principal Investments, LLC, establishing a Committed Equity Facility ("CEF") under which the Company has the right, but not the obligation, in the Company's sole discretion, to sell up to $40,000,000 of shares of common stock from time to time over a period of up to 36 months following satisfaction of specified commencement conditions. Specifically, the Company may not effect sales of equity under the CEF until April 9, 2027, unless the restriction is waived. The Company controls the timing and amount of any sales, which are subject to the conditions and limitations in the CSPA, including a $1.00 minimum closing-price threshold, per-share prices based on the volume weighted average price of the common stock less a fixed discount of 3.0% (for market open and intraday purchases) or 5.0% (for pre-market and post-market purchases), a 19.99% Nasdaq exchange cap of 3,585,375 shares (absent stockholder approval or an average purchase price of at least $4.3056 per share), and a 4.99% beneficial ownership limitation applicable to Roth Principal Investments. The Company agreed to pay Roth Principal Investments a cash commitment fee of $400,000 equal to 1.0% of the $40,000,000 commitment, payable out of the first proceeds of sales under the CEF at a 10% participation rate, and to reimburse specified expenses, and expects to use any net proceeds for working capital and general corporate purposes. The CSPA terminates automatically on the earliest of the first day of the month following the 36-month anniversary of the commencement date, the date on which Roth Principal Investments has purchased $40,000,000 of common stock, and delisting from the Nasdaq or bankruptcy events. The Company may also terminate at any time after commencement upon 10 trading days’ notice without cost or penalty (subject to acceleration of the commitment fee if terminated within 90 days of the closing date). The registration statement on Form S-1 (File No. 333-299025) covering the resale by Roth Principal Investments of up to 12,050,000 shares of common stock issuable under the CSPA was declared effective on September 29, 2026. As of September 30, 2026, the Company has not sold any shares under the CEF.

May 2026 Private Placement

On May 21, 2026, the Company entered into a Securities Purchase Agreement with an institutional investor (the "Investor"), pursuant to which the Investor purchased 746,269 shares of common stock at a purchase price of $3.35 per share, for aggregate gross proceeds to us of $2,500,000. The Company paid issuance cost of $146,253, which is reflected as a deduction within equity.

Issuance of Common Stock and Warrants to Service Provider

On April 8, 2024, the Company entered into an agreement with a service provider to provide certain services until December 27, 2025 (the “Service Agreement”) in exchange for 60,000 shares of restricted common stock with a fair value of $860,400 based on the market price of the Company's common stock on the grant date. Further, the Company issued the service provider a common stock purchase warrant (“Warrant”) which permits the service provider to purchase 50,000, 50,000 and 100,000 shares of the Company’s common stock at a price of $4.00 per share, $5.00 per share and $6.00 per share, respectively. The Warrant is immediately exercisable in whole or in part, by the service provider from April 8, 2024, to April 8, 2029. The total estimated grant date fair value of the Warrant using the Black-Scholes option pricing model was $1,943,500 and was recognized into expense over the term of the service provider’s agreement. The following inputs were utilized in the Black-Scholes option pricing model to estimate the Warrant fair value: common stock price as quoted on the OTC market of $10.78, exercise price of $4 - $6, volatility of 124.34%, and risk-free rate of 4.43%.

The initial value of the common stock and warrants have been reflected as an increase to additional paid in capital and prepaid expenses in the aggregate amount of $2,803,900. The fair value of these stock-based payments was being amortized into expense as services were provided by the vendor. During the second quarter of 2025, the Service Agreement was terminated, and the Company recognized the remaining $1,202,766 prepaid expense balance as stock-based compensation expense included within general and administrative expenses.

The following table presents the Company’s common stock warrant activity during the nine months ended September 30, 2026:


	Number of Shares Underlying Warrants		Weighted Average Exercise Price		Weighted Average Remaining Term (Years)
Outstanding as of December 31, 2025		2,033,467	$	2.27	2.72
Granted		1,488,974		3.86	3.52
Exercises		-		-		-
Outstanding and exercisable as of September 30, 2026		3,522,441	$	2.94		2.62

Series A-1 Convertible Preferred Shares

The Company has designated 300 shares of preferred stock with a par value of $0.001 as “Series A-1 Convertible Preferred Shares”.

The Series A-1 Convertible Preferred Shares entitle their holders to a number of votes equal to the number of shares issuable upon conversion times 2,000,000 granting the holders of Series A-1 Convertible Preferred Shares, as a group, effective control of the Company.

The Series A-1 Convertible Preferred Shares are convertible, at the option of the holders, or automatically upon a Qualified Public Offering resulting in gross proceeds to the Company of not less than $30 million, in whole but not in part, into 300 shares of common stock.

Holders of Series A-1 Convertible Preferred Shares are not entitled to receive dividends, out of assets legally available thereof, prior and in preference to any declaration or payment of any dividend on the common stock or any other capital stock of the Corporation.

As of September 30, 2026 and December 31, 2025 there are 300 shares of Series A-1 Convertible Preferred Shares outstanding.

Series B-1 Convertible Preferred Shares

The Company has designated 500,000 shares of preferred stock with a par value of $0.001 as “Series B-1 Convertible Preferred Shares”.

The Series B-1 Convertible Preferred Shares entitle their holders to votes equal to the number of shares issuable upon conversion.

The Series B-1 Convertible Preferred Shares are convertible, at the option of the holders, or automatically upon a Qualified Public Offering resulting in gross proceeds to the Company of not less than $30 million, in whole but not in part, into 30 shares of common stock.

The Series B-1 Convertible Preferred Shares shall be entitled to receive an annual dividend, payable in newly issued common stock, in an amount equal to ten percent of the number of then existing Series B-1 Convertible Preferred Shares issued and outstanding prior and in preference to any declaration or payment of any dividend on the common stock or any other capital stock of the Corporation. This dividend is cumulative.

As of September 30, 2026 and December 31, 2025, there are 5 shares of Series B-1 Convertible Preferred Shares outstanding.

Common Stock

Subject to the rights of holders of Series B-1 preferred shares, common stock shall be entitled to receive such cash dividends may be declared thereon by the Board from time to time out of assets of funds of the Corporation legally available.

The Company is authorized to issue 975,000,000 shares of common stock with a par value of $0.001 per share as of September 30, 2026 and December 31, 2025.

Common Stock Issuances

Three Months Ended September 30, 2026

During the three months ended September 30, 2026, the Company issued 104,727 shares of restricted common stock for fully vested RSUs. See the restricted stock unit disclosure in Note 12 below.

On September 30, 2026, the Company entered into a Purchase Agreement with certain institutional investors pursuant to which the investors purchased an aggregate of 735,296 shares of common stock at a purchase price of $4.08 per share, for aggregate gross proceeds of $3,000,008. However, the proceeds were allocated to the estimated fair value of the Warrants issued in conjunction with the September 30, 2026 Private Placement discussed above.

Three Months Ended September 30, 2025

During the three months ended September 30, 2025, the Company issued 29,549 shares of restricted common stock for fully vested RSUs.

During the three months ended September 30, 2025, the Company issued 279 shares of common stock for $3,000 of services, based on the market price of the Company's stock on the grant date.

During the three months ended September 30, 2025, the Company issued 10,000 shares of common stock for the exercise of a warrant and received cash proceeds of $15,000.

Nine Months Ended September 30, 2026

During the nine months ended September 30, 2026, the Company issued 371,436 shares of restricted common stock for fully vested RSUs. See the restricted stock unit disclosure in Note 12 below.

During the nine months ended September 30, 2026, the Company issued 773 shares of common stock for services for $4,000 based on the market price of the Company's stock on the grant date.

During the nine months ended September 30, 2026, the Company entered into a Purchase Agreement with an investor pursuant to which the investor purchased 746,269 shares of our common stock at a purchase price of $3.35 per share, for aggregate gross proceeds of $2,500,000. As described above, the Company also entered into a Purchase Agreement with certain institutional investors pursuant to which the investors purchased an aggregate of 735,296 shares of common stock at a purchase price of $4.08 per share, for aggregate gross proceeds of $3,000,008.

Nine Months Ended September 30, 2025

During the nine months ended September 30, 2025, the Company issued 94,052 shares of restricted common stock for fully vested RSUs.

During the nine months ended September 30, 2025, the Company issued 1,140 shares of common stock for $15,000 of services, based on the market price of the Company's stock on the grant date.

During the nine months ended September 30, 2025, the Company issued 26,667 shares of common stock for the exercise of a warrant and received cash proceeds of $48,334.

Note 12- Stock Based Compensation

Share-based Compensation Plan

The Board of Directors and stockholders approved the BioStem Technologies, Inc. 2022 Equity Incentive Plan (2022 EIP), effective as of January 3, 2023, which serves as the successor to the BioStem Technologies, Inc. 2021 Equity Incentive Plan (2021 EIP) and permits the grant of incentive and nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, and cash-based awards and other stock-based awards to qualified employees, directors, and consultants. No new awards will be issued under the 2021 EIP as of the effective date of the 2022 EIP. Outstanding awards under the 2021 EIP continue to be subject to the terms and conditions of the 2021 EIP. If shares issued under the 2021 EIP and 2022 EIP pursuant to awards of restricted stock, restricted stock units, performance shares or performance units are repurchased by the Company or are forfeited to the Company due to the failure to vest, such shares are added back to the reserves of the 2022 EIP. Shares used to pay the exercise price of an award or to satisfy the tax withholdings related to an award will also become available for future grant or sale under the current EIP. The maximum aggregate number of shares that may be subject to awards and sold under the 2022 EIP is 6,752,693 shares. The shares may be authorized but unissued, or reacquired common stock. As of September 30, 2026, there were 4,118,554 shares reserved for future issuance under the current EIP. The term of each Option will be stated in the Award Agreement. In the case of an incentive stock option, the term will be no more than ten (10) years from the date of grant thereof. In the case of an incentive stock option granted to a Participant who, at the time the incentive stock option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement.

Stock Options

The fair value of service-based stock options granted to employees and non-employees was estimated on the grant date using the Black-Scholes valuation model with the following assumptions:


	September 30, 2026			September 30, 2025
Dividend yield		0	%		0	%
Expected term	6 years			6 years
Risk-free interest rates	3.86%-4.45%			3.93%-4.42%
Expected volatility	102.09%-107.32%			104.47%-106.98%

Dividend Yield – The dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to do so.

Expected Term – The expected term represents the period that the Company’s stock-based awards are expected to be outstanding. The Company determines the expected term using the simplified method as the Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the options.

Expected Volatility – Since the Company does not have a sufficient trading history of its common stock, the expected volatility is derived from the average historical stock volatilities of several unrelated public companies within the Company’s industry that the Company considers to be comparable to its business over a period equivalent to the expected term of the stock option grants.

Fair Value of Common Stock– The fair value of common stock is based on the closing price of the Company’s common stock, as reported on the Nasdaq Capital Market on the date of grant.

The following table summarizes activity under the Company’s stock options plans for service-based and market-based stock options:


	Number of Shares Underlying Options			Weighted Average Exercise Price		Weighted Average Remaining Term (Years)		Intrinsic Value
Outstanding as of December 31, 2025		6,280,284		$	2.92		6.67	$	5,576,041
Granted		1,546,147			5.03		9.26		-
Forfeited		(141,063	)		6.95		-		-
Outstanding as of September 30, 2026		7,685,368			3.26		6.67		-
Vested and exercisable as of September 30, 2026		5,768,742		$	2.38		5.84	$	4,095,807

The weighted-average grant date fair value of options granted during the nine months ended September 30, 2026 and 2025, was $4.10 and $8.68, respectively. During the three and nine months ended September 30, 2026 and 2025, the Company recognized $1,009,258 and $2,677,603 and $504,787 and $2,732,673 , respectively, of stock-based compensation expense in connection with service-based and market-based option grants which is included in general and administrative expenses on the condensed consolidated statements of operations. As of September 30, 2026, total unrecognized stock-based compensation expense for service-based option grants was $7,959,771, which is expected to be recognized on a straight-line basis over a weighted-average period of 2.09 years.

Market-Based Stock Option Grants

In July 2022, the Board of Directors approved and amended executive employment agreements for the Company’s Chief Executive Officer (“CEO”) and Chief Operating Officer (“COO”). Additionally, in October 2022 the Board of Directors granted 2,250,000 options at an exercise price of $2.00, to both the CEO and COO, for a total of 4,500,000 options with an aggregate grant date fair value of $14,829,290 estimated using the Monte Carlo simulation. Vesting of these options were based on Sustained Market Capitalization targets. The last capitalization target was met during the first quarter of 2025, and the remaining stock-based compensation of $1,438,538 was recognized on these market-based option grants. The options may be exercised for up to 10 years after the date of grant.

Restricted Stock Units (“RSUs”)

During the nine months ended September 30, 2026, a total of 876,400 RSUs with an aggregate grant date fair value of $4,705,105 were granted to certain members of the Board of the Directors and executive leadership team. The RSUs granted vest 33% on the first anniversary of the grant date with quarterly vesting over two (2) years thereafter. The fair value of restricted stock is based on the closing price of the Company’s common stock on the date of the grant.

The following table summarizes the restricted stock unit activity during the nine months ended September 30, 2026:


	Shares Outstanding			Weighted Average Grant Date Fair Value
Unvested balance-December 31, 2025		661,882		$	9.93
Granted		876,400			5.37
Vested		(371,436	)	9.17
Forfeited or canceled		(7,430	)		12.45
Unvested balance-September 30, 2026		1,159,416		$	6.71

During the three and nine months ended September 30, 2026 and 2025, the Company recognized stock-based compensation expense in connection with restricted stock units of $1,078,223 and $3,319,974 and $644,201 and $1,665,083, respectively. During the nine months ended September 30, 2026, two Board of Directors resigned. As part of their resignation, the Company agreed to accelerate the vesting of their outstanding RSU awards, and the remaining aggregate stock-based compensation expense of $234,121 associated with their awards was recognized within general and administrative expenses on the condensed consolidated statement of operations. As of September 30, 2026, unrecognized stock-based compensation on unvested RSUs was $6,699,429 which will be recognized through April 2029 over a weighted average period of 1.90 years.

Note 13 - Commitments and Contingencies

Operating Leases

On April 14, 2025, the Company entered into a twenty-four (24) month and sixteen (16) day lease for additional office space in Fort Lauderdale, Florida commencing May 1, 2025. Monthly lease payments are $4,857, $9,713, and $9,872 for the periods May 15, 2025, through May 31, 2025, June 1, 2025, through May 31, 2026, and June 1, 2026, through May 31, 2027, respectively.

Upon the lease commencing, the Company recognized an operating right-of-use asset and operating lease liabilities of approximately $217,655 for the present value of the lease payments required over the term of the lease using an incremental borrowing rate of 11.31%.

On March 15, 2024, the Company entered into a thirty-eight (38) month lease for office space commencing April 1, 2024. On April 1, 2024, the Company occupied its new expanded office space in Fort Lauderdale, Florida and received the months of April and May rent free. Monthly lease payments are $10,159, $10,250, $10,420, $10,117, and $10,198 for the periods June 1, 2024, through December 31, 2024, January 1, 2025, through May 31, 2025, June 1, 2025, through September 30, 2025, October 1, 2025, through May 1, 2026, and June 1, 2026, through May 1, 2027, respectively.

Upon the lease commencing, the Company recognized an operating right-of-use asset and operating lease liabilities of approximately $340,401 for the present value of the lease payments required over the term of the lease using an incremental borrowing rate of 12.00%.

Future payments required on the operating lease liabilities, over a weighted average remaining lease term of approximately 8.16 months are as follows:


Year Ending December 31,
2026 (remaining)	$	63,976
2027		109,363
Total		173,339
Less present value discount		(7,516	)
Total operating lease liabilities	$	165,823

During the three months and nine months ended September 30, 2026 and 2025, the Company incurred lease expense of $63,711 and $202,973 and $56,060 and $133,782, respectively, included within general and administrative expenses on the condensed consolidated statement of operations.

Legal Matters

From time to time, claims are made against the Company in the ordinary course of business, which could result in litigation. Claims and associated litigation are subject to inherent uncertainties and unfavorable outcomes could occur, such as monetary damages, fines, penalties, or injunctions prohibiting the Company from selling one or more products or engaging in other activities. The occurrence of an unfavorable outcome in any specific period could have a material adverse effect on the Company’s results of operations for that period or future periods.

In September 2026, the Company received a Civil Investigative Demand (“CID”) from the U.S. Department of Justice (“DOJ”) under the False Claims Act, 31 U.S.C. §§ 3729-3733, and the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b. The CID seeks documents and information concerning pricing and the reporting of ASP for the Company's skin substitute products and arrangements with a distributor. The matter is still in preliminary stages and is in too early a stage to assess potential outcomes. The Company intends to cooperate with the request and any further inquiries.

On September 23, 2024, GMA submitted a Demand for Arbitration to the American Arbitration Association relating to the repayment of the Notes in the amount of $3,000,000 plus interest. On April 27, 2026, the Company entered into a Settlement Agreement and Release with GMA to resolve all disputes arising from loan agreements in default (See Note 10).

Note 14 - Income Taxes

The Company recorded an income tax expense of $0 and $707,677 for the three months ended September 30, 2026 and 2025, respectively. For the nine months ended September 30, 2026 and 2025, the Company recorded an income tax expense of $0 and $2,247,428, respectively.

The Company’s effective tax rate (“ETR”) for the nine months ended September 30, 2026 and 2025, was 0% and 32.44%, respectively. The Company’s ETR decreased from the nine months ended September 30, 2025, due to the full valuation allowance placed on deferred tax assets during the fourth quarter of 2025. The ETR for the nine months ended September 30, 2025, deviated from the US federal statutory rate due to nondeductible expense.

Note 15– Segment Information

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly provided to the Chief Operating Decision Maker (CODM) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s Chief Executive Officer comprises the Company’s CODM. The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. The CODM uses consolidated net (loss) income as the primary metric to assess performance and the allocation of resources. As such, the Company has determined that it operates as one operating and reportable segment. Segment assets, liabilities and stockholders’ equity are presented the same as disclosed on the consolidated balance sheets.

The following tables set forth significant expense categories and other specified amounts included in consolidated net income that are otherwise regularly provided to the CODM for the three months and nine months ended September 30, 2026 and 2025:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2026			2025			2026			2025
Revenue	$	7,640,885		$	10,473,402		$	21,675,664		$	37,403,597
Cost of goods sold		3,346,797			1,204,794			8,781,424			2,743,409
Gross profit		4,294,088			9,268,608			12,894,240			34,660,188

General and administrative		529,308			531,385			1,528,461			1,944,285
Research and development		18,176			30,556			67,821			81,457
Sales and marketing		639,387			263,688			2,033,625			503,147
Professional fees		5,241,836			3,936,032			16,361,679			13,130,629
Compensation and related		6,934,669			3,000,513			18,027,427			12,017,452
Depreciation and amortization		706,661			57,644			1,936,415			172,344
Interest income, net		(6,359	)		(143,284	)		(93,397	)		(236,616	)
Other expense		1,606,064			123,345			2,198,928			120,275
Income tax expense		-			707,677			-			2,247,428
Segment expense		15,669,742			8,507,556			42,060,959			29,980,401
Net (loss) income	$	(11,375,654	)	$	761,052		$	(29,166,719	)	$	4,679,787

Note that the amounts presented above for research and development, sales and marketing, and general and administrative are exclusive of share-based compensation, payroll, and professional fee expenses.

Note 16 - Subsequent Events

On October 7, 2026, two executive officers of the Company, the Chief Executive Officer and Chief Operating Officer, each exercised 250,000 of their market stock options at an exercise price of $2.00 per share. The Company received cash proceeds of $1,000,000 and issued an aggregate of 500,000 shares of common stock upon exercise. These market options were included in the total options outstanding and exercisable as of September 30, 2026, in Note 12. The Company has evaluated subsequent events through the date the financial statements were issued and determined that no additional events require disclosure.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

The following management’s discussion and analysis of financial condition and results of operations is intended to provide information necessary to understand our condensed consolidated financial statements for the three and nine months ended September 30, 2026 and 2025, and highlight certain other information which, in the opinion of management, will enhance a reader’s understanding of our financial condition, changes in financial condition and results of operations.

You should read the following discussion and analysis of our financial condition and results of operations together with the section titled “Risk Factors” and the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, as well as assumptions that may never materialize or that may be proven incorrect. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in the sections titled “Cautionary note regarding forward-looking statements" and “Risk Factors,” and in other parts of this Quarterly Report.

Overview

Our mission is to create and deliver the most advanced healing technologies in the world. We are focused on the development and commercialization of perinatal tissue-based therapies that support healing across the continuum of care, including advanced wound care and surgical applications. We harness the natural properties of perinatal tissue through our proprietary processing technologies to deliver solutions intended to support tissue repair and regeneration.

Patients present with acute and chronic wounds, as well as wounds resulting from surgical procedures, in a variety of care settings, with conditions ranging in severity and complexity. These include diabetic foot ulcers, venous leg ulcers, pressure ulcers, traumatic wounds, and surgical incisions. We believe that the increasing prevalence of chronic diseases such as diabetes and obesity, along with growth in surgical procedures, will drive demand for advanced regenerative therapies that improve healing outcomes and reduce the overall cost of care.

Patients may benefit from these technologies in a variety of ways. In wound care applications, these technologies are intended to support the body’s natural healing processes and promote faster healing and improved quality of life. In surgical applications, these technologies are intended to support healing and recovery following surgical procedures to reduce complications and promote faster healing. We believe these technologies contribute to improved patient outcomes and may help reduce the overall cost of care over time.

The benefits of these technologies have been highlighted in peer-reviewed publications that include prospective controlled clinical trials, which are studies in which subjects are enrolled based on predefined protocols and the safety and efficacy outcomes of such studies are measured, as well as retrospective data reviews, which analyze previously collected patient data or outcomes and are generally not randomized. In controlled clinical trials, these technologies have shown statistically significant improvements in patient outcomes when compared to standard of care treatment alone.

Our portfolio consists primarily of placenta-derived tissue allografts, which are human tissues used as protective barriers or coverings to support the body’s natural healing processes. We offer both dry and cryopreserved allografts that are utilized across a broad range of clinical settings, including advanced wound care and surgical applications. We intend to continue expanding our portfolio with complementary regenerative therapies and technologies that address unmet needs across wound management and surgical healing.

Key Factors Affecting Our Business and Operating Results

Recent Developments

BioTissue Asset Acquisition

On January 21, 2026, we expanded our portfolio through the purchase and licensing of certain assets from BioTissue Holdings Inc.’s (“BioTissue”) surgical and wound care business. Specifically, we purchased the Neox® and Clarix® trademarks as well as two patents relating to technologies focused on certain orthopedic therapies, which may support future expansion into other clinical applications for our products. We also acquired a national commercial infrastructure through the hiring of BioTissue’s direct sales representatives and the assumption of sales agent and consulting agreements with independent sales agents. We also assumed agreements with GPO and Integrated Delivery Networks ("IDN") which facilitate procurement and distribution of our products to affiliated hospitals, providers and healthcare facilities. As part of the BioTissue acquisition, we also licensed all patents related to the manufacture and commercialization of the Neox® and Clarix® product lines, including the CryoTek®, and SteriTek® technologies, as well as certain related trademarks. BioTissue retained ownership of the licensed intellectual property which it utilizes in the manufacture and commercialization of its other products.

The aggregate purchase consideration of the asset acquisition consisted of (i) an upfront cash payment of approximately $15.0 million, (ii) the payment of $10.0 million upon BioTissue’s receipt of 510(k) clearance of the Catalyze product (the “Clearance Payment”), and (iii) royalty payments, as described below. As a result of BioTissue’s receipt of 510(k) clearance for the Catalyze product on June 5, 2026, we are required to pay BioTissue the Clearance Payment of $10.0 million to acquire the commercial rights to the Catalyze product.

Pursuant to Amendment No. 1 to the Asset Purchase Agreement, dated July 15, 2026 (“Amendment No.1”), the deadline for payment of the Clearance Payment was extended to August 13, 2026, and was further extended to September 15, 2026, subject to the timely payment of interim extension payments. On July 6, 2026, we paid BioTissue $500,000, allocated as (i) $250,000 as consideration for the extension of the payment deadline to August 13, 2026, and (ii) $250,000 as an advance against the Clearance Payment. The $250,000 advance reduced the remaining balance of the Clearance Payment, provided the full remaining balance was received by BioTissue on or before August 13, 2026, or September 15, 2026 if the further extension payment described below was timely made. On August 13, 2026, we paid BioTissue $500,000. Pursuant to Amendment No. 1, this additional payment served as consideration for a further extension of the payment deadline to September 15, 2026.

Pursuant to Amendment No.1, if we fail to make the additional $500,000 payment on its terms, or fail to pay the Clearance Payment by September 15, 2026, we forfeit all amounts paid under these extension provisions and the Clearance Payment will become immediately due and payable. We are in continued discussions with BioTissue with respect to the payment of the Clearance Payment, which has not yet been made, and we continue to seek debt and equity financing to fund the Clearance Payment. We will also pay a 7% royalty on net revenues earned from the assets acquired upon the technology transfer up to a $15.0 million cap.

In conjunction with the BioTissue asset acquisition in January 2026, we executed a Supply Agreement with BioTissue (the “Supply Agreement”). Under this agreement, BioTissue will continue to manufacture the Neox and Clarix brand products on our behalf for up to three years, as well as provide inventory storage and distribution services. We pay an agreed upon transfer price to BioTissue for each SKU manufactured, and an additional fee for the logistical support. We expect to complete a technology transfer to allow us to manufacture these products internally as soon as operationally feasible. Under the terms of the Supply Agreement, such transfer may occur as early as twelve months following the acquisition date.

In addition, under the Supply Agreement, BioTissue will manufacture the Catalyze product on our behalf, subject to our agreement with BioTissue regarding the transfer-pricing terms.

Amendment to Venture Medical Distribution Agreement

Effective January 1, 2026, we entered into an amendment to our distribution and services agreement with Venture Medical (the “Distribution Agreement”). Under the amended arrangement, the per unit consideration to be received upon shipment of our products to Venture decreased by at least 90%. As a result of the changes to the Distribution Agreement, we expect that the proportion of our revenue derived from Venture Medical will continue to decline significantly as compared to historical periods. During the three months ended September 30, 2026 and 2025, our single distributor customer accounted for approximately 11% and 99% of our unaudited consolidated revenue, respectively. During the nine months ended September 30, 2026 and 2025, our single distributor customer accounted for approximately 12% and 100% of our unaudited consolidated revenue, respectively. We believe this revised arrangement better aligns the commercial relationship with the current reimbursement environment and supports a more sustainable distribution model going forward.

Hesed Commercialization Agreement

We licensed the “AmnioWrap2” tradename and the Q-code from Hesed pursuant to an Exclusive Commercialization and IP Agreement (the “Commercialization Agreement”). On January 1, 2026, Hesed delivered written notice of termination of the Commercialization Agreement, pursuant to which the Commercialization Agreement terminated effective June 29, 2026. This decision was driven primarily by changes to Medicare reimbursement rates under the CMS fee schedules that became effective January 1, 2026, which rendered the sale of AW2 economically infeasible under the pricing terms of the Commercialization Agreement.

The Commercialization Agreement states that Hesed has “complete ownership of, rights to (including all patents, trademark(s), know-how, the Q-code 4221 and other intellectual property), and control of Amniowrap 2”. However, based on our knowledge and due diligence, Hesed’s only ownership rights with respect to the AW2 product are the “AmnioWrap 2” trade name and the Q-code, and we own all other rights and intellectual property necessary for the manufacture of the AW2 product. Specifically, we have all right, title, and interest in and to the BioREtain technology that is necessary to manufacture AW2. Hesed has no rights whatsoever to BioREtain. Although Hesed has not asserted any rights with respect to any intellectual or other rights to the AW2 product or made any claims that they have complete ownership rights and control of AW2 based on the language of the Commercialization Agreement, they may assert such claim and we would be forced to defend our rights at some expense to us.

May 2026 Private Placement

On May 21, 2026, we entered into a Securities Purchase Agreement with an investor (the "Investor"), pursuant to which the Investor purchased 746,269 shares of our common stock, par value $0.001 per share, at a purchase price of $3.35 per share, for aggregate gross proceeds to us of approximately $2,500,000. The Securities Purchase Agreement includes price-based anti-dilution protection for the Investor. Specifically, for a period of nine months or until the closing of a third additional offering of our common stock or common stock equivalents, whichever occurs first, we are restricted from issuing or selling common stock, or any security convertible or exchangeable into common stock, at a price per share below $3.35 -- the price per share paid by the Investor in this transaction. This protection is subject to certain limited exceptions and a price per share adjustment floor of $0.70, with customary adjustments for stock dividends, stock splits, reorganizations, or similar events affecting our common stock. If as a result of the anti-dilution provisions, we are required to issue additional common stock to the Investor such that they would own greater than 19.99% of the outstanding shares of common stock or voting power, we will only issue shares up to the 19.99% cap, as the balance will be issued as a pre-funded warrant.

Committed Equity Facility

On September 18, 2026, we entered into a common stock purchase agreement (the “CSPA”) and a related registration rights agreement with Roth Principal Investments, LLC, establishing a Committed Equity Facility ("CEF") under which we have the right, but not the obligation, in our sole discretion, to sell up to $40,000,000 of shares of common stock from time to time over a period of up to 36 months following satisfaction of specified commencement conditions. Specifically, we may not effect sales of equity under the CEF until April 9, 2027, unless the restriction is waived. We control the timing and amount of any sales, which are subject to the conditions and limitations in the CSPA, including a $1.00 minimum closing-price threshold, per-share prices based on the volume weighted average price of the common stock less a fixed discount of 3.0% (for market open and intraday purchases) or 5.0% (for pre-market and post-market purchases), a 19.99% Nasdaq exchange cap of 3,585,375 shares (absent stockholder approval or an average purchase price of at least $4.3056 per share), and a 4.99% beneficial ownership limitation applicable to Roth Principal Investments. We agreed to pay Roth Principal Investments a cash commitment fee of $400,000, equal to 1.0% of the $40,000,000 commitment, payable out of the first proceeds of sales under the CEF at a 10% participation rate, and to reimburse specified expenses, and expect to use any net proceeds for working capital and general corporate purposes. The CSPA terminates automatically on the earliest of the first day of the month following the 36-month anniversary of the commencement date, the date on which Roth Principal Investments has purchased $40,000,000 of common stock, and delisting from the Nasdaq or bankruptcy events. We may terminate at any time after commencement upon 10 trading days’ notice without cost or penalty (subject to acceleration of the commitment fee if terminated within 90 days of the closing date). The registration statement on Form S-1 (File No. 333-299025) covering the resale by Roth Principal Investments of up to 12,050,000 shares of common stock issuable under the CSPA was declared effective on September 29, 2026. As of September 30, 2026, the Company has not drawn from the CEF.

September 2026 Private Placement

On September 29, 2026, we entered into a purchase agreement with certain institutional investors, pursuant to which we issued and sold in a private placement (the “September 2026 Private Placement”) 735,296 shares of common stock at a purchase price of $4.08 per share accompanied by (i) the Series A Warrants to purchase up to 735,296 shares of common stock and (ii) the Series B Warrants to purchase up to 735,296 shares of common stock, each Common Warrant having an exercise price of $3.83 per share. H.C. Wainwright & Co., LLC acted as the exclusive placement agent for the private placement. The Company paid the placement agent a cash fee equal to 7.0% of the gross proceeds and reimbursed certain of its expenses, for aggregate cash fees and expenses of $295,001. The Company also issued warrants to the placement agent to purchase 18,382 shares of common stock at an exercise price of $6.12, in substantially the same form as the Common Warrants. The September 2026 Private Placement closed on September 30, 2026.

Pursuant to the purchase agreement, each Common Warrant is exercisable immediately upon issuance. The Series A Warrants have a term of five years from the Effective Date. The Series B Warrants have a term of twenty-four (24) months from the Effective Date. The Common Warrants contain customary adjustment provisions for stock dividends, stock splits, pro rata distributions and similar events, and beneficial ownership limitations of 4.99% (or, upon election of the holder, 9.99%).

Market Trends

Growing Wound Care Market

We operate within the broader market for products that support tissue repair, regeneration, and healing across both wound care and surgical applications. This market is generally segmented into advanced wound care, surgical biologics, and regenerative medicine products, and includes a range of solutions such as advanced dressings, medical devices, extracellular matrices, and HCT/Ps.

The prevalence of wounds requiring advanced treatment is significant and growing. Chronic wounds are estimated to affect approximately 1–2% of the population in developed countries, with millions of patients impacted in the United States. These conditions represent a substantial economic burden, with estimated Medicare spending on chronic wounds in excess of $30 billion annually and total U.S. healthcare expenditures related to wound care in excess of $100 billion annually.

The advanced wound care market is driven by the prevalence of chronic, non-healing wounds, including diabetic foot ulcers, venous leg ulcers, and pressure ulcers. These conditions are typically associated with underlying comorbidities such as diabetes, obesity, cardiovascular disease, and advanced age, which impair the body’s ability to heal.

The surgical biologics and regenerative medicine markets are driven by procedural volumes and the need to improve surgical outcomes. Products in this segment are used across a range of specialties, including orthopedic, general, plastic and reconstructive, and cardiovascular surgery, and are intended to support tissue healing, reduce complications, and improve recovery. Common clinical objectives include reducing the incidence of infection, minimizing adhesions, supporting soft tissue repair, and promoting faster or more complete healing. Demand in this segment is influenced by surgical procedure growth, product efficacy, surgeon adoption, and hospital or ambulatory surgery center (ASC) purchasing dynamics.

Across both wound care and surgical applications, there is increasing focus on improving clinical outcomes while reducing total cost of care. Chronic wounds and surgical complications can result in extended treatment durations, hospitalizations, readmissions, and additional interventions. As a result, payors and providers are increasingly evaluating products based on their ability to demonstrate clinical effectiveness, support evidence-based protocols, and contribute to overall cost savings.

The site of care for these therapies continues to evolve. Products are utilized across hospitals (inpatient and outpatient), ASCs, physician offices, wound care centers, and long-term care settings with a continued shift toward outpatient and ASC settings, driven by cost efficiencies and patient preference, which has implications for product distribution, pricing, and utilization.

Within the wound care segment, treatment typically progresses from standard of care, which includes debridement, infection control, and traditional dressings, to advanced therapies when healing does not occur within an expected timeframe. Advanced therapies, including skin substitutes and tissue-based products, are generally introduced after several weeks of unsuccessful standard treatment, subject to clinical guidelines and reimbursement policies. Utilization of these products is influenced by provider education, access, and coverage determinations.

Advances in tissue processing and preservation technologies have expanded the use of biologic products across both wound care and surgical applications. Historically limited by storage and handling constraints, modern techniques such as dehydration and cryopreservation have improved product shelf life, ease of use, and safety. As a result, amniotic membrane-derived and other biologic products are now used more broadly as protective barriers and scaffolds to support tissue repair in chronic wounds, surgical incisions, and other clinical applications.

Reimbursement/Regulatory Landscape

With the exception of certain government accounts, most purchasers of our products, including physicians, hospitals, and ambulatory surgical centers, rely on reimbursement from third-party payers. Accordingly, our growth is dependent on the availability of adequate reimbursement for our products.

Third-party payers include U.S. federal healthcare programs, such as Medicare and Medicaid, as well as private insurance plans, managed care organizations, and workers’ compensation programs. These payers are increasingly focused on cost containment and may implement measures that control, restrict access to, or influence the use of healthcare products and services. Coverage decisions are made by each payer and are typically based on an assessment of clinical evidence, medical necessity, and cost-effectiveness.

A portion of our products are purchased directly by U.S. government agencies, including the VA and other federal healthcare systems, which do not rely on third-party reimbursement. We participate in federal purchasing programs, including the FSS to support access to these customers.

On October 31, 2025, CMS issued a final rule updating Medicare reimbursement for skin substitute products. The rule (i) establishes uniform reimbursement across hospital outpatient departments, physician offices, and other sites of care, (ii) replaces the prior “ASP + 6%” reimbursement methodology with a fixed rate of $127.14 per square centimeter, subject to geographic adjustments, and (iii) reclassifies certain products as “incident-to” supplies under the physician fee schedule with a corresponding flat payment rate. This change from an ASP + 6% to a flat $127.14 methodology, which became effective January 1, 2026, decreased our revenue per square centimeter of our products used to treat chronic wounds in the physician office setting, in some cases, by up to 95%.

Uncertainty associated with the transition from the ASP + 6% reimbursement model to a fixed-rate methodology adversely affected our operating results in 2025, as physician offices adjusted purchasing and utilization patterns for advanced wound care products while evaluating the potential impact of the new reimbursement framework. This included a general slowdown in purchasing as well as increased purchasing of competitors’ products with higher reimbursement rates.

The ultimate impact of these reimbursement changes on utilization, pricing, and site-of-care decisions remains uncertain. We expect that the revised CMS reimbursement methodology may continue to adversely affect sales volumes and revenue in our physician office business in the future; however, the extent and duration of such impacts are difficult to predict. We expect to partially offset any such declines through incremental revenue contributions from our surgical assets acquired from BioTissue in January 2026, although there can be no assurance regarding the timing or magnitude of such offset.

Components of our Results of Operations

Revenue, Net

Our revenue, net is derived from selling our wound care and surgical products, less any administration fees, primarily through direct sales representatives, independent sales agents and distributors to private physician offices, wound care centers, hospital inpatient and outpatient settings, ambulatory surgery centers, nursing homes and federal facilities, whose medical professionals use our products to treat patients with advanced wound care and surgical needs. These medical professionals choose advanced wound care products based upon a variety of factors, including product efficacy, ease of product use, price, availability of coverage and adequate third-party reimbursement. We recognize revenue, net from product sales at a point in time when control of our product has transferred to the customer, which generally occurs upon shipment of the product. Shipping and handling costs that are charged to customers are included as a component of revenue with an equal offsetting amount included in cost of goods sold. Revenue, net is recognized in an amount that reflects the consideration that we expect to receive in exchange for the product, which is generally fixed. Based on prior experience, and the nature of the product, variable consideration resulting from product discounts is not material. Returns from customers are not accepted. Accordingly, there is no provision for sales returns recorded for any period presented.

Costs of Goods Sold

Cost of goods sold represents costs directly related to the production of our products. Products sold are typically shipped to the customer with costs associated with shipping and handling included as a component of cost of goods sold. Costs associated with any inventory write-downs resulting from quarterly physical inventory counts are also included within cost of goods sold.

Cost of goods sold includes product testing costs, quality assurance costs, personnel costs, manufacturing costs, raw materials and product costs, and depreciation and facility costs associated with our manufacturing and warehouse facilities. Through December 31, 2025, license fees on AW2 sales were included as part of cost of goods sold. Effective January 1, 2026, the Hesed license agreement was terminated. Any license fees are a component of cost of goods sold. Fluctuations in our cost of goods sold correspond with the fluctuations in these costs as well as sales volume.

Gross Profit

Gross profit is calculated as revenue, net less cost of goods sold. Gross margin is calculated as gross profit divided by revenue, net. Our gross margin is affected by product and geographic sales mix, realized pricing of our products, the efficiency of our manufacturing operations and the costs of materials used to make our products. Regulatory actions, including with respect to reimbursement for our products, may require costly expenditures or result in pricing pressure, and may decrease our gross profit and gross margin.

Sales and Marketing Expenses

Sales and marketing expenses consist primarily of sales and marketing personnel payroll expenses, independent sales agents’ commissions, advertising, strategic and digital marketing, and trade show expenses.

General and Administrative Expenses

General, administrative and other expenses consist mainly of payroll expenses, share-based compensation, legal and professional fees, and general office expenses

Research and Development Expenses

Research and development expenses include clinical trial expenses, payroll expenses for our research and development personnel, expenses related to improvements in our manufacturing processes, enhancements to our currently available products, and additional investments in our product and platform development pipeline. We expense research and development expenses as incurred.

Depreciation and Amortization Expenses

Depreciation and amortization expenses relate to our property and equipment and intangible assets, respectively, with finite lives. We recognize depreciation and amortization expense on the straight-line method based on estimated useful lives.

Interest income, net

Interest income consists of interest earned on our cash balances. Interest expense consists of interest incurred from our debt obligations.

Other (expense) income

Other expense and income primarily consist of expense and income not related to operational activities.

Results of Operations for the Three Months and Nine Months Ended September 30, 2026 and 2025

Comparison of the three and nine months ended September 30, 2026 and 2025


	Three Months Ended September 30,						Nine Months Ended September 30,
	2026			2025			2026			2025
Revenue, net	$	7,640,885		$	10,473,402		$	21,675,664		$	37,403,597
Cost of goods sold		3,346,797			1,204,794			8,781,424			2,743,409
Gross profit		4,294,088			9,268,608			12,894,240			34,660,188

Sales and marketing expenses		5,346,021			1,305,957			14,431,865			3,704,484
General and administrative expenses		7,536,166			4,498,341			21,235,115			18,367,104
Research and development expenses		481,189			1,957,876			2,352,033			5,605,382
Depreciation and amortization expense		706,661			57,644			1,936,415			172,344
Total operating expenses		14,070,037			7,819,818			39,955,428			27,849,314
(Loss) income from operations		(9,775,949	)		1,448,790			(27,061,188	)		6,810,874
Other (expense) income:
Interest income, net		6,359			143,284			93,397			236,616
Other (expense) income		(1,606,064	)		(123,345	)		(2,198,928	)		(120,275	)
Other (expense) income, net		(1,599,705	)		19,939			(2,105,531	)		116,341
Total (loss) income from operations before income taxes		(11,375,654	)		1,468,729			(29,166,719	)		6,927,215
Income tax expense		-			(707,677	)		-			(2,247,428	)
Net (loss) income	$	(11,375,654	)	$	761,052		$	(29,166,719	)	$	4,679,787

Basic net (loss) income per share attributable to common stockholders	$	(0.64	)	$	0.05		$	(1.68	)	$	0.28

Diluted net (loss) income per share attributable to common stockholders	$	(0.64	)	$	0.03		$	(1.68	)	$	0.20

Basic weighted average common shares outstanding		17,864,178			16,749,593			17,351,828			16,771,945

Diluted weighted average common shares outstanding		17,864,178			22,787,934			17,351,828			23,268,317

Revenue, net

For the three and nine months ended September 30, 2026, total revenue, net decreased $2,832,517, or 27% and $15,727,933, or 42% compared to the same periods in 2025, respectively. The decrease in revenue, net was primarily driven by reduced product pricing relating to our physician office sales dictated by CMS. On October 31, 2025, CMS issued a final rule updating Medicare reimbursement for skin substitute products. The rule (i) establishes uniform reimbursement across hospital outpatient departments, physician offices, and other sites of care, (ii) replaces the prior “ASP + 6%” reimbursement methodology with a fixed rate of $127.14 per square centimeter, subject to geographic adjustments, and (iii) reclassifies certain products as “incident-to” supplies under the physician fee schedule with a corresponding flat payment rate. This change from an ASP + 6% to a flat $127.14 methodology, which became effective January 1, 2026, decreased our revenue per square centimeter of our products used to treat chronic wounds in the physician office setting, in some cases, by up to 95%.

For the three and nine months ended September 30, 2026, total physician office revenue, net was $809,586 and $2,679,687, respectively, representing a decrease of $9,603,816, or 92% and $34,663,910, or 93% compared to the same periods in 2025, respectively. The total decrease in revenue, net for the three and nine months ended September 30, 2026, compared to the same periods in 2025, was partially offset by our hospital revenue, net of $6,831,299 and $18,907,417, respectively, as a result of the BioTissue acquisition. There was no hospital revenue during 2025.

During the three months ended September 30, 2026 and 2025, our single distributor customer accounted for approximately 11% and 99% of our unaudited consolidated revenue, respectively. During the nine months ended September 30, 2026 and 2025, our single distributor customer accounted for approximately 12% and 100% of our unaudited consolidated revenue, respectively.

Cost of Goods Sold

For the three and nine months ended September 30, 2026, total cost of goods sold increased $2,142,003, or 178% and $6,038,015, or 220% compared to the same periods in 2025, respectively. The increases were attributable to $2,919,643 and $7,661,765 in higher contract manufacturing costs associated with the Neox® and Clarix® products during the three months and nine months ended September 30, 2026 as compared to the same periods in 2025, respectively. The increases in cost of goods sold for the three and nine months ended September 30, 2026 as compared to the same periods in 2025, were offset by lower cost of goods sold of $777,640 and $1,623,750, respectively, related to our lower physician office sales during 2026. We currently outsource the manufacturing of the Neox® and Clarix® brands, which has increased our cost of goods sold in the current year. Throughout 2025, all products were manufactured in our existing facility.

Gross Profit

For the three and nine months ended September 30, 2026, gross profit decreased $4,974,520, or 54% and $21,765,948, or 63% compared to the same periods in 2025, respectively. As described within the revenue, net and cost of goods sold discussion above, the decrease in overall revenue and increase in overall cost of goods sold for the three and nine months ended September 30, 2026, as compared to the same periods in 2025, resulted in the respective declines in gross profit

Sales and Marketing Expenses

For the three and nine months ended September 30, 2026, total sales and marketing expenses increased $4,040,064, or 309% and $10,727,381, or 290% compared to the same periods in 2025, respectively. The increases were primarily driven by additional sales and marketing headcount resulting from the acquisition of the BioTissue surgical and wound care product lines during the three and nine months ended September 30, 2026. As a result, commission and other payroll related expenses increased $1,408,444 and $1,905,242, respectively, during the three months ended September 30, 2026 as compared to the same period in 2025. The remaining $726,378 increase in sales and marketing expenses for the three months ended September 30, 2026, as compared to the same period in 2025 was attributable to higher travel and entertainment costs of $233,084, marketing events and sponsorships of $228,616, professional fees incurred of $306,453, and other miscellaneous expenses of $159,024. These increases during the three months ended September 30, 2026 as compared to the same period in 2025 were offset by lower recruiting and training and development as well as media and public relations ("PR") expenses totaling $200,799.

Commission and other payroll related expenses increased $4,290,415 and $4,456,520, respectively, during the nine months ended September 30, 2026, as compared to the same period in 2025. The remaining $1,980,446 increase in sales and marketing expenses for the nine months ended September 30, 2026 as compared to the same period in 2025 was attributable to higher expenses incurred for travel and entertainment of $666,139, marketing events and sponsorships of $622,403, recruiting and training and development of $385,632, other professional fees of $736,062 , as well as other miscellaneous expenses of $380,562. These increases during the nine months ended September 30, 2026 as compared to the same period in 2025 were offset by a decrease in Media and PR expenses of $837,352.

General and Administrative Expenses

For the three and nine months ended September 30, 2026, total general and administrative expenses increased $3,037,825, or 68% and $2,868,011, or 16% compared to the same periods in 2025, respectively. For the three months ended September 30, 2026 as compared to the same period in 2025, the $3,037,825 increase in general and administrative expenses was largely driven by an increase in compensation expense of $2,029,526, which includes share-based compensation, general corporate communication expenses of $579,404, as well as general professional fees incurred of $442,648 mostly attributable to expenses incurred in relation to our registration statements during the three months ended September 30, 2026. These increases were offset by a total decrease in other general miscellaneous expenses of $13,753 during the three months ended September 30, 2026, as compared to the same period in 2025.

For the nine months ended September 30, 2026, as compared to the same period in 2025, the $2,868,011 increase in general and administrative expenses was primarily driven by increases in compensation expenses of $1,508,630, which includes share-based compensation, and general corporate communication expenses of $1,967,296. These increases were offset by decreases in cost incurred during the nine months ended September 30, 2026, as compared to the same period in 2025, relating to recruiting and training and development of $306,602, general professional fees of $176,536, as well as other general miscellaneous expenses totaling $124,776.

Research & Development Expenses

For the three and nine months ended September 30, 2026, total research and development expenses decreased $1,476,687, or 75% and $3,253,349, or 58% compared to the same periods in 2025, respectively. We have three significant R&D programs related to clinical trials, and the nature of costs across all clinical trials above are primarily site patient fees, labor, and monitoring fees. During the three months ended September 30, 2026 as compared to the same period in 2025, the $1,476,687 decrease was primarily driven by a $1,400,313 decrease in clinical trial expenses with the remaining decrease of $76,374 attributable to less total internal R&D costs incurred unrelated to the clinical trial studies.

For the nine months ended September 30, 2026, as compared to the same period in 2025, the $3,253,349 decrease was primarily driven by a $2,999,729 decrease in clinical trial expenses with the remaining decrease of $253,620 attributable to less total internal R&D costs incurred unrelated to the clinical trial studies.

The overall decrease in clinical trial expenses incurred in 2026 is a result of our current trials nearing their end.

Depreciation & Amortization Expense

For the three and nine months ended September 30, 2026, total depreciation and amortization expense increased $649,017 or 1,126% and $1,764,071, or 1,024% compared to the same periods in 2025, respectively. During the three and nine months ended September 30, 2026, compared to the same periods in 2025 depreciation expense was consistent period to period, while amortization expense increased by $642,465 and $1,745,886, respectively. The increase in amortization expense during the three and nine months ended September 30, 2026, compared to the same periods in 2025 was largely attributable to amortization expense relating to the intangible assets acquired from BioTissue.

Other (Expense) Income, net

For the three months ended September 30, 2026 and 2025, we recognized other expense, net of $1,599,705 and other income, net of $19,939, respectively, representing a decrease of $1,619,644, or 8,123%. This decrease was attributable to a $136,925 decrease in interest income as well as an increase in other expenses of $1,482,719. The increase in other expenses for the three months ended September 30, 2026, as compared to the same period in 2025 was largely driven by $1,000,000 in extension payments to BioTissue relating to the Clearance Payment as well as $336,926 in issuance cost relating to the September private placement. The remaining $145,793 increase in other expenses was attributable to a $39,172 day one loss recognized on the issuance of warrants as part of the September private placement, filing fee expenses, as well as expenses related to a financing arrangement that was never executed.

For the nine months ended September 30, 2026 and 2025, we recognized other expense, net of $2,105,531 and other income, net of $116,341, respectively, representing a decrease of $2,221,872, or 1,910%. This decrease was attributable to a $143,219 decrease in interest income as well as an increase to other expense of $2,078,653. The increase in other expense was largely attributable to the factors described above paired with the change in fair value of our consideration payable of $1,412,000 offset by the $ 815,250 gain on debt extinguishment that occurred during the nine months ended September 30, 2026.

Income Tax Expense

For the three and nine months ended September 30, 2026, total income tax expense was $0 compared to $707,677 and $2,247,428 for the three and nine months ended September 30, 2025, respectively. Our effective tax rate (“ETR”) for the nine months ended September 30, 2026 and 2025, was 0% and 32.44%, respectively. Our ETR decreased from the nine months ended September 30, 2025, due to the full valuation allowance placed on deferred tax assets during the fourth quarter of 2025.

Net (loss) Income

As a result of the above factors, we had a net loss for the three and nine months ended September 30, 2026, of $11,375,654 and $29,166,719, respectively, as compared to net income of $761,052 and $4,679,787 for the three and nine months ended September 30, 2025, respectively.

Liquidity and Capital Resources

As of September 30, 2026, we had cash and cash equivalents of $971,145. During the three months ended September 30, 2026 and 2025, we had a net loss of $11,375,654 and net income of $761,052, respectively. We had a net loss of $29,166,719 and net income of $4,679,787 during the nine months ended September 30, 2026 and 2025, respectively. As of September 30, 2026, we had an accumulated deficit of $50,341,035.

We expect to incur net losses and negative cash flows from operations for at least the next twelve months due to recent changes to product pricing determined by CMS and have contractual obligations over the next twelve months related to the BioTissue acquisition and an existing promissory note. In addition, as a result of receiving 510(k) clearance of the Catalyze product in June 2026, we were required to pay BioTissue additional consideration of up to $10,000,000, which has not yet been paid and became immediately due and payable under Amendment No. 1 following September 15, 2026, as described above in the Recent Developments section of this management discussion and analysis. As such, we will require additional liquidity to continue our operations and meet our obligations over the next 12 months. We plan to finance our operations and development needs with cash derived from anticipated sales of our products as well as additional capital through a combination of public or private equity offerings, debt financings, strategic collaborations or licensing arrangements. Under the purchase agreement for the September 2026 Private Placement, we may not effect sales under the CEF until April 9, 2027, unless the restriction is waived. There can be no assurance that we will be able to obtain additional financing on terms acceptable to us, on a timely basis, or at all. If we are unable to obtain sufficient capital when needed, we may be required to delay, scale back, or eliminate some or all of our operations and development activities, seek protection under applicable bankruptcy or insolvency laws, or otherwise wind down our operations. Accordingly, substantial doubt exists about our ability to continue as a going concern for at least one year from the issuance of these financial statements. The condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability of assets or the amounts and classifications of liabilities that may be necessary if we were unable to continue as a going concern.

We will require additional liquidity to continue our operations and meet our obligations over the next 12 months. We plan to finance our operations and development needs with cash derived from anticipated sales of our products as well as additional capital through a combination of public or private equity offerings, debt financing, strategic collaborations or licensing arrangements. There can be no assurance that we will be able to obtain additional financing on terms acceptable to us, on a timely basis, or at all. If we are unable to obtain sufficient capital when needed, we may be required to delay, scale back, or eliminate some or all of our operations and development activities, seek protection under applicable bankruptcy or insolvency laws, or otherwise wind down our operations. Accordingly, substantial doubt exists about our ability to continue as a going concern for at least one year from the issuance of these financial statements. The condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability of assets or the amounts and classifications of liabilities that may be necessary if we were unable to continue as a going concern.

Our primary uses of cash are working capital requirements, our BioTissue asset acquisition, capital expenditures, and upcoming debt service payments. Working capital is used principally for payroll costs as well as manufacturing costs related to the production of our products. Our working capital requirements vary from period to period depending on manufacturing requirements, the timing of product shipments and the payment cycles of our customers and third-party payers. Our agreements with customers typically have payment terms of between 30-90 days. Generally, our vendors require payments from us within 30 days of an invoice date. The timing difference between when we collect payments from customers and when we pay our vendors could affect our liquidity and our ability to manage working capital. Our capital expenditures consist primarily of building improvements, and manufacturing equipment. Additionally, from time to time, we may use capital for acquisitions and other investing and financing activities. We will need to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices. We expect to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting and legal and administrative resources, including increased audit and legal fees.

To the extent additional funds are necessary to meet our liquidity needs, we anticipate that they will be obtained through additional equity or debt financing, other strategic financing transactions or a combination of these potential sources of funds. Such financing may not be obtained and if obtained may be on terms that are unfavorable to us or our shareholders, and any equity financing may result in dilution to existing shareholders.

As of September 30, 2026, we had total current assets of $16,133,736 and total current liabilities of $22,169,888 compared to total current assets of $44,403,449 and total current liabilities of $10,783,580 as of December 31, 2025.

As of September 30, 2026, we had a cash and cash equivalents balance of $971,145, a decrease of $28,577,873, as compared to $29,549,018 in cash and cash equivalents as of December 31, 2025.

Debt Obligations

GMA Bridge Fund Loans

On April 27, 2026, we entered into a Settlement Agreement and Release with GMA to resolve all disputes arising from the previous outstanding notes payable and related arbitration proceedings.

Under the terms of the Settlement Agreement and Release, we extinguished our total outstanding obligation to GMA of $5,315,250, comprised of $3,000,000 in original principal and $2,315,250 in accrued interest, through a cash payment of $3,500,000 and the issuance to GMA of a new $1,000,000 secured promissory note, resulting in an $815,250 gain on extinguishment of debt, which was recognized as other income during the nine months ended September 30, 2026. The new promissory note, issued pursuant to a Bridge Loan Agreement and Promissory Note dated April 27, 2026, bears interest at a rate of 0.50% per month for the first six months and 0.75% per month thereafter, and matures on April 27, 2027. The note is secured by a mortgage on our property located at 2836 Center Port Circle in Pompano Beach, Florida. As of September 30, 2026, the full $1,000,000 principal amount of the note remained outstanding, and we will need to repay it, together with accrued interest, from available cash or additional financing on or before its maturity date.

Cash Flows for the Nine Months Ended September 30, 2026 and 2025


	Nine Months Ended September 30,
	2026			2025
Net cash (used in) provided by operating activities	$	(15,186,242	)	$	7,102,864
Net cash used in investing activities		(15,245,386	)		(1,654,436	)
Net cash provided by (used in) financing activities		1,853,755			(1,123,017	)
Net change in cash		(28,577,873	)		4,325,411
Cash end of period	$	971,145		$	27,158,117

Operating Activities

Net cash used in operating activities for the nine months ended September 30, 2026, was $15,186,242, which resulted from a net loss of $29,166,719 offset by the add-back of net non-cash charges of $8,778,971 and net cash of $5,201,506 provided by changes in operating assets and liabilities. Non-cash charges consisted of stock-based compensation expense, depreciation and amortization expense, the expense recognized on the fair value adjustment of our contingent consideration, and expenses associated with the issuance of warrants. The addition of these non-cash charges was partially offset by a deduction from our gain on debt extinguishment. The cash inflow from changes in operating assets and liabilities resulted from a decrease in accounts receivable of $3,274,440, a decrease in prepaid expenses and other assets of $9,968, an increase in accounts payable and accrued expenses of $5,915,638, as well as an increase in accrued interest of $114,083 during the nine months ended September 30, 2026. The cash inflow from changes in operating assets and liabilities was offset by cash outflows due to an increase in inventory of $3,574,198, a decrease in payables excluding accounts payable and accrued expenses of $326,712, as well as a decrease in other current and long-term liabilities of $211,713 during the nine months ended September 30, 2026.

Net cash provided by operating activities for the nine months ended September 30, 2025, was $7,102,864 which resulted from net income of $4,679,787, the add-back of net non-cash charges of $6,099,044 offset by net cash outflows of $3,675,967 from changes in operating assets and liabilities. Non-cash charges consisted of stock-based compensation expense as well as depreciation and amortization expense. The addition of these non-cash charges was partially offset by a deduction from a deferred tax benefit during the nine months ended September 30, 2025. The cash outflows from changes in operating assets and liabilities were due to increases in inventory of $904,980 and prepaid expenses and other assets of $847,831 and decreases in total payables and accrued expenses and other current and long-term liabilities totaling $5,122,271 during the nine months ended September 30, 2025. These outflows were partially offset by cash inflows from changes in operating assets and liabilities, which resulted from a decrease in accounts receivable of $3,002,098 and an increase in accrued interest of $197,017 during the nine months ended September 30, 2025.

Investing Activities

Net cash used in investing activities was $15,245,386 for the nine months ended September 30, 2026, compared to $1,654,436 for the nine months ended September 30, 2025. Net cash used in investing activities during the nine months ended September 30, 2026, related to cash paid for the BioTissue acquisition of $15,018,371, the purchases of property and equipment and construction-in-process of $57,925, and the development of internal-use software of $169,090. During the nine months ended September 30, 2025, cash used in investing activities was $2,904,436 related to purchases of property and equipment and construction-in-process, which was offset by proceeds of $1,250,000 received from the repayment on a short-term loan receivable.

Financing Activities

Net cash provided by financing activities was $1,853,755 for the nine months ended September 30, 2026, compared to $1,123,017 of cash used in financing activities for the nine months ended September 30, 2025. During the nine months ended September 30, 2026, the net cash provided by financing activities consisted of $5,353,755 in proceeds, net of issuance costs, from the issuance of common stock as discussed in the “May 2026 Private Placement” and “September 2026 Private Placement” sections above in this management discussion and analysis, offset by the $3,500,000 payment we made on notes payable. During the nine months ended September 30, 2025, cash used in financing activities was attributable to repayments on notes payable of $1,171,351 offset by proceeds of $48,334 due to the exercise of a warrant.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of the condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis using historical experience and other factors and adjust those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from these estimates and assumptions. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the financial statements. There have been no changes to our critical accounting policies and estimates from those previously disclosed in our Form 10.

Recent Accounting Pronouncements

We have implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and we do not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position or results of operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of September 30, 2026.

Our disclosure controls and procedures are designed to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures, and is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2026, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended September 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are subject to routine legal proceedings in the ordinary course of business. We believe that the ultimate resolution of these matters will not have a material adverse effect on our business, financial condition or results of operations.

Item 1A. Risk Factors.

Our operations and financial results are subject to various risks and uncertainties. The information presented below updates, and should be read in conjunction with, the risk factors and information previously disclosed in Item 1A, “Risk Factors” in our Registration Statement on Form 10.

We will require additional financing in the future to fund our operations, and if we are unable to obtain such financing, we may be required to implement workforce reductions and other cost-cutting measures, and raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish certain rights.

We will need additional capital in the future to fund our operations and meet our near-term obligations. Under the Asset Purchase Agreement with BioTissue, as amended by Amendment No. 1, we are obligated to pay BioTissue a $10,000,000 Clearance Payment as a result of BioTissue’s receipt of 510(k) clearance for the Catalyze product. The Clearance Payment was due by September 15, 2026, and as of the date of this Quarterly Report it has not been made. We are in continued discussion with BioTissue with respect to the payment of the Clearance Payment. We also have a $1,000,000 secured promissory note payable to GMA Bridge Fund, LLC that matures on April 27, 2027 and is secured by a mortgage on our headquarters.

Although we have entered into the CEF, our ability to sell shares under it is subject to a $1.00 minimum closing price, an exchange cap and other conditions, and is restricted by covenants in our existing financing agreements, which also limit our ability to pursue other financing structures. As a result, we may be unable to access the CEF when needed and will depend on other sources of debt or equity financing to continue our operations.

We expect to seek additional capital through a combination of public or private equity offerings, debt financings, strategic collaborations or licensing arrangements. If we raise capital by selling equity, convertible debt securities or other equity-based derivative securities, your ownership interest will be diluted. The terms of these securities may also include liquidation or other preferences that adversely affect your rights as a stockholder. Any indebtedness we incur could involve restrictive covenants, such as limitations on our ability to incur additional debt, declare dividends, pledge our assets, make capital expenditures and other operating restrictions that could adversely impact our ability to conduct our business. In addition, any issuance of equity or debt securities, or the perception in the market that such an issuance may occur, could cause the market price of our common stock to decline.

Our ability to obtain additional financing will depend on a number of factors, including market conditions, our operating performance and investor sentiment. If we are unable to raise additional capital when required or on acceptable terms, we may be required to delay, scale back or discontinue certain commercial, development and capital expenditure programs.

In addition, whether or not we obtain additional financing, we have begun implementing a cost reduction and operational efficiency program that we expect to reduce our annualized cash operating expenses and conserve cash, which could include reducing our workforce, deferring discretionary spending or renegotiating or terminating certain contractual arrangements. Any such measures may not result in the anticipated cost savings or other benefits, or may take longer than expected to achieve, and we may incur unanticipated charges, including severance, benefits and other termination-related costs, in connection with their implementation. Workforce reductions and other cost-cutting measures could also result in the loss of institutional knowledge and expertise, the attrition of employees and independent sales agents beyond the intended reductions, decreased employee morale, disruption to our operations, including our ongoing integration of the business acquired from BioTissue, our planned technology transfer and our commercialization efforts, and an impairment of our ability to attract and retain qualified personnel, to maintain effective internal controls and to comply with our reporting obligations as a public company. Moreover, such measures may not be sufficient to allow us to meet our obligations as they become due, including our obligation to pay the Clearance Payment to BioTissue and to repay our secured promissory note, and we may be required to take additional measures in the future. Any of the foregoing could materially and adversely affect our business, liquidity, financial condition, results of operations, and prospects.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On August 18, 2026, four employees each received an aggregate of 3,802 stock options with a grant date fair value of $10,000 to purchase shares of our common stock at an exercise price of $3.15 per share. The stock options vest over three years with 33% vesting after one year, then quarterly thereafter.

No underwriting discounts and commissions were paid with respect to the foregoing transactions. We believe the sales and issuances of the above securities were exempt from registration under the Securities Act by virtue of Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder because the issuance of securities to the recipients did not involve a public offering or in reliance on Rule 701 because the transactions were pursuant to compensatory benefit plans or contracts relating to compensation as provided under such rule.

On September 30, 2026, pursuant to a securities purchase agreement dated September 29, 2026 with certain institutional investors, we issued and sold, in the September 2026 Private Placement, 735,296 shares of common stock at a purchase price of $4.08 per share, together with Series A Warrants and Series B Warrants, each exercisable for up to 735,296 shares of common stock at an exercise price of $3.83 per share, for aggregate gross proceeds of approximately $3,000,008. In connection with the September 2026 Private Placement, we paid H.C. Wainwright & Co., LLC, as placement agent, cash fees and expenses of $295,001 and issued to it Placement Agent Warrants exercisable for up to 18,382 shares of common stock at an exercise price of $6.12 per share. The shares of common stock, the Series A Warrants, the Series B Warrants and the Placement Agent Warrants were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated thereunder.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

(a) Departure of Directors or Certain Officers

On November 10, 2026, Michael Fortunato notified the Company of his intention to retire from his position as Principal Accounting Officer, effective December 18, 2026. Upon the effectiveness of Mr. Fortunato's retirement, Brandon Poe, the Company’s Chief Financial Officer, will assume the responsibilities of Principal Accounting Officer.

During the three months ended September 30, 2026, none of our officers (as defined in Rule 16a-1(f) of the Exchange Act) or directors adopted, modified or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits.

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.


Exhibit Number		Description
4.1		Form of Common Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 30, 2026).
10.1		Amendment No. 1 to Asset Purchase Agreement, dated July 15, 2026 (incorporated by reference to Exhibit 10.24 to the Company’s Registration Statement on Form 10 filed with the Securities and Exchange Commission on July 24, 2026).
10.2		Common Stock Purchase Agreement with Roth Principal Investments, LLC dated September 18, 2026 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 18, 2026).
10.3		Registration Rights Agreement with Roth Principal Investments, LLC dated September 18, 2026 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 18, 2026).
10.4		Form of Securities Purchase Agreement with Intracoastal Capital LLC, Anson Investments Master Fund LP and Anson East Master Fund LP dated September 29, 2026 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 30, 2026).
10.5		Form of Registration Rights Agreement with Intracoastal Capital LLC, Anson Investments Master Fund LP and Anson East Master Fund LP dated September 29, 2026 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 30, 2026).
31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith.

** Furnished herewith

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	BioStem Technologies, Inc.

Date: November 12, 2026	By:	/s/ Jason Matuszewski
		Jason Matuszewski
		Chief Executive Officer (Duly Authorized Officer)

Date: November 12, 2026	By:	/s/ Brandon Poe
		Brandon Poe
		Chief Financial Officer (Principal Financial Officer)