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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Mark One)

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

For the fiscal year ended December 31, 2025

☐	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 001-33678

STABLECOIN DEVELOPMENT CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	68-0454536
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2000 Powell Street, Suite 1150, Emeryville, California 94608

(Address of principal executive offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code: (510) 899-8800

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, par value $0.01 per share	SDEV	NYSE American

Securities Registered Pursuant to Section 12(g) of the Act: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐ No ☒

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

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

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Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☒

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☒

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

The aggregate market value of the voting common stock held by non-affiliates of the registrant, computed by reference to the last sale price of the common stock on June 30, 2025 on the NYSE American, was approximately $3,373,126. This figure excludes an aggregate of 1,123 shares of common stock held by the registrant’s affiliates, including officers and directors, as of June 30, 2025. Exclusion of shares held by any of these affiliates should not be construed to indicate that such person possesses the power, direct or indirect, to direct or cause the direction of the management or policies of the registrant, or that such person is controlled by or under common control with the registrant. The registrant has no non-voting common stock.

As of March 16, 2026, there were 26,625,029 shares of the registrant’s common stock outstanding.

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STABLECOIN DEVELOPMENT CORPORATION

ANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2025

EXPLANATORY NOTE

This Amendment No. 1 on Form 10-K/A (this “Amendment”) to the Annual Report on Form 10-K of Stablecoin Development Corporation (the “Company”) for the fiscal year ended December 31, 2025 (the “Original Form 10-K”), as filed with the Securities and Exchange Commission (the “SEC”) on March 19, 2026, is being filed to amend and restate our audited consolidated financial statements and related disclosures as of and for the year ended December 31, 2025.

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		Page
PART I
ITEM 1A.	RISK FACTORS	4

PART II
ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	6
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	12
ITEM 9A.	CONTROLS AND PROCEDURES	55

PART III
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	57
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	58

PART IV
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	59

In addition, subsequent to December 31, 2025, on February 20, 2026, we effected a 1-for-5 reverse stock split of our common stock (the “Reverse Stock Split”). Except as otherwise specifically noted, all share numbers, share prices, exercise/conversion prices and per share amounts in this annual report have been adjusted, on a retroactive basis, to reflect the Reverse Stock Split. On April 2, 2026, the Company’s legal name change became effective, and the transition to the new trading symbol reflects the Company’s previously announced strategic repositioning as an on-chain holding company focused on protocol-aligned digital asset ecosystems, with an initial focus on the Sky protocol ecosystem.

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Background of the Restatement

The error relates to the determination of the number of shares of common stock issuable upon exercise of the October 2025 Pre-Funded Warrants that were issued by the Company in October 2025, which contain certain anti-dilution adjustment provisions with respect to subsequent issuances of common stock by the Company related to the conversion of certain convertible securities. At the time of issuance on October 16, 2025, the October 2025 Pre-Funded Warrants represented the right to purchase 1,081,082 shares of common stock at a per share exercise price of $0.05. In the Company's Form 10-K for the year ended December 31, 2025, the Company did not correctly account for the impact of the anti-dilution adjustment provisions contained in the October 2025 Pre-Funded Warrants triggered by dilutive issuances of securities from the Series D Preferred and Series E Preferred conversion subsequent to the issuance of the October 2025 Pre-Funded Warrants. Specifically, the Company failed to correctly reflect both (i) the decrease in the exercise price of such warrants to $0.002385 per share, and (ii) the increase in the number of shares issuable upon exercise of such warrants, each as required by the anti-dilution adjustment provisions. As a result of such provisions, the number of shares of common stock issuable upon exercise of October 2025 Pre-Funded Warrants increased to 22,664,040 shares.

The cumulative effect of the restatement on the Company's financial statements is an increase in the warrant liability balance and corresponding increases in (i) loss from the change in fair value of warrant liabilities and (ii) loss on fair value of warrant liability in excess of proceeds, aggregating to $608.6 million at December 31, 2025. Refer to Item 8, Note 3, “Restatement of Consolidated Financial Statements” for further details regarding the amounts of the adjustments. These adjustments are non-cash and do not impact the Company's operating expenses, operating income, net cash flows or cash and cash equivalents as previously reported.

This Amendment amends the Original Filing only to the extent necessary to reflect the restatement. The following items in the Original Filing have been amended by the Amendment to reflect the restatement:

·	Part I - Item 1A. Risk Factors

·	Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations;

·	Part II - Item 8. Financial Statements and Supplementary Data;

·	Part II - Item 9A. Controls and Procedures;

·	Part III - Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters;

·	Part III - Item 13. Certain Relationships and Related Transactions, and Director Independence; and

·	Part IV - Item 15. Exhibits and Financial Statement Schedules

This Amendment also includes as exhibits, the required officer certifications from our Chief Executive Officer and Chief Financial Officer dated as of the date of the Amendment.

Items in the Original Filing that have not been amended have been omitted from this Amendment. This Amendment is as of the date of the Original Filing on the Form 10-K and has not been updated to reflect events occurring subsequent to the date of the Original Filing other than those associated with the restatement of the Company’s audited consolidated financial statements.

ITEM 1A. RISK FACTORS.

There are no changes to Item 1A as disclosed in our originally filed Annual Report on Form 10-K for the year ended December 31, 2025 except for the addition of the following risk factor.

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Risks Related to Our Common Stock

We have identified a material weakness in our internal control over financial reporting that resulted in the restatement of our consolidated financial statements included in this Annual Report on Form 10-K/A. This material weakness, uncorrected, could continue to affect adversely our ability to report our results of operations and financial condition accurately and in a timely manner.

Our management is responsible for maintaining internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with GAAP. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025, and identified a material weakness in our controls over the review of the contractual terms of our outstanding equity-linked financial instruments and the identification of triggering events under those instruments. As a result of this material weakness, our management concluded that our internal control over financial reporting and our disclosure controls and procedures were not effective as of December 31, 2025. See Part II - Item 9A, “Controls and Procedures.”

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. The effectiveness of any controls or procedures is subject to certain limitations, and as a result, there can be no assurance that our controls and procedures will detect all errors or fraud. A control can provide only reasonable, not absolute, assurance that the objectives of the control system will be attained. We also cannot assure you that other material weaknesses will not arise as a result of our past failure to maintain adequate internal controls and procedures or that circumvention of those controls and procedures will not occur. Additionally, even improved controls and procedures may not be adequate to prevent or identify errors or irregularities or ensure that our financial statements are prepared in accordance with generally accepted accounting principles. If we cannot maintain and execute adequate internal control over financial reporting or implement required new or improved controls that provide reasonable assurance of the reliability of the financial reporting and preparation of our financial statements for external use, we could suffer harm to our reputation, fail to meet our public reporting requirements on a timely basis, or be unable to report properly on our business and the results of our operations, and the market price of our securities could be materially adversely affected.

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PART II

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis (“MD&A”) is intended to provide an understanding of our financial condition, results of operations and cash flows by focusing on changes in certain key measures from year to year. This discussion should be read in conjunction with the consolidated financial statements and related notes in Item 8 of this Report.

Restatement

As discussed in the Explanatory Note to this Amended Filing, the Company is amending and restating its audited consolidated financial statements and related disclosures as of and for the years ended December 31, 2025, as included in Item 8, Note 3, “Restatement of Consolidated Financial Statements”. The Original Filing was filed with the SEC on March 19, 2026.

Cautionary Statement Regarding Forward-looking Statements

Our MD&A contains forward-looking statements that discuss, among other things, future expectations and projections regarding future developments, operations and financial condition. All forward-looking statements are based on management’s existing beliefs about present and future events outside of management’s control and on assumptions that may prove to be incorrect. If any underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or intended. We undertake no obligation to publicly update or revise any forward-looking statements to reflect actual results, changes in expectations or events or circumstances after the date of this Report is filed.

Digital Asset Holdings – SKY

As of March 16, 2026, the Company held approximately 2.1 billion SKY tokens. SKY tokens are a network-native digital asset that may be held and transferred through blockchain-based wallets and may be exchanged on trading venues that support SKY trading pairs.

The Sky Protocol is a decentralized, non-custodial software protocol built around the USDS stablecoin and governed by Sky ecosystem participants through on-chain governance processes. The protocol is implemented through open-source smart contracts deployed on the Ethereum blockchain. The Sky Protocol includes two primary native tokens: USDS, a collateral-backed stablecoin designed to maintain a soft peg to the U.S. dollar, and SKY, the protocol token used in governance and certain protocol-level economic mechanisms.

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The market price of SKY is determined by supply and demand across network-based markets and may be volatile. Prices may fluctuate due to factors including protocol changes, governance decisions, market sentiment, macroeconomic conditions, and broader digital asset market dynamics.

Custody and Safeguarding of Digital Assets

We safeguard our digital assets through a combination of third-party custodial services and internally controlled wallet infrastructure. A portion of our SKY is held in custody accounts with a regulated digital asset custodian that serves as custodian of record under applicable law.

We also utilize internally controlled wallet infrastructure to manage private keys and execute on-chain transactions, including staking and other protocol interactions. Digital assets held through this infrastructure are controlled by the Company rather than held in trust by a third-party custodian.

Digital assets maintained outside of custodial accounts are generally limited to amounts necessary to facilitate protocol participation and transactional activity and are subject to internal controls designed to mitigate loss.

Governmental, Regulatory, and Accounting Considerations

The regulatory framework applicable to blockchain-based networks and digital assets continues to evolve in the United States and internationally. Regulatory developments affecting trading venues, custodians, or service providers may impact access, liquidity, or pricing of digital assets held by the Company. We monitor regulatory developments and adjust our policies, counterparties, and controls as appropriate.

Digital assets held by the Company will be subject to evolving accounting standards, and changes in market value and protocol participation may result in volatility in the Company’s financial results.

Discontinued Operations

As part of the comprehensive realignment of our business during 2024 and 2025, we completed the Avenova Asset Divestiture, the PhaseOne Divestiture, and the DERMAdoctor Divestiture, and decided to exit our involvement in the China NeutroPhase product line. The historical financial results of these businesses are reflected as discontinued operations in the Consolidated Financial Statements included in this annual report. See Notes 14, “Avenova Asset Divestiture and Bridge Loan,” 15 “PhaseOne Divestiture”, 16, “DERMAdoctor Divestiture” and 17, “Summary of Discontinued Operations” to the Consolidated Financial Statements in Part II, Item 8 of this annual report for additional details.

Financial Overview and Outlook

All of the stablecoins received in the January 2026 Private Placement were converted into U.S. dollars to support operating liquidity, and a significant portion was deployed to acquire additional SKY tokens. Subsequent to the January 2026 Private Placement and through March 16, 2026, the Company deployed approximately $70.7 million in cash to acquire approximately 1.1 billion SKY tokens.

Critical Accounting Estimates

Our Consolidated Financial Statements have been prepared in accordance with U.S. GAAP. The preparation of these Consolidated Financial Statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements, as well as the reported revenues and expenses during the reporting periods. In preparing these Consolidated Financial Statements, management has made its best estimates and judgments of certain amounts, giving due consideration to materiality. On an ongoing basis, we evaluate our estimates and judgments. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances. Actual results may differ from these estimates.

While our significant accounting policies are more fully described in Note 2, “Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this annual report, we believe that the following accounting estimates are most critical to fully understanding and evaluating our reported financial results as discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, particularly taking into account the significant changes that occurred to our business as a result of the closing of the Avenova Asset Divestiture and the PhaseOne Divestiture in January 2025.

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Common Stock Warrant Liabilities

For warrants that are classified as liabilities, the Company records the fair value of the warrants upon issuance and remeasures the warrants at each balance sheet date, with changes in estimated fair value recorded as a non-cash gain or loss in the Consolidated Statements of Operations.

The fair value of warrant liabilities is determined in accordance with ASC 820 using valuation techniques that are appropriate based on the specific terms and economic characteristics of each warrant instrument. Depending on the nature of the warrants, valuation techniques may include option pricing models, such as the Black-Scholes option pricing model, or intrinsic value calculations.

Warrants that contain nominal exercise prices are economically similar to common stock, and do not require assumptions related to volatility, expected term, or other option-pricing inputs are generally measured based on intrinsic value, calculated as the excess of the Company’s common stock price over the exercise price, multiplied by the number of warrant shares outstanding. Other warrant instruments may require the use of option pricing models that incorporate assumptions such as expected volatility, risk-free interest rates, expected term, and dividend yield.

Certain of our outstanding warrants contain anti-dilution adjustment provisions that adjust the per-share exercise price and the number of shares issuable upon exercise for the warrants upon the occurrence of specified dilutive issuances of securities by the Company. The application of these provisions requires us to identify triggering events, calculate the resulting adjustments in accordance with the contractual formula, and reflect the adjusted share count and exercise price in the measurement of the related warrant liability at each reporting date. The number of shares issuable upon exercise for such warrants and, accordingly, the fair value of the related warrant liability, can change materially as a result of these adjustments. See Note 10 for additional information regarding our outstanding warrants and the related anti-dilution adjustment provisions.

The determination of the appropriate valuation technique and the related assumptions requires significant judgment. Changes in the Company’s stock price, volatility, or other valuation inputs could materially affect the recorded fair value of warrant liabilities and the related non-cash gains or losses recognized in the Consolidated Statements of Operations. See additional information in Note 10, “Common Stock Warrants and Warrant Liabilities” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this annual report.

Impairment of Assets

We review long-lived assets for impairment at least annually or whenever events or changes in business circumstances indicate that any such asset may be impaired, that the carrying amount of any such asset may not be fully recoverable or that the useful life of the asset, if applicable, is no longer appropriate. Management uses judgment in making critical assumptions and estimates in determining when an impairment assessment should be recorded, if more frequent than annually, or in the completion of any such assessment. This includes cash flow projections that look several years into the future and assumptions on variables such as economic conditions, probability of success, and discount rates. Changes in judgments with respect to these assumptions and estimates could impact any such impairments recorded during 2025 as further described in Notes 2, “Summary of Significant Accounting Policies;” and 7, “Commitments and Contingencies” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this annual report.

Digital Assets

The Company did not hold any digital assets as of and during the years ended December 31, 2025 and 2024. Subsequent to December 31, 2025, in January 2026, the Company entered into the January 2026 Private Placement pursuant to which it received digital assets, including stablecoins and SKY tokens, and subsequently engaged in purchases and sales of such digital assets.

Digital assets acquired in connection with the January 2026 Private Placement and subsequent transactions will be accounted for in accordance with applicable U.S. GAAP and other authoritative accounting guidance in effect at the time, including Accounting Standards Update No. 2023-08, Accounting for and Disclosure of Crypto Assets, which established Subtopic 350-60 within ASC 350, Intangibles—Goodwill and Other, where applicable. Depending on the nature of the digital assets held and the Company’s specific facts and circumstances—including the Company’s activities (such as staking or other yield-generating activities), the contractual terms of related arrangements, and the Company’s relationships with counterparties—the Company may apply different accounting models. Such models could include digital assets held at fair value with changes in fair value recognized in earnings under applicable crypto-asset guidance or, if such guidance is not applicable, accounting under other relevant U.S. GAAP models, including accounting for certain digital assets as indefinite-lived intangible assets measured at historical cost and evaluated for impairment. The applicable accounting framework may differ depending on the specific facts and circumstances, and the resulting classification, measurement, and presentation could materially affect the Company’s financial position and results of operations, including potential variability in reported results.

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Results of Operations

Comparison of years ended December 31, 2025 and 2024 (in thousands)

	For the years ended December 31,
Statement of Operations	2025 (Restated)			2024			Dollar Change			Percent Change

Operating expenses:
General and administrative	$	7,585		$	7,379			206			3	%
Impairment of long-lived assets		854			—			854			—
Total operating expenses		8,439			7,379			1,060			14	%
Operating loss		(8,439	)		(7,379	)		(1,060	)		14	%

Non-cash (loss) gain on changes in fair value of warrant liability		(509,940	)		114			(510,054	)		(447,416	%)
Non-cash loss on fair value of warrant liability in excess of proceeds at issuance		(123,185	)		—			(123,185	)		(100	%)
Accretion of interest and amortization of discounts on convertible notes		(277	)		(904	)		627			(69	%)
Other expense, net		(20	)		(581	)		561			(97	%)
Net loss from continuing operations		(641,861	)		(8,750	)		(633,111	)		7,236	%

Net income from discontinued operations, net of taxes		11,081			1,527			9,554			626	%
Net loss	$	(630,780	)	$	(7,223	)	$	(623,557	)		8,633	%

Impact of Divestitures

Financial results related to divested assets from the Avenova Asset Divestiture and the PhaseOne Divestiture and the China NeutroPhase product line for the years ended December 31, 2025 and 2024 and from the DERMAdoctor Divestiture for the year ended December 31, 2024 have been aggregated and reported for each of these periods in the line item titled “Net income from discontinued operations, net of taxes” in the table above. Prior-period amounts have been revised to correct the presentation of the loss on the DERMAdoctor Divestiture and related divestiture proceeds, which were previously presented within continuing operations and are now reflected within discontinued operations. This revision did not affect total net loss, total net loss per share, total cash flows, or the Company’s financial position. See additional information in Notes 14, “Avenova Asset Divestiture and Bridge Loan;” 15, “PhaseOne Divestiture”, 16, “DERMAdoctor Divestiture” and 17, “Summary of Discontinued Operations” in Notes to the Consolidated Financial Statements in Part II, Item 8 of this annual report for additional details regarding these financial results for the periods presented. The discussions below and throughout this section apply only to results from our continuing operations except as otherwise noted.

General and administrative

General and administrative expenses increased $0.2 million, or 3%, to $7.6 million for the year ended December 31, 2025, from $7.4 million for the year ended December 31, 2024. The increase was due primarily to higher legal costs associated with non-recurring strategic initiatives during the year ended December 31, 2025.

Impairment of Long-Lived Assets

During the year ended December 31, 2025, the Company recorded an impairment of $854 thousand related primarily to right-of-use assets and fixed assets associated with excess leased office capacity resulting from our strategic realignment. This impairment reflects actions taken to reduce our office space and streamline our cost structure following the realignment. No comparable impairment was recorded during the year ended December 31, 2024.

Non-cash (loss) gain on changes in fair value of warrant liability

Adjustments to the fair value of warrant liabilities resulted in a non-cash loss of $509.9 million for the year ended December 31, 2025 and a non-cash gain of $0.1 million for the year ended December 31, 2024. The warrant liability recorded during the year ended December 31, 2025 related to the October 2025 Pre-Funded Warrants. The warrant liability recorded during the year ended December 31, 2024 related to the December 2023 Warrants and the March 2024 Warrants. For additional information regarding warrant liabilities and their valuation, please see Note 10, “Common Stock Warrants and Warrant Liabilities,” in the Notes to Consolidated Financial Statements, in Part II, Item 8 of this annual report.

Non-cash loss on fair value of warrant liability in excess of proceeds at issuance

For the year ended December 31, 2025, the Company recognized a non-cash loss of $123.2 million with no comparable results for the year ended December 31, 2024. The issuance-date fair value of the October 2025 Pre-Funded Warrants exceeded the cash proceeds received, resulting in a non-cash loss on warrant issuance. For additional information, please see Note 10, "Common Stock Warrants and Warrant Liabilities," in the Notes to Consolidated Financial Statements in Part II, Item 8 of this annual report.

Accretion of interest and amortization of discounts on convertible notes

Accretion of interest and amortization of discounts on convertible notes was $0.3 million for the year ended December 31, 2025, compared to $0.9 million for the year ended December 31, 2024. The decrease reflects the elimination of the Secured Convertible Notes, which were outstanding during 2024 and carried higher interest and discount amortization, with only the Unsecured Convertible Notes outstanding during 2025. See additional discussion in Note 9, “Convertible Notes,” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this annual report.

Other expense, net

Other expense, net was $20 thousand for the year ended December 31, 2025, compared to $0.6 million for the year ended December 31, 2024. The amounts recorded in each period primarily relate to separate and unrelated financing activities. The higher expense in 2024 reflects non-recurring financing-related costs incurred during that period.

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Financial Condition, Liquidity and Capital Resources

We have incurred net losses and generated negative cash flows from operations since inception and expect to incur losses as we pursue our strategic initiatives. Our net losses from continuing operations were $641.9 million and $8.8 million for the years ended December 31, 2025 and 2024, respectively. The net loss from continuing operations for the year ended December 31, 2025 included aggregate non-cash warrant-related losses of $633.1 million in connection with the October 2025 Pre-Funded Warrants, consisting of a $123.2 million loss on issuance and a $509.9 million loss from changes in fair value of warrant liabilities. As of December 31, 2025, our cash and cash equivalents were $8.0 million, compared to $0.4 million as of December 31, 2024.

Cash Used in Operating Activities, Continuing Operations

Net cash used in operating activities from continuing operations was $8.4 million for the year ended December 31, 2025, which consisted primarily of a net loss from continuing operations of $641.9 million, adjusted by stock-based compensation expenses related to employee and director stock awards of $29 thousand, non-cash loss on changes in fair value of warrant liabilities of $509.9 million, non-cash loss on fair value of warrant liability in excess of proceeds at issuance of $123.2 million, non-cash right-of-use amortization of $0.1 million, right-of-use impairment of $0.9 million, accretion of interest and amortization of debt discounts on convertible notes of $0.2 million, and a net increase of $1.0 million in our net operating assets and liabilities of continuing operations.

Net cash used in operating activities from continuing operations was $7.5 million for the year ended December 31, 2024, which consisted primarily of a net loss from continuing operations of $8.8 million, adjusted by stock-based compensation expenses related to employee and director stock awards of $0.1 million, non-cash loss on extinguishment of Secured Convertible Note of $13 thousand, non-cash expense incurred to obtain consent of Secured Convertible Note (as defined in Note 9, “Convertible Notes”) holders to release collateral for the DERMAdoctor Divestiture of $0.4 million, non-cash loss on modifications of warrants of $69 thousand, non-cash gain on changes in fair value of warrant liabilities of $0.1 million, non-cash loss on changes in fair value of embedded derivative liability of $18 thousand, non-cash right-of-use amortization of $0.3 million, accretion of interest and amortization of debt discounts on convertible notes of $0.9 million, and a net increase of $0.5 million in our net operating assets and liabilities of continuing operations.

Cash Used in Investing Activities, Continuing Operations

The Company reported no cash used in or provided by investing activities for the years ended December 31, 2025 and 2024.

Cash Provided by Financing Activities, Continuing Operations

Net cash provided by financing activities from continuing operations was $4.6 million for the year ended December 31, 2025, which included net proceeds of $5.8 million from the 2025 Preferred Stock Purchase Agreement (as defined in Note 8, “Financing Activities”), net proceeds of $5.9 million from the October 2025 Pre-Funded Warrants, repurchase of warrants of $2.0 million, repayment of $0.5 million for the Bridge Loan, net proceeds of $0.9 million from exercise of warrants, payment on redemption of Series F Preferred Stock of $0.2 million and payment of a Special Dividend of $4.8 million.

Net cash provided by financing activities from continuing operations was $1.5 million for the year ended December 31, 2024, which included repayment of $2.0 million for the Secured Convertible Notes, net proceeds of $2.9 million from the 2024 Public Offering (as defined in Note 8, “Financing Activities”), net proceeds of $0.2 million from the 2024 Warrant Reprice transaction, and the Bridge Loan of $0.5 million.

Additional information on Financing Activities can be found in Notes 7 to 10 in the Notes to Consolidated Financial Statements, in Part II, Item 8 of this annual report.

Net Operating Losses and Tax Credit Carryforwards

We believe that we experienced an ownership change during 2025 and, as a result, our pre-change net operating loss (“NOL”) carryforwards became subject to significant limitations under Section 382 of the Internal Revenue Code. As of December 31, 2025, we had federal and state NOL carryforwards of approximately $2.9 million and $348 thousand, respectively, primarily generated subsequent to the 2025 ownership change. Our federal NOLs may be carried forward indefinitely but are generally limited to offsetting 80% of taxable income in any given year. The state NOL carryforwards begin to expire in 2045. As of December 31, 2025, we had no federal or state tax credit carryforwards.

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Future changes in our stock ownership, including transactions completed subsequent to year end such as the January 2026 Private Placement, could result in an additional ownership change under Section 382, which could further limit our ability to utilize our remaining tax attributes. Any such limitation could result in the expiration of carryforwards before they are utilized.

Inflation

Our costs and operating expenses are subject to fluctuations, particularly due to changes in the cost of labor and service providers. Under our digital asset strategy, our exposure to inflationary pressures is reduced relative to our prior pharmaceutical operations; however, inflation may affect general and administrative costs, third-party service fees, and the broader economic environment in which digital asset markets operate. Failure to manage these fluctuations could adversely impact our results of operations or cash flows.

Known Trends and Uncertainties

Our shift to a digital asset strategy introduces exposure to certain known trends and uncertainties that may materially affect our financial condition and results of operations in future periods. These include: (i) volatility in the market price of SKY and other digital assets, which could result in significant fluctuations in the reported fair value of our digital asset holdings; (ii) evolving regulatory frameworks applicable to digital assets, stablecoins, and related activities, which could impose new compliance obligations or restrict certain activities; (iii) uncertainty regarding the accounting treatment of digital assets as well as staking rewards and protocol participation income; and (iv) liquidity risk associated with converting digital asset holdings to cash or cash equivalents. We continue to monitor these trends and uncertainties and may adjust our strategy, capital allocation, or operations as circumstances warrant. See “Risk Factors” in Part I, Item 1A for additional discussion of these and other risks.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements at December 31, 2025 or December 31, 2024 as defined in Item 303(b) of SEC Regulation S-K.

Contractual Obligations

In the normal course of business, we have historically entered into contracts and commitments that obligate us to make payments in the future and we expect to enter into contracts and commitments on behalf of the Company in connection with pursuing other strategic alternatives.

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ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements required by this Item 8 are set forth below. Our financial information is set forth in Item 7 of this annual report and is hereby incorporated into this Item 8 by reference.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
	Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 199)	13
Report of Independent Registered Public Accounting Firm (PCAOB ID: 100)	14
Consolidated Balance Sheets as of December 31, 2025 and 2024	16
Consolidated Statements of Operations for the Years Ended December 31, 2025 and 2024	17
Consolidated Statements of Stockholders’ Deficit for the Years Ended December 31, 2025 and 2024	18
Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024	19
Notes to Consolidated Financial Statements	21

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

Stablecoin Development Corporation (f/k/a NovaBay Pharmaceuticals, Inc.)

Opinion on the Financial Statements

We have audited the accompanying balance sheet of Stablecoin Development Corporation (f/k/a NovaBay Pharmaceuticals, Inc.) (the “Company”) as of December 31, 2025, the related statements of operations, stockholders’ deficit and cash flows for the year ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, based on our audit, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

We also have audited the adjustments to the 2024 financial statements to retrospectively apply the discontinued operations reclassifications related to the dispositions of Avenova and PhaseOne, as described in Notes 14 and 15, and the retrospective adjustments to share and per share data as a result of the reverse stock split, as described in Note 1. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2024 financial statements of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2024 financial statements taken as a whole.

We also have audited the adjustments described in Note 16 that were applied to revise the 2024 financial statements to correct an error. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2024 financial statements of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2024 financial statements taken as a whole.

Emphasis of Matter – Restatement

As described in Note 3 to the financial statements, the accompanying financial statements as of and for the year ended December 31, 2025, have been restated.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ CBIZ CPAs P.C.

CBIZ CPAs P.C.

We have served as the Company’s auditor since 2026.

Philadelphia, PA

March 19, 2026, except for the effects of the restatement described in Note 3 to the financial statements as to which the date is April 29, 2026.

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

NovaBay Pharmaceuticals, Inc.

Opinion on the Consolidated Financial Statements

We have audited, before the effects of the adjustments to retrospectively apply the discontinued operations reclassifications related to the dispositions of Avenova and PhaseOne described in Notes 14 and 15, the retrospective adjustments to share and per share data as a result of the reverse stock split as described in Note 1, as well as the correction of the error described in Note 16, the accompanying consolidated balance sheet of NovaBay Pharmaceuticals, Inc. and subsidiaries (the “Company”) as of December 31, 2024, and the related consolidated statements of operations, stockholders’ (deficit) equity, and cash flows for the year ended December 31, 2024 (collectively referred to as the “consolidated financial statements”) (the consolidated financial statements before the effects of the adjustments discussed in Notes 1, 14, 15, and 16 are not presented herein). In our opinion, except for the error described in Note 16, the consolidated financial statements, before the effects of the adjustments to retrospectively apply the discontinued operations reclassifications related to the dispositions of Avenova and PhaseOne described in Notes 14 and 15 and the retrospective adjustments to share and per share data as a result of the reverse stock split as described in Note 1, present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the discontinued operations reclassifications related to the dispositions of Avenova and PhaseOne described in Notes 14 and 15 or the retrospective adjustments to share and per share data as a result of the reverse stock split as described in Note 1 and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by CBIZ CPAs P.C.

We were not engaged to audit, review, or apply any procedures to the adjustments for the correction of the error described in Note 16 and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by CBIZ CPAs P.C.

Emphasis of Matter

As discussed in Note 1 to the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2024, the Company is seeking approval from its stockholders to dissolve and distribute all remaining assets to stockholders. Management has determined that it is in the best interest of the Company and its stockholders to continue pursuing the voluntary Dissolution pursuant to the Plan of Dissolution and management’s plans regarding these matters are also described in Note 1 to the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2024. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

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Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements; and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowances for Product Returns

Description of the Matter

As described in Note 2 of the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2024, when recognizing revenue from product sales, the Company makes an estimate of the amount of consideration the Company expects to be entitled to receive. Upon recognition of these product sales, the Company records an estimate for variable consideration consisting of service fees, discounts, rebates, and product returns, resulting in a reduction in product revenue. The variable consideration provisions are recorded within accrued liabilities in the same period that the related revenue is recognized. Liabilities related to the allowance for product returns involve the use of significant assumptions and judgments in their calculation. These significant assumptions and judgments include historical sales and return rates and inventory levels in the distribution channel, as well as existing return policies with customers.

The Company’s estimated allowance for product returns requires a high degree of judgment and is subject to change based on various quantitative and qualitative factors. Accordingly, extensive audit effort and a high degree of auditor judgment were needed to evaluate management’s estimates and assumptions used in the determination of the allowance for product returns. Therefore, we identified the Company’s allowance for product returns as a critical audit matter.

How We Addressed the Matter in Our Audit

We obtained an understanding of and evaluated the design of controls relating to the Company’s processes for estimating the allowance for product returns. We evaluated the significant accounting policies relating to product returns, as well as management’s application of the policies, for appropriateness and reasonableness.

We obtained the Company’s allowance for product returns analysis and performed testing procedures on the underlying data that was used in management’s development of the product returns estimate. We compared the significant assumptions used by management to customer contract information, tested the historical returns data used in the analysis, and reviewed subsequent product return activity. In addition, we performed sensitivity analyses of significant assumptions used in the analysis to determine what changes in assumptions are particularly sensitive when calculating the amount of the allowance for product returns. Additionally, we tested the mathematical accuracy of management’s calculation of revenue, net of product sales allowances, and the associated timing of revenue recognition, in the consolidated financial statements.

/s/ WithumSmith+Brown, PC

New York, New York

April 2, 2025

We served as the Company’s auditor from 2010 through January 2026.

PCAOB ID Number 100

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STABLECOIN DEVELOPMENT CORPORATION

(F/K/A NOVABAY PHARMACEUTICALS, INC.)

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value amounts)

	As of December 31,
	2025 (As Restated)			2024

ASSETS
Current assets:
Cash and cash equivalents	$	7,958		$	430
Prepaid expenses and other current assets		717			272
Current assets, discontinued operations		—			1,233
Total current assets		8,675			1,935
Operating lease right-of-use assets		—			955
Other assets		360			524
Other assets, discontinued operations		—			9
TOTAL ASSETS	$	9,035		$	3,423

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Liabilities:
Current liabilities:
Accounts payable	$	257		$	109
Accrued liabilities		396			581
Bridge Loan		—			500
Unsecured Convertible Notes, net of discounts		67			65
Operating lease liabilities		422			398
Current liabilities, discontinued operations		—			1,190
Total current liabilities		1,142			2,843
Warrant liabilities, at fair value		639,071			—
Operating lease liabilities-non-current		287			709
Total liabilities		640,500			3,552
Commitments and contingencies (Note 7)

Mezzanine (temporary) equity:
Preferred stock, $0.01 par value; 5,000 shares authorized;
Series F Preferred Stock; 1,347 and 0 shares issued and outstanding at December 31, 2025 and 2024, respectively		350			—

Stockholders’ deficit:
Preferred stock, $0.01 par value; 5,000 shares authorized;
Series B Preferred Stock; 1 and 1 shares issued and outstanding at December 31, 2025 and 2024, respectively		6			6
Common stock, $0.01 par value; 1,500,000 shares authorized, 25,216 and 977 shares issued and outstanding at December 31, 2025 and 2024, respectively*		252			10
Additional paid-in capital*		186,981			183,312
Accumulated deficit		(819,054	)		(183,457	)
Total stockholders’ deficit		(631,815	)		(129	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	9,035		$	3,423

* After giving retroactive effect to a 1-for-5 reverse stock split that became effective February 20, 2026.

The accompanying notes are an integral part of these Consolidated Financial Statements.

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STABLECOIN DEVELOPMENT CORPORATION

(F/K/A NOVABAY PHARMACEUTICALS, INC.)

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

	For the years ended December 31,
	2025 (As Restated)			2024 (As Revised)

Operating expenses
General and administrative	$	7,585		$	7,379
Impairment of long-lived assets		854			—
Total operating expenses		8,439			7,379
Operating loss		(8,439	)		(7,379	)

Non-cash (loss) gain on changes in fair value of warrant liability		(509,940	)		114
Non-cash loss on fair value of warrant liability in excess of proceeds at issuance		(123,185	)		—
Accretion of interest and amortization of discounts on convertible notes		(277	)		(904	)
Other expense, net		(20	)		(581	)
Net loss from continuing operations	$	(641,861	)	$	(8,750	)

Net income from discontinued operations, net of taxes		11,081			1,527
Net loss	$	(630,780	)	$	(7,223	)
Less: Increase to accumulated deficit due to adjustment to common stock warrants exercise price		—			(1,005	)
Less: Increase to accumulated deficit due to adjustment to Preferred Stock conversion prices		—			(380	)
Net loss attributable to common stockholders	$	(630,780	)	$	(8,608	)

Weighted-average shares of common stock used in computing net loss per share attributable to common stockholders (basic and diluted)*		5,820			679

Basic and diluted net loss per share
Basic loss per share from continuing operations*	$	(110.29	)	$	(14.93	)
Basic earnings per share from discontinued operations*		1.90			2.25
Basic (loss) earnings per share attributable to common stockholders*	$	(108.39	)	$	(12.68	)

* After giving retroactive effect to a 1-for-5 reverse stock split that became effective February 20, 2026.

The accompanying notes are an integral part of these Consolidated Financial Statements.

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STABLECOIN DEVELOPMENT CORPORATION

(F/K/A NOVABAY PHARMACEUTICALS, INC.)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY

(in thousands)

																							Total
																							Stockholders’
	Redeemable																Additional			Accumulated			Equity
	Preferred Stock						Preferred Stock						Common Stock				Paid-In			Deficit			(Deficit) (As
	Shares			Amount			Shares			Amount			Shares*		Amount*		Capital*			(As Restated)			Restated)
Balance at December 31, 2023		7		$	1,950			7		$	1,950			64	$	1	$	176,212		$	(174,849	)	$	3,314
Net loss		—			—			—			—			—		—		—			(7,223	)		(7,223	)
Conversion of Series B Preferred Stock to common stock		(5	)		(268	)		(5	)		(268	)		125		1		267			—			—
Conversion of Series C Preferred Stock to common stock		(1	)		(1,676	)		(1	)		(1,676	)		41		—		1,676			—			—
Adjustment of Series C Preferred Stock conversion price		—			—			—			—			—		—		380			(380	)		—
Modification of common stock warrants in connection with 2024 Warrant Reprice Transaction		—			—			—			—			—		—		69			—			69
Issuance of common stock in connection with 2024 Warrant Reprice Transaction, net of offering costs		—			—			—			—			18		—		130			—			130
Reclassification of December 2023 Warrants from liability		—			—			—			—			—		—		212			—			212
Reclassification of March 2024 Warrant from liability		—			—			—			—			—		—		100			—			100
Reclassification of embedded derivative liability		—			—			—			—			—		—		242			—			242
Shares issued for 35:1 reverse stock split due to rounding feature		—			—			—			—			21		—		—			—			—
Issuance of common stock and pre-funded warrants in the 2024 Public Offering, net of issuance cost		—			—			—			—			299		3		2,855			—			2,858
Exercise of pre-funded warrants		—			—			—			—			409		5		16			—			21
Adjustment to common stock warrant exercise price		—			—			—			—			—		—		1,005			(1,005	)		—
Stock-based compensation expense related to employee and director stock awards		—			—			—			—			—		—		148			—			148
Balance at December 31, 2024		—		$	—			1		$	6			977	$	10	$	183,312		$	(183,457	)	$	(129	)
Net loss		—			—			—			—			—		—		—			(630,780	)		(630,780	)
Issuance of Series D Preferred Stock, net of offering costs		—			—			481			3,786			—		—		—			—			3,786
Conversion of Series D Preferred Stock to common stock		—			—			(481	)		(3,786	)		15,400		154		3,632			—			—
Issuance of Series E Preferred Stock, net of offering costs		—			—			269			2,049			—		—		—			—			2,049
Conversion of Series E Preferred Stock to common stock		—			—			(269	)		(2,049	)		8,600		86		1,963			—			—
Issuance of Series F Preferred Stock and Cancellation of Warrants in conjunction with Series F Agreements		1,987			525			—			—			—		—		(1,484	)		—			(1,484	)
Deemed Capital Contribution pursuant to Series F Agreements		—			—			—			—			—		—		434			—			434
Redemption of Series F Preferred Stock		(640	)		(175	)		—			—			—		—		—			—			—
Conversion of Unsecured Convertible Notes to common stock		—			—			—			—			14		—		246			—			246
Exercise of warrants		—			—			—			—			224		2		850			—			852
Repurchase of Warrants		—			—			—			—			—		—		(2,001	)		—			(2,001	)
Stock-based compensation expense related to employee and director stock awards		—			—			—			—			—		—		29			—			29
Vesting of director RSU awards		—			—			—			—			1		—		—			—			—
Dividend Paid ($4.00 per share of common stock)		—			—			—			—			—		—		—			(4,817	)		(4,817	)
Balance at December 31, 2025		1,347		$	350			1		$	6			25,216	$	252	$	186,981		$	(819,054	)	$	(631,815	)

* After giving retroactive effect to a 1-for-5 reverse stock split that became effective February 20, 2026.

The accompanying notes are an integral part of these Consolidated Financial Statements.

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STABLECOIN DEVELOPMENT CORPORATION

(F/K/A NOVABAY PHARMACEUTICALS, INC.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	For the years ended December 31,
	2025 (As Restated)			2024 (As Revised)

Operating activities:
Net loss	$	(630,780	)	$	(7,223	)
Net income from discontinued operations, net of taxes		(11,081	)		(1,527	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense related to employee and director stock awards		29			148
Non-cash loss on extinguishment of Secured Convertible Note		—			13
Non-cash expense incurred to obtain consent of Secured Convertible Note holders		—			368
Non-cash loss (gain) on changes in fair value of warrant liability		509,940			(114	)
Non-cash loss on fair value of warrant liability in excess of proceeds at issuance		123,185			—
Non-cash loss on changes in fair value of embedded derivative liability		—			18
Non-cash loss on modifications of warrants		—			69
Non-cash right-of-use amortization		140			341
Non-cash impairment of long-lived assets		854			—
Amortization of debt discounts on convertible notes		248			873
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(445	)		(65	)
Other assets		(85	)		28
Accounts payable and accrued liabilities		(37	)		(57	)
Operating lease liabilities		(398	)		(369	)
Net cash used in operating activities, continuing operations		(8,430	)		(7,497	)

Financing activities:
Net proceeds from issuance of Series D Preferred Stock		3,786			—
Net proceeds from issuance of Series E Preferred Stock		2,049			—
Cash payment pursuant to warrant exchange		(525	)		—
Proceeds from Warrants Exercise		852			247
Proceeds from issuance of October 2025 pre-funded warrants		5,946			—
Proceeds from issuance of common stock and pre-funded warrants the 2024 Public Offering, net of issuance costs		—			2,858
Proceeds from Bridge Loan		—			500
Payment on Bridge Loan		(500	)		—
Payments on Secured Convertible Notes		—			(1,991	)
Payments on warrants purchase		(2,001	)		—
Payment on redemption of Series F Preferred Stock		(175	)		—
Dividend paid		(4,817	)		—
Cash debt issuance cost		—			(115	)
Net cash provided by financing activities, continuing operations		4,615			1,499

Net decrease in cash, cash equivalents, and restricted cash, continuing operations		(3,815	)		(5,998	)
Net increase in cash and cash equivalents, discontinued operations		11,133			3,299
Net decrease in cash, cash equivalents and restricted cash, consolidated		7,318			(2,699	)
Cash, cash equivalents and restricted cash, beginning of year		907			3,606
Cash, cash equivalents and restricted cash of continuing operations, end of year	$	8,225		$	907

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	For the years ended December 31,
	2025		2024
Supplemental disclosure of cash flow information:
Interest paid in continuing operations	$	8	$	130

	For the years ended December 31,
	2025		2024
Supplemental disclosure of non-cash information:
Conversions of preferred stock to common stock	$	5,835	$	1,944
Cancellation of Common Stock Warrants pursuant to Series F Agreements		1,484		—
Deemed Capital Contribution pursuant to Series F Agreements		434		—
Conversion of Unsecured Convertible Notes to common stock		246		—
Down round feature adjustments related to common stock warrants		—		1,005
Down round feature adjustments related to preferred stock		—		380
Warrant liabilities transferred to equity		—		312
Derivative liability related to Unsecured Convertible Notes transferred to equity		—		242
Issuance of derivative liability in conjunction with Unsecured Convertible Notes		—		224

The accompanying notes are an integral part of these Consolidated Financial Statements.

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STABLECOIN DEVELOPMENT CORPORATION

(F/K/A NOVABAY PHARMACEUTICALS, INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025

NOTE 1. ORGANIZATION

Stablecoin Development Corporation (f/k/a NovaBay Pharmaceuticals, Inc.) (the “Company” or “our,” “we,” or “us”) was previously focused on the development and sale of eyecare, wound care, and skin care products.

	●	The Avenova Asset Divestiture closed on January 17, 2025 in which we sold our primary eyecare business (see Note 14, “Avenova Asset Divestiture and Bridge Loan”);
	●	The PhaseOne Divestiture closed on January 8, 2025 in which we sold our PhaseOne trademark (see Note 15, “PhaseOne Divestiture”); and
	●	The DERMAdoctor Divestiture closed on March 12, 2024 in which we sold our primary skin care business (see Note 16, “DERMAdoctor Divestiture”).

During 2025, the Company completed a comprehensive realignment of its business and adopted a capital allocation approach focused on acquiring and holding digital assets that enable participation in decentralized financial networks, subject to applicable risk, liquidity, governance, and regulatory considerations. As part of this strategy, the Company intends to accumulate and hold digital assets for participation in blockchain-based networks, which may involve staking, governance participation, or other protocol-level activities. Such activities, when undertaken, may generate protocol-defined incentives or rewards in accordance with network rules.

The Company is incorporated under the laws of the State of Delaware. The Company has one operating and reportable segment encompassing its consolidated operations as of December 31, 2025.

Subsequent to December 31, 2025, on February 20, 2026, we effected a 1-for-5 Reverse Stock Split. Except as otherwise specifically noted, all share numbers, share prices, exercise/conversion prices and per share amounts in this annual report have been adjusted, on a retroactive basis, to reflect the Reverse Stock Split.

Discontinued Operations

Historical financial results related to each of the businesses and assets divested above are now presented as discontinued operations in our Consolidated Financial Statements (see Note 14, “Avenova Asset Divestiture and Bridge Loan”; Note 15, “PhaseOne Divestiture”; Note 16, “DERMAdoctor Divestiture” and Note 17, “Summary of Discontinued Operations”).

Liquidity

Based on funds available as of December 31, 2025, aggregate gross cash proceeds of approximately $25.0 million from the January 2026 Private Placement, net cash generated from the conversion of all of the stablecoins received in the January 2026 Private Placement into U.S. dollars, and $13.5 million in gross cash proceeds from issuances under the 2026 ATM Program between January 20, 2026 and March 16, 2026, management believes that the Company’s existing cash and cash equivalents will be sufficient to fund its planned operating expenses at least through March 19, 2027. However, there may be unknown or potential future claims and liabilities that may arise or changing circumstances that may cause the Company to expend cash significantly faster than currently anticipated because of factors beyond its control.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. GAAP and are expressed in U.S. dollars.

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Principles of Consolidation

The accompanying Consolidated Financial Statements include the accounts of the Company and its former wholly owned subsidiary, DERMAdoctor, which was fully divested on March 12, 2024, as of and for the year ended December 31, 2024. All significant intercompany balances and transactions have been eliminated in consolidation. See also Note 16, “DERMAdoctor Divestiture.” The accompanying Consolidated Financial Statements include only the accounts of the Company as of and for the year ended December 31, 2025.

Assets Held for Sale

The Company classifies long-lived assets or disposal groups as held for sale when management commits to a plan to sell and all criteria in ASC 360 are met, including availability for immediate sale, active marketing, and probable sale within one year. If shareholder approval is required, the held-for-sale criteria are not considered met until such approval is obtained. Assets and liabilities classified as held for sale are presented separately in the consolidated balance sheets. Prior periods are reclassified to conform to current presentation.

Discontinued Operations

A component of the Company is reported as a discontinued operation when it has been disposed of or classified as held for sale and the disposal represents a strategic shift that has, or will have, a major effect on the Company’s operations and financial results in accordance with ASC 205-20. Results of discontinued operations, including any gain or loss on disposal, are presented separately from continuing operations in the consolidated statements of operations for all periods presented. Prior periods are reclassified to conform to current presentation.

Financial Statement Reclassification

Certain account balances from prior periods have been reclassified in these Consolidated Financial Statements to conform to current period classifications.

Use of Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results may differ significantly from those estimates. Significant estimates made by management include, but are not limited to, assumptions for valuing warrants, assumptions for valuing derivative liabilities, long-lived asset impairments, stock-based compensation, income taxes and other contingencies.

These estimates are based on management’s best estimates and judgment. Actual results may differ from these estimates. Estimates, judgments, and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions, judgments and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Segment Information

The Company has one operating and reportable segment encompassing its consolidated operations as of December 31, 2025 and 2024. The Company’s chief operating decision maker (“CODM”) is its chief executive officer. The measurement of segment profit or loss is the net loss from continuing operations, as reported in the consolidated statements of operations. The measurement of segment assets is total consolidated assets, as reported on the consolidated balance sheet. The CODM allocates resources and assesses performance on a consolidated basis and is not regularly provided with disaggregated actual expense information beyond that included in the consolidated financial statements.

Cash, Cash Equivalents, and Highly Liquid Restricted Cash

The Company considers all highly-liquid instruments with a stated maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents are stated at cost, which approximates fair value. As of December 31, 2025 and 2024, the Company’s cash and cash equivalents were held in major financial institutions in the United States.

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The following table provides a reconciliation of the cash, cash equivalents, and restricted cash reported in the Consolidated Balance Sheets (in thousands):

	As of December 31,
	2025		2024
Cash and cash equivalents	$	7,958	$	430
Restricted cash included in other assets		267		477
Total cash, cash equivalents, and restricted cash in the Consolidated Statements of Cash Flows	$	8,225	$	907

The restricted cash amount included in other assets on the Consolidated Balance Sheets represents amounts held as certificates of deposit for long-term financing and lease arrangements as contractually required by our financial institution and landlord.

Concentrations of Credit Risk and Major Partners

Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash, cash equivalents and restricted cash. The Company maintains deposits of cash, cash equivalents and restricted cash with major financial institutions in the United States.

The Company has a significant amount of its cash balances at a major financial institution which exceed the federally insured limit of $250,000. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows.

The Company did not hold any digital assets as of December 31, 2025. Subsequent to year end, in connection with the January 2026 Private Placement and related transactions, the Company acquired and accumulated a significant position in SKY tokens. The concentration of the Company’s assets in SKY tokens increases the Company’s exposure to price volatility and other risks associated with the SKY token. See Note 20, “Subsequent Events,” for additional information regarding these transactions and related activities.

Fair Value of Financial Assets and Liabilities

The Company’s financial instruments include cash and cash equivalents, restricted cash, accounts payable, accrued liabilities and warrant liabilities. The Company’s cash and cash equivalents, restricted cash, accounts payable, and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments.

The Company follows Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures, with respect to assets and liabilities that are measured at fair value on a recurring basis and nonrecurring basis. Under this standard, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The standard also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. There are three levels of inputs that may be used to measure fair value:

Level 1 – quoted prices in active markets for identical assets or liabilities;

Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable; and

Level 3 – inputs that are unobservable (for example, cash flow modeling inputs based on assumptions).

Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

See additional information in Note 4, “Fair Value Measurements.”

Digital Assets

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Impairment of Long-Lived Assets

The Company’s long-lived assets are reviewed for impairment in accordance with ASC 360, Property, Plant and Equipment, which requires that companies consider whether events or changes in facts and circumstances, both internally and externally, may indicate that an impairment of long-lived assets held for use are present. The Company reviews long-lived assets for impairment at least annually or whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. In the event that such cash flows are not expected to be sufficient to recover the carrying amount of the asset, the assets are written down to their estimated fair values and the loss is recognized in the Consolidated Statements of Operations. The Company recorded $854 thousand and $0 thousand in long-lived assets impairment losses for the years ended December 31, 2025 and 2024, respectively. This included $39 thousand for fixed assets including leasehold improvements and $815 thousand for operating lease right-of-use assets for the year ended December 31, 2025. There was no impairment of long-lived assets for the year ended December 31, 2024.

Leases

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use assets may be required for items such as initial direct costs paid or incentives received.

The Company has elected to combine lease and non-lease components as a single component. This will potentially result in the initial and subsequent measurement of the balances of the right-of-use assets and lease liability for leases being greater than if the policy election was not applied. Leases include variable components (e.g., common area maintenance) that are paid separately from the monthly base payment based on actual costs incurred and therefore were not included in the right-of-use assets and lease liability but are reflected as an expense in the period incurred.

The lease expense is recognized over the expected term on a straight-line basis. Operating leases are recognized in the Consolidated Balance Sheets as right-of-use assets, operating lease liabilities current and operating lease liabilities non-current.

The Company recorded $815 thousand in impairment losses for the year ended December 31, 2025, related to operating lease right-of-use assets. There was no impairment losses related to leases for the year ended December 31, 2024.

Common Stock Warrants

The Company accounts for common stock purchase warrants issued in connection with its equity offerings in accordance with the provisions of ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging (ASC 815).

The Company classifies as equity any warrants that (i) require physical share settlement or net-share settlement or (ii) give the Company a choice of net-cash settlement (physical share settlement or net-share settlement). The Company classifies as liabilities any warrants that (i) require net-cash settlement, (ii) give the counterparty a choice of net-cash physical settlement or net-share settlement. In accordance with ASC 815, the Company also classifies as liabilities any warrants for which the shares underlying the contract are subject to stockholder approval before the warrant can be exercised.

For warrants that are classified as liabilities, the Company records the fair value of the warrants upon issuance and at each balance sheet date with changes in the estimated fair value recorded as a non-cash gain or loss in the Consolidated Statements of Operations. Warrants that contain nominal exercise prices are economically similar to common stock, and do not require assumptions related to volatility, expected term, or other option-pricing inputs are generally measured based on intrinsic value, calculated as the excess of the Company’s common stock price over the exercise price, multiplied by the number of warrant shares outstanding. The fair values of other warrants are determined using the Black-Scholes option pricing model and subject to a significant degree of management’s judgment. See Note 4, “Fair Value Measurements,” subheading “Black Scholes Valuation Models and Assumptions” and Note 10, “Common Stock Warrants and Warrant Liabilities,” subheading “Summary of Common Stock Warrant Liabilities.”

Preferred Stock

Preferred stock that is redeemable at the option of the holder or upon events not solely within the control of the Company is classified as mezzanine (temporary) equity in accordance with ASC 480-10-S99-3A. Such instruments are initially recorded at fair value, net of issuance costs, and are not accreted to redemption value unless redemption becomes probable.

Terms of the Company’s Preferred Stock have historically included a ratchet whereby the applicable conversion price could be adjusted (as defined and described in Note 11, “Stockholders’ Deficit”). The applicable ratchet provisions of the Company’s outstanding Series B Preferred Stock terminated during the year ended December 31, 2024. When a conversion price for outstanding Preferred Stock is adjusted under the ratchet, the Company records a deemed dividend as a reduction to income available to common stockholders. In accordance with ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), the deemed dividend was measured as the difference between (1) the fair value of the Preferred Stock immediately prior to the conversion price adjustment (but without the ratchet anti-dilution protection feature) and (2) the fair value of the Preferred Stock immediately after the conversion price adjustment (but without the ratchet anti-dilution protection feature). These fair values were determined using the Black Scholes option pricing model. These values are subject to a significant degree of management’s judgment. See also Note 4, “Fair Value Measurements,” subheading “Black Scholes Valuation Models and Assumptions.”

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Stock-Based Compensation

The Company’s stock-based compensation includes grants of stock options and restricted stock units (“RSUs”) to employees, consultants and non-employee directors. The expense associated with these grants is recognized in the Company’s Consolidated Statements of Operations based on their fair values as they are earned under the applicable vesting terms. For stock options granted, the fair value of the stock options is estimated using a Black-Scholes option pricing model. The Company accounts for RSUs issued to employees and non-employees (directors, consultants and advisory board members) based on the fair market value of the Company’s common stock on the date of issuance. See Note 12, “Stock-Based Compensation” for further information regarding stock-based compensation expense and the assumptions used in estimating the expense.

Income Taxes

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion or the entire deferred tax asset will not be recognized.

Uncertain Tax Positions

The Company accounts for uncertainty in income taxes in accordance with ASC 740-10. The Company recognizes the financial statement effects of a tax position only when it is more likely than not, based on the technical merits of the position, that the position will be sustained upon examination by the relevant taxing authority. For tax positions meeting the more-likely-than-not threshold, the amount recognized is measured as the largest amount of tax benefit that is greater than 50 percent likely to be realized upon ultimate settlement. The Company recognizes any interest and penalties related to uncertain tax positions as a component of income tax expense. Accrued interest and penalties are included in the related tax liability line in the consolidated balance sheets.

Income Tax Payments

Income taxes paid are presented as operating cash flows in the consolidated statements of cash flows. Refunds received are also presented within operating activities.

Net Loss per Share

The Company computes net loss per share by presenting both basic and diluted loss per share (“EPS”) as shown in the Company’s Consolidated Statements of Operations.

Basic EPS is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period, including stock options and warrants, using the treasury stock method. In computing diluted EPS, the average stock price for the period is used to determine the number of shares assumed to be purchased from the exercise of stock options or warrants. Potentially dilutive common share equivalents are excluded from the diluted EPS computation in net loss periods if their effect would be anti-dilutive.

The following table provides a reconciliation of the numerator used for basic and diluted (loss) earnings per share (in thousands):

	For the years ended December 31,
	2025 (As Restated)			2024
Numerator for basic and diluted income (loss) per share:
Net loss from continuing operations	$	(641,861	)	$	(8,750	)
Less: Increase to accumulated deficit due to adjustment to common stock warrants exercise price		—			1,005
Less: Increase to accumulated deficit due to adjustment to Preferred Stock conversion price		—			380
Net loss from continuing operations attributable to common stockholders	$	(641,861	)	$	(10,135	)
Net income from discontinued operations, net of taxes		11,081			1,527
Net loss	$	(630,780	)	$	(8,608	)

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The following outstanding Unsecured Convertible Notes, Preferred Stock, stock options and stock warrants were excluded from the diluted EPS computation as their effect would have been anti-dilutive:

	As of December 31,
	2025* (As Restated)		2024*
Shares issuable upon conversion of Unsecured Convertible Notes		7,143		21,429
Common stock equivalent of Series B Non-Voting Convertible Preferred Stock (the “*Series B Preferred Stock*”)		3,013		3,013
Stock options and RSUs		18,201		1,372
Stock warrants		22,681,197		2,167,279
		22,709,554		2,193,093

* After giving retroactive effect to a 1-for-5 reverse stock split that became effective February 20, 2026.

Revenue Recognition

The Company’s product revenue recognition policies are established in accordance with ASC 606, Revenue from Contracts with Customers, in accordance with the following five steps:

identify the contract(s) with a customer;

ii.

identify the performance obligations in the contract;

iii.

determine the transaction price;

iv.

allocate the transaction price to the performance obligations in the contract; and

recognize revenue when (or as) the entity satisfies performance obligations.

Revenue is recognized in accordance with the amount of consideration which the Company expects to receive when control of the goods is transferred to the customer, which generally occurs upon delivery of the products to a third-party carrier who is delivering the products to the customer. The Company defers recognition for pre-payments until the Company’s performance obligations are satisfied.

Cost of Goods Sold

Cost of goods sold includes third-party manufacturing costs, shipping and handling costs, third-party fulfillment fees, and other costs associated with products sold. Cost of goods sold also includes any necessary allowances for excess and obsolete inventory as well as lower of cost and estimated net realizable value.

Recent Accounting Pronouncements

In December 2025, the FASB issued Accounting Standards Update (“ASU”) No. 2025-11, Narrow-Scope Improvements (“ASU 2025-11”). ASU 2025-11 is effective for annual reporting periods beginning after December 15, 2027. Early adoption is permitted. While the adoption of ASU 2025-11 is not expected to have an effect on our Consolidated Financial Statements, it is expected to result in incremental disclosures within the notes to our Consolidated Financial Statements. The Company is currently evaluating ASU 2025-11.

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 is intended to increase transparency and provide investors with more detailed information about the nature of expenses reported on the face of the statements of operations. ASU 2024-03 does not change the requirements for the presentation of expenses on the face of the statements of operations. Under ASU 2024-03, entities are required to disaggregate, in tabular format, expenses presented on the face of the statements of operations if they include any of the following expense categories: employee compensation, depreciation, intangible asset amortization, and depreciation or depletion. For any remaining items within each relevant expense caption, entities must provide a qualitative description of the nature of those expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. While the adoption of ASU 2024-03 is not expected to have an effect on our Consolidated Financial Statements, it is expected to result in incremental disclosures within the notes to our Consolidated Financial Statements. The Company is currently evaluating ASU 2024-03.

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In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the transparency and disaggregation of income tax disclosures. The amendments primarily require (i) expanded income tax rate reconciliation disclosures using prescribed categories and (ii) disaggregation of income taxes paid, net of refunds, by federal, state and foreign jurisdictions, among other disclosure enhancements. The amendments do not change the recognition or measurement of income taxes under ASC 740. The Company adopted ASU 2023-09 effective January 1, 2025 on a prospective basis. The adoption did not have a material impact on the Company’s financial position, results of operations or cash flows, but resulted in expanded income tax disclosures in the accompanying notes to the consolidated financial statements.

In November 2023, the FASB issued ASU 2023-08, Intangibles — Goodwill and Other — Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). The adoption had no impact on the Company’s financial statements for the year ended December 31, 2025, as the Company held no crypto assets during the fiscal year. As described in Note 20, “Subsequent Events”, in January 2026 the Company entered into the January 2026 Private Placement pursuant to which it received digital assets, including stablecoins and SKY tokens, and subsequently engaged in purchases and sales of digital assets. Digital assets acquired in connection with the January 2026 Private Placement and subsequent transactions will be accounted for in accordance with ASU 2023-08. Depending on the nature of the digital assets held and the Company’s specific facts and circumstances—including the Company’s activities (such as staking or other yield-generating activities), the contractual terms of related arrangements, and the Company’s relationships with counterparties—the Company may apply different accounting models. Such models could include digital assets held at fair value with changes in fair value recognized in earnings under applicable crypto-asset guidance or, if such guidance is not applicable, accounting under other relevant U.S. GAAP models, including accounting for certain digital assets as indefinite-lived intangible assets measured at historical cost and evaluated for impairment. The applicable accounting framework may differ depending on the specific facts and circumstances, and the resulting classification, measurement, and presentation could materially affect the Company’s financial position and results of operations, including potential variability in reported results.

NOTE 3. RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS

On April 27, 2026, the audit committee of the board of directors and management of the Company concluded that the Company’s previously issued audited consolidated financial statements for the year ended December 31, 2025, should no longer be relied upon because of an error in the Company’s accounting for certain outstanding common stock warrants, which are referred to as the October 2025 Pre-funded Warrants herein. The error relates to the determination of the number of shares of common stock issuable upon exercise of the October 2025 Pre-funded Warrants that were issued by the Company in October 2025, which contain certain anti-dilution adjustment provisions with respect to subsequent issuances of common stock by the Company related to the conversion of certain convertible securities. At the time of issuance, the October 2025 Pre-funded Warrants represented the right to purchase 1,081,082 shares of common stock at a per share exercise price of $0.05. In the Company’s Form 10-K for the year ended December 31, 2025, the Company did not correctly account for the impact of the anti-dilution adjustment provisions contained in the October 2025 Pre-Funded Warrants triggered by dilutive issuances of securities from the Series D Preferred and Series E Preferred conversion in October 2025. Specifically, the Company failed to correctly reflect both (i) the decrease in the exercise price of such warrants to $0.002385 per share, and (ii) the increase in the number of shares issuable upon the exercise of such warrants, each as required by the anti-dilution adjustment provisions. As a result of such provisions, the number of shares issuable upon the exercise of the October 2025 Pre-Funded Warrants increased to 22,664,040 shares in October 2025.

The cumulative effect of the restatement on the Company’s financial statements is a $608.6 million increase in the warrant liability balance as of December 31, 2025 and a $123.2 million loss on fair value of warrant liability in excess of proceeds at issuance and a $485.5 million increase in loss on changes in fair value of warrant liability for the year ended December 31, 2025. These adjustments are non-cash and do not impact the Company’s operating expenses, operating income, net cash flows or cash and cash equivalents as previously reported.

The effects of the restatement on the consolidated balance sheets are summarized in the following table:

	As of December 31, 2025
	As Originally Reported			Adjustments			As Restated
Warrant liabilities		30,432			608,639			639,071
Total liabilities		31,861			608,639			640,500

Accumulated deficit		(210,415	)		(608,639	)		(819,054	)
Total stockholders’ equity		(23,176	)		(608,639	)		(631,815	)

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The effects of the restatement on the consolidated statements of operations and comprehensive income/loss are summarized in the following table:

	For the Year Ended December 31, 2025
	As Originally Reported			Adjustments			As Restated
Non-cash loss on changes in fair value of warrant liabilities		(24,486	)		(485,454	)		(509,940	)
Non-cash loss on fair value of warrant liability in excess of proceeds at issuance		—			(123,185	)		(123,185	)
Net income (loss) from continuing operations		(33,222	)		(608,639	)		(641,861	)
Net loss		(22,141	)		(608,639	)		(630,780	)
Net loss attributable to common stockholders	$	(22,141	)	$	(608,639	)	$	(630,780	)

Weighted-average shares of common stock used in computing net loss per share attributable to common stockholders (basic and diluted)		5,820			-			5,820

Basic and diluted net loss per share
Basic loss per share from continuing operations	$	(5.70	)	$	(104.58	)	$	(110.29	)
Basic earnings per share from discontinued operations		1.90			-			1.90
Basic (loss) earnings per share attributable to common stockholders	$	(3.80	)	$	(104.58	)	$	(108.39	)

The effects of the restatement on the consolidated statement of stockholders’ (deficit) equity are summarized in the following table:

	For the Year Ended December 31, 2025
	As Originally Reported			Adjustments			As Restated
Accumulated Deficit
Net loss	$	(22,141	)	$	(608,639	)	$	(630,780	)
Balance at December 31, 2025		(210,415	)		(608,639	)		(819,054	)

	For the Year Ended December 31, 2025
	As Originally Reported			Adjustments			As Restated
Total Stockholders' Equity (Deficit)
Net loss	$	(22,141	)	$	(608,639	)	$	(630,780	)
Balance at December 31, 2025		(23,176	)		(608,639	)		(631,815	)

The effects of the restatement on the consolidated statement of cash flows are summarized in the following table:

	For the Year Ended December 31, 2025
	As Originally Reported			Adjustments			As Restated
Operating activities:
Net loss	$	(22,141	)	$	(608,639	)	$	(630,780	)
Non-cash loss on changes in fair value of warrant liabilities		24,486			485,454			509,940
Non-cash loss on fair value of warrant liabilities in excess of proceeds at issuance		—			123,185			123,185

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NOTE 4. FAIR VALUE MEASUREMENTS

The following tables present the Company’s financial instruments measured at fair value on a recurring basis as of December 31, 2025 and 2024 (in thousands):

Fair Value Measurements Using

Quoted

Prices in

Active

Markets

Significant

for

Other

Significant

As of

Identical

Observable

Unobservable

December

Items

Inputs

31, 2025

(Level 1)

(Level 2)

(Level 3)

Assets

Restricted cash held as a certificate of deposit

267

—

Liabilities

Warrant liability

639,071

—

639,071

—

Fair Value Measurements Using

Quoted

Prices in

Active

Markets

Significant

for

Other

Significant

As of

Identical

Observable

Unobservable

December

Items

Inputs

31, 2024

(Level 1)

(Level 2)

(Level 3)

Assets

Restricted cash held as a certificate of deposit

477

—

The Company’s restricted cash held as a deposit is classified within Level 1 of the fair value hierarchy because it is valued using quoted market prices in active markets, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency.

The warrant liability is measured at fair value based on the intrinsic value of the warrants, which is determined using the quoted market price of the Company’s common stock at the measurement date. Because the warrants themselves are not actively traded and the valuation relies on observable market inputs other than quoted prices for identical instruments, the liability is classified within Level 2 of the fair value hierarchy.

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Black Scholes Valuation Models and Assumptions

The Company utilizes a Black Scholes model for various valuations as outlined throughout this report. The following tables summarize the assumptions utilized for valuations impacting results for the periods reported.

Warrant Liabilities

Certain of the Company’s warrants were subject to stockholder approval upon issuance or amendment and prior to exercise. Warrants requiring stockholder approval are recorded as a liability at fair value upon issuance or amendment and continue to be recorded as a liability at fair value at each reporting date until stockholder approval occurs at which time they are transferred to stockholders’ equity at their fair value on the date of approval.

For warrants with substantive exercise prices, fair value is determined using a Black-Scholes option pricing model as outlined below. Pre-funded warrants with a nominal exercise price are considered to be substantially intrinsic value instruments, as the exercise price is de minimis relative to the fair value of the underlying common stock. Accordingly, the fair value of such pre-funded warrants is based on the market price of the Company’s common stock less the nominal exercise price. See Note 10, “Common Stock Warrants” for additional information and the definitions of the Company’s warrants.

	December 2023 Warrants
Measurement event	Stockholder Approval

Date	May 28, 2024
Total Value (in millions)	$	0.2
Gain (Loss) (in thousands)	$	(51	)

Assumptions:
Exercise price	$	43.75
Market price	$	24.70
Volatility		83.9	%
Risk-free rate		4.56	%
Dividend yield		0.0	%
Term (years)		5.1

	March			March
	2024			2024
	Warrant			Warrant
Measurement event	Reporting Date			Stockholder Approval
Date	March 31, 2024			May 28, 2024
Total Value (in millions)	$	0.1		$	0.1
Gain (Loss) (in thousands)	$	21		$	28

Assumptions:
Exercise price	$	24.50		$	24.50
Market price	$	18.30		$	24.70
Volatility		86.9	%		83.9	%
Risk-free rate		4.21	%		4.56	%
Dividend yield		0.0	%		0.0	%
Term (years)		5.5			5.3

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Warrant Modifications

Amendments to warrant terms are recorded as a non-cash gain (or loss) on modification of common stock warrants. The gain or loss represents the decrease or increase in the fair value of the amended warrants when comparing the value immediately before and after amendment using the Black Scholes option pricing model. Fair value was determined using a Black Scholes model as outlined below.

	September 2022, November 2022, and May 2023 Warrants
Measurement event	Prior to amendment					After amendment
Date	June 14, 2024					June 14, 2024
Total Value (in thousands)	$	66				$	100
Loss (in thousands)	not applicable					$	70

Assumptions:
Exercise price	$	43.75	-	262.50		$	12.50
Market price	$	12.55				$	12.55
Volatility		89.3			%		89.3			%
Risk-free rate		4.27	-	5.08	%		4.27	-	5.08	%
Dividend yield		0.0			%		0.0			%
Term (years)		1.0	-	4.4			1.0	-	4.4	%

Warrant Down Round Feature Adjustment

Terms of the Company’s outstanding 2024 July Warrants included a down round feature adjustment whereby the applicable exercise price was automatically adjusted (see Note 8, “Financing Activities”). When the exercise price was adjusted, the Company recorded a deemed dividend as a reduction to income available to common stockholders. In accordance with ASC 820, the deemed dividend is measured as the difference between (1) the fair value of the 2024 July Warrants immediately prior to the conversion price adjustment and (2) the fair value of the 2024 July Warrants immediately after the conversion price adjustment. Fair value was determined using a Black Scholes model, as outlined below.

	Series F-1
Measurement event	Prior to adjustment			After adjustment

Date	September 27, 2024			September 27, 2024
Total value (in millions)	$	1.7		$	1.9
Deemed dividend (in millions)	not applicable			$	0.2

Assumptions:
Exercise price	$	5.50		$	3.30
Market price	$	3.55		$	3.55
Volatility		97.1	%		97.1	%
Risk-free rate		3.55	%		3.55	%
Dividend yield		0.0	%		0.0	%
Term (in years)		4.84			4.84

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	Series F-2
Measurement event	Prior to adjustment			After adjustment

Date	September 27, 2024			September 27, 2024
Total value (in millions)	$	0.2		$	0.6
Deemed dividend (in millions)	not applicable			$	0.4

Assumptions:
Exercise price	$	5.50		$	3.30
Market price	$	3.55		$	3.55
Volatility		97.1	%		97.1	%
Risk-free rate		4.64	%		4.64	%
Dividend yield		0.0	%		0.0	%
Term (in years)		0.34			0.34

	Series F-3
Measurement event	Prior to adjustment			After adjustment

Date	September 27, 2024			September 27, 2024
Total value (in millions)	$	0.6		$	1.0
Deemed dividend (in millions)	not applicable				0.4

Assumptions:
Exercise price	$	5.50		$	3.30
Market price	$	3.55		$	3.55
Volatility		97.1	%		97.1	%
Risk-free rate		4.10	%		4.10	%
Dividend yield		0.0	%		0.0	%
Term (in years)		0.84			0.84

Preferred Stock Conversion Price Adjustments

Terms of the Company’s outstanding Series C Preferred Stock historically included a ratchet whereby the applicable conversion price could be adjusted (see Note 11, “Stockholders’ Deficit”). The applicable ratchet provisions of the Company’s outstanding Preferred Stock terminated during the year ended December 31, 2024. Prior to its termination, when a conversion price for outstanding Preferred Stock was adjusted under the ratchet, the Company recorded a deemed dividend as a reduction to income available to common stockholders. In accordance with ASC 820, the deemed dividend is measured as the difference between (1) the fair value of the Preferred Stock immediately prior to the conversion price adjustment (but without the ratchet anti-dilution protection feature) and (2) the fair value of the Preferred Stock immediately after the conversion price adjustment (but without the ratchet anti-dilution protection feature). Fair value was determined using a Black Scholes model as outlined below.

	Series C Preferred Stock
Measurement event	Prior to ratchet			After ratchet
Date	March 24, 2024			March 24, 2024
Total value (a) (in millions)	$	0.5		$	0.9
Deemed dividend (in millions)	not applicable			$	0.4

Assumptions:
Exercise price	$	43.75		$	24.50
Market price	$	23.85		$	23.85
Volatility		79.9	%		79.9	%
Risk-free rate		5.51	%		5.51	%
Dividend yield		0.0	%		0.0	%
Term (in years)		0.1			0.1

(a)

Includes value of incremental shares underlying preferred stock and adjusted for probability of occurrence.

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Derivative liability Issued in Conjunction with Unsecured Convertible Notes

Upon issuance in March 2024, the Unsecured Convertible Notes contained a lender’s conversion option which represented an embedded call option requiring bifurcation as an embedded derivative liability at fair value (see Note 9, “Convertible Notes” for additional discussion). Fair value was determined using a Black Scholes model as outlined below.

	Unsecured Convertible Notes derivative			Unsecured Convertible Notes derivative
Measurement event	Issuance			Shareholder Approval
Date	March 25, 2024			May 28, 2024
Total value (in millions)	$	0.2		$	0.2
Gain (Loss) (in thousands)	not applicable			$	(82	)

Assumptions:
Exercise price	$	24.50		$	24.50
Market price	$	22.55		$	24.70
Volatility		86.9	%		83.9	%
Risk-free rate		4.54	%		4.94	%
Dividend yield		0.0	%		0.0	%
Term (years)		2.0			1.8

NOTE 5. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following (in thousands):

	As of December 31,
	2025		2024
Prepaid insurance	$	299	$	48
Deferred financing costs		241		-
Other		177		224
Total prepaid expenses and other current assets	$	717	$	272

NOTE 6. ACCRUED LIABILITIES

Accrued liabilities consisted of the following (in thousands):

	As of December 31,
	2025		2024
Taxes	$	247	$	—
Interest on Unsecured Convertible Notes		58		37
Employee payroll and benefits		33		360
Other		58		184
Total accrued liabilities	$	396	$	581

NOTE 7. COMMITMENTS AND CONTINGENCIES

Indemnification Agreements

As permitted under Delaware law and in accordance with its bylaws, the Company indemnifies its officers and directors for certain events or occurrences while the officer or director is or was serving at the Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum amount of potential future indemnification is unlimited; however, the Company has a director and officer insurance policy that limits its exposure and may enable it to recover a portion of any future payments. The Company believes the fair value of these indemnification agreements is minimal. Accordingly, it has not recorded any liabilities for these agreements as of December 31, 2025 or December 31, 2024.

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In the normal course of business, the Company provides indemnification of varying scope under its agreements with other entities, typically its suppliers and others, including in connection with capital raises transactions. Additionally, the Company provided for certain indemnification in conjunction with the Avenova Asset Divestiture (see Note 14, “Avenova Asset Divestiture and Bridge Loan”). Pursuant to these agreements, it generally indemnifies, holds harmless, and agrees to reimburse the indemnified parties for losses suffered or incurred by the indemnified parties in connection with the use or testing of its products or product candidates or with any U.S. patent or any copyright or other intellectual property infringement claims by any third party with respect to its products. The term of these indemnification agreements is generally perpetual. The potential future payments the Company could be required to make under these indemnification agreements are unlimited. Historically, costs related to these indemnification provisions have been immaterial. The Company also maintains various liability insurance policies that limit its exposure. As a result, it believes the fair value of these indemnification agreements is minimal. Accordingly, the Company has not recorded any liabilities for these agreements as of December 31, 2025 or December 31, 2024.

Legal Matters

From time to time, the Company is subject to various legal proceedings, as well as demands, claims and threatened litigation, which arise in the normal course of our business. The ultimate outcome of any litigation or other legal dispute is uncertain. When a loss related to a legal proceeding or claim is probable and reasonably estimable, the Company accrues its best estimate for the ultimate resolution of the matter. If one or more legal matters are resolved against the Company in a reporting period for an amount above expectations, the Company’s financial condition and operating results for that period may be adversely affected. As of December 31, 2025 and December 31, 2024, there were no legal matters that, in the opinion of management, would ultimately result in liability that would have a material adverse effect on the Company’s financial position, results of operations or cash flows. Any outcome, whether favorable or unfavorable, may materially and adversely affect the Company due to legal costs and expenses, diversion of management attention and other factors. The Company cannot provide assurance that additional contingencies of a legal nature or contingencies having legal aspects will not be asserted against it in the future, and these matters could relate to prior, current, or future transactions or events.

Leases

The Company leases office space for its corporate headquarters located in Emeryville, California. The current lease term expires on July 31, 2027. The Company recorded $815 thousand in impairment losses for the year ended December 31, 2025 related to operating lease right-of-use assets with no impairment loss for the year ended December 31, 2024.

Lease costs for the years ended December 31, 2025 and 2024 were as follows (in thousands):

	For the years ended December 31,
	2025		2024
Operating lease – expense	$	207	$	400
Operating lease – included in operating cash flow		389		426

The Company has measured its operating lease liabilities as the present value of minimum lease payments using its incremental borrowing rate over the remaining term for each operating lease. The weighted average remaining lease term and the weighted average discount rate for operating leases from continuing operations are summarized as follows:

	For the years ended December 31,
	2025			2024
Weighted-average remaining lease term (in years)		1.6			2.6
Weighted-average discount rate		5	%		5	%

Future lease payments under non-cancelable leases as of December 31, 2025 were as follows (in thousands):

2026		444
2027		290
Total future minimum lease payments		734
Less: Imputed interest		(25	)
Total	$	709

Reported as:
Operating lease liability	$	422
Operating lease liability- non-current		287
Total	$	709

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NOTE 8. FINANCING ACTIVITIES

October 2025 Pre-Funded Warrants

On October 16, 2025, the Company issued and sold pre-funded warrants (the "October 2025 Pre-Funded Warrants") to purchase an aggregate of 1,081,082 shares of Common Stock, to R01 and Framework in two transactions for aggregate net proceeds of approximately $5.9 million. The purchase price was $5.50 per October 2025 Pre-Funded Warrant, representing 110% of the closing price of the Common Stock on the day before the issuance, less the $0.05 exercise price for each such October 2025 Pre-Funded Warrant. Pursuant to the terms of the October 2025 Pre-Funded Warrants, the exercise price and the number of shares issuable thereunder are subject to adjustment upon the occurrence of certain dilutive issuances of securities by the Company, including issuances at a price per share below the then-current exercise price (the "Anti-Dilution Provisions"). The Anti-Dilution Provisions are designed to preserve the economic value of the October 2025 Pre-Funded Warrants by proportionally increasing the number of underlying shares upon any reduction in the exercise price. As a result of dilutive issuances made by the Company during the year ended December 31, 2025, the exercise price of the October 2025 Pre-Funded Warrants was reduced to $0.002385 per share and the aggregate number of shares issuable upon exercise of the October 2025 Pre-Funded Warrants increased to 22,664,040 shares. The October 2025 Pre-Funded Warrants are exercisable for shares of Common Stock upon the receipt of stockholder approval at the March 12, 2026 special meeting of stockholders.

The October 2025 Pre-Funded Warrants were classified as a liability under ASC 815 from issuance through the receipt of stockholder approval subsequent to December 31, 2025, on March 12, 2026. The issuance-date fair value of the warrants exceeded the cash proceeds received, resulting in the recognition of a non-cash loss on fair value of warrant liability in excess of proceeds at issuance of $123.2 million during the year ended December 31, 2025. See Note 10, "Common Stock Warrants and Warrant Liabilities," for additional information.

2025 Preferred Stock Purchase Agreement

On August 19, 2025, the Company entered into a securities purchase agreement (the “2025 Preferred Stock Purchase Agreement”) that provides for the Company to sell in a private placement (i) an aggregate of 481,250 shares of Series D Preferred Stock convertible into an aggregate of 15.4 million shares of Common Stock for $3.85 million and (ii) after the Conversion Approval (as described below), an aggregate of 268,750 shares of Series E Preferred Stock convertible into an aggregate of 8.6 million shares of Common Stock for an additional $2.15 million.

The purchase of the 481,250 shares of Series D Preferred Stock was completed on August 19, 2025 at a price of $8.00 per share for aggregate gross proceeds of $3.9 million and net proceeds to the Company of $3.8 million after deducting $64 thousand of issuance costs (the “Initial Series D Preferred Purchase”).

Since the Common Stock is currently listed on the NYSE American, and among these requirements are Section 713(a) and (b) of the NYSE American Company Guide. Section 713(a) of the Company Guide requires stockholder approval in connection with any transaction, other than a public offering, involving the sale, issuance, or potential issuance, of common stock or securities convertible into common stock, equal to 20.0% or more of presently outstanding stock for less than the greater of book or market value. Section 713(b) of the Company Guide requires stockholder approval of a transaction, other than a public offering, involving the sale, issuance or potential issuance by an issuer of common stock (or securities convertible into, or exercisable for, common stock) when the issuance or potential issuance of additional shares may result in a change of control of the issuer. As a result of the significant number of shares of Common Stock that may be issued upon the future conversion of the Series D Preferred Stock and Series E Preferred Stock compared to the currently issued and outstanding shares of Common Stock as provided above, the Company was required to obtain stockholder approval in accordance with the Company Guide Rule 713(a) and Rule 713(b) for the future conversion of the Series D Preferred Stock and the Series E Preferred Stock (the “Conversion Approval”) which the Company received in October 2025.

In October 2025, after the Conversion Approval, each share of Series D Preferred Stock automatically converted into 32 shares of Common Stock or an aggregate of 15.4 million shares of Common Stock. As of December 31, 2025, no shares of Series D Preferred Stock remained outstanding.

On October 16, 2025, after the Conversion Approval, pursuant to the 2025 Preferred Stock Purchase Agreement, the Company filed the certificate of designations relating to the Series E Preferred Stock and issued 268,750 shares to the Purchasers for gross proceeds of approximately $2.2 million (the “Series E Preferred Closing”). Each share of Series E Preferred Stock was eligible to convert at the option of the holder or, otherwise, automatically convert 30 business days after the Stockholder Approval, into 32 shares of Common Stock, for an aggregate of 8.6 million shares of Common Stock. On October 21, 2025, at the option of the Purchasers, all 268,750 shares of Series E Preferred Stock were converted into 8.6 million shares of Common Stock. As of December 31, 2025, no shares of Series E Preferred Stock remained outstanding.

2025 Warrant Exchange and Issuance of Series F Preferred Stock

On August 19, 2025, simultaneous with the signing of the 2025 Preferred Stock Purchase Agreement, the Company entered into warrant exchange agreements (the “Series F Agreements”) with each of Anson Investments Master Fund LP, Hudson Bay Capital Management LP and Armistice Capital, LLC (collectively, the “Series F Holders”). The Series F Agreements provide for the irrevocable surrender and cancellation of all warrants beneficially owned by the Series F Holders, in exchange for the Company issuing (i) an aggregate of 1,986,568 shares of Series F Preferred Stock and (ii) an aggregate cash payment of $525 thousand to the Series F Holders. Series F-1 through F-3 Warrants exercisable for an aggregate of 397,657 shares of common stock were surrendered and cancelled in conjunction with the Series F Agreements. The Series F Agreements also include a “most favored nations” provision that would increase the amount paid to the Series F Holders if, after the effective date of the Series F Agreements, another holder of the Company’s Common Stock purchase warrants receives a higher amount per underlying warrant; except that this provision shall not apply to (i) settlements with retail investor warrant holders that (1) individually is less than or equal to six and thirty hundredths percent (6.30%) of a Series F Holder’s total warrants outstanding or (2) in the aggregate is less than or equal to twelve and seventy hundredths percent (12.70%) of a Series F Holder’s total warrants outstanding or (ii) prior warrant settlements by the Company.

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Because the book value of the Common Stock Warrants cancelled in conjunction with the Series F Agreements exceeded the total cash payment made and carry value of the Series F Preferred Stock issued, the Company recorded a deemed capital contribution of $434 thousand upon entering the Series F Agreements.

2024 Public Offering

On July 26, 2024, the Company entered into an underwriting agreement with Ladenburg Thalmann & Co., Inc., as the sole underwriter (the “Underwriter”), relating to the issuance and sale in a public offering of: (i) 231,713 shares of common stock and 408,362 July 2024 Pre-Funded Warrants, in lieu of shares of common stock, (ii) 640,076 Series F-1 Warrants to purchase up to 640,076 shares of common stock, (iii) 640,076 Series F-2 Warrants to purchase up to 640,076 shares of common stock and (iv) 640,076 Series F-3 Warrants to purchase up to 640,076 shares of common stock.

The Series F-1 Warrants had an exercise price of $5.50 per share at issuance, were exercisable immediately upon issuance, and will expire on the five-year anniversary of the date of issuance. The Series F-2 Warrants had an exercise price of $5.50 per share at issuance, were exercisable immediately upon issuance, and expired on the six-month anniversary of the date of issuance. The Series F-3 Warrants had an exercise price of $5.50 per share at issuance, were exercisable immediately upon issuance, and will expire on the one-year anniversary of the date of issuance. The July 2024 Pre-Funded Warrants were immediately exercisable at a nominal exercise price of $0.05 per share and could be exercised at any time until the July 2024 Pre-Funded Warrants were exercised in full. As of September 30, 2024, all of the July 2024 Pre-Funded Warrants had been exercised, resulting in the Company issuing 408,362 shares of common stock. In connection with such exercises, the Company received net proceeds of approximately $20 thousand.

The July 2024 Warrants include a down round feature adjustment where the exercise price was automatically reset to a price equal to the lesser of (i) the then exercise price and (ii) 90% of the volume weighted average prices for the five (5) trading days immediately preceding the date that is sixty calendar days after issuance of the July 2024 Warrants as applicable. Such down round feature adjustment was triggered on September 27, 2024, resulting in a reduced exercise price of $3.30 per share. As a result of the reduced exercise price, a deemed dividend of $1.0 million was recognized in accordance with a Black Scholes valuation model.

The exercise price and number of shares of common stock issuable upon exercise of the July 2024 Warrants is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting the common stock and the exercise price. Subject to limited exceptions, a holder may not exercise any portion of its July 2024 Warrants to the extent that the holder would beneficially own more than 4.99% (or, at the election of the holder prior to the date of issuance, 9.99%) of the Company’s outstanding common stock after exercise.

In addition, the Company granted the Underwriter a 45-day option to purchase up to 95,454 additional shares of common stock and/or 95,454 Series F-1 Warrants to purchase up to 95,454 shares of common stock, 95,454 Series F-2 Warrants to purchase up to 95,454 shares of common stock and 95,454 Series F-3 Warrants to purchase up to 95,454 shares of common stock, or any combination thereof, as determined by the Underwriter, at the public offering price, less underwriting discounts and commissions, in each case solely to cover over-allotments, if any.

The Underwriter partially exercised this option on July 26, 2024, for (i) 67,366 shares of common stock, (ii) 67,366 Series F-1 Warrants to purchase up to 67,366 shares of common stock, (iii) 67,366 Series F-2 Warrants to purchase up to 67,366 shares of common stock and (iv) 67,366 Series F-3 Warrants to purchase up to 67,366 shares of common stock.

The 2024 Public Offering closed on July 29, 2024, and the Company received gross proceeds of $3.9 million. Net proceeds of $2.9 million were recorded as equity after taking into account underwriting discounts and commissions. A portion of the proceeds were used towards repaying the Secured Convertible Notes, which were repaid in full during the third quarter of 2024.

2024 Warrant Reprice Transaction

In June 2024, the Company entered into a warrant reprice transaction (the “2024 Warrant Reprice Transaction”) with certain existing holders of (i) warrants issued in September 2022 to purchase common stock, (ii) Series A-1 warrants issued in November 2022 to purchase common stock, (iii) Series B-1 Warrants issued in May 2023 to purchase common stock, and (iv) Series B-2 Warrants issued in May 2023 to purchase common stock (collectively (i) through (iv), the “Participant Warrants”). The participants agreed to exercise a portion of their Participant Warrants at a reduced exercise price of $12.50 per share. Participant Warrants were exercised for an aggregate of 18,076 shares of common stock, resulting in gross proceeds of approximately $0.2 million.

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The Company also issued participants in the 2024 Warrant Reprice Transaction a new June 2024 Warrant to purchase a number of shares of common stock equal to 100% of the shares of common stock exercised. The June 2024 Warrants are substantially similar to the Participant Warrants, except that the June 2024 Warrants will (i) be initially exercisable on the six-month anniversary of the date of issuance; (ii) have an exercise price of $12.85 per share; and (iii) have a term of five (5) years and six (6) months from the date of the closing of the 2024 Warrant Reprice Transaction.

The Company incurred total issuance costs of $96 thousand in conjunction with the 2024 Warrant Reprice Transaction. The Company incurred a $69 thousand non-cash loss on the modification of common stock warrants which was recorded in “Other expense, net” during the year ended December 31, 2024.

NOTE 9. CONVERTIBLE NOTES

Unsecured Convertible Notes

On March 24, 2024, in connection with completing certain required conditions to close the DERMAdoctor Divestiture (see Note 16, “DERMAdoctor Divestiture”), the Company and the holders of the Secured Convertible Notes (as defined below) entered into a First Amendment (the “First Amendment”) to the Company’s Security Agreement, dated April 27, 2023 (the “Security Agreement”), to remove all of the DERMAdoctor membership units and any assets of DERMAdoctor as collateral for the Company’s obligations pursuant to the Secured Convertible Notes and for DERMAdoctor to be removed as a party to the Security Agreement, and a Consent and Release (the “Subsidiary Guarantee Consent”), to terminate the Subsidiary Guarantee, dated April 7, 2023 (the “Subsidiary Guarantee”) (collectively, the “2024 Subsidiary Guarantee Termination”).

The Company issued $525 thousand aggregate principal amount of unsecured convertible notes (the “Unsecured Convertible Notes”) in conjunction with the 2024 Subsidiary Guarantee Termination. The Unsecured Convertible Notes were due March 25, 2026 and bear no stated interest. The Unsecured Convertible Notes may be converted at a conversion price equal to $24.50 per share at any time at the election of the holder up to the amount of outstanding principal at the time of conversion subject to certain limitations such as beneficial ownership limitations.

Upon issuance in March 2024, the lender’s conversion option under the Unsecured Convertible Notes represented an embedded call option requiring bifurcation as an embedded derivative liability because the common stock underlying the option required stockholder approval before the option could be exercised. The fair value of the embedded derivative was determined to be $224 thousand upon issuance in accordance with a Black Scholes valuation model. See also Note 4, “Fair Value Measurements,” subheading “Black Scholes Valuation Models and Assumptions.” Upon stockholder approval on May 28, 2024, the embedded call option no longer required liability treatment and was reclassified to equity. The fair value of the embedded derivative liability was determined to be $242 thousand as of May 28, 2024. The increase of $18 thousand in fair value between issuance and May 28, 2024 was recorded in other expense, net in the Consolidated Statements of Operations. See also Note 4, “Fair Value Measurements,” subheading “Black Scholes Valuation Models and Assumptions.”

Upon issuance, the discount to the note recorded for the embedded derivative liability and debt issuance costs were amortized to interest expense using the effective interest rate method over the term of the Unsecured Convertible Notes, assuming that the Unsecured Convertible Notes will be redeemed for cash of $525 thousand at time of maturity as of March 25, 2026. The effective interest rate on the Unsecured Convertible Notes is 144%. Interest expense recognized, including amortization of the issuance costs and debt discount, was $275 and $62 thousand, which was included in other expense, net in the Consolidated Statements of Operations for the years ended December 31, 2025 and 2024, respectively.

In December 2025, certain holders elected to convert $350 thousand aggregate principal amount of the Unsecured Convertible Notes to 14,286 shares of common stock. The conversions were accounted for as partial extinguishments of debt at carrying value in accordance with ASC 470, resulting in the reclassification of $246 thousand to stockholders’ equity during the year ended December 31, 2025, with no comparable activity during the year ended December 31, 2024. Amortization of the debt discount and issuance costs ceased for the portions of the Unsecured Convertible Notes that were converted, with interest expense recognized through the respective conversion dates. The effective interest rate and amortization methodology for the remaining outstanding balance were not modified.

As of December 31, 2025, the remaining $175 thousand aggregate principal amount of Unsecured Convertible Notes outstanding were convertible into 7,143 shares of common stock. The net carrying amount of the remaining Unsecured Convertible Notes was approximately $125 thousand, reflecting approximately $50 thousand of unamortized debt discount and issuance costs. Of this amount, approximately $67 thousand was presented as Unsecured Convertible Notes on the Consolidated Balance Sheets and approximately $58 thousand of accrued interest was included in accrued liabilities. Based on the closing price of the Company’s common stock of $28.20 per share on December 31, 2025, the aggregate if-converted value of the shares issuable upon conversion of the remaining notes exceeded the principal amount by approximately $26 thousand. The estimated fair value of the remaining Unsecured Convertible Notes as of December 31, 2025 was approximately $201 thousand, based on the market price of the Company’s common stock and the number of shares issuable upon conversion, and is classified as Level 2 within the fair value hierarchy. Subsequent to December 31, 2025, in January 2026, all remaining outstanding Unsecured Convertible Notes were converted into 7,143 shares of common stock.

Secured Convertible Notes

In May 2023, the Company issued $3.3 million aggregate principal amount Original Issue Discount Senior Secured Convertible Debentures (the “Secured Convertible Notes”) in conjunction with a May 2023 private placement (the “2023 Private Placement”). The Secured Convertible Notes were issued with a $300 thousand original issue discount.

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Beginning June 1, 2023, the Company was required to start making a monthly redemption of 1/18th of the original principal amount of the Secured Convertible Notes. Each monthly redemption reduced the outstanding principle of the Secured Convertible Note by $183 thousand.

The Secured Convertible Notes also provided for a redemption equal to up to 20% of the gross proceeds received by the Company from any financing completed while the Secured Convertible Notes were outstanding. In connection with the 2024 Warrant Reprice Transaction (see Note 11, “Stockholders’ Deficit”), the Company made such a payment totaling $45 thousand in cash against the Secured Convertible Notes. In connection with the 2024 Public Offering (see Note 11, “Stockholders’ Deficit”), the Company repaid the remaining balance of the Secured Convertible Notes with a payment totaling $433 thousand in cash. Upon full repayment, the Company was released from any further obligations under the Secured Convertible Notes with the lenders.

The discounts and debt issuance costs were amortized to interest expense using the effective interest rate method over the term of the Secured Convertible Notes. The effective interest rate on the Secured Convertible Notes was 173%. During the year ended December 31, 2024, interest expense recognized, including amortization of the issuance costs and debt discount, was $0.8 million which was included in other expense, net in the Consolidated Statements of Operations.

NOTE 10. COMMON STOCK WARRANTS AND WARRANT LIABILITIES

Summary of Outstanding Common Stock Warrants and Related Activity (after giving retroactive effect to a 1-for-5 reverse stock split that became effective February 20, 2026)

	July 2020 Warrants		TLF Warrants		November 2021 Warrants			September 2022 Warrants			November 2022 A-1 Warrants			December 2023 Warrants			June 2024 Warrants			July 2024 Pre-Funded Warrants			July 2024 Series F-1 Warrants			July 2024 Series F-2 Warrants			July 2024 Series F-3 Warrants			October 2025 Pre-Funded Warrants (As Restated)		Other Warrants			Total Warrants (As Restated)
Outstanding at December 31, 2023		784		3		4,593			1,875			2,949			14,452			-			-			-			-			-			-		17,537			42,193
Warrants granted		-		-		-			-			-			-			18,077			-			707,443			707,443			707,443			-		5,715			2,146,121
Pre-funded Warrants granted		-		-		-			-			-			-			-			408,363			-			-			-			-		-			408,363
Warrants exercised		-		-		-			(1,021	)		(2,495	)		-			-			-			-			-			-			-		(14,561	)		(18,077	)
Pre-funded Warrants exercised		-		-		-			-			-			-			-			(408,363	)		-			-			-			-		-			(408,363	)
Warrants expired		-		-		-			-			-			-			-			-			-			-			-			-		(2,976	)		(2,976	)
Outstanding at December 31, 2024		784		3		4,593			854			454			14,452			18,077			-			707,443			707,443			707,443			-		5,715			2,167,261
Warrants granted		-		-		-			-			-			-			-			-			-			-			-			-		-			-
Pre-funded Warrants granted		-		-		-			-			-			-			-			-			-			-			-			1,081,082		-			1,081,082
Warrants exercised		-		-		-			-			-			-			(11,751	)		-			(25,700	)		(80,546	)		(105,986	)		-		-			(223,983	)
Warrants expired		-		-		-			-			-			-			-			-			-			(626,897	)		(409,988	)		-		-			(1,036,885	)
Warrants exchanged pursuant to Series F Agreements		-		-		(536	)		(522	)		-			(7,253	)		(1,815	)		-			(381,818	)		-			-			-		(5,715	)		(397,659	)
Warrants repurchased		-		-		(1,225	)		-			-			(1,858	)		-			-			(297,025	)		-			(191,469	)		-		-			(491,577	)
Outstanding at December 31, 2025		784		3		2,832			332			454			5,341			4,511			-			2,900			-			-			1,081,082		-			1,098,239

Weighted Average Exercise Price at December 31, 2025	$	4,566.65	$	4,114.80	$	557.65		$	1,102.50		$	1,102.50		$	43.75		$	12.85					$	3.30								$	0.002385				$	5.77
Expiration Date	January 22, 2026		January 15, 2026		September 11, 2028			September 11, 2028			November 20, 2028			June 21, 2029			December 17, 2029						July 30, 2029									do not expire

The total number of outstanding warrants as of December 31, 2025 was 1,098,239. However, the 1,081,082 outstanding October 2025 Pre-Funded Warrants are exercisable into an aggregate of 22,664,040 shares of common stock as a result of the anti-dilution adjustments described above. Accordingly, the total number of shares of common stock issuable upon exercise of all outstanding warrants as of December 31, 2025 was 22,681,197 shares. Total net proceeds from warrant exercises during the years ended December 31, 2025 and 2024 was $852 thousand and $247 thousand, respectively.

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October 2025 Pre-Funded Warrants

In October 2025, the Company issued and sold pre-funded warrants (the "October 2025 Pre-Funded Warrants") to purchase an aggregate of 1,081,082 shares of Common Stock, to R01 and Framework for aggregate net proceeds of approximately $5.9 million. The purchase price was $5.50 per October 2025 Pre-Funded Warrant, representing 110% of the closing price of the Common Stock on the day before the issuance, less the $0.05 exercise price for each such October 2025 Pre-Funded Warrant. The October 2025 Pre-Funded Warrants are exercisable for shares of Common Stock at any time after January 1, 2026, subject to receipt of stockholder approval which occurred subsequent to December 31, 2025, on March 12, 2026. The October 2025 Pre-Funded Warrants contain anti-dilution adjustment provisions, which were triggered by dilutive issuances of securities made by the Company during 2025, resulting in a reduction of the exercise price to $0.002385 per share and an increase in the number of shares issuable upon exercise of the October 2025 Pre-Funded Warrants to 22,664,040 shares as of December 31, 2025. The October 2025 Pre-Funded Warrants contain a 9.9% beneficial ownership limitation that restricts a holder from exercising the warrants to the extent such exercise would result in the holder, together with its affiliates, beneficially owning in excess of 9.9% of the Company's outstanding Common Stock.

In accordance with ASC 815, the October 2025 Pre-Funded Warrants were initially classified as a liability from the date of issuance and remained classified as a liability as of December 31, 2025 because stockholder approval was required before they could be exercised. The liability is measured at fair value at each reporting date based on the intrinsic value of the October 2025 Pre-Funded Warrants, determined as the quoted market price of the Company's Common Stock less the per-share exercise price, multiplied by the number of common shares issuable upon exercise of the October 2025 Pre-Funded Warrants.

July 2024 Pre-Funded Warrants

In July 2024, in conjunction with the 2024 Public Offering, the Company issued 408,362 July 2024 Pre-Funded Warrants (in lieu of shares of common stock (see additional discussion in Note 8, “Financing Activities”). The July 2024 Pre-Funded Warrants were classified as a component of permanent equity because they are freestanding financial instruments that are legally detachable and separately exercisable from the shares of common stock with which they were issued, were immediately exercisable, did not embody an obligation for us to repurchase our shares, and permitted the holders to receive a fixed number of shares of common stock upon exercise.

Series F Warrants

In July 2024, in conjunction with the 2024 Public Offering, the Company issued new July 2024 Warrants.

	●	Series F-1 Warrants exercisable for 707,442 shares of common stock for an initial exercise price of $5.50 per share through July 30, 2029; and
	●	Series F-2 Warrants exercisable for 707,442 shares of common stock for an initial exercise price of $5.50 per share through January 29, 2025; and
	●	Series F-3 Warrants exercisable for 707,442 shares of common stock for an initial exercise price of $5.50 per share through July 29, 2025.

The July 2024 Warrants were classified as a component of permanent equity. The July 2024 Warrants down round feature adjustment was triggered on September 27, 2024, resulting in a reduced exercise price of $3.30 per share. As a result of the reduced exercise price, a deemed dividend of $1.0 million was recognized in accordance with a Black Scholes valuation model. See Note 4, “Fair Value Measurements,” subheading “Black Scholes Valuation Models and Assumptions.”

In March 2025, the Company entered into three (3) separate confidential settlement and release agreements (collectively, the “Settlement Agreements”) with each of Sabby Volatility Warrant Master Fund, Ltd. (“Sabby”), Bigger Capital Fund, LP (“Bigger”) and District 2 Capital Fund LP (“District 2,” and together with Sabby and Bigger, the “Warrant Holders”) to settle certain disputed matters relating to the July 2024 Warrants held by each of the Warrant Holders. In connection with the Settlement Agreements, Series F-3 Warrants were exercised for 105,557 shares of common stock. Additionally, in conjunction with the Settlement Agreements, Series F-1 Warrants and Series F-3 Warrants exercisable for 254,545 and 148,988 shares of common stock, respectively, were repurchased by the Company for $1.8 million. The repurchase of these warrants was recorded as a reduction of additional paid-in capital in the Company’s unaudited condensed consolidated balance sheet.

The Settlement Agreements include a “most favored nations” provision for each of the Warrant Holders that would increase the amount paid to the Warrant Holders if any other holder of the Company’s common stock receives a higher amount per underlying warrant, as well as a mutual release of all claims by the Company and the Warrant Holders against each other, without any admission of liability by either party.

During the year ended December 31, 2025, the Company repurchased additional Series F-1 Warrants exercisable for 42,480 shares of common stock and Series F-3 Warrants exercisable for 42,480 shares of common stock for $0.2 million.

On August 19, 2025, Series F-1 Warrants exercisable for 381,818 shares of common stock were surrendered and cancelled in conjunction with the Series F Agreements (see Note 8, “Financing Activities”).

June 2024 Warrants

In June 2024, in conjunction with the 2024 Warrant Reprice Transaction, the Company issued new common stock purchase warrants (the “June 2024 Warrants”) exercisable for 18,076 shares of common stock for $12.85 per share through December 17, 2029. The June 2024 Warrants were classified as a component of permanent equity.

On August 19, 2025, June 2024 Warrants exercisable for 1,814 shares of common stock were surrendered and cancelled in conjunction with the Series F Agreements (see Note 8, “Financing Activities”).

March 2024 Warrant

In March 2024, the Company executed the First Amendment and Subsidiary Guarantee Consent as part of the 2024 Subsidiary Guarantee Termination with holders of the Secured Convertible Notes (see Note 9, “Convertible Notes”) in order to satisfy a closing condition for the DERMAdoctor Divestiture (see Note 16, “DERMAdoctor Divestiture”). In exchange for the consent of each holder, the option, at the holder’s election, to receive upon the closing of the DERMAdoctor Divestiture either, a new common stock warrant (the “March 2024 Warrant”), or a new unsecured convertible note (see Note 9, “Convertible Notes”). One holder elected the option to receive a March 2024 Warrant exercisable for 5,714 shares of common stock for $24.50 per share.

The March 2024 Warrant was initially classified as a liability from the date of issuance until Company stockholder approval on May 28, 2024, at which time it was reclassified to equity.

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On August 19, 2025, all remaining March 2024 Warrants exercisable for 5,714 shares of common stock were surrendered and cancelled in conjunction with the Series F Agreements (see Note 8, “Financing Activities”).

December 2023 Warrants

In December 2023, the Company issued new common stock purchase warrants (the “December 2023 Warrants”) exercisable for 14,451 shares of common stock for $43.75 per share through June 21, 2029.

The December 2023 Warrants were initially classified as liabilities from the date of issuance until Company stockholder approval was received on May 28, 2024, at which time it was reclassified to equity.

On August 19, 2025, December 2023 Warrants exercisable for 7,253 shares of common stock were surrendered and cancelled in conjunction with the Series F Agreements (see Note 8, “Financing Activities”).

During the year ended December 31, 2025, the Company repurchased December 2023 Warrants exercisable for 1,857 shares of common stock for $3 thousand.

May 2023 Warrants

In May 2023, the Company issued the following new common stock purchase warrants (collectively, the “May 2023 Warrants”):

●

May 2023 Series B-1 Warrants exercisable for 14,506 shares of common stock for an initial exercise price of $227.50 per share through June 9, 2028 (“May 2023 B-1 Warrants”); and

●

May 2023 Series B-2 Warrants exercisable for 14,506 shares of common stock for an initial exercise price of $227.50 per share through June 9, 2025 (“May 2023 B-2 Warrants”).

In December 2023, the Company amended certain May 2023 Warrants to reduce their exercise prices to $43.75 per share. In June 2024, in conjunction with the 2024 Warrant Reprice Transaction, the Company amended certain May 2023 Warrants to reduce their exercise prices to $12.50 per share.

November 2022 Warrants

In November 2022, the Company issued the following common stock purchase warrants (collectively, the “November 2022 Warrants”):

●

November 2022 Series A-1 Warrants exercisable for 2,948 shares of common stock for an initial exercise price of $1,102.50 per share through November 20, 2028 (“November 2022 A-1 Warrants”); and

●

November 2022 Series A-2 Warrants exercisable for 2,948 shares of common stock for an initial exercise price of $1,102.50 per share through May 20, 2024 (“November 2022 A-2 Warrants”).

In May 2023, the Company amended certain November 2022 Warrants to reduce their exercise prices from $1,102.50 per share to $262.50. In June 2024, in conjunction with the 2024 Warrant Reprice Transaction, the Company amended certain November 2022 Warrants to reduce their exercise prices from $262.50 per share to $12.50 per share as follows:

September 2022 Warrants

In September 2022, the Company issued new common stock purchase warrants (the “September 2022 Warrants”) exercisable for 1,874 shares of common stock for an initial exercise price of $1,102.50 per share through September 11, 2028.

In May 2023, the Company amended certain September 2022 Warrants exercisable for 1,364 shares of common stock to reduce their exercise prices from $1,102.50 per share to $262.50 per share. In June 2024, in conjunction with the 2024 Warrant Reprice Transaction, the Company amended certain September 2022 Warrants exercisable for 1,021 shares of common stock to reduce their exercise prices from $262.50 per share to $12.50 per share. On August 19, 2025, September 2022 Warrants exercisable for 522 shares of common stock were surrendered and cancelled in conjunction with the Series F Agreements (see Note 8, “Financing Activities”).

November 2021 Warrants

In November 2021, the Company issued new common stock purchase warrants (the “November 2021 Warrants”) exercisable for 6,123 shares of common stock for an initial exercise price of $3,246.25 per share through March 9, 2023.

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In September 2022, the Company amended all November 2021 Warrants to reduce their exercise prices from $3,246.25 per share to $1,102.50 per share and extend their termination date to September 11, 2028. In May 2023, the Company amended certain November 2021 Warrants exercisable for 3,062 shares of common stock to reduce their exercise prices from $1,102.50 per share to $262.50 per share. On August 19, 2025, November 2021 Warrants exercisable for 536 shares of common stock were surrendered and cancelled in conjunction with the Series F Agreements (see Note 8, “Financing Activities”). During the year ended December 31, 2025, the Company repurchased November 2021 Warrants exercisable for 1,225 shares of common stock for $3 thousand.

July 2020 Warrants

In July 2020, the Company issued new common stock purchase warrants (the “July 2020 Warrants”) exercisable for 1,127 shares of common stock for an initial exercise price of $10,106.25 per share through January 22, 2026.

In September 2022, the Company amended certain July 2020 Warrants exercisable for 784 shares of common stock to reduce their exercise prices from $10,106.25 to $1,102.50 per share. In May 2023, in conjunction with the 2023 Private Placement, the Company amended certain July 2020 Warrants exercisable for 441 shares of common stock to reduce their exercise prices from $1,102.50 per share to $262.50 per share.

Summary of Common Stock Warrant Liabilities

The following roll-forward presents the Company’s warrant liabilities measured at fair value as of December 31, 2025 and 2024 (in thousands). The October 2025 Pre-Funded Warrants, which have a nominal exercise price, were recorded based on the market price of the Company’s common stock less the nominal exercise price upon issuance and at December 31, 2025 (as restated).

Warrant liabilities as of December 31, 2024	$	—
Fair value of October 2025 Pre-Funded Warrants upon issuance		129,131
Increase in fair value of October 2025 Pre-Funded Warrants during period		509,940
Warrant liabilities as of December 31, 2025 (as restated)	$	639,071

NOTE 11. STOCKHOLDERS' DEFICIT

Authorized Share Capital

Under the Company’s Amended and Restated Certificate of Incorporation, as amended, the Company is authorized to issue up to 1,500,000,000 shares of common stock and up to 5,000,000 shares of preferred stock with rights and preferences as may be approved by the Company’s Board. As further described in Note 20, “Subsequent Events”, the Company’s Amended and Restated Certificate of Incorporation was further amended to increase the number of authorized shares of common stock from 1,500,000,000 to 5,000,000,000 subsequent to December 31, 2025.

Preferred Stock

There were four series of preferred stock of the Company outstanding during the year ended December 31, 2025 – the Series B Non-Voting Convertible Preferred Stock (“Series B Preferred Stock”), Series D Preferred Stock, Series E Preferred Stock and the Series F Voting Retractable Preferred Stock (“Series F Preferred Stock”). The rights and preferences of each are described below.

Series B Preferred Stock

The Company issued 15,000 shares of Series B Preferred Stock in November 2021 in connection with a private placement transaction. For both years ending December 31, 2025 and December 31, 2024, 131 shares of Series B Preferred Stock remained outstanding. As of December 31, 2025, outstanding shares of Series B Preferred Stock were convertible at the option of the holder into 3,013 shares of common stock at a conversion price of $43.75.

The Series B Preferred Stock does not have any preemptive rights or a preference upon any liquidation, dissolution or winding-up of the Company. Each share of Series B Preferred Stock is convertible into $1,000.00 of common stock at a conversion price per share of $43.75.

Series D Preferred Stock

The Company issued 481,250 shares of Series D Preferred Stock on August 19, 2025 in connection with the 2025 Preferred Stock Purchase Agreement. The Series D Preferred Stock was non‑voting, except for certain protective provisions, and is entitled to dividends and liquidation rights on an as‑converted‑to‑common basis. There were no redemption or repurchase rights that required cash settlement for the Series D Preferred Stock. The Company was not obligated to redeem or repurchase any shares of the Series D Preferred Stock. In October 2025, after the Stockholder Approval, each share of Series D Preferred Stock automatically converted into 32 shares of Common Stock. As of December 31, 2025, no shares of Series D Preferred Stock remained outstanding. See also Note 8, “Financing Activities”.

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Series E Preferred Stock

The rights and preferences of the Series E Preferred Stock are identical to those of the Series D Preferred Stock described above except that conversion is at the option of the holder. In October 2025, each share of Series E Preferred Stock was converted into 32 shares of Common Stock. As of December 31, 2025, no shares of Series E Preferred Stock remained outstanding. See also Note 8, “Financing Activities”.

Series F Preferred Stock

The Series F Preferred Stock is not convertible into Common Stock or any other equity instrument and has no dividend rights. The Series F Preferred Stock has voting rights similar to Common Stock with each share of Series F Preferred Stock representing the voting equivalent of approximately 2.12 shares of Common Stock and a liquidation preference equivalent to common stock up to its redemption amount. The Series F Preferred Stock has a total aggregate fixed redemption value of $525 thousand in cash. The redemption terms provide that, after the earlier of (i) Conversion Approval (see Note 8, “Financing Activities”) or (ii) December 31, 2025, holders may redeem the Series F Preferred Stock in exchange for $525 thousand total in cash at any time. The Company may also force redemption of outstanding shares at any time after December 31, 2025. Once redeemed, the shares are cancelled and extinguished; and they revert to authorized but unissued status.

The Series F Preferred Stock is redeemable at the option of the holder. Accordingly, until redemption election is made, the Series F Preferred Stock is classified as mezzanine equity (temporary equity) on the Company’s Consolidated Balance Sheet, between liabilities and stockholders’ equity, at its redemption value. The Company will not accrete the carrying value of the Series F Preferred Stock to its redemption amount since they are equivalent. In October 2025, the Company obtained the Conversion Approval and 639,935 shares of Series F Preferred Stock were redeemed for a $175 thousand cash payment. As of December 31, 2025, 1,346,633 shares of Series F Preferred Stock with a redemption value of $350 thousand remained outstanding. Subsequent to December 31, 2025, in February 2026, an additional 639,935 shares of Series F Preferred Stock were redeemed for a $175 thousand cash payment.

Dividends

On August 26, 2025, the Special Transaction Committee of the Board of Director and the Company’s Board of Directors declared a special cash dividend of $4.00 per share for the Company’s common stock (the “Special Dividend”). The dividend totaling $4.8 million was paid on September 29, 2025 to stockholders of record of Common Stock at the close of business on September 15, 2025.

NOTE 12. STOCK-BASED COMPENSATION

Equity Compensation Plans

In October 2007, the Company adopted the 2007 Omnibus Incentive Plan (the “2007 Plan”) to provide for the grant of equity awards, such as stock options, unrestricted and restricted common stock, stock units, dividend equivalent rights, and stock appreciation rights to employees, directors and outside consultants, as determined by the Board. The 2007 Plan expired on March 15, 2017. Upon expiration, new awards cannot be issued pursuant to the 2007 Plan, but outstanding awards continue to be governed by its terms. Stock options granted under the 2007 Plan expire no later than ten years from the date of grant. All stock options outstanding under the 2007 Plan were fully vested as of December 31, 2025.

In March 2017, the Company adopted the 2017 Omnibus Incentive Plan (the “2017 Plan”), which was approved by stockholders on June 2, 2017, to provide for the grant of equity awards, such as nonqualified stock options (“NQSOs”), incentive stock options (“ISOs”), restricted stock, performance shares, stock appreciation rights (“SARs”), RSUs and other share-based awards to employees, directors, and consultants, as determined by the Board. The 2017 Plan does not affect awards previously granted under the 2007 Plan. Upon adoption, the 2017 Plan allowed for awards of up to 16,249 shares of the Company’s common stock, plus an automatic annual increase in the number of shares authorized for awards on the first day of each of the Company’s fiscal years beginning January 1, 2018 through January 1, 2027 equal to (i) 4% of the number of shares of common stock outstanding on the last day of the immediately preceding fiscal year or (ii) such lesser number of shares of common stock as determined by the Board. On November 25, 2025, the number of shares available for future awards under the 2017 Plan was increased by 239,086 shares, which included 200,000 shares the Company’s stockholders approved for issuance under the Plan pursuant to a stockholder vote at the Company’s 2025 stockholder meeting on October 16, 2025. As of December 31, 2025, there were 223,952 shares available for future awards under the 2017 Plan.

Under the terms of the 2017 Plan, the exercise price of NQSOs, ISOs and SARs may not be less than 100% of the fair market value of the Company’s common stock on the date of grant and, if ISOs are granted to an owner of more than 10% of the Company’s common stock, then not less than 110% of the fair market value of the Company’s common stock on the date of grant. The term of option awards will not be longer than ten years or, in the case of ISOs, no longer than five years with respect to holders of more than 10% of the Company’s common stock. Stock options granted to employees generally vest over four years, while options granted to directors and consultants typically vest over a shorter period, subject to continued service. RSUs granted to directors typically vest over 1 year. The Company issues new shares of Company common stock to satisfy exercises of options under or settlement of RSUs from the 2007 Plan and the 2017 Plan.

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Summary of Outstanding Equity Awards

The following table summarizes information about the Company’s stock options and RSUs outstanding at December 31, 2025, and activity during the year ended December 31, 2025 (in thousands except per share and years):

(in thousands, except years and per share data)	Awards*			Weighted- Average Exercise Price*		Weighted- Average Remaining Contractual Life (years)		Aggregate Intrinsic Value
Outstanding at December 31, 2024		1		$	2,358.20		8.3	$	3
Restricted stock units vested		(1	)		—
Restricted stock units granted		18			—
Options forfeited/cancelled		(—	)		4,749.95
Outstanding at December 31, 2025		18			137.40		9.7		508

Vested and expected to vest at December 31, 2025		18			137.40		9.7		508

Vested and exercisable at December 31, 2025		1			12,480.35		2.7		—

* After giving retroactive effect to a 1-for-5 reverse stock split that became effective February 20, 2026.

Aggregate intrinsic value is calculated as the difference between the closing market price of the Company’s common stock as quoted on the NYSE American and the exercise price of the underlying stock options as of the applicable measurement date for option awards that have an exercise price that is lower than the market price. There were no stock option awards exercised during the years ended December 31, 2025 or 2024.

As of December 31, 2025, the total unrecognized compensation cost related to unvested stock options and RSUs was approximately $81 thousand. This amount is expected to be recognized as stock-based compensation expense in the Company’s Consolidated Statements of Operations over the remaining weighted average vesting period of 0.8 years.

Equity Awards to Employees and Directors

The Company grants options to purchase common stock to its employees and directors at prices equal to or greater than the market value of the stock on the dates the options are granted. The Company has estimated the value of stock option awards as of the date of grant by applying the Black-Scholes option pricing model using the single-option valuation approach. The application of this valuation model involves assumptions that are judgmental and subjective in nature. See Note 2, “Summary of Significant Accounting Policies,” for a description of the accounting policies that the Company applied to value its stock-based awards.

During each of the years ended December 31, 2025 and 2024, the Company did not grant any stock options to employees and directors to purchase shares of the Company’s common stock.

Forfeitures are estimated at the time of grant and reduce compensation expense ratably over the vesting period. This estimate is adjusted periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate.

During each of the years ended December 31, 2025 and 2024, the Company granted 18,000 and 1,030 RSUs, respectively, to directors.

For the years ended December 31, 2025 and 2024, the Company recognized stock-based compensation expense of $29 thousand and $84 thousand, respectively, for equity awards to employees and directors.

Stock-Based Awards to Non-Employees

The Company did not grant options or restricted stock to non-director non-employees during the years ended December 31, 2025 and 2024.

For the year ended December 31, 2024, the Company recognized stock-based compensation expense of $13 thousand, as it relates to non-director non-employees. The Company did not recognize stock-based compensation expense as it relates to non-employees for the year ended December 31, 2025.

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Stock-Based Compensation Expense

Total stock-based compensation expense recognized for the years ended December 31, 2025 and 2024 was approximately $29 thousand and $148 thousand, respectively, and is included in general and administrative expense in the Company’s Consolidated Statements of Operations.

Of these amounts, approximately $29 thousand and $84 thousand for the years ended December 31, 2025 and 2024, respectively, relate to employees supporting continuing operations.

For the year ended December 31, 2024, the remaining stock-based compensation expense relates to employees and non-employees associated with the Company’s discontinued operations. No stock-based compensation expense was recognized for employees or non-employees associated with discontinued operations during the year ended December 31, 2025.

The Company’s equity compensation plans are administered on a centralized, corporate basis and the related awards result in an increase to consolidated equity. Management determined that allocating stock-based compensation expense to discontinued operations components would not provide meaningful information to investors. Accordingly, stock-based compensation is presented within continuing operations in the Consolidated Financial Statements.

NOTE 13. EMPLOYEE BENEFIT PLAN

The Company has a 401(k) plan covering all eligible employees. The Company provides matching contributions equal to 100% of the first 3% of compensation deferred, plus 50% of the next 2% of compensation deferred. The Company contributed $37 thousand and $45 thousand to the plan in the years ended December 31, 2025 and 2024, respectively.

NOTE 14. AVENOVA ASSET DIVESTITURE AND BRIDGE LOAN

On January 17, 2025, the Company completed the sale of its eyecare products sold under the Avenova brand and related assets (the “Avenova Assets”) to PRN Physician Recommended Nutriceuticals, LLC, a Delaware limited liability company (“PRN”), which constituted substantially all of the Company’s revenue generating and operating assets (the “Avenova Asset Divestiture”). The Avenova Asset Divestiture was consummated pursuant to the Asset Purchase Agreement, dated September 19, 2024, as amended by Amendment No. 1 to the Asset Purchase Agreement, dated November 5, 2024 (as so amended, the “Purchase Agreement”). The Purchase Agreement provided for, among other terms, a base purchase price of $11.5 million for the Avenova Assets and for PRN to provide the Company with up to a $1.0 million secured promissory note (the “Bridge Loan”). Amounts borrowed under the Bridge Loan were required to be used for working capital purposes, bore interest at a rate of 10% per annum and were secured by all of the Company’s assets as collateral. On November 22, 2024, the Company requested and received $0.5 million under the Bridge Loan.

In accordance with the Purchase Agreement, at the closing of the Avenova Asset Divestiture the Company received the cash purchase price equal to $11.5 million, less (i) the $507,954 balance of the Bridge Loan, including accrued interest, which was discharged with collateral released and (ii) $500,000, which amount was deposited into an escrow account (the “Escrow”) for up to six (6) months to be used for the Company’s indemnification obligations under the Purchase Agreement or the payment of the Net Working Capital Adjustment (as defined below) after the closing. The final amount of the purchase price that the Company received in the Avenova Asset Divestiture was subject to a post-closing working capital adjustment, upward or downward, that was limited to an amount of up to $500,000 (the “Net Working Capital Adjustment”). The Net Working Capital Adjustment was mutually determined by PRN and the Company based upon the difference between the amount of the Company’s Net Working Capital (as defined in the Purchase Agreement) immediately prior to the closing and the agreed upon target working capital value of $800,000. The Net Working Capital Adjustment was determined to be $365,566, which reduced the amount of total proceeds that we received from the Avenova Asset Divestiture. The Company recorded a gain of $10.7 million on the Avenova Asset Divestiture during the year ended December 31, 2025, net of the agreed upon Net Working Capital Adjustment.

In connection with the closing of the Avenova Asset Divestiture on January 17, 2025, the Company entered into a Transition Services Agreement, dated January 17, 2025 with PRN, pursuant to which the Company agreed to provide services to PRN with respect to specified accounting, marketing, sales, customer service, regulatory and operational support for a period of four (4) months after the closing of the Avenova Asset Divestiture (the “PRN Transition Services Agreement”). In exchange for providing such services, PRN and the Company agreed upon service fees to be paid to the Company. The Company recognized $16 thousand of income under the PRN Transition Services Agreement for the year ended December 31, 2025, which was included in other expense, net in the Company’s Consolidated Statements of Operations.

The accounting requirements for reporting results related to the Avenova Assets as discontinued operations were met during the first quarter of 2025. Accordingly, the Consolidated Financial Statements and Notes to the Consolidated Financial Statements reflect the results related to the Avenova Assets as a discontinued operation for the periods presented.

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In accordance with the provisions of ASC 205-20, the Company has separately reported the assets and liabilities of the discontinued operations in the Consolidated Balance Sheets. The assets and liabilities related to the Avenova Assets have been reflected as discontinued operations in the Consolidated Balance Sheets as of December 31, 2024, and consist of the following (in thousands):

	As of December 31, 2024
ASSETS
Current assets:
Accounts receivable, net	$	352
Inventory, net		765
Prepaid expenses and other current assets		62
Total current assets, discontinued operations		1,179
Property and equipment, net, discontinued operations		9
Total assets, discontinued operations	$	1,188

LIABILITIES
Liabilities:
Current liabilities:
Accounts payable	$	471
Accrued liabilities		676
Total current liabilities, discontinued operations	$	1,147

In accordance with the provisions of ASC 205-20, the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the Consolidated Statements of Operations. Results related to the Avenova Asset for the years ended December 31, 2025 and 2024 have been reflected as discontinued operations in the Consolidated Statements of Operations and consist of the following (in thousands):

	For the years ended December 31,
	2025		2024

Net sales	$	433	$	9,781
Cost of goods sold		170		3,300
Gross profit		263		6,481
Operating expenses:
Research and development		—		2
Sales and marketing		224		4,034
Total operating expenses		224		4,036
Operating income		39		2,445
Gain on divestiture		10,700		—
Net income from discontinued operations before income taxes		10,739		2,445
Provision for income taxes		230		—

Net income from discontinued operations, net of taxes	$	10,509	$	2,445

In accordance with the provisions of ASC 205-20, the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the Consolidated Statements of Cash Flows. Results related to the Avenova Asset for the years ended December 31, 2025 and 2024 have been reflected as discontinued operations in the Consolidated Statements of Cash Flows and consist of the following (in thousands):

	For the years ended December 31,
	2025			2024

Operating activities:
Net income from discontinued operations, net of taxes	$	10,509		$	2,445
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash gain on divestiture		(10,700	)		—
Changes in operating assets and liabilities:
Accounts receivable		(89	)		43
Inventory		73			(264	)
Prepaid expenses and other current assets		—			(16	)
Other assets		9			5
Accounts payable and accrued liabilities		(252	)		199
Net cash (used in) provided by operating activities, discontinued operations		(450	)		2,412

Investing activities:
Proceeds from divestiture		11,000			—
Net cash provided by investing activities, discontinued operations		11,000			—

Net increase in cash and cash equivalents, discontinued operations	$	10,550		$	2,412

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NOTE 15. PHASEONE DIVESTITURE

On January 3, 2025, the Company entered into a Trademark Acquisition Agreement with its distributor, PhaseOne Health LLC (“PhaseOne”), that provided for the purchase by PhaseOne of two of the Company’s wound care trademarks (the “Wound Care Trademarks”) for a purchase price of $500,000 (the “Trademark Acquisition Agreement,” and such sale, the “PhaseOne Divestiture”). In connection with the PhaseOne Divestiture, the Company also entered into a Transition Services Agreement, dated January 3, 2025, with PhaseOne (the “PhaseOne Transition Services Agreement”), pursuant to which the Company: (i) provided limited transition services to PhaseOne until January 10, 2025; (ii) sold the Company’s existing PhaseOne finished goods inventory from an outstanding purchase order to PhaseOne for an aggregate payment of $126,000; and (iii) a limited amount of remaining componentry inventory. In addition, the PhaseOne Transition Services Agreement provided that the existing supplier and distributor relationship between the Company and PhaseOne would be terminated upon the closing of the PhaseOne Divestiture. The Company completed the PhaseOne Divestiture on January 8, 2025. The Company recorded a net gain of $0.5 million as a result of the PhaseOne Divestiture during the year ended December 31, 2025.

The accounting requirements for reporting results related to the Wound Care Trademarks as discontinued operations were met during the first quarter of 2025. Accordingly, the Consolidated Financial Statements and Notes to Consolidated Financial Statements reflect the results related to the Wound Care Trademarks as a discontinued operation for the years presented.

In accordance with the provisions of ASC 205-20, the Company has separately reported the assets and liabilities of discontinued operations in the Consolidated Balance Sheets. The assets and liabilities related to the Wound Care Trademarks have been reflected as discontinued operations in the Consolidated Balance Sheets as of December 31, 2024, and consist of the following (in thousands):

	As of December 31, 2024
ASSETS
Current assets:
Accounts receivable, net	$	6
Inventory		48
Total current assets, discontinued operations	$	54

LIABILITIES
Liabilities:
Current liabilities:
Accounts payable	$	43
Total current liabilities, discontinued operations	$	43

In accordance with the provisions of ASC 205-20, the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the Consolidated Statements of Operations. Results related to the Wound Care Trademarks for the years ended December 31, 2025 and 2024 have been reflected as discontinued operations in the Consolidated Statements of Operations and consist of the following (in thousands):

	For the years ended December 31,
	2025		2024

Net sales	$	122	$	258
Cost of goods sold		75		147
Gross profit		47		111
Operating expenses:
Research and development		3		40
Total operating expenses		3		40
Operating income		44		71
Gain on divestiture		500		—
Net income from discontinued operations before income taxes		544		71
Provision for income taxes		14		—

Net income from discontinued operations, net of taxes	$	530	$	71

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In accordance with the provisions of ASC 205-20, the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the Consolidated Statements of Cash Flows. Results related to the Wound Care Trademarks for the years ended December 31, 2025 and 2024 have been reflected as discontinued operations in the Consolidated Statements of Cash Flows and consist of the following (in thousands):

	For the years ended December 31,
	2025			2024

Operating activities:
Net income from discontinued operations	$	530		$	71
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash gain on divestiture		(500	)		—
Changes in operating assets and liabilities:
Accounts receivable		6			6
Inventory		43			12
Accounts payable and accrued liabilities		(38	)		(21	)
Net cash provided by operating activities, discontinued operations		45			68

Investing activities:
Proceeds from divestiture		500			—
Net cash provided by investing activities, discontinued operations		500			—

Net increase in cash and cash equivalents, discontinued operations	$	541		$	68

NOTE 16. DERMADOCTOR DIVESTITURE

On March 12, 2024, the Company entered into an agreement to sell 100% of the membership units of DERMAdoctor for a closing purchase price of $1.1 million (the “DERMAdoctor Divestiture”). The sale of the membership units closed, and the DERMAdoctor Divestiture occurred, on March 25, 2024. The accounting requirements for reporting the DERMAdoctor business as discontinued operations were met during the first quarter of 2024. Accordingly, the Consolidated Financial Statements and Notes to Consolidated Financial Statements reflect the results of the DERMAdoctor business as a discontinued operation for the years presented.

Revision of Prior-Period Financial Statements

During the preparation of the Company’s consolidated financial statements for the year ended December 31, 2025, the Company identified an error in the presentation of the loss on the DERMAdoctor Divestiture and related divestiture proceeds in its previously issued consolidated financial statements for the year ended December 31, 2024. The loss on divestiture of approximately $0.9 million had been presented within continuing operations, and the related $1.1 million of proceeds from divestiture had been presented within investing activities of continuing operations in the Consolidated Statements of Cash Flows. In accordance with ASC 205-20-45-3 through 45-4, the gain or loss on disposal of a discontinued component and the related cash flows should be presented within discontinued operations. The Company has revised the prior-period presentation to reflect the loss on divestiture and related cash flows within discontinued operations. This revision affected the presentation of loss from continuing operations, loss from discontinued operations, related earnings per share from continuing operations and discontinued operations, and certain cash flow subtotals. Loss per share from continuing operations increased by $0.26 per share, with an equal offset to loss per share from discontinued operations. The revision did not affect total net loss, total net loss per share attributable to common stockholders, total assets, total liabilities, stockholders’ equity, total cash flows, or the Company’s financial position for the year ended December 31, 2024.

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Results of DERMAdoctor’s operations

In accordance with the provisions of ASC 205-20, Presentation of Financial Statements: Discontinued Operations (“ASC 205-20”), the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the Consolidated Statements of Operations. The results of DERMAdoctor’s operations for the years ended December 31, 2025 and 2024 have been reflected as discontinued operations in the Consolidated Statements of Operations and consist of the following (in thousands):

	For the years ended December 31,
	2025		2024 (As Revised)

Net sales	$	—	$	717
Cost of goods sold		—		493
Gross profit		—		224
Operating expenses:
Research and development		—		2
Sales and marketing		—		292
General and administrative		—		48
Total operating expenses		—		342
Operating loss		—		(118	)

Loss on divestiture		—		(871	)

Net loss from discontinued operations	$	—	$	(989	)

In accordance with the provisions of ASC 205-20, the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the Consolidated Statements of Cash Flows. The results of DERMAdoctor for the years ended December 31, 2025 and 2024 have been reflected as discontinued operations in the Consolidated Statements of Cash Flows and consist of the following (in thousands):

	For the years ended December 31,
	2025		2024 (As Revised)

Operating activities:
Net loss from discontinued operations	$	—	$	(989	)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash loss on divestiture		—		865
Changes in operating assets and liabilities:
Accounts receivable		—		(262	)
Inventory		—		183
Prepaid expenses and other current assets		—		(4	)
Other assets				15
Accounts payable and accrued liabilities		—		63
Operating lease liabilities		—		(31	)
Net cash used in operating activities, discontinued operations		—		(160	)

Stablecoin Development Corp 10-K/A