Z Squared Inc. (COEP) Q1 2026 shows $4.0M loss and going concern warning
Z Squared Inc., formerly Coeptis Therapeutics Holdings, reported unaudited results for the quarter ended March 31, 2026. The company generated sales of $113,771, up from $62,874 a year earlier, but recorded a net loss of $4,020,896 and loss per share of $0.65.
Total assets were $19,786,693, including $5,211,188 of cash and $13,159,346 of investments. Stockholders’ equity was $17,578,844, while the accumulated deficit reached $113,870,346. Operating activities used $1,758,887 of cash in the quarter.
The filing highlights a going concern uncertainty, noting that recurring losses and the large accumulated deficit raise substantial doubt about the company’s ability to continue without additional financing. After March 31, 2026, the company completed a merger and spin-out that will shift its primary business to digital asset mining.
Positive
- None.
Negative
- Going concern uncertainty: As of March 31, 2026, the company had an accumulated deficit of $113,870,346 and a quarterly net loss of $4,020,896, and explicitly states these conditions raise substantial doubt about its ability to continue as a going concern without additional financing.
Insights
Quarter shows continued cash burn, going concern risk, and a pending pivot in business model.
Z Squared Inc. posted modest quarterly sales of $113,771 against operating expenses of nearly $3.98M, producing a net loss of $4.02M. Cash was $5.21M as of March 31, 2026, and operating cash outflows were $1.76M for the quarter.
The company discloses that an accumulated deficit of $113.87M and ongoing losses raise “substantial doubt” about its ability to continue as a going concern. Management plans rely on raising additional capital through equity or debt, but the text notes there is no assurance such funding will be obtained.
The filing also describes a completed merger on April 24, 2026, after which Z Squared’s principal business becomes digital asset mining and prior biopharmaceutical operations are largely spun out. Future filings will reflect Z Squared as the accounting acquirer, so investors will need subsequent reports to understand the new mining-focused financial profile.
Key Figures
Key Terms
reverse acquisition financial
going concern financial
Standby Equity Purchase Agreement financial
derivative liability warrants financial
non-controlling interest financial
binomial lattice model financial
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| Quarterly REPORT PURSUANT to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
or
| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transaction period from _____________ to _____________
Commission File No.
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(
zsquaredinc.com
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of exchange on which registered |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant:
(1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 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.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer ☐ | Accelerated Filer ☐ |
| Smaller Reporting Company | |
| Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12(b)-2 of the Exchange Act). Yes ☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
The number of shares outstanding of the registrant’s common
stock as of the latest practicable date was:
Z Squared Inc.
FORM 10-Q
For the Quarter Ended March 31, 2026
TABLE OF CONTENTS
| PART I – FINANCIAL INFORMATION | 3 |
| Item 1. | Unaudited Financial Statements | 3 |
| Unaudited Condensed Consolidated Balance Sheets | 3 | |
| Unaudited Condensed Consolidated Statements of Operations | 4 | |
| Unaudited Condensed Consolidated Statements of Stockholders’ Equity | 5 | |
| Unaudited Condensed Consolidated Statements of Cash Flows | 7 | |
| Condensed Consolidated Notes to Unaudited Financial Statements | 8 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 32 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 43 |
| Item 4. | Controls and Procedures | 43 |
| PART II – OTHER INFORMATION | 45 |
| Item 1. | Legal Proceedings | 45 |
| Item 1A. | Risk Factors | 45 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 51 |
| Item 3. | Defaults Upon Senior Securities | 51 |
| Item 4. | Mine Safety Disclosures | 51 |
| Item 5. | Other Information | 51 |
| Item 6. | Exhibits | 52 |
| SIGNATURES | 53 |
| 2 |
PART I — FINANCIAL INFORMATION
| Item 1. | Unaudited Financial Statements |
Z SQUARED INC. formerly known as COEPTIS THERAPEUTICS HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| As of | ||||||||
| March
31, 2026 (unaudited) | December 31, 2025 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Marketable securities | ||||||||
| Interest receivable | ||||||||
| Prepaid assets | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| PROPERTY AND EQUIPMENT | ||||||||
| Furniture and fixtures, net | ||||||||
| OTHER ASSETS | ||||||||
| Investments | ||||||||
| Intangible assets, net | ||||||||
| Co-development rights, net | ||||||||
| Right of use asset, net of accumulated amortization | ||||||||
| Total other assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Convertible notes payable, in default | ||||||||
| Right of use liability, current portion | ||||||||
| Customer deposit | ||||||||
| Other current liabilities | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| LONG TERM LIABILITIES | ||||||||
| SBA loan payable | ||||||||
| Derivative liability warrants | ||||||||
| Right of use liability, non-current portion | ||||||||
| TOTAL LONG TERM LIABILITIES | ||||||||
| TOTAL LIABILITIES | ||||||||
| COMMITMENTS AND CONTINGENCIES (NOTE 10) | – | – | ||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred stock, $ | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Subscription receivable | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY - CONTROLLING INTERESTS | ||||||||
| TOTAL STOCKHOLDERS’ EQUITY - NONCONTROLLING INTERESTS | ||||||||
| TOTAL STOCKHOLDERS’ EQUITY | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of the condensed consolidated unaudited financial statements.
| 3 |
Z SQUARED INC. formerly known as COEPTIS THERAPEUTICS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended | ||||||||
| March 31, 2026 | March 31, 2025 | |||||||
| SALES | ||||||||
| Sales | $ | $ | ||||||
| Total sales | ||||||||
| Cost of goods | ||||||||
| Gross profit | ||||||||
| COST OF OPERATIONS | ||||||||
| Research and development expense | ||||||||
| Salary expense | ||||||||
| Amortization expense | ||||||||
| Professional services expense | ||||||||
| Stock based compensation expense | ||||||||
| General and administrative expenses | ||||||||
| Selling and marketing expense | ||||||||
| Total cost of operations | ||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ||||
| OTHER (EXPENSE) INCOME | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Other income, net | ||||||||
| Unrealized loss on marketable securities | ( | ) | ||||||
| Unrealized loss on investments | ( | ) | ||||||
| Realized gain on sale of marketable securities | ||||||||
| Change in fair value of derivative liabilities | ( | ) | ||||||
| TOTAL OTHER (EXPENSE) INCOME, net | ( | ) | ||||||
| LOSS BEFORE INCOME TAXES | ( | ) | ( | ) | ||||
| PROVISION FOR INCOME TAXES (BENEFIT) | ||||||||
| NET LOSS | ( | ) | ( | ) | ||||
| NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | ( | ) | ( | ) | ||||
| NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS | ( | ) | ( | ) | ||||
| NET LOSS | $ | ( | ) | $ | ( | ) | ||
| LOSS PER SHARE | ||||||||
| Loss per share, basic and fully diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common shares outstanding | ||||||||
The accompanying notes are an integral part of the condensed consolidated unaudited financial statements.
| 4 |
Z SQUARED INC. formerly known as COEPTIS THERAPEUTICS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025
(Unaudited)
| ADDITIONAL | COMMON | |||||||||||||||||||||||
| PREFERRED STOCK | COMMON STOCK | PAID-IN | STOCK | |||||||||||||||||||||
| SHARES | AMOUNT | SHARES | AMOUNT | CAPITAL | SUBSCRIBED | |||||||||||||||||||
| BALANCE AT DECEMBER 31, 2024 | $ | $ | $ | $ | ||||||||||||||||||||
| Series A preferred stock offering | – | – | – | – | ||||||||||||||||||||
| Pre-funded warrants exercise | – | – | – | |||||||||||||||||||||
| Preferred share conversion | ( | ) | ( | ) | ( | ) | – | |||||||||||||||||
| Shares issued for services | – | – | – | – | ||||||||||||||||||||
| Shares issued for SEPA | – | – | – | |||||||||||||||||||||
| Asset purchase agreement | – | – | ( | ) | ||||||||||||||||||||
| Stock based compensation | – | – | – | – | – | |||||||||||||||||||
| Warrants issued for services | – | – | – | – | – | |||||||||||||||||||
| Net loss | – | – | – | – | – | – | ||||||||||||||||||
| BALANCE AT MARCH 31, 2025 | $ | $ | $ | $ | ||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2025 | $ | $ | $ | $ | ||||||||||||||||||||
| Shares issued for SEPA | – | – | – | |||||||||||||||||||||
| Shares issued for services | – | – | – | – | – | – | ||||||||||||||||||
| Shares issued for investment | – | – | – | |||||||||||||||||||||
| Stock option exercised | – | – | – | |||||||||||||||||||||
| Stock based compensation | – | – | – | – | – | |||||||||||||||||||
| Net loss | – | – | – | – | – | – | ||||||||||||||||||
| BALANCE AT MARCH 31, 2026 | $ | $ | $ | $ | ||||||||||||||||||||
(continued)
| 5 |
Z SQUARED INC. formerly known as COEPTIS THERAPEUTICS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)
FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025
(Unaudited)
| TOTAL | NON- | |||||||||||||||||||
| SUBSCRIPTION | ACCUMULATED | CONTROLLING | CONTROLLING | TOTAL | ||||||||||||||||
| RECEIVABLE | DEFICIT | INTEREST | INTEREST | EQUITY | ||||||||||||||||
| BALANCE AT DECEMBER 31, 2024 | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||
| Series A preferred stock offering | – | |||||||||||||||||||
| Pre-funded warrants exercise | – | – | – | |||||||||||||||||
| Preferred share conversion | – | – | – | – | – | |||||||||||||||
| Shares issued for services | – | – | – | |||||||||||||||||
| Shares issued for SEPA | – | – | – | |||||||||||||||||
| Asset purchase agreement | – | – | – | – | – | |||||||||||||||
| Stock based compensation | – | – | – | |||||||||||||||||
| Warrants issued for services | – | – | – | |||||||||||||||||
| Net loss | – | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
| BALANCE AT MARCH 31, 2025 | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||
| BALANCE AT DECEMBER 31, 2025 | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||
| Shares issued for SEPA | – | – | – | |||||||||||||||||
| Shares issued for services | – | – | ||||||||||||||||||
| Shares issued for investment | – | – | – | |||||||||||||||||
| Stock option exercised | – | – | – | |||||||||||||||||
| Stock based compensation | – | – | – | |||||||||||||||||
| Net loss | – | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
| BALANCE AT MARCH 31, 2026 | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||
The accompanying notes are an integral part of the condensed consolidated unaudited financial statements.
| 6 |
Z SQUARED INC. formerly known as COEPTIS THERAPEUTICS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended | ||||||||
| March 31, 2026 | March 31, 2025 | |||||||
| OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation and amortization | ||||||||
| Right of use asset amortization | ||||||||
| Amortization of debt discount | ||||||||
| Non-cash revenue | ( | ) | ( | ) | ||||
| Stock based compensation | ||||||||
| Shares issued for non-employee services | ||||||||
| Warrants issued for services | ||||||||
| Change in fair value of derivative liability | ( | ) | ||||||
| Change in fair value of derivative liability warrants | ( | ) | ||||||
| Realized gain on sale of marketable securities | ( | ) | ||||||
| Forgiveness of interest | ||||||||
| Unrealized loss on investments | ||||||||
| Unrealized loss on marketable securities | ||||||||
| (Increase) decrease in: | ||||||||
| Interest receivable | ( | ) | ||||||
| Prepaid assets | ||||||||
| Increase (decrease) in: | ||||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses | ||||||||
| Customer deposit | ||||||||
| Right of use liability | ( | ) | ( | ) | ||||
| Other current liabilities | ( | ) | ||||||
| NET CASH USED IN OPERATING ACTIVITIES | ( | ) | ( | ) | ||||
| INVESTING ACTIVITIES | ||||||||
| Sale of marketable securities | ||||||||
| NET CASH PROVIDED BY INVESTING ACTIVITIES | ||||||||
| FINANCING ACTIVITIES | ||||||||
| Proceeds from notes payable | ||||||||
| Repayment of notes payable | ( | ) | ||||||
| Shares issued for SEPA | ||||||||
| Warrants issued for cash | ||||||||
| Stock option exercised | ||||||||
| Preferred stock offering | ||||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | ||||||||
| NET (DECREASE) INCREASE IN CASH | ( | ) | ||||||
| CASH AT BEGINNING OF PERIOD | ||||||||
| CASH AT END OF PERIOD | $ | $ | ||||||
| SUPPLEMENTAL CASH FLOW DISCLOSURES | ||||||||
| Interest paid | $ | $ | ||||||
| Taxes paid | $ | $ | ||||||
| SUPPLEMENTAL NON-CASH DISCLOSURES | ||||||||
| Shares issued for investment | $ | $ | ||||||
| Investments received for stock options exercised | $ | $ | ||||||
| Increase in right of use assets due to lease renewal | $ | $ | – | |||||
The accompanying notes are an integral part of the condensed consolidated unaudited financial statements.
| 7 |
Z SQUARED INC. formerly known as COEPTIS THERAPEUTICS HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2026 (unaudited)
NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Description of Business
General. The registrant (the “Company,” “we” or “our”) was originally incorporated in the British Virgin Islands on November 27, 2018 under the name Bull Horn Holdings Corp. On October 27, 2022, Bull Horn Holdings Corp. domesticated from the British Virgin Islands to the State of Delaware. On October 28, 2022, in connection with the closing of a prior business combination, the Company changed its corporate name from Bull Horn Holdings Corp. to “Coeptis Therapeutics Holdings, Inc.” On April 24, 2026, in connection with the closing of the business combination described in Notes 16 and 17 (the “Merger”), the Company changed its corporate name from “Coeptis Therapeutics Holdings, Inc.” to “Z Squared Inc.”
Nature of Business During the Period Covered. Throughout the three months ended March 31, 2026, and prior to the closing of the Merger and the related Spin-Out described in Notes 16 and 17, the Company operated as a biopharmaceutical and technology company. The Company's biopharmaceutical division focused on developing innovative cell therapy platforms for cancer, autoimmune, and infectious diseases. The Company's technology division focused on AI-powered marketing software and robotic process automation tools designed to optimize business processes and improve operational efficiency. The accompanying condensed consolidated financial statements present the financial position, results of operations, and cash flows of the Company and its consolidated subsidiaries as they existed during, and as of the end of, the three-month period ended March 31, 2026, reflecting the biopharmaceutical and technology business as then conducted.
Subsidiaries During the Period Covered. During the three months ended March 31, 2026, the Company conducted its operations through its direct and indirect subsidiaries SNAP Biosciences, Inc. and GEAR Therapeutics, Inc. (each majority owned), and Coeptis Therapeutics, Inc., Coeptis Pharmaceuticals, Inc., and Coeptis Pharmaceuticals, LLC (each wholly owned).
Subsequent Change in Business; Reverse Acquisition Accounting. On April 24, 2026, the Company completed the Merger with Z Squared, Inc., a Wyoming corporation (“Z Squared”), and effected a related Spin-Out of substantially all of its biopharmaceutical operations other than those conducted through GEAR Therapeutics, Inc. As a result of the Merger and the Spin-Out, (i) the Company's principal business following the closing is the digital asset mining operations conducted through Z Squared and its subsidiaries; (ii) the Company's interests in Coeptis Therapeutics, Inc., Coeptis Pharmaceuticals, Inc., Coeptis Pharmaceuticals, LLC, and SNAP Biosciences, Inc. (collectively, the “Spin-Out Subsidiaries”) are no longer held by the Company; and (iii) the Company's interest in GEAR Therapeutics, Inc. continues to be held by the Company. The Merger is being accounted for as a reverse acquisition under ASC 805-40, with Z Squared as the accounting acquirer and the Company as the accounting acquiree, as disclosed in the Company's Registration Statement on Form S-4 (File No. 333-288329) declared effective on December 23, 2025. Accordingly, the accompanying condensed consolidated financial statements as of and for the three months ended March 31, 2026 represent the historical financial statements of the legal acquirer in the Merger; the Company's financial statements for periods ending on or after the closing date of the Merger will reflect the operations of Z Squared as the accounting acquirer and the net assets of the Company (other than those of the Spin-Out Subsidiaries) recorded at their acquisition-date fair value. See Notes 16 and 17 for additional information regarding the Merger, the Spin-Out, and the related accounting treatment.
Basis of Presentation – The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly the Company's financial position, results of operations, and cash flows. The interim results of operations are not necessarily indicative of the results that may occur for the full fiscal year, and in particular, as further described in Notes 16 and 17 and in the “Recent Business Combination” and “Basis of MD&A Discussion” sections of Item 2 of this Quarterly Report, the financial position, results of operations, and cash flows of the Company in future periods will differ materially from those presented herein as a result of the Merger and the Spin-Out. Certain information and footnote disclosure normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to instructions, rules, and regulations prescribed by the United States Securities and Exchange Commission (the “SEC”). The condensed interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025 that was filed with the SEC on March 19, 2026.
| 8 |
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation – The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries identified above under “Subsidiaries During the Period Covered.” All material intercompany accounts, balances, and transactions have been eliminated. As described under “Subsequent Change in Business; Reverse Acquisition Accounting” above and in Notes 16 and 17, certain of these subsidiaries (the Spin-Out Subsidiaries) were distributed to the Company's stockholders in connection with the Spin-Out, which occurred subsequent to March 31, 2026 and is therefore not reflected in the accompanying condensed consolidated financial statements
Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Reclassification – The Company reclassified certain amounts of total stockholders’ equity – noncontrolling interests, net loss attributable to non-controlling interests, and accumulated deficit from prior periods. These presentation changes did not affect total stockholders’ equity or net loss.
Employee and Non-Employee Share-Based Compensation – The Company applies Accounting Standards Codification (“ASC”) 718-10, Share-Based Payment, which requires the measurement and recognition of compensation expenses for all share-based payment awards made to employees and directors including employee stock options equity awards issued to employees and non-employees based on estimated fair values.
ASC 718-10 requires companies to estimate the fair value of equity-based option awards on the date of grant using an option-pricing model. The fair value of the award is recognized as an expense on a straight-line basis over the requisite service periods in the Company’s unaudited condensed consolidated statements of operations. The Company recognizes share-based award forfeitures as they occur.
The Company estimates the fair value of granted option equity awards using a Black-Scholes option pricing model. The option-pricing model requires a number of assumptions, of which the most significant are share price, expected volatility and the expected option term (the time from the grant date until the options are exercised or expire). Expected volatility is estimated based on volatility of the Company. The Company has historically not paid dividends and has no foreseeable plans to issue dividends. The risk-free interest rate is based on the yield from governmental zero-coupon bonds with an equivalent term. The expected option term is calculated for options granted to employees and directors using the “simplified” method. Changes in the determination of each of the inputs can affect the fair value of the options granted and the results of operations of the Company.
Recent Accounting Pronouncements – The following standards have been issued by the Financial Accounting Standards Board ("FASB") but have not yet been adopted by the Company. The Company is evaluating each standard's applicability to its operations and the potential impact, if any, on its consolidated financial statements.
ASU 2024-04 – Debt – Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments – In November 2024, the FASB issued ASU 2024-04, which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion rather than a debt extinguishment. The amendments replace the prior requirement that all equity securities issuable under the original conversion terms must be included in an inducement offer, clarifying that induced conversion accounting may also apply to certain settlements involving cash conversion features. The assessment of the form and amount of consideration in an inducement offer is performed as of the date the offer is accepted by the holder. The ASU is applicable for smaller reporting entities for fiscal years beginning after December 15, 2026 and should be adopted, if applicable, beginning first quarter of 2027.
| 9 |
ASU 2025-04 – Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer – In May 2025, the FASB issued ASU 2025-04, which clarifies the accounting for share-based payment awards granted by an entity as consideration payable to a customer in conjunction with the sale of goods or services. The amendments revise the definition of "performance condition" to explicitly address vesting conditions based on a customer's volume or monetary amount of purchases, eliminate the policy election to account for forfeitures as they occur for service conditions, and clarify that the variable consideration constraint under Topic 606 does not apply to share-based consideration payable to a customer measured under Topic 718. The ASU is applicable for smaller reporting entities for fiscal years beginning after December 15, 2026 and should be adopted, if applicable, beginning first quarter of 2027.
Revenue Recognition – The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) to depict the transfer of control to the Company’s customers in an amount reflecting the consideration to which the Company expects to be entitled. The Company determines revenue recognition through the following steps:
| i. | Identification of the contract, or contracts, with a customer | |
| ii. | Identification of the performance obligations in the contract | |
| iii. | Determination of the transaction price | |
| iv. | Allocation of the transaction price to the performance obligations in the contract | |
| v. | Recognition of revenue, when, or as, the company satisfies the performance obligations. |
Under ASC 606, revenue is recognized when control of promised goods and services is transferred to customers. A performance obligation is a contractual promise to transfer a distinct good or service to the customer and is the unit of account under ASC 606. The transaction price of a contract is allocated to distinct performance obligations and recognized as revenue when or as the performance obligations are satisfied.
The Company generates revenue from its customers by 1) performing data research for its customers and delivering advertising campaigns via cold emails and social media sites, and 2) providing webinars for its customers to a targeted business-to-business audience. The fee for these services is based on observable prices explicitly negotiated between the Company and the customer. The Company recognizes revenue at the point in time when the good or service is delivered to the customer, which occurs upon delivery of the advertising campaign or webinar and there is a transfer of control to the customer.
During the three months ended March 31, 2026,
revenues from delivering advertising campaigns via cold emails and social media sites were recognized from one customer who accounted
for
During the three months ended March 31, 2025,
revenues from delivering advertising campaigns via cold emails and social media sites were recognized from two customers who accounted
for
| 10 |
Investments and Marketable Securities – The Company classifies its investments and marketable securities in accordance with ASC 320, Investments – Debt and Equity Securities, and ASC 321, Investments – Equity Securities, as applicable. Investments in equity securities with readily determinable fair values are measured at fair value, with unrealized gains and losses recognized in net income. For equity securities without readily determinable fair values, the Company applies the measurement alternative, recording these investments at cost, adjusted for impairments or observable price changes from transactions involving similar securities.
Marketable securities are categorized as trading securities and are thus marked to market and stated at fair value. Fair value is determined using the quoted closing bid prices and is recorded as a Level 1 asset. Realized gains and losses on marketable securities are recognized as incurred in the condensed consolidated statements of operations. Net changes in unrealized gains and losses are reported in the condensed consolidated statements of operations in the current period.
Going Concern – The accompanying
unaudited condensed consolidated financial statements have been prepared in conformity with GAAP, which contemplates continuation of
the Company as a going concern, which is dependent upon the Company’s ability to obtain sufficient financials or establish itself
as a profitable business. At March 31, 2026, the Company had an accumulated deficit of $
NOTE 3 – CO-DEVELOPMENT RIGHTS
In December 2018, the Company entered into an
agreement with Purple Biotech (“Purple”) to market, distribute, and sell the Consensi product (the “Product”)
on an exclusive basis within the United States and Puerto Rico. In September of 2021, the Company executed a license termination agreement
with Purple to cease all efforts for sales and promotion of the Product in the United States and Puerto Rico. The termination included
(i) issuance of $
During the year ended December 31, 2021, the Company
and Vy-Gen-Bio, Inc. (“Vy-Gen”) entered into agreements to jointly develop and commercialize two Vy-Gen product candidates,
CD38-GEAR-NK and CD38-Diagnostic (the “CD38 Assets”). The Company paid $
| 11 |
The Company made certain judgments as the basis in determining the accounting treatment of these options. The CD38 Assets represent a platform technology and a diagnostic tool which have multiple applications and uses. Both projects are intended to be used in more than one therapy or diagnostic option. For example, GEAR-NK is a technology which allows for the gene editing of human natural killer cells, so that these cells can no longer bind and be destroyed by targeted monoclonal antibody treatments. The GEAR-NK technology can be modified to work concomitantly with many different monoclonal antibody treatments in which there are currently over 100 approved by the FDA. Anti- CD38 is only the first class of monoclonal antibody treatments being developed under the GEAR-NK platform. Therefore, the pursuit of FDA approval for the use of CD38 assets for at least one indication or medical device approval is at least reasonably expected. Further, as the diagnostic asset may be used as an in vitro technology, it could be classified as a medical device, and therefore toxicity studies would not be a contingency to be resolved before reasonably establishing future value assumptions. In addition, there is perceived value in the CD38 assets, based on publicly disclosed current business deals in cell therapies, the developing market for these innovative technologies, and current interest from third parties in these technologies. The Company may sell or license its rights to another party, with the written consent of Vy-Gen, which cannot be unreasonably withheld. Furthermore, the Company believes that any negative results from ongoing development of a single therapy or use, would not result in abandoning the project. Given these considerations, The Company has determined that these options have alternative future use and should be recorded as assets pursuant to ASC 730-10-25-2, Research and Development.
Related to the joint development, the Company, under the direction of the joint steering committee, is assessing market opportunities, intellectual property protection, and potential regulatory strategies for the CD38 Assets. Vy-Gen is responsible for development activities conducted and overseen by the scientists at Karolinska Institute. The agreement does not currently require additional payments for research and development costs by the Company and no additional payments are required upon development or regulatory milestones.
In March 2025, the Company reached an agreement
with Vy-Gen to successfully license the exclusive worldwide development and commercialization rights to the GEAR™ (Gene Edited Antibody
Resistant) Cell Therapy Platform, representing a first-in-class approach to modifying potent cancer-targeting immune cells to optimize
the likelihood of deep remission in patients with hematologic malignancies and other cancers. Coeptis had previously held limited co-development
rights to GEAR. As part of this exclusive GEAR license agreement with VyGen-Bio, Inc., the Company paid a total of $
The total gross capitalized co-development
rights recorded was $
NOTE 4 – CONVERTIBLE NOTES
In September 2021, as part of a termination of
a license agreement with Purple (see Note 3, Co-Development Options), the Company issued a convertible note in the principal amount of
$
In October 2022, in connection with the
Company’s prior business combination, the Company entered into a convertible promissory note agreement with an unrelated third
party in the principal amount of $
| 12 |
Yorkville Convertible Notes
On November 1, 2024, the Company entered into
a Standby Equity Purchase Agreement (“SEPA”) pursuant to which the Company has the right to sell Yorkville up to $20,000,000
of its shares of Company Common Stock, subject to certain limitations and conditions set forth in the SEPA, from time to time during the
term of the SEPA (such transaction, the “Yorkville Transaction”). In connection with the SEPA, Yorkville has agreed to advance
to the Company in the form of a convertible promissory note (the “Convertible Note”) an aggregate principal amount of up to
$
On January 2, 2025, Yorkville elected to
convert a portion of the outstanding principal balance on YA Note-1, the convertible promissory note with an outstanding principal
balance of $1,304,758. Yorkville converted $
The SEPA is an equity-linked contract that does
not qualify for equity classification and is accounted for as a derivative liability recognized at fair value. Any changes in fair value
between the carrying amount of the forward issuance contracts and the settlement amounts will be recognized in other (expense) income
in the condensed consolidated statements of operations. As of March 31, 2026 and December 31, 2025, the fair value of the SEPA was $
The derivative liability is accounted for as a liability in accordance with ASC 480 and is measured at fair value at inception and on a recurring basis, with changes in fair value presented in the condensed consolidated statements of operations.
The derivative liability was valued using a binomial lattice model, which is considered to be a Level 3 fair value measurement. The binomial lattice model’s primary unobservable input utilized in determining the fair value of the derivative liability is the step factors input, assumed price movement, and probabilities assigned to them.
| 13 |
The following table provides quantitative information regarding Level 3 fair value measurements for the derivative liability:
| Schedule of assumptions used for valuation | ||||
| December 31, 2025 | ||||
| Risk-free interest rate | ||||
| Expected volatility | ||||
| Conversion price | $ | |||
| Stock price | $ | |||
The following table presents the changes in the fair value of derivative liability:
| Schedule of changes in fair value of derivative liability | ||||
| Warrant Liabilities | ||||
| Fair value as of November 1, 2024 (inception) | $ | |||
| Change in fair value | ||||
| Fair value as of December 31, 2024 | ||||
| Change in fair value | ( | ) | ||
| Extinguishment of fair value of liability | ( | ) | ||
| Fair value as of December 31, 2025 | $ | |||
There were
On January 16, 2025, the Company entered into
a convertible promissory note with YA II PN, LTD, a Cayman Islands exempt limited partnership (“Yorkville”), in the original
principal amount of $
Additionally, the Company, at its option, shall have the right, but not the obligation, to redeem early a portion or all amounts outstanding under the note at a redemption amount equal to the outstanding principal balance being repaid or redeemed, plus a 5% prepayment premium, plus all accrued and unpaid interest; provided that (i) the Company provides Yorkville with no less than ten trading days’ prior written notice thereof and (ii) on the date such notice is issued, the VWAP of the Common Stock is less than the Fixed Price.
An “Amortization Event” will occur under the terms of the Promissory Note if (i) the daily VWAP is less than the Floor Price for five trading days during a period of seven consecutive trading days, or (ii) the Company has issued to Yorkville, pursuant to the transactions contemplated in the note and any integrated transactions, in excess of 99% of the Common Shares available under the Exchange Cap.
In July 2025, Yorkville elected to convert the
entire outstanding principal balance on YA Note-2, $
| 14 |
NOTE 5 – SBA LOAN PAYABLE
Loans under the CARES Act -- On July 8,
2020, the Company received a loan of $
NOTE 6 – DERIVATIVE LIABILITY WARRANTS
At March 31, 2026 and December 31, 2025, there
were (i)
The Company may call the Public Warrants for redemption, in whole and not in part, at a price of $0.01 per warrant:
| · | at any time while the Public Warrants are exercisable, | |
| · | upon not less than 30 days’ prior written notice of redemption to each Public Warrant holder, | |
| · | if, and only if, the reported last sale price of the ordinary shares equals or exceeds $16.50 per share, for any 20 trading days within a 30-trading day period ending on the third trading day prior to the notice of redemption to Public Warrant holders, and | |
| · | if, and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption. |
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described above, the warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. Accordingly, the warrants may expire worthless.
| 15 |
The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants only allow the holder thereof to one ordinary share. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
Within ASC 815, Derivative and Hedging, Section 815-40-15 addresses equity versus liability treatment and classification of equity-linked financial instruments, including warrants, and states that a warrant may be classified as a component of equity only if, among other things, the warrant is indexed to the issuer’s ordinary share. Under ASC Section 815-40-15, a warrant is not indexed to the issuer’s ordinary share if the terms of the warrant require an adjustment to the exercise price upon a specified event and that event is not an input to the fair value of the warrant. Based on management’s evaluation, the Company’s audit committee, in consultation with management, concluded that the Company’s Private Placement Warrants and Public Warrants are not indexed to the Company’s ordinary share in the manner contemplated by ASC Section 815-40-15 because the holder of the instrument is not an input into the pricing of a fixed-for-fixed option on equity shares. In addition, based on management’s evaluation, the Company’s audit committee, in consultation with management, concluded that certain warrant provisions preclude equity treatment as by ASC Section 815-10-15.
The Company accounts for its Public Warrants and Private Placement Warrants as liabilities as set forth in ASC 815-40-15-7D and 7F. See below for details about the methodology and valuation of the Warrants.
The following table presents information about the Company’s derivative liability warrant that are measured at fair value on a recurring basis at March 31, 2026 and December 31, 2025, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| Schedule of fair value hierarchy | ||||||||||
| Description | Level | March 31, 2026 | December 31, 2025 | |||||||
| Warrant Liability – Public Warrants | 1 | $ | $ | |||||||
| Warrant Liability – Private Placement Warrants | 3 | |||||||||
| Total | $ | $ | ||||||||
The Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within derivative liability warrants in the accompanying condensed consolidated balance sheets. The derivative liability warrants are measured at fair value at inception and on a recurring basis, with changes in fair value presented in the condensed consolidated statements of operations.
The Private Placement Warrants were valued using a binomial lattice model, which is considered to be a Level 3 fair value measurement. The binomial lattice model’s primary unobservable input utilized in determining the fair value of the Warrants is the expected volatility of the ordinary shares. The expected volatility as of the Initial Public Offering date was derived from observable public warrant pricing on comparable ‘blank-check’ companies without an identified target. For periods subsequent to the detachment of the Public Warrants from the Units, the close price of the Public Warrant price will be used as the fair value as of each relevant date.
The following table provides quantitative information regarding Level 3 fair value measurements:
| Schedule of fair value assumptions | ||||||||
| March 31, 2026 | December 31, 2025 | |||||||
| Risk-free interest rate | ||||||||
| Expected volatility | ||||||||
| Exercise price | $ | $ | ||||||
| Stock price | $ | $ | ||||||
| 16 |
The following table presents the changes in the fair value of warrant liabilities:
| Schedule of changes in fair value of warrant liabilities | ||||||||||||
| Private Placement | Public | Warrant Liabilities | ||||||||||
| Fair value as of December 31, 2025 | $ | $ | $ | |||||||||
| Change in valuation inputs | ||||||||||||
| Fair value as of March 31, 2026 | $ | $ | $ | |||||||||
There were no transfers in or out of Level 3 from other levels in the fair value hierarchy during the quarter ended March 31, 2026 and year ended December 31, 2025.
NOTE 7 – CAPITAL STRUCTURE
The total number of shares of stock which
the corporation shall have authority to issue is 160,000,000 shares, of which
Common Stock - As of March 31, 2026, the
Company had
During the three months ended March 31, 2026 and the year ended December 31, 2025, there were no capital distributions.
On December 28, 2023, the Company granted pre-funded
warrants exercisable to acquire up to 60,000 shares of our common stock for net proceeds of $1,200,000. The pre-funded common stock purchase
warrants can be exercised at a price of $0.0001 per share, with no expiration date. During the first quarter of 2024, the Company and
the third-party borrower agreed to amend the note as a result of the decline in the publicly traded common stock price. The amount of
pre-funded warrants exercisable to acquire up to 60,000 shares of common stock was amended to 100,000 shares of common stock, and the
total principal balance of the note agreement was increased from $1,000,000 to $1,100,000. The aggregate exercise price of this Warrant
was partially pre-funded in connection with $100,000 and a $
| 17 |
On February 8, 2024, the Company granted pre-funded warrants exercisable to acquire up to 200,000 shares of our common stock for net proceeds of $2,400,000. The pre-funded common stock purchase warrants can be exercised at a price of $0.0001 per share, with no expiration date. The aggregate exercise price of this Warrant was partially pre-funded in connection with $500,000 and a $1,900,000 subscription receivable at a 6% per annum interest rate due on December 31, 2024. On August 12, 2024, the third-party assigned shares of common stock in a privately held company for the equivalent amount of principal and accrued interest owed, which satisfied the subscription receivable in full. See Note 9, Investments, for additional information.
During the third quarter of 2025, the Company
completed a private placement offering issuing 436,467 shares of common stock for total proceeds of $
During the fourth quarter of 2025, the Company
completed subscription agreements with two investors, resulting in gross proceeds of $
Treasury Stock – There was
Preferred Stock – The Company has
On June 13, 2024, the Company performed an initial
Series A preferred stock closing and raised $
On July 31, 2024, the Company performed a second
closing as part of its series A preferred stock offering and raised $
On September 4, 2024, the Company performed a
third closing as part of its series A preferred stock offering and raised $
On December 23, 2024, the Company performed a
fourth closing as part of its series A preferred stock offering and raised $
On February 6, 2025, the Company completed its
successful closure of the remaining $
On July 25, 2025, the Company and a holder of
its preferred stock, who is also a party to an existing consulting agreement with the Company, entered into an addendum to amend the terms
of the consulting arrangement. Under the amendment, the Company agreed to prepay the final six months of the consulting agreement by offsetting
the outstanding $
Throughout the year ended December 31, 2025, all
The series A investors currently have an aggregate 15% non-voting equity ownership interest in the Company’s two newly formed subsidiaries, SNAP Biosciences Inc. and GEAR Therapeutics Inc.
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The key terms of the Series A Preferred Stock are as follows:
Conversion. Each share of Series A Preferred Stock is convertible at the option of the holder, subject to the beneficial ownership and, if applicable, the primary market limitations described below, into such number of shares of the Company’s common stock as is equal to the number of shares of Series A Preferred Stock to be converted, multiplied by the stated value of $1,000 (the “Stated Value”), divided by the then conversion price. The initial conversion price is $0.40 per share of common stock, subject to adjustment in the event of stock splits, stock dividends, and similar transactions. In addition, the Series A Preferred Stock will automatically convert into shares of the Company’s common stock, subject to the beneficial ownership and, if applicable, the primary market limitations described below upon the consummation of a fundraising transaction in which the Company raises gross proceeds of at least $20 million.
Rank. The Series A Preferred Stock will be senior to the Company’s common stock and any other class of the Company’s capital stock that is not by its terms senior to or pari passu with the Series A Preferred Stock.
Dividends. The holders of Series A Preferred Stock will be entitled to dividends equal, on an as-if-converted to shares of the Company’s common stock basis (in each case after applying the beneficial ownership and, if applicable, the primary market limitations described below), to and in the same form as dividends actually paid on shares of the Company’s common stock when, as, and if such dividends are declared on shares of the Company’s common stock.
Liquidation. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of shares of Series A Preferred Stock then outstanding will be entitled to be paid out of the assets of the Company available for distribution to its stockholders, before any payment shall be made to the holders of the Company’s common stock by reason of their ownership thereof, an amount per share equal to the greater of (i) the Stated Value, plus any dividends accrued but unpaid thereon, or (ii) such amount per share as would have been payable had all shares of Series A Preferred Stock been converted (in each case after applying the beneficial ownership and, if applicable, the primary market limitations described below) into the Company’s common stock immediately prior to such event.
Voting. On any matter to be acted upon or considered by the stockholders of the Company, each holder of Series A Preferred Stock shall be entitled to vote on an “as converted” basis (after applying the beneficial ownership and primary market limitations described below).
Beneficial Ownership Limitation. The Company will not affect any conversion of the Series A Preferred Stock, and a holder will not have the right to receive dividends or convert any portion of its Series A Preferred Stock, to the extent that prior to the conversion such holder (together with such holder’s affiliates, and any persons acting as a group together with such holder or any of the holder’s affiliates) beneficially owns less than 20% of the Company’s outstanding common stock and, after giving effect to the receipt of dividends or the conversion, the holder (together with such holder’s affiliates, and any persons acting as a group together with such holder or any of the holder’s affiliates) would beneficially own 20% or more of the Company’s outstanding common stock.
Exchange Limitation. Unless the approval of the Company’s stockholders is not required by the applicable rules of Nasdaq for issuances of the Company’s common stock in excess of 19.99% of the outstanding common stock as of June 14, 2024 (the “Market Limit”), or unless the Company has obtained such approval, the Company shall not affect any conversion of the Series A Preferred Stock, including, without limitation, any automatic conversion, and a holder shall not have the right to receive dividends on or convert any portion of the Series A Preferred Stock, to the extent that, after giving effect to the receipt of the Company’s common stock in connection with such dividends or conversion, the holder would have received in excess of its pro rata share of the Market Limit.
Stock Based Compensation –
A summary of the Company’s stock option activity is as follows:
| Schedule of stock option activity | ||||||||||||||||
| Shares Underlying Options | Weighted Average Exercise Price | Weighted Average Contractual Life (Years) | Intrinsic Value | |||||||||||||
| Outstanding at December 31, 2025 | $ | $ | ||||||||||||||
| Granted | – | – | ||||||||||||||
| Exercised | ( | ) | – | – | ||||||||||||
| Surrendered | ( | ) | – | – | ||||||||||||
| Outstanding at March 31, 2026 | $ | – | $ | – | ||||||||||||
| 19 |
For the three months ended March 31, 2026 and
2025, the Company recorded $
There were no options granted during the three months ended March 31, 2026 and the options granted during the three months ended March 31, 2025 were valued using the Black-Scholes option pricing model using the following weighted average assumptions:
| Schedule of weighted average assumptions | ||||||||
| For the three months ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Expected term, in years | N/A | |||||||
| Expected volatility | N/A | |||||||
| Risk-free interest rate | N/A | |||||||
| Dividend yield | N/A | |||||||
Option Exchange Program
On February 5, 2026, the Company completed an option exchange program pursuant to which eligible employees were offered the opportunity to exchange certain outstanding stock options that were out-of-the-money for shares of restricted common stock (the “Exchange”). The Exchange was treated as a modification of the original awards under ASC 718, Compensation — Stock Compensation.
In connection with the Exchange, the Company recognized all previously unrecognized compensation expense attributable to the original awards through the modification date of February 5, 2026. Additionally, the vesting conditions applicable to the newly issued restricted common stock were accelerated, with all remaining vesting requirements deemed satisfied as of the modification date. The Company measured the incremental compensation cost arising from the modification as the excess of the fair value of the replacement awards over the fair value of the original awards immediately prior to the modification date and recognized such incremental cost in full as of February 5, 2026, as a result of the accelerated vesting.
For the three months ended March 31, 2026, the
Company recognized total stock-based compensation expense related to the Exchange of approximately $
Exercise of Stock Options — Consideration Received in Cash and Third-Party Public Company Common Stock
On March 2, 2026, certain holders exercised stock options for shares of the Company’s restricted common stock. In connection with such exercises, the Company received consideration in the form of a combination of cash and shares of common stock of a publicly traded third party (the “Third-Party Shares”).
As a result of this modification, the Company
recognized additional stock-based compensation expense equal to the difference between (i) the compensation cost based on the initially
expected fair value of the Third-Party Shares and (ii) the compensation cost based on the actual fair value of the Third-Party Shares
received. For the three months ended March 31, 2026, the Company recognized incremental compensation expense of approximately $
| 20 |
Exercise of Stock Options — Consideration Received in Private Company Common Stock
During the three months ended March 31, 2026, certain holders exercised stock options for shares of the Company’s restricted common stock, and the Company received shares of common stock of a privately held third-party entity (the "Private Company Shares") as the exercise consideration.
Fair value of the Private Company Shares was estimated
using observable inputs and valuation techniques consistent with ASC 820, Fair Value Measurement. The fair value of the Private
Company Shares was determined to be approximately $
Options/Stock Awards
On March 4, 2025, the Company granted options
to purchase an aggregate of
Common Stock Warrants –
All common stock warrants outstanding are listed in the table below:
| Schedule of warrants outstanding | ||||||||||||||||||||
| Outstanding at | ||||||||||||||||||||
| Reference | Date Issued | Exercise price | Expiration | March 31, 2026 | December 31, 2025 | |||||||||||||||
| Warrant Holder 1 | $ | |||||||||||||||||||
| Warrant Holder 1 | $ | |||||||||||||||||||
| Warrant Holder 1 | $ | |||||||||||||||||||
| Warrant Holder 2 | $ | |||||||||||||||||||
| Warrant Holder 2 | $ | |||||||||||||||||||
| Warrant Holder 5 | $ | |||||||||||||||||||
| Warrant Holder 20 | $ | |||||||||||||||||||
| Warrant Holder 21 | $ | |||||||||||||||||||
| Series A & B Warrants | $ | |||||||||||||||||||
| Series B Warrants | $ | |||||||||||||||||||
| Warrant Holder 22 | $ | |||||||||||||||||||
| Warrant Holder 22 | $ | |||||||||||||||||||
| Warrant Holder 23 | $ | |||||||||||||||||||
| Warrant Holder 23 | $ | |||||||||||||||||||
| Warrant Holder 24 | $ | |||||||||||||||||||
| Warrant Holder 25 | $ | |||||||||||||||||||
| Total Warrants outstanding | ||||||||||||||||||||
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Subscription receivable – In
June 2024, in connection with the Company’s series A preferred stock offering, the Company closed on subscription agreements totaling
$
During the second quarter of 2025, the Company
collected $
During the third quarter of 2025, in connection
with the Company’s private placement offering, the Company recorded $
During the fourth quarter of 2025, the Company
issued a total of
Standby Equity Purchase Agreement – On November 1, 2024, the Company entered into the SEPA with Yorkville pursuant to which the Company has the right to sell to Yorkville up to $20,000,000 of common stock, subject to certain limitations and conditions set forth in the SEPA, from time to time during the term of the SEPA. The Company also entered into a Registration Rights Agreement with Yorkville pursuant to which it will register the resale of shares of common stock issued to Yorkville pursuant to the SEPA. Sales of common stock to Yorkville under the SEPA, and the timing of any such sales, are at the Company’s option, and the Company is under no obligation to sell common stock to Yorkville under the SEPA, except in connection with notices that may be submitted by Yorkville in certain circumstances as described below.
Each advance (each, an “Advance”) the Company requests in writing to Yorkville under the SEPA (notice of such request, an “Advance Notice”) may be for a number of shares of common stock up to such amount as is equal to 100% of the average daily volume traded of the common stock during the five trading days immediately prior to the date the Company requests each Advance. The shares of common stock purchased pursuant to an Advance delivered by the Company will be purchased at a price equal to 95% of the lowest daily VWAP of the shares of common stock during the three consecutive trading days commencing on the date of the delivery of the Advance Notice, other than the daily VWAP on a day in which the daily VWAP is less than a minimum acceptable price as stated by the Company in the Advance Notice or there is no VWAP on the subject trading day. The Company may establish a minimum acceptable price in each Advance Notice below which the Company will not be obligated to make any sales to Yorkville. “VWAP” is defined as the daily volume weighted average price of the shares of Common Stock for such trading day on the Nasdaq Stock Market (“Nasdaq”) during regular trading hours as reported by Bloomberg L.P.
| 22 |
The SEPA will automatically terminate on the earliest to occur of (i) December 1, 2027, provided that the Convertible Note has been fully repaid or (ii) the date on which the Company shall have made full payment of Advances pursuant to the SEPA. The Company has the right to terminate the SEPA at no cost or penalty upon five trading days’ prior written notice to Yorkville, provided that there are no outstanding Advance Notices for which shares of common stock need to be issued and the Company has paid all amounts owed to Yorkville pursuant to the Convertible Note. The Company and Yorkville may also agree to terminate the SEPA by mutual written consent.
Any purchase under an Advance would be subject to certain limitations, including that Yorkville shall not purchase or acquire any shares that would result in it and its affiliates beneficially owning more than 4.99% of the then outstanding voting power or number of shares of common stock or any shares that, aggregated with shares issued under all other earlier Advances, would exceed 19.99% of all shares of common stock outstanding on the date of the SEPA (the “Exchange Cap”), unless the Company obtains stockholder approval to issue shares of common stock in excess of the Exchange Cap in accordance with applicable Nasdaq rules.
In connection with the execution of the SEPA,
the Company agreed to pay a commitment fee of $
Additionally, Yorkville agreed to advance to the
Company, in exchange for the Convertible Note, an aggregate principal amount of $
Additionally, the Company, at its option, shall have the right, but not the obligation, to redeem early a portion or all amounts outstanding under the Convertible Note at a redemption amount equal to the outstanding principal balance being repaid or redeemed, plus a 5% prepayment premium, plus all accrued and unpaid interest; provided that (i) the Company provides Yorkville with no less than ten trading days’ prior written notice thereof and (ii) on the date such notice is issued, the VWAP of the common stock is less than the Fixed Price.
Throughout the three months ended March 31, 2026
and 2025, in connection with the SEPA, the Company issued
| 23 |
NOTE 8 – NON-CONTROLLING INTEREST
As a result of the series A preferred stock offering
discussed in Note 7, Capital Structure, the Company has consolidated the two subsidiaries, SNAP Biosciences, Inc. and GEAR Therapeutics,
Inc., because we have a controlling interest in both. Therefore, the entities’ financial statements are consolidated in our condensed
consolidated financial statements and the portion of the entities’ equity attributable to external ownership is recorded as a non-controlling
interest. As part of the initial closings, the Series A Investors received in the aggregate a 15% non-voting equity ownership in both
of the newly formed subsidiaries. In addition, investors who participated in the 2025 private placement common stock offering received
an additional 10% aggregate non-voting ownership in SNAP Biosciences, Inc, resulting in an extra $79,000 in equity attributable to non-controlling
interests. The Company contributed the co-development rights to GEAR Therapeutics, Inc. and recorded $1,063,300 of non-controlling interest
at March 31, 2026. The remainder was recorded as additional paid in capital. The Company contributed both the exclusive license and corporate
research agreements with the University of Pittsburgh to SNAP Biosciences, Inc. Net of accumulated losses of $
NOTE 9 – INVESTMENTS
In August 2024, the Company
satisfied $
In November 2025, the
Company issued
During the year ended
December 31, 2025, the Company entered into a one-year agreement with a customer to provide access to the NexGenAI Affiliates Network
platform. The contract fee paid by the customer consisted of
During the three months
ended March 31, 2026, the Company accepted
In March 2026, the Company
exchanged
| 24 |
NOTE 10 – COMMITMENTS AND CONTINGENCIES
Leases – The Company leases office
space under an operating lease that commenced December 1, 2017 and was extended through multiple lease extensions. The third lease extension
extended the lease for twenty-four months, beginning on June 1, 2022 and ended on May 31, 2024. The fourth lease extension, signed on
January 30, 2024, extended the lease for twenty-four months, beginning June 1, 2024 and ending on May 31, 2026. The monthly rent is $
The Company records rent expense associated with
this lease on the straight-line basis in conjunction with the terms of the underlying lease. During the three months ended March 31,
2026, rents paid totaled $
Right of use asset is summarized below:
| Schedule of lease information | ||||||||
| March 31, 2026 | December 31, 2025 | |||||||
| Office lease | $ | $ | ||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Right of use asset, net | $ | $ | ||||||
Operating lease liability is summarized below:
| March 31, 2026 | December 31, 2025 | |||||||
| Office lease | $ | $ | ||||||
| Less: current portion | ( | ) | ( | ) | ||||
| Long term portion | $ | $ | ||||||
Future minimum rental payments required under the lease are as follows:
| Schedule of future minimum rental payments | ||||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| Total minimum lease payments: | ||||
| Less amount representing interest | ( | ) | ||
| Present value of minimum lease payments: | $ | |||
Legal Matters – The Company is currently not a defendant in any litigation or threatened litigation that could have a material effect on the Company’s condensed consolidated financial statements.
CAR T License – On August 31, 2022,
the Company entered into an exclusive license agreement with the University of Pittsburgh for certain intellectual property rights related
to the universal self-labeling SynNotch and CARs for programable antigen-targeting technology platform. The Company paid the University
of Pittsburgh a non-refundable fee in the amount of $75,000 for the exclusive patent rights to the licensed technology. Under the terms
of the agreement, the Company has been assigned the worldwide development and commercialization rights to the licensed technology in the
field of human treatment of cancer with antibody or antibody fragments using SNAP-CAR T-cell technology, along with (i) an intellectual
property portfolio consisting of issued and pending patents and (ii) options regarding future add-on technologies and developments. In
consideration of these rights, the Company paid an initial license fee of $
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To supplement the development work conducted under the Sponsored Research Agreement (“SRA”), the Company’s subsidiary SNAP Biosciences, in May 2025, entered into a grant agreement with the Alici Lab at the Karolinska Institute (“KI”). Under the terms of the grant agreement, KI will continue the pre-clinical and clinical development initially started by Deverra under the terms of the SRA described above. The grant agreement has an 18-month term which the Company agreed to pay to KI quarterly payments equal to $105,000.
Also in May 2025, the Company’s subsidiary, SNAP Biosciences, entered into a License Agreement with Monarch Therapeutics. The agreement grants SNAP Biosciences access to Monarch’s small-molecule adaptor-based technology platform for use with SNAP-CAR. Under the terms of the agreement, SNAP Biosciences agreed to pay to Monarch a $50,000 upfront payment, a $10,000 annual license fee, and future success-based milestone payments.
In September 2023, the Company expanded its exclusive
license agreement with the University of Pittsburgh to include the SNAP-CAR technology platform in natural killer (NK) cells. The Company
agreed to pay $
Deverra Therapeutics, Inc. – On August 16, 2023, the Company entered into an exclusive licensing arrangement (the “License Agreement”) with Deverra Therapeutics Inc. (“Deverra”), pursuant to which the Company completed the exclusive license of key patent families and related intellectual property related to a proprietary allogeneic stem cell expansion and directed differentiation platform for the generation of multiple distinct immune effector cell types, including natural killer (NK) and monocyte/macrophages. The License Agreement provides the Company with exclusive rights to use the license patents and related intellectual property in connection with development and commercialization efforts in the defined field of use (the “Field”) of (a) use of unmodified NK cells as anti-viral therapeutic for viral infections, and/or as a therapeutic approach for treatment of relapsed/refractory AML and high-risk MDS; (b) use of Deverra’s cell therapy platform to generate NK cells for the purpose of engineering with Coeptis SNAP-CARs and/or Coeptis GEAR Technology; and (c) use of Deverra’s cell therapy platform to generate myeloid cells for the purpose of engineering with the Company’s current SNAP-CAR and GEAR technologies. In support of the exclusive license, the Company also entered into with Deverra (i) an asset purchase agreement (the “APA”) pursuant to which the Company purchased certain assets from Deverra, including but not limited to two Investigational New Drug (IND) applications and two Phase 1 clinical trial stage programs (NCT04901416, NCT04900454) investigating infusion of DVX201, an unmodified natural killer (NK) cell therapy generated from pooled donor CD34+ cells, in hematologic malignancies and viral infections and (ii) a non-exclusive sublicense agreement (the “Sublicense Agreement”), in support of the assets obtained by the exclusive license, pursuant to which the Company sublicensed from Deverra certain assets which Deverra has rights to pursuant a license agreement (“FHCRC Agreement”) by and between Deverra and The Fred Hutchinson Cancer Research Center (“FHCRC”).
In addition, in accordance with the terms of the Sublicense Agreement, the Company agreed to pay FHCRC certain specified contingent running royalty payments and milestone payments under the FHCRC Agreement, in each case to the extent such payments are triggered by the Company’s development activities.
Registration Rights – Pursuant to a registration rights agreement entered into on October 29, 2020, the holders of the founder shares, the Private Placement Warrants and underlying securities, and any securities issued upon conversion of Working Capital Loans (and underlying securities) would be entitled to registration rights pursuant to a registration rights agreement. The holders of at least a majority in interest of the then-outstanding number of these securities were entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination. The registration rights agreement did not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company would bear the expenses incurred in connection with the filing of any such registration statements.
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Finder’s Fee and Indemnity Agreement – The Company
entered into a finder’s fee and indemnity agreement with a third party, pursuant to which the Company has agreed to pay a fee in
connection with the successful introduction and execution of the SEPA. Under the terms of the agreement, the Company was obligated to
pay a 4% fee upon the closing of the net funding amount of $1,350,000, equaling $54,000, and then 6% of the total cash consideration
received by the Company or the Company’s creditors in connection with any follow-on financing, and 0.5% on the amount of any drawdown
made by the Company on the SEPA. The Company also agreed to indemnify and hold harmless the third party from and against any and all
losses, claims, damages, obligations, penalties, judgments, any and all legal and other actions caused by or related to the third party’s
engagement with the Company. As of March 31, 2026, the Company paid a total of $103,500 to the third party in connection with this
finder’s fee and indemnity agreement recorded in professional services expense. $
Master Services Agreements – On
December 31, 2024 and during the year ended December 31, 2025, the Company entered into one-year agreements with six customers to
provide access to the NexGenAI Affiliates Network platform. Under the terms of these agreements, the Company is obligated to deliver
platform access and related services over the contract period beginning in 2025. Revenue recognition will commence upon the start of
services in accordance with ASC 606, Revenue from Contracts with Customers. The Company recognized $
GEAR™ Cell Therapy Platform –
In March 2025, the Company reached an agreement with Vy-Gen to successfully license the exclusive worldwide development and commercialization
rights to the GEAR™ Cell Therapy Platform, representing a first-in-class approach to modifying potent cancer-targeting immune cells
to optimize the likelihood of deep remission in patients with hematologic malignancies and other cancers. Coeptis had previously held
limited co-development rights to GEAR. As part of this exclusive GEAR license agreement with VyGen-Bio, Inc., the Company paid a total
of $
NOTE 11 – 401(k) PROFIT-SHARING PLAN
The Company sponsors a qualified profit-sharing
plan with a 401(k) feature that covers all eligible employees. Participation in the 401(k) feature of the plan is voluntary.
NOTE 12 – INCOME TAXES
For the three months ended March 31, 2026 and
2025,
NOTE 13 – RELATED PARTY TRANSACTION
In September 2023, the Company entered into a
transaction with AG Bio Life Capital I LP (“AG”), a Delaware limited partnership, where an employee of the Company is the
general partner. The Company agreed to issue
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As of March 31, 2026, the Company holds investments
in certain privately held companies, recorded as investments on the Company’s condensed consolidated balance sheets. The Company’s
Chief Executive Officer and Chief Financial Officer each hold ownership interests in these privately held companies. As of March 31,
2026 and December 31, 2025, the Company’s carrying value of these investments was $
NOTE 14 – INTANGIBLE ASSETS
On December 19, 2024, the Company acquired the
assets of NexGenAI Affiliates Network Platform (“NexGenAI”), from the seller NexGenAI Solutions Group, Inc., which contains
AI-powered marketing software and robotic process automation capabilities. The acquired assets include intellectual property, a domain
name and associated website, and the technology stack as defined in the agreement. As consideration for the purchase, the Company paid
the seller
The Company accounted for the NexGenAI transaction
as an asset acquisition in accordance with ASC 805-50, Business Combinations – Asset Acquisitions, and recorded as intangible
assets on the condensed consolidated balance sheets, net of amortization, in the amount of $
NOTE 15 – SEGMENT REPORTING
Operating segments are components of an enterprise about which separate financial information is available and is evaluated regularly by management, namely the Chief Operating Decision Maker (“CODM”) of an organization, in order to determine operating and resource allocation decisions. By this definition, the Company has identified its Chief Executive Officer as the CODM. Effective in 2024, the Company began operating in two segments: Biotechnology and Technology. Prior to 2024, the Company did not report operating segments.
Biotechnology Segment: This segment is non-revenue
generating and incurs expenses by developing its biotechnology product pipeline. The Biotechnology Segment had total assets of $
Technology Segment: This segment is revenue generating
and incurs expenses by acquiring technology assets to support and enhance operational capabilities through advanced technologies. The
Technology Segment had total assets of $
The Company believes that this structure reflects its current operational and financial management, and that it provides the best structure for the Company to focus on growth opportunities while maintaining financial discipline. The factors used to identify the Biotechnology and Technology operating segments were the difference in future potential revenue streams and customer base for each segment, the reporting structure for operational and performance information within the Company, and management’s decision to organize the Company around the different future potential revenue generating activities of the segments.
Segment information relating to the Company’s two operating segments for the three months ended March 31, 2026 and 2025 is as follows:
| Schedule of segment information | ||||||||||||
Three Months Ended March 31, 2026 | ||||||||||||
Biotechnology Segment | Technology Segment | Consolidated | ||||||||||
| Sales | $ | $ | $ | |||||||||
| Cost of goods sold | ||||||||||||
| Total operating expenses | ||||||||||||
| Net loss from operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
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Three Months Ended March 31, 2025 | ||||||||||||
Biotechnology Segment | Technology Segment | Consolidated | ||||||||||
| Sales | $ | $ | $ | |||||||||
| Cost of goods sold | ||||||||||||
| Total operating expenses | ||||||||||||
| Net loss from operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
NOTE 16 – MERGER AGREEMENT
On April 25, 2025, the Company (“Coeptis” or the “Purchaser”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with CP Merger Sub Inc., a Wyoming corporation and wholly-owned subsidiary of Coeptis (“Merger Sub”), and Z Squared, Inc., a Wyoming corporation (“Z Squared”).
Pursuant to the Merger Agreement, subject to the terms and conditions set forth therein, upon the consummation of the transactions contemplated by the Merger Agreement (the “Closing”), (i) Merger Sub will merge with and into Z Squared (the “Merger”) and (ii) Coeptis will immediately prior to the Merger effect a spin out of its biotechnology operations (the “Spin Out” and, together with Merger and the other transactions contemplated by the Merger Agreement, the “Transactions”), with Z squared continuing as the surviving corporation in the Merger and becoming a wholly-owned subsidiary of Coeptis.
In the Merger, all shares of Z Squared common stock issued and outstanding immediately prior to the effective time of the Merger (other than those properly exercising any applicable dissenters rights under Wyoming law), will be converted into the right to receive a portion of the Merger Consideration (as defined below) and (ii) any other outstanding securities with the right to convert into or acquire equity securities of Z Squared will be terminated. At the Closing, Coeptis will change its name as mutually agreed upon by the Purchaser and Z Squared. The Merger closed on April 24, 2026, subsequent to the balance sheet date covered by this Quarterly Report. See Note 17 – Subsequent Events.
In connection with the Spin Out, all of Coeptis’ assets comprising its biotechnology business will be assigned and contributed prior to Closing to one or more Spin Out Subsidiaries, which will then spin out to Coeptis’ stockholders of record on the record date established for the Coeptis Special Meeting (as defined below).
The aggregate Merger Consideration received by Z Squared security holders from Coeptis at the Closing will be a number of shares of Purchaser Common Stock that represents at Closing the Applicable Percentage of Purchaser’s issued and outstanding shares of Purchaser Common Stock as calculated on a Fully-Diluted Basis.
NOTE 17 – SUBSEQUENT EVENTS
Management has performed a review of all events and transactions occurring after March 31, 2026 for items requiring recognition or disclosure in the accompanying condensed consolidated financial statements, noting the following subsequent events.
Completion of Business Combination. On April 24, 2026, the Company (then named Coeptis Therapeutics Holdings, Inc.) completed the business combination contemplated by the Agreement and Plan of Merger, dated as of April 25, 2025 (the “Merger Agreement”), by and among the Company, CP Merger Sub Inc., a Wyoming corporation and wholly-owned subsidiary of the Company (“Merger Sub”), and Z Squared, Inc., a Wyoming corporation (“Z Squared”). At the effective time of the merger (the “Effective Time”), Merger Sub merged with and into Z Squared, with Z Squared surviving as a wholly-owned subsidiary of the Company (the “Merger”). In connection with the closing of the Merger, the Company changed its corporate name from “Coeptis Therapeutics Holdings, Inc.” to “Z Squared Inc.”
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At the Effective Time, each share of Z Squared common stock, par value $0.001 per share, outstanding immediately prior to the Effective Time was converted into the right to receive shares of the Company's common stock, par value $0.0001 per share, in accordance with the share-exchange ratio set forth in the Merger Agreement. As aggregate consideration for the Merger, the former Z Squared stockholders collectively received 43,877,497 shares of the Company's common stock, representing the Applicable Percentage (as defined in the Merger Agreement) of the Company's issued and outstanding common stock calculated on a fully-diluted basis as of the closing.
Commencing on April 27, 2026, the Company's common stock began trading on the Nasdaq Global Market under the new ticker symbol “ZSQR” (previously “COEP”).
Spin-Out of Certain Biotechnology Operations. Immediately prior to the Effective Time, and as a condition to the consummation of the Merger, the Company effected a spin-out (the “Spin-Out”) of certain of its biotechnology operations. The Company contributed substantially all of the assets, liabilities, and equity interests comprising its biopharmaceutical operations conducted through Coeptis Therapeutics, Inc., Coeptis Pharmaceuticals, Inc., Coeptis Pharmaceuticals, LLC, and the Company's 73% interest in SNAP Biosciences, Inc. (collectively, the “Spin-Out Subsidiaries”) to one or more newly-formed spin-out subsidiaries, the equity of which was then distributed to the Company's stockholders of record as of the applicable record date established for the Spin-Out. As a result of the Spin-Out, the Spin-Out Subsidiaries are no longer part of the Company's consolidated group. The Company's interest in GEAR Therapeutics, Inc. was not part of the Spin-Out and continues to be held by the Company following the Merger.
Change in Business. Following the completion of the Merger and the Spin-Out, the Company's principal business is the digital asset mining operations conducted through Z Squared and its subsidiaries, including vertically integrated cryptocurrency mining of Dogecoin (DOGE), Litecoin (LTC), and other digital assets at facilities located in North Carolina, South Carolina, and Iowa. The Company is also pursuing complementary business lines, including power generation, data center development, and high-performance compute hosting. The Company also continues to hold its interest in GEAR Therapeutics, Inc., which conducts the residual biopharmaceutical operations retained by the Company following the Spin-Out.
Accounting Treatment. As disclosed in the “Anticipated Accounting Treatment” section of the Company's Registration Statement on Form S-4 (File No. 333-288329) declared effective by the Securities and Exchange Commission on December 23, 2025 (the “Registration Statement”), the Merger is being accounted for as a reverse acquisition under ASC 805-40, with Z Squared treated as the accounting acquirer and the Company treated as the accounting acquiree for financial reporting purposes. Accordingly, in the Company's financial statements for periods ending on or after the closing date, the Company expects that: (i) the reported historical operating results will be those of Z Squared; (ii) the net assets of the Company (other than those of the Spin-Out Subsidiaries) acquired in the Merger will be recorded at their respective acquisition-date fair values; (iii) the legal capital of the surviving entity will be that of the Company, with the prior-period equity of Z Squared recast to reflect the share-exchange ratio under the Merger Agreement; and (iv) earnings per share for periods prior to the Merger will be recast to reflect that share-exchange ratio. The Company is in the process of finalizing the accounting under ASC 805 for the reverse acquisition, including the related fair value measurements, and that analysis is not yet complete.
Impact on the Financial Statements Presented. Because each of the Merger, the Spin-Out, the name change, and the ticker change occurred subsequent to the March 31, 2026 balance sheet date, each constitutes a non-recognized subsequent event under ASC 855-10-25-3 and does not affect the recognition or measurement of any amounts in the accompanying condensed consolidated balance sheet as of March 31, 2026 or the related condensed consolidated statements of operations, stockholders' equity, and cash flows for the three months ended March 31, 2026.
The Company's financial statements in subsequent periods will, however, be materially different from those presented herein as a result of the Merger, the Spin-Out, and the related change in business. In particular, (i) the operations historically conducted through the Spin-Out Subsidiaries will not be reflected in the Company's results of operations in subsequent periods; (ii) under the reverse acquisition treatment described above, the operations of Z Squared (which have not historically been included in the Company's consolidated financial statements) will be reflected in subsequent periods as those of the accounting acquirer; and (iii) the Company's outstanding shares of common stock increased from 6,553,996 at March 31, 2026 to 51,431,493 at May 12, 2026, primarily as a result of the issuance of the Merger Consideration. Because the Company has not yet finalized the accounting under ASC 805 for the reverse acquisition or the related fair value measurements, an estimate of the financial effect of these subsequent events on the Company's results of operations, financial position, and cash flows in future periods, beyond the foregoing, cannot reasonably be made at the date of issuance of these financial statements.
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For additional information regarding the Merger, the Spin-Out, and the resulting change in the Company's business, reference is made to the Registration Statement and to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on April 30, 2026 reporting the completion of the Merger and related transactions.
On April 29, 2026, Z Squared announced that it has entered into a binding letter of intent to acquire 100% of the membership interests of Skycore Digital LLC (“Skycore”), an operating digital infrastructure company with three active sites in North Carolina powered by Duke Energy. Skycore operates approximately 24 megawatts (“MW”) of energized power capacity currently connected to the Duke Energy grid, with an additional 18 MW available through existing Duke Energy Letters of Authorization. Together, the assets provide Z Squared with a defined path to up to 42 MW of total potential capacity.
The transaction is structured entirely in Series B Convertible Preferred Stock, with no cash consideration and no debt financing. Total consideration consists of Series B Convertible Preferred Stock with an $18 million base aggregate liquidation preference at closing, plus up to an additional $4 million, scaled pro rata based on additional MW secured prior to closing, with the full $4 million payable upon securement of 18 MW. Maximum aggregate consideration is $22 million. Key terms of the Series B Convertible Preferred Stock include a $1,000 stated value per share; an 8% cash dividend or 10% payment-in-kind dividend, at the Company’s election; conversion at a 10% premium to the 20-day VWAP at signing; a seven-year mandatory redemption; an annual holder put right beginning in year two, capped at 20% per year; and a $500,000 break-up fee payable by Z Squared. The parties have agreed to a 90-day exclusivity period. The acquisition is expected to close within 60 days following execution of a definitive purchase agreement, subject to customary closing conditions.
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| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Recent Business Combination
On April 24, 2026, subsequent to the close of the three-month period covered by this Quarterly Report on Form 10-Q, the Company (then named Coeptis Therapeutics Holdings, Inc.) completed the business combination (the “Merger”) contemplated by the Agreement and Plan of Merger, dated as of April 25, 2025, with Z Squared, Inc., a Wyoming corporation. At the effective time of the Merger, CP Merger Sub Inc., a Wyoming corporation and wholly-owned subsidiary of the Company, merged with and into Z Squared, with Z Squared surviving as a wholly-owned subsidiary of the Company. As consideration for the Merger, we issued an aggregate of 43,877,497 shares of common stock to former Z Squared stockholders. In connection with the closing, the Company changed its corporate name from “Coeptis Therapeutics Holdings, Inc.” to “Z Squared Inc.,” and on April 27, 2026, our common stock began trading on the Nasdaq Global Market under the new ticker symbol “ZSQR” (previously “COEP”).
Immediately prior to the closing of the Merger, the Company effected a spin-out (the “Spin-Out”) of substantially all of its biopharmaceutical operations other than those conducted through GEAR Therapeutics, Inc. Our interests in Coeptis Therapeutics, Inc., Coeptis Pharmaceuticals, Inc., Coeptis Pharmaceuticals, LLC, and SNAP Biosciences, Inc. (collectively, the “Spin-Out Subsidiaries”) were contributed to one or more newly-formed spin-out subsidiaries, the equity of which was distributed to our stockholders of record as of the applicable record date. The Spin-Out Subsidiaries are no longer part of our consolidated group following the Spin-Out. Our interest in GEAR Therapeutics, Inc. was not part of the Spin-Out and continues to be held by us.
Following the closing of the Merger and the Spin-Out, our principal business is the digital asset mining operations conducted through Z Squared and its subsidiaries, including vertically integrated cryptocurrency mining of Dogecoin (DOGE), Litecoin (LTC), and other digital assets at facilities located in North Carolina, South Carolina, and Iowa. We are also pursuing complementary business lines, including power generation, data center development, and high-performance compute hosting. We continue to hold our interest in GEAR Therapeutics, Inc., which conducts the residual biopharmaceutical operations retained by us following the Spin-Out. For additional information regarding the business of Z Squared, reference is made to the section entitled “Z Squared's Business” in our Registration Statement on Form S-4 (File No. 333-288329) declared effective by the SEC on December 23, 2025 (the “Registration Statement”), and to our Current Report on Form 8-K filed on April 24, 2026, reporting the completion of the Merger.
As disclosed in the “Anticipated Accounting Treatment” section of the Registration Statement, the Merger is being accounted for as a reverse acquisition in accordance with U.S. GAAP. Under this method of accounting, Z Squared will be deemed to be the accounting acquirer for financial reporting purposes. As a result of the Merger, the net assets of the Company (other than those of the Spin-Out Subsidiaries) will be recorded at their acquisition-date fair value in the financial statements of Z Squared, and the reported operating results in our financial statements for periods commencing on or after the closing date of the Merger will be those of Z Squared as the accounting acquirer.
Basis of MD&A Discussion
The accompanying condensed consolidated financial statements as of and for the three months ended March 31, 2026 and 2025 represent the historical financial statements of the legal acquirer in the Merger (i.e., the predecessor entity, Coeptis Therapeutics Holdings, Inc.), reflecting the biopharmaceutical and technology business conducted by the Company through the Spin-Out Subsidiaries and GEAR Therapeutics, Inc. during those periods, prior to the closing of the Merger and the Spin-Out. The discussion and analysis that follows under “Results of Operations” and “Liquidity and Capital Resources” relates to that historical pre-Merger business. Because each of the Merger and the Spin-Out occurred subsequent to March 31, 2026, the historical financial statements presented in this Quarterly Report do not reflect the operations of Z Squared as the accounting acquirer or the disposition of the Spin-Out Subsidiaries.
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Investors are cautioned that the Company's historical financial information presented in this Quarterly Report is not indicative of, and is not comparable to, the financial information that will be presented in the Company's subsequent periodic reports filed with the SEC, in which (i) the operations of Z Squared will be reflected as those of the accounting acquirer; (ii) the operations of the Spin-Out Subsidiaries will no longer be reflected; and (iii) the net assets of the Company (other than those of the Spin-Out Subsidiaries) will be presented at their acquisition-date fair value. Investors should refer to the Registration Statement, our Current Report on Form 8-K reporting the completion of the Merger, and the pro forma financial information contained therein for information regarding the financial profile of the combined company.
When we use words like “we,” “us,” “our,” “the Company” and words of like import in the discussion and analysis that follows, unless otherwise indicated, we are referring to the registrant and its consolidated subsidiaries as they existed during the three months ended March 31, 2026, prior to the closing of the Merger and the Spin-Out.
Forward-Looking Statements
This Report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements relating to our future results, certain projections, and business trends. Assumptions relating to forward-looking statements involve judgments with respect to, among other things, future economic, competitive, and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. When used in this Report, the words “estimate,” “project,” “intend,” “believe,” “expect,” “anticipate,” “plan,” “may,” “will,” “should,” “would,” “could,” “potential,” “future,” and similar expressions are intended to identify forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of those assumptions could prove inaccurate, and we may not realize the results contemplated by such forward-looking statements. Management decisions are subjective in many respects and susceptible to interpretations and periodic revisions based on actual experience and business developments, the impact of which may cause us to alter our business strategy or capital expenditure plans that may, in turn, affect our results of operations. In light of the significant uncertainties inherent in the forward-looking information included in this Report, you should not regard the inclusion of such information as our representation that we will achieve any strategy, objective, or other plan. The forward-looking statements contained in this Report speak only as of the date of this Report as stated on the front cover, and we have no obligation to update publicly or revise any of these forward-looking statements, except as required by applicable law. These and other statements that are not historical facts are based largely on management's current expectations and assumptions and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those contemplated by such forward-looking statements. These risks and uncertainties include, among others, those relating to: (i) the recently completed business combination (the “Merger”) with Z Squared, Inc., a Wyoming corporation, and the related spin-out (the “Spin-Out”) of substantially all of our historical biopharmaceutical operations other than those conducted through GEAR Therapeutics, Inc.; (ii) the accounting for the Merger as a reverse acquisition and the integration of the operations, accounting, treasury, custody, and reporting systems of Z Squared, Inc. into our existing reporting infrastructure; (iii) the volatility of cryptocurrency prices, mining economics (including hash rate, network difficulty, halving cycles, transaction fees, and energy costs), and the regulatory developments affecting digital assets and digital asset mining; (iv) our planned expansion into power generation, data center development, and high-performance compute hosting business lines and our limited operating history in those business lines; (v) our pending acquisition of SkyCore, and the issuance of newly-designated Series B Convertible Preferred Stock in connection therewith; (vi) substantial dilution to holders of our common stock resulting from the Merger, the pending acquisitions, our existing Standby Equity Purchase Agreement, the bonus share issuance to Group 10 Holdings LLC, and other capital-raising arrangements; (vii) substantial doubt about our ability to continue as a going concern; (viii) the change in our management team and board of directors and any related effects on disclosure controls and procedures and internal control over financial reporting; and (ix) the risks and uncertainties described under the caption “Risk Factors” in Part II, Item 1A of this Report, in the “Risk Factors” section of our Registration Statement on Form S-4 (File No. 333-288329) declared effective by the Securities and Exchange Commission on December 23, 2025, and in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, in each case as such risks may be updated from time to time in our subsequent filings with the Securities and Exchange Commission.
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References in this Report to “the Company,” “we,” “us,” “our,” and similar terms refer to the registrant — Z Squared Inc. (formerly known as Coeptis Therapeutics Holdings, Inc.) — and its consolidated subsidiaries. The composition of the Company's consolidated group changed materially in connection with the Merger and the Spin-Out completed on April 24, 2026, as described above and in Notes 16 and 17 to the accompanying condensed consolidated financial statements. Unless the context otherwise requires, when used in connection with the financial statements presented in this Report or the discussion and analysis thereof, these terms refer to the registrant and its consolidated subsidiaries as they existed during the three months ended March 31, 2026 (consisting of the registrant together with its then-subsidiaries Coeptis Therapeutics, Inc., Coeptis Pharmaceuticals, Inc., Coeptis Pharmaceuticals, LLC, SNAP Biosciences, Inc., and GEAR Therapeutics, Inc.), prior to the closing of the Merger and the Spin-Out. When used in connection with events occurring after March 31, 2026, these terms refer to the registrant and its consolidated subsidiaries as they exist following the Merger and the Spin-Out, consisting of the registrant together with Z Squared, Inc. (the Wyoming corporation surviving the Merger as a wholly-owned subsidiary of the registrant) and its subsidiaries and GEAR Therapeutics, Inc.
Objective
The objective of our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is to provide users of our financial statements with the following:
| · | A narrative explanation from the perspective of management of our financial condition, results of operations, cash flows, liquidity and certain other factors that may affect future results; | |
| · | Useful context to the financial statements; and | |
| · | Information that allows assessment of the likelihood that past performance is indicative of future performance. |
Our MD&A is provided as a supplement to, and should be read together with, our unaudited condensed consolidated financial statements for the three months ended March 31, 2026 and 2025, included in Part I, Item 1 of this Form 10-Q.
Company History
The Company was originally incorporated in the British Virgin Islands on November 27, 2018 under the name Bull Horn Holdings Corp. On October 27, 2022, Bull Horn Holdings Corp. domesticated from the British Virgin Islands to the State of Delaware. On October 28, 2022, in connection with the closing of the Company's prior business combination with Coeptis Therapeutics, Inc., the Company changed its corporate name from Bull Horn Holdings Corp. to “Coeptis Therapeutics Holdings, Inc.” On April 24, 2026, in connection with the closing of the Merger described above and in Notes 16 and 17 to the accompanying condensed consolidated financial statements, the Company changed its corporate name from “Coeptis Therapeutics Holdings, Inc.” to “Z Squared Inc.”
Subsidiaries
During the three months ended March 31, 2026, and prior to the closing of the Merger and the Spin-Out, the Company conducted its operations through its direct and indirect subsidiaries SNAP Biosciences, Inc. and GEAR Therapeutics, Inc. (each majority owned), and Coeptis Therapeutics, Inc., Coeptis Pharmaceuticals, Inc., and Coeptis Pharmaceuticals, LLC (each wholly owned). As discussed in the “Recent Business Combination” section above and in Notes 16 and 17 to the accompanying condensed consolidated financial statements, on April 24, 2026 the Company effected the Spin-Out of Coeptis Therapeutics, Inc., Coeptis Pharmaceuticals, Inc., Coeptis Pharmaceuticals, LLC, and the Company's 73% interest in SNAP Biosciences, Inc., and accordingly those entities are no longer subsidiaries of the Company. Following the closing of the Merger and the Spin-Out, the Company's consolidated subsidiaries consist of Z Squared, Inc. (the Wyoming corporation that survived the Merger as a wholly-owned subsidiary of the Company) and its subsidiaries, and GEAR Therapeutics, Inc. (which was not part of the Spin-Out and remains a majority-owned subsidiary of the Company).
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Overview and Outlook
The Company is a digital asset mining and digital infrastructure company. Following the completion of the Merger and the Spin-Out on April 24, 2026, the Company's principal business consists of the digital asset mining operations conducted through Z Squared, Inc., a Wyoming corporation, and its subsidiaries, including the vertically integrated mining of Dogecoin (DOGE), Litecoin (LTC), and other cryptocurrencies at facilities located in North Carolina, South Carolina, and Iowa. The Company operates a fleet of specialized application-specific integrated circuit, or ASIC, mining hardware (including Antminer L7, L9, and DG1+ models) deployed across multiple mining algorithms (including SHA-256, Scrypt, and kHeavyHash). Key elements of the Company's mining operations include continuous fleet optimization, in-house equipment repair and spare-parts management, dynamic power-cost management responsive to wholesale and retail electricity market conditions, and real-time performance monitoring of hash rate, unit status, and per-machine revenue.
The Company is also pursuing strategic expansion into complementary digital infrastructure business lines, including (i) power generation, intended to provide cost-effective and stable energy supply for the Company's mining and digital infrastructure operations and, where economically advantageous, sales of power into wholesale electricity markets; (ii) data center development, intended to support the Company's own digital infrastructure operations and, where market conditions warrant, to provide colocation services to third-party customers; and (iii) high-performance compute hosting, intended to serve customers requiring graphics processing unit and other specialized compute capacity for artificial intelligence, machine learning, and similar workloads. The Company has limited or no operating history in these expansion business lines, and there can be no assurance that the Company will successfully enter or operate in any of them. For a discussion of the risks associated with these expansion business lines, see Part II, Item 1A of this Report under “Risk Factors.”
In addition, the Company is pursuing a strategic acquisition intended to expand its digital asset mining footprint and digital infrastructure capacity: (i) the proposed acquisition of SkyCore through the issuance of newly-designated Series B Convertible Preferred Stock (the “SkyCore Acquisition”). The SkyCore Acquisition remains subject to negotiation of definitive agreements, completion of due diligence, board approval, and the satisfaction of customary closing conditions, and there can be no assurance that either transaction will be consummated on the terms currently contemplated or at all. For a discussion of these proposed acquisitions and the risks associated with them, see Part II, Item 1A of this Report under “Risk Factors.”
Following the Spin-Out, the Company continues to hold its majority interest in GEAR Therapeutics, Inc., which conducts the residual biopharmaceutical operations retained by the Company. GEAR Therapeutics, Inc. is not the Company's principal business focus following the completion of the Merger and the Spin-Out.
The historical period reflected in the accompanying condensed consolidated financial statements (the three months ended March 31, 2026 and the comparative three months ended March 31, 2025) predates the closing of the Merger and the Spin-Out. During that period, the Company operated as a biopharmaceutical and technology company through its consolidated subsidiaries, and the historical financial position, results of operations, and cash flows discussed in the “Results of Operations” and “Liquidity and Capital Resources” sections that follow relate to that historical biopharmaceutical and technology business. As discussed in the “Basis of MD&A Discussion” section above, the Company's results of operations in subsequent periods will not be comparable to the historical results reflected in this Report.
Biotechnology Segment
Vy-Gen-Bio, Inc.
In May 2021, we entered into two exclusive option agreements (the “CD38 Agreements”) relating to separate technologies designed to improve the treatment of CD38-related cancers (e.g., multiple myeloma, chronic lymphocytic leukemia, and acute myeloid leukemia) with Vy-Gen-Bio, Inc. (“Vy-Gen”), a majority-owned subsidiary of Vycellix, Inc., a Tampa, Florida-based private, immuno-centric discovery life science company focused on the development of transformational platform technologies to enhance and optimize next-generation cell and gene-based therapies, including T-cell and Natural Killer (NK) cell-based cancer therapies.
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The CD38 Agreements relate to two separate Vy-Gen drug product candidates, as follows:
CD38-GEAR-NK. This Vy-Gen drug product candidate is designed to protect CD38+ NK cells from destruction by anti-CD38 monoclonal antibodies, or mAbs. CD38-GEAR-NK is an autologous, NK cell-based therapeutic that is derived from a patient’s own cells and gene-edited to enable combination therapy with anti-CD38 mAbs. We believe CD38-GEAR-NK possesses the potential to minimize the risks and side effects from CD38-positive NK cell fratricide.
Market Opportunity. We believe CD38-GEAR-NK could potentially revolutionize how CD38-related cancers are treated, by protecting CD38+ NK cells from destruction by anti-CD38 mAbs, thereby promoting the opportunity to improve the treatment of CD38-related cancers, including multiple myeloma, chronic lymphocytic leukemia, and acute myeloid leukemia.
Multiple myeloma is the first cancer indication targeted with CD38-GEAR-NK. The global multiple myeloma market was $28.42B in 2024 and is expected to reach $47.04B by 2031 [Source: Data Bridge Market Research].
CD38-Diagnostic. This Vy-Gen product candidate is an in vitro diagnostic tool to analyze if cancer patients might be appropriate candidates for anti-CD38 mAb therapy. CD38-Diagnostic is an in vitro screening tool that provides the ability to pre-determine which cancer patients are most likely to benefit from targeted anti-CD38 mAb therapies, either as monotherapy or in combination with CD38-GEAR-NK. CD38-Diagnostic also has the potential to develop as a platform technology beyond CD38, to identify patients likely to benefit for broad range of mAb therapies across myriad indications.
Market Opportunity. We believe CD38-Diagnostic provides opportunity to make more cost-effective medical decisions for the treatment of B cell malignancies with high CD38 expression, including multiple myeloma, which may help to avoid unnecessary administration of anti-CD38 therapies. CD38-Diagnostic could prevent patients from being subjected to ineffective therapy and enable significant savings to healthcare systems.
CD38-Diagnostic could be offered as an in-vitro diagnostic for determining patient suitability and likelihood of positive treatment outcomes for CD38-GEAR-NK and/or CD38 monoclonal antibody therapies.
On September 28, 2023, we received FDA’s response to our 513(g) request for information submission pertaining to the classification of the CD38-Diagnostic. The CD38-Diagnostic has been designated a Class II type device. The confirmation of this classification is beneficial as we’re now better able to plan for and execute future development activities.
GEAR-NK Product Overview. GEAR-NK is an autologous, gene-edited, natural killer cell-based therapeutic development platform that allows for modified NK cells to be co-administered with targeted mAbs, which, in the absence of the GEAR-NK, would otherwise be neutralized by mAb therapy.
In May 2021, we made initial payments totaling $750,000 under the CD38 Agreements, to acquire the exclusive options to acquire co-development rights with respect to CD38-GEAR-NK and CD38-Diagnostic. On August 15, 2021, we entered into amendments to each of the CD38 Agreements. In connection with the two amendments, we delivered to Vy-Gen promissory notes aggregating $3,250,000 with maturity dates of December 31, 2021, and made a cash payment of $1,000,000, upon which cash payment we exercised the two definitive option purchase agreements. In December 2021, we completed our payment obligations to secure the 50% ownership interest in the CD38-Diagnostic, and subsequently in November 2022 we completed our purchase of the 50% ownership interest for the CD38-GEAR-NK product candidate. Details of the two August amendments and the December amendment are summarized in the amendments attached at Exhibits 4.1 and 4.2 to our Current Report on Form 8-K dated August 19, 2021 and Exhibits 4.2 to our Current Report on Form 8-K dated December 27, 2021.
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In connection with the Vy-Gen relationship and the Company’s ownership in the two product candidates described above, in December 2021 the Company and Vy-Gen entered into a co-development and steering committee agreement. The co-development and steering committee agreement provides for the governance and economic agreements between the Company and Vy-Gen related of the development of the two Vy-Gen drug product candidates and the revenue sharing related thereto, including each company having a 50% representation on the steering committee and each company receiving 50% of the net revenues related to the Vy-Gen product candidates. Related to the joint development, under the direction of the joint steering committee, we are currently assessing market opportunities, intellectual property protection and potential regulatory strategies for the CD38 Assets, and Vy-Gen is overseeing the development activities being conducted through the scientists at Karolinska Institute. Details of the co-development and steering committee agreement are summarized in our Current Report on Form 8-K dated December 27, 2021, including Exhibits 4.1 and 4.2 thereto.
In March 2025, the Company reached an agreement with Vy-Gen to successfully license the exclusive worldwide development and commercialization rights to the GEAR™ (Gene Edited Antibody Resistant) Cell Therapy Platform, representing a first-in-class approach to modifying potent cancer-targeting immune cells to optimize the likelihood of deep remission in patients with hematologic malignancies and other cancers. Coeptis had previously held limited co-development rights to GEAR.
Deverra Therapeutics, Inc.
On August 16, 2023, the Company entered into an exclusive licensing arrangement (the “License Agreement”) with Deverra Therapeutics Inc. (“Deverra”), pursuant to which the Company completed the exclusive license of key patent families and related intellectual property related to a proprietary allogeneic stem cell expansion and directed differentiation platform for the generation of multiple distinct immune effector cell types, including natural killer (NK) and monocyte/macrophages. The License Agreement provides the Company with exclusive rights to use the license patents and related intellectual property in connection with development and commercialization efforts in the defined field of use (the “Field”) of (a) use of unmodified NK cells as anti-viral therapeutic for viral infections, and/or as a therapeutic approach for treatment of relapsed/refractory AML and high-risk MDS; (b) use of Deverra’s cell therapy platform to generate NK cells for the purpose of engineering with Coeptis SNAP-CARs and/or Coeptis GEAR Technology; and (c) use of Deverra’s cell therapy platform to generate myeloid cells for the purpose of engineering with the Company’s current SNAP-CAR and GEAR technologies. In support of the exclusive license, the Company also entered into with Deverra (i) an asset purchase agreement (the “APA”) pursuant to which the Company purchased certain assets from Deverra, including but not limited to two Investigational New Drug (IND) applications and two Phase 1 clinical trial stage programs (NCT04901416, NCT04900454) investigating infusion of DVX201, an unmodified natural killer (NK) cell therapy generated from pooled donor CD34+ cells, in hematologic malignancies and viral infections and (ii) a non-exclusive sublicense agreement (the “Sublicense Agreement”), in support of the assets obtained by the exclusive license, pursuant to which the Company sublicensed from Deverra certain assets which Deverra has rights to pursuant a license agreement (“FHCRC Agreement”) by and between Deverra and The Fred Hutchinson Cancer Research Center (“FHCRC”).
As consideration for the transactions described above, the Company paid Deverra approximately $570,000 in cash, issued to Deverra 4,000,000 shares of the Company’s common stock and assumed certain liabilities related to the ongoing clinical trials. Total consideration paid was $4,937,609, which was fully expensed in accordance with ASC 730, and is reflected within research and development in the consolidated statement of operations for the year ended December 31, 2023. In addition, in accordance with the terms of the Sublicense Agreement, the Company agreed to pay FHCRC certain specified contingent running royalty payments and milestone payments under the FHCRC Agreement, in each case to the extent such payments are triggered by the Company’s development activities.
On October 26, 2023, the Company entered into a Shared Services Agreement (“SSA”) with Deverra, in accordance with requirements set forth in the APA. Under the terms of the SSA, Coeptis and Deverra shared resources and collaborated to further the development of Coeptis’ GEAR and SNAP-CAR platforms, as well as the purchased and licensed assets under the License Agreement and APA. While the SSA was terminated in December 2024, the Company is continuing its development focus on both GEAR and SNAP-CAR, and will be considering prospective strategic partners for such development.
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SNAP-CAR Technologies; University of Pittsburgh
The SNAP-CAR License: On August 31, 2022, we entered into an exclusive license agreement with the University of Pittsburgh for certain intellectual property rights related to the universal self-labeling SynNotch and CARs for programable antigen-targeting technology platform. We paid the University of Pittsburgh a non-refundable fee in the amount of $75,000 for the exclusive patent rights to the licensed technology.
In September 2023, we executed the first amendment to the SNAP-CAR License in which we expanded the field of use to include natural killer cells. We believe this is a valuable addition as we continue to develop the SNAP-CAR platform as a universal therapeutic.
A key potential benefit that we see in the licensed technology is its potential application in therapeutic treatments that involve solid tumors. While there are currently a number of FDA-approved CAR-T therapies for hematologic malignancies, there are currently no CAR-T therapies marketed that are indicated for the treatment of solid tumors.
Under the terms of the agreement, we have been assigned the worldwide development and commercialization rights to the licensed technology in the field of human treatment of cancer with antibody or antibody fragments using SNAP-CAR T-cell technology, along with (i) an intellectual property portfolio consisting of issued and pending patents and (ii) options regarding future add-on technologies and developments. In consideration of these rights, we paid an initial license fee of $75,000, and will have annual maintenance fees ranging between $15,000 and $25,000, as well as developmental milestone payments (as defined in the agreement and royalties equal to 3.5% of net sales. Additionally, the agreement contemplates that we will enter into a Sponsored Research Agreement with the University of Pittsburgh within ninety days of the execution of the agreement, with the goal of further researching and optimizing the SNAP-CAR platform.
The Sponsored Research Agreement: In January 2023 we entered into a sponsored research agreement (“SRA”) with the University of Pittsburgh, the focus of which is to perform pre-clinical research as it relates to our SNAP-CAR program. Our target objectives have been to: (i) test and validate CRO antibody conjugation chemistry and improve the activity of adaptors by investigating alternative chemical composition, (ii) investigate HER2 and other solid-tumor model in mice for both breast and ovarian cancers, (iii) identify and test other non-HER2 targets, (iv) further investigate multi-antigen targeting by dosing multiple adaptors simultaneously to address tumor heterogeneity/resistance in hematological and/or solid tumors and (v) expand the potential impact of SNAP-CAR by performing in vitro screening of many additional antigen-antibody combinations in hematological and/or solid tumors. The term of the SRA expired by its terms at the end of January 2025. The data generated during the term of the SRA will be instrumental in determining target indications, development plans, and clinical study designs.
The SNAP-CAR Platform: Chimeric antigen receptor (CAR) therapy is a treatment for cancer in which a patient’s T-cells (a type of immune cell) are genetically engineered to recognize cancer cells to target and destroy them. Cells are extracted from the patient and then genetically engineered to make the CAR and are re-introduced back into the patient. This therapy is revolutionizing the treatment of many blood cancers including B cell leukemias and lymphomas by targeting specific proteins found on these cancers, and there is hope in treating additional cancers including solid tumors by having them recognize new targets. The “SNAP-CAR” CAR cell therapy platform is being developed to be a universal therapeutic. The SNAP-CAR technology is in the preclinical stage of development at the University of Pittsburgh. Instead of directly binding to a target on the tumor cell, the CAR T-cells are co-administered with one or more antibody adaptors that bind to the tumor cells and are fitted with a chemical group that irreversibly connects them to the SNAP-CAR on the therapeutic cells via a covalent bond. A covalent bond is the highest affinity bond possible, and we believe this binding could translate into highly potent therapeutic activity.
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Pre-clinical studies in mice have demonstrated a potential benefit that by targeting solid tumors via antibody adaptor molecules, the SNAP-CAR therapy may be able to provide a highly programmable therapeutic platform, one that we envision could deliver several potential advantages over standard CAR-T treatments, including:
| – | Reduction of Potential Toxicity: The therapeutic activity of the SNAP-CAR T-cells is being developed to allow controls by way of the antibody dose, which we envision would allow clinicians to mitigate toxicity from over-activity. We also envision that the immune response against cancer may also be boosted in patients administered with additional doses of the tagged tumor-specific antibody; and | |
| – | Reduction in Cancer Relapse: Relapse from CAR T-cell therapy often results from the loss or down-regulation of the targeted protein on the cancer. Our research and development will continue the pre-clinical development efforts to date, which focuses in part on the potential avoidance of or reduction in relapses by combining SNAP-CAR T-cells with antibodies targeting multiple antigens at once. |
Market Opportunity: Due to its unique targeting and binding properties, we believe the SNAP-CAR platform could help accelerate the utilization and effectiveness of CAR T-cell therapies for the treatment of solid tumors. By way of market size, according to Polaris Market Research, the CAR T-cell therapy market size is expected to reach $20.56 billion by 2029 (from $1.96 billion in 2021), representing a compound annual growth rate (CAGR) of 31.6% during the forecast period from 2022 to 2029. However, based on the anticipated application of the licensed technology (i.e. initially focusing on solid tumor treatment) we cannot at this time project the market size of our target market until we further develop the licensed technology and settle on the initial target indications and follow-up indications. Additional research and analysis are being conducted which will aid us in the proper identification and selection of the cancer indication(s) we intend to further study. Once the optimal indication(s) are selected and the overall development strategy is fully identified, the market opportunity can be further defined.
Vici Health Sciences, LLC.
In 2019, we entered into a co-development agreement with Vici Health Sciences, LLC (“Vici”). Through this partnership, we would co-develop, seek FDA approval and share ownership rights with Vici to CPT60621, a novel, ready to use, easy to swallow, oral liquid version of an already approved drug used for the treatment of Parkinson’s Disease (PD). As we continue to direct its operational focus towards the Vy-Gen opportunities previously described, we have recently stopped allocating priority resources to the development of CPT60621. We are currently in negotiations in which Vici intends to buy-out most or all of our remaining ownership rights.
Technology Segment
NexGenAI Affiliates Network
On December 19, 2024, the Company acquired the assets of NexGenAI Affiliates Network Platform (“NexGenAI”), from the seller NexGenAI Solutions Group, Inc., which contains AI-powered marketing software and robotic process automation capabilities. The acquired assets include intellectual property, a domain name and associated website, and the technology stack as defined in the agreement.
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The acquired assets include a technology-enabled AI driven marketing automation platform, along with associated tools and infrastructure that enable the Company to offer managed digital marketing services under its own brand. Originally launched in the third quarter of 2023, the platform was developed to support client efforts in enhancing brand visibility, generating qualified leads, and advancing strategic growth initiatives. The Company’s managed service offerings now include lead generation, content marketing, social media marketing, email marketing, account-based marketing, marketing analytics, event marketing, and branding support.
The Company will utilize a proprietary suite of automation and virtual assistant technologies to streamline client outreach, engagement
workflows, and digital marketing operations across our operations.
Our Results of Operations
Revenue. To date, we have generated revenue mostly from lead generation and webinar services offered through our NexGenAI platform. We have not yet achieved profitability, and there remains uncertainty regarding our ability to generate sufficient revenue to cover operating expenses and fund our business plan without additional capital.
Operating Expenses. Operating expenses consist primarily of salaries and related costs for personnel and professional fees for consulting services related to regulatory, pharmacovigilance, quality, legal, and business development. We expect that our general and administrative expenses will increase in the future as we increase our headcount to support the business growth. We also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance, insurance, and investor relation expenses associated with operating as a public company.
Research and Development Costs. Research and developments costs will continue to be dependent on the strategic business collaborations and agreements we are anticipating in the future. We expect development costs to increase to support our new strategic initiatives.
Comparison of the three months ended March 31, 2026 and March 31, 2025
Revenues. Revenues recorded in the three months ended March 31, 2026 and 2025 were $113,771 and $62,874, respectively. The Company’s revenue generating activities are a result of the lead generation and webinar services of its NexGenAI Affiliates Network platform within its Technology segment. The activities of the Company’s Biotechnology segment primarily include product development, raising capital, and building infrastructure. Management will continue to pursue drug development toward the goal of commercializing, through a partnership or otherwise, one or more of the Company’s target products or technologies.
Operating Expenses
Overview. Operating expenses decreased from $4,074,702 in the three months ended March 31, 2025 to $3,983,259 in the three months ended March 31, 2026. The decrease is attributed to a decrease in professional services expense offset by an increase in general and administrative expenses and stock-based compensation.
General and Administrative Expenses. For the three months ended March 31, 2026 and 2025, general and administrative expenses are included in operating expenses. All costs incurred can be attributed to the planned principal operations of product development, raising capital, building infrastructure, and the state of Delaware franchise taxes.
Interest Expense. Interest expense was $71,491 for the three months ended March 31, 2025 and was $5,257 for the three months ended March 31, 2026. The decrease is primarily due to the satisfaction of notes payable.
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Change in Fair Value of Derivative Liabilities. The change in fair value for the three months ended March 31, 2025 was a gain of $596,120 and was a loss of $19,875 for the three months ended March 31, 2026. The change in value of the derivative liability warrants, is a result of a drop in the implied volatility of the warrants and the shortened expiration time, as well as a decrease in the principal amount of the related convertible note in combination with an increase in the common share price during the period, leading to a reduced number of shares available to be converted.
Unrealized loss on marketable securities. The Company recognized an unrealized loss on its portfolio of marketable securities of $176,045 for the three months ended March 31, 2026. The unrealized loss was attributable to a decline in the market value of the securities during the period. The unrealized loss is non-cash in nature and reflects a temporary change in fair value as of the balance sheet date. Management does not expect the unrealized loss to have a material impact on the Company’s liquidity or ongoing operations.
Realized gain on marketable securities. For the three months ended March 31, 2026 the Company recognized a realized gain on the sale of marketable securities of $85,407, compared to no such gain for the three months ended March 31, 2025. The gain resulted from the sale of equity securities during the period. Management does not expect the realized gain to have a material impact on the Company’s liquidity or ongoing operations.
Liquidity and Capital Resources
The Company has historically funded its operations through sales of equity and debt securities and, more recently, through advances under the Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, Ltd. (“Yorkville”) described in Note 7 to the condensed consolidated financial statements. During the three months ended March 31, 2026, the Company’s principal sources of liquidity consisted of cash on hand, proceeds from sales of marketable securities, and proceeds from the issuance of common stock under the SEPA.
At March 31, 2026, the Company had cash of $5,211,188, compared to cash of $5,674,302 at December 31, 2025. During the three months ended March 31, 2026, the Company used $1,758,887 of cash in operating activities, generated $591,519 of cash from investing activities (consisting of proceeds from the sale of marketable securities), and generated $704,254 of cash from financing activities (consisting of $504,254 of proceeds from the issuance of common stock under the SEPA and $200,000 of cash proceeds received in connection with stock option exercises). In addition, the Company received non-cash consideration in connection with stock option exercises during the period consisting of shares of privately-held companies valued at $1,663,580 and marketable securities valued at $56,112.
As described in Note 2 to the condensed consolidated financial statements, the Company has concluded, and its independent registered public accounting firm has expressed in connection with the audit of the Company’s financial statements for the year ended December 31, 2025, that there is substantial doubt about the Company’s ability to continue as a going concern. At March 31, 2026, the Company had an accumulated deficit of $113,870,346, and for the three months ended March 31, 2026, the Company had a net loss of $4,020,896. The Company’s ability to continue as a going concern is dependent on its ability to raise additional capital, generate positive cash flow from operations, and ultimately achieve and sustain profitable operations. There can be no assurance that the Company will be successful in any of these respects.
Although the historical financial statements presented in this Quarterly Report reflect the operations of Coeptis Therapeutics Holdings, Inc. and its subsidiaries during the period covered, the Company’s liquidity needs and capital resources in subsequent periods will reflect the digital asset mining operations conducted through Z Squared, Inc. as the accounting acquirer following the closing of the Merger and the Spin-Out on April 24, 2026. As described in the Registration Statement on Form S-4 (File No. 333-288329) and the Company’s Current Report on Form 8-K filed on April 30, 2026, Z Squared has historically incurred substantial losses and has likewise reflected substantial doubt about its ability to continue as a going concern. The combined company’s liquidity needs in subsequent periods will be materially greater than those reflected in this Quarterly Report as a result of (i) the operating costs of the digital asset mining business (including energy procurement, hosting, equipment maintenance, and fleet replacement costs), (ii) the capital expenditures associated with the Company’s planned expansion into power generation, data center development, and high-performance compute hosting business lines, and (iii) the costs of the pending acquisition of Skycore Digital LLC described in Note 17 and under Part II, Item 1A of this Quarterly Report.
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As of the date of this Quarterly Report, the Company has access to remaining capacity under the SEPA, subject to the limitations described in Note 7 to the condensed consolidated financial statements (including the Exchange Cap, the 4.99% beneficial ownership limit applicable to Yorkville, and the minimum-acceptable-price provisions). The Company also expects that it will need to raise additional capital through one or more public or private offerings of equity, debt, or hybrid securities, project financings, joint ventures, or strategic transactions to fund the operations of the combined company and the planned expansion into the new business lines described above. There can be no assurance that any such additional capital will be available to the Company on acceptable terms, or at all. If the Company is unable to access additional capital when needed, the Company may be required to delay, reduce in scope, or abandon planned business activities, including its planned expansion into power generation, data center development, and high-performance compute hosting, any of which could materially and adversely affect the Company’s business, financial condition, and results of operations.
The Company’s material cash commitments at March 31, 2026 consisted of (i) future minimum rental payments under the Company’s office lease aggregating $103,163 through 2028, as described in Note 10 to the condensed consolidated financial statements; (ii) the SBA Economic Injury Disaster Loan in the principal amount of $150,000, bearing interest at 3.75% per annum, as described in Note 5; (iii) the convertible note payable in the principal amount of $100,000, which is in default as described in Note 4; and (iv) contingent royalty, milestone, license maintenance, and performance-based payments under the various biotechnology license, sublicense, and research agreements described in Notes 3 and 10, the timing and amount of which depend on the occurrence of contingent events. Following the closing of the Merger and the Spin-Out on April 24, 2026, certain of these commitments — including those relating to the GEAR Cell Therapy Platform and other biotechnology operations not included in the Spin-Out — continue to be obligations of the Company. In addition, following the closing of the Merger, the Company has assumed the cash commitments of Z Squared, including those associated with its digital asset mining operations.
Critical Accounting Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Management evaluates these estimates on an ongoing basis. Actual results could differ materially from these estimates under different assumptions or conditions. The Company considers an accounting estimate to be “critical” if (i) the estimate requires assumptions to be made that were uncertain at the time the estimate was made and (ii) different estimates that the Company reasonably could have used, or changes in those estimates that are reasonably likely to occur, could have a material effect on the Company’s financial position, results of operations, or cash flows. The following accounting estimates were critical to the historical financial statements of Coeptis Therapeutics Holdings, Inc. and its subsidiaries presented in this Quarterly Report:
Fair Value of Warrant Liabilities. The Company classifies its Public Warrants and Private Placement Warrants as derivative liabilities measured at fair value on a recurring basis, with changes in fair value recognized in the condensed consolidated statements of operations. The Private Placement Warrants are valued using a binomial lattice model, which is a Level 3 fair value measurement. The primary unobservable input is the expected volatility of the Company’s common stock. Changes in the expected volatility, the risk-free interest rate, or the underlying stock price could result in materially different fair value measurements. See Note 6 to the condensed consolidated financial statements.
Fair Value of Investments in Privately-Held Companies. The Company holds significant investments in equity securities of privately-held companies, recorded as investments on the condensed consolidated balance sheets at a carrying value of $13,159,346 at March 31, 2026. The Company applies the measurement alternative under ASC 321, recording these investments at cost less impairment, with adjustments for observable price changes in orderly transactions involving similar securities. The Company assesses these investments for impairment at least annually, or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. The assessment of whether impairment exists involves significant management judgment, including with respect to the financial condition and near-term business prospects of the investee, the duration and extent to which the fair value of the investment may have been less than cost, and the existence of observable transactions involving comparable securities. Changes in these judgments could result in materially different impairment conclusions. See Notes 9 and 13 to the condensed consolidated financial statements.
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Share-Based Compensation. The Company estimates the fair value of granted option awards under ASC 718 using a Black-Scholes option pricing model, which requires inputs that involve management judgment, including share price, expected volatility, risk-free interest rate, dividend yield, and expected option term. The Company also accounts for modifications of share-based payment awards under ASC 718, including the option exchange program completed on February 5, 2026 (in which eligible employees exchanged out-of-the-money options for shares of restricted common stock and the original awards were treated as modified) and the option exercises completed during the period in which the Company received non-cash consideration in the form of shares of privately-held companies and shares of a publicly-traded third party. The measurement of fair value at the modification date involves significant management judgment, and changes in the assumptions used could result in materially different stock-based compensation expense. See Note 7 to the condensed consolidated financial statements.
Going Concern. As described in Note 2 to the condensed consolidated financial statements, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern. The going-concern conclusion involves significant management judgment with respect to, among other things, the Company’s projected cash flows and the likelihood of executing on management’s plans for additional financing. Changes in those projections or plans could result in materially different conclusions regarding the Company’s ability to continue as a going concern.
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
The Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information under this Item.
| Item 4. | Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
As described in the “Recent Business Combination” section of Item 2 of Part I of this Quarterly Report and in Note 17 to the accompanying condensed consolidated financial statements, on April 24, 2026, subsequent to the close of the period covered by this Quarterly Report, the Company completed the Merger with Z Squared and the related Spin-Out of substantially all of the Company's historical biopharmaceutical operations other than those conducted through GEAR Therapeutics, Inc. In connection with the closing of the Merger, the composition of the Company's executive officer team and board of directors changed substantially. The Company's current co-principal executive officers, David Halabu and Michelle Burke, and current principal financial officer, Brian Cogley, were appointed to their respective positions effective on or about April 24, 2026.
The Company’s management, with the participation of the Company’s current co-principal executive officers and current principal financial officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of March 31, 2026, the end of the period covered by this Quarterly Report. In conducting that evaluation, the Company’s current co-principal executive officers, neither of which were officers of the Company during the period covered by the Quarterly Report, and the current principal financial officer reviewed the Company’s historical disclosure controls and procedures as in effect during the period covered by this Quarterly Report, made inquiry of the personnel who had primary responsibility for the operation of such controls during such period, and reviewed relevant documentation, including the certifications of the Company’s prior principal executive officer and principal financial officer in connection with the Company’s prior periodic reports. Based on that evaluation, and subject to the inherent limitations of any system of controls described below, the Company’s current co-principal executive officers and current principal financial officer concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2026.
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Changes in Internal Control over Financial Reporting
There were no changes in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended March 31, 2026 that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
The Company notes, however, that the Merger and the Spin-Out, each completed on April 24, 2026 and described in the “Recent Business Combination” section of Item 2 of Part I of this Quarterly Report and in Note 17 to the accompanying condensed consolidated financial statements, will materially affect the Company's internal control over financial reporting in subsequent periods. The Company is in the process of integrating the accounting, treasury, custody, and operational systems of Z Squared and its subsidiaries — including those relating to digital asset custody, hash rate measurement, energy procurement, mining revenue recognition, and reporting of holdings of digital assets — into the Company's internal control over financial reporting framework, and the Company expects to make significant changes to that framework as a result of the Transactions and the change in the Company's principal business. The Company will report on the status of those changes, including any material weaknesses or significant deficiencies identified in connection with them, in its subsequent periodic reports.
Inherent Limitations on the Effectiveness of Controls
The Company’s management, including its current co-principal executive officers and current principal financial officer, does not expect that the Company’s disclosure controls and procedures or its internal control over financial reporting will prevent or detect all errors and all fraud. Any system of controls, however well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the system are met. Further, the design of any control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations of any system of controls, no evaluation of controls can provide absolute assurance that all control issues and all instances of fraud, if any, have been detected.
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PART II — OTHER INFORMATION
| Item 1. | Legal Proceedings |
None.
| Item 1A. | Risk Factors |
In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “Annual Report”), as supplemented and superseded by the risk factors set forth in the “Risk Factors” section of the Company’s Registration Statement on Form S-4 (File No. 333-288329) declared effective by the Securities and Exchange Commission on December 23, 2025 (the “Registration Statement”), and as further updated by the risk factors set forth below. There have been material changes to the risk factors disclosed in the Annual Report as a result of (i) the completion on April 24, 2026 of the business combination (the “Merger”) with Z Squared, Inc., a Wyoming corporation (“Z Squared”), and the related spin-out (the “Spin-Out” and, together with the Merger, the “Transactions”) of substantially all of the Company’s historical biopharmaceutical operations other than those conducted through GEAR Therapeutics, Inc., each as described in the “Recent Business Combination” section of Item 2 of Part I of this Quarterly Report and in Notes 16 and 17 to the accompanying condensed consolidated financial statements; (ii) the resulting change in the Company’s principal business from the biopharmaceutical and technology business conducted by Coeptis Therapeutics Holdings, Inc. and its subsidiaries to the digital asset mining business now conducted through Z Squared and its subsidiaries; (iii) the change in the Company’s management team and board of directors; and (iv) certain new and pending strategic transactions and capital structure matters described below.
Incorporation by Reference of Risk Factors from the Registration Statement.
The risk factors set forth in the “Risk Factors” section of the Registration Statement, beginning on page 41 thereof, are incorporated by reference into this Quarterly Report on Form 10-Q, except as follows:
(a) The risk factors set forth under the caption “Risks Related to the Merger” in the Registration Statement no longer apply, as the Merger was completed on April 24, 2026.
(b) The risk factors set forth under the caption “Risks Related to Coeptis” in the Registration Statement that relate to the biopharmaceutical and technology businesses conducted through the Spin-Out Subsidiaries are no longer applicable to the Company, as those operations have been distributed to the Company’s stockholders in connection with the Spin-Out. Risks relating to the Company’s continuing interest in GEAR Therapeutics, Inc. (which was not part of the Spin-Out) remain applicable, as do the corporate-level and capital-structure risks set forth under the subheadings “Risks Related to Our Capital Requirements and Capital Structure” and “Risks Related to Our Organization and Structure.”
(c) The risk factors set forth under the caption “Risks Related to Z Squared” in the Registration Statement remain applicable in all material respects and describe the substantive operational, market, technological, and regulatory risks of the digital asset mining business now conducted by the Company. Investors are urged to read those risk factors carefully.
(d) The risk factors set forth under the caption “Risks Related to the Combined Company” in the Registration Statement remain applicable in all material respects, except as updated by the risk factors set forth below.
(e) The risk factors set forth under the caption “Risks Related to the Spin Out Transaction” in the Registration Statement should be read in light of the completion of the Spin-Out on April 24, 2026, but the risks relating to the tax characterization of the Spin-Out, the indemnification arrangements between the Company and the Spin-Out Subsidiaries, and the limitations on use of the Company’s net operating loss carryforwards described therein remain applicable to the Company.
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The risk factors set forth below supplement, update, and (to the extent inconsistent) supersede the risks disclosed in the Annual Report and the Registration Statement.
Risks Related to the Completed Business Combination and the Resulting Change in Business
The Company’s historical financial statements do not reflect its current business and are not indicative of its future results.
The condensed consolidated financial statements as of and for the three months ended March 31, 2026 and 2025 included in this Quarterly Report reflect the historical operations of Coeptis Therapeutics Holdings, Inc. and its consolidated subsidiaries, comprising a biopharmaceutical and technology business, prior to the closing of the Transactions on April 24, 2026. As a result of the Merger and the Spin-Out, the Company’s principal business is now the digital asset mining operations conducted through Z Squared. Investors should not rely on the Company’s historical financial statements as indicative of the Company’s future results of operations, financial position, or cash flows. The Company’s financial statements in subsequent periods will reflect (i) under the reverse acquisition treatment described in Notes 1 and 17, the historical operations of Z Squared as the accounting acquirer, (ii) the disposition of the Spin-Out Subsidiaries, and (iii) the assets and liabilities of the Company (other than those of the Spin-Out Subsidiaries) recorded at their acquisition-date fair value. Pro forma financial information reflecting the Transactions is or will be set forth in the Company’s Current Report on Form 8-K reporting the completion of the Merger.
The Company has a new management team with limited experience operating the Company as a public company in the digital asset mining business.
Following the closing of the Merger, the Company’s executive officer team and board of directors were substantially replaced. The new executive officers are drawn principally from the management of Z Squared, which was a privately-held company prior to the Merger. Although the new management team has experience in the digital asset mining industry, the team has limited experience operating as the management of a publicly-traded company subject to the reporting, governance, and compliance requirements of the Securities Exchange Act of 1934, the rules and regulations of the SEC, the listing standards of The Nasdaq Stock Market, and the Sarbanes-Oxley Act. The integration of the new management team into the Company’s existing public-company reporting infrastructure, including its disclosure controls and procedures and internal control over financial reporting, may take time and may give rise to material weaknesses, deficiencies, or compliance failures that could adversely affect the Company’s ability to satisfy its reporting obligations on a timely basis, the accuracy of its financial reporting, and the trading price of its common stock.
The Company’s internal control over financial reporting may be inadequate as a result of the Transactions, the change in management, and the change in business.
The Company’s existing system of internal control over financial reporting was designed primarily for the biopharmaceutical and technology business conducted by Coeptis Therapeutics Holdings, Inc. and its subsidiaries prior to the Merger. As a result of the Transactions, the change in the Company’s principal business, the change in management, and the integration of Z Squared’s accounting, treasury, custody, and operational systems (including those relating to digital asset custody, hash rate measurement, energy procurement, and mining revenue recognition), the Company expects to make significant changes to its internal control over financial reporting in the periods following the closing of the Transactions. The Company may identify material weaknesses or significant deficiencies in its internal control over financial reporting as a result of these changes. Any failure to maintain effective internal control over financial reporting could result in material misstatements in the Company’s financial statements, loss of investor confidence, restrictions on the Company’s ability to access the capital markets (including its eligibility to use shelf registration statements on Form S-3), and adverse effects on the trading price of the Company’s common stock.
Substantial doubt about the Company’s ability to continue as a going concern, as identified in the Annual Report, continues to apply, and Z Squared’s historical financial statements have also reflected substantial doubt about its ability to continue as a going concern.
The Annual Report and the Company’s audited financial statements for the year ended December 31, 2025 contained an explanatory paragraph from the Company’s independent registered public accounting firm expressing substantial doubt about the Company’s ability to continue as a going concern. As disclosed in the Registration Statement, Z Squared’s historical financial statements have similarly reflected substantial doubt about Z Squared’s ability to continue as a going concern. Neither the Merger nor the Spin-Out, individually, has eliminated those concerns. The Company’s ability to continue as a going concern depends on its ability to achieve and sustain profitability in its digital asset mining business, generate cash flow from operations, and access the capital markets on acceptable terms. There is no assurance that the Company will be able to do so.
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Risks Related to Pending Strategic Transactions
The Company’s pending acquisition of SkyCore would require the issuance of newly-designated Series B Convertible Preferred Stock with substantial liquidation preference and would result in significant additional dilution to holders of the Company’s common stock.
On April 29, 2026, the Company entered into a binding letter of intent (the “SkyCore LOI”) to acquire all of the membership interests of Skycore Digital LLC (“SkyCore”) in exchange for newly-designated Series B Convertible Preferred Stock (the “SkyCore Acquisition”). Under the SkyCore LOI, the consideration consists of Series B Convertible Preferred Stock with an $18 million base aggregate non-participating liquidation preference at closing, plus up to an additional $4 million of liquidation preference scaled on a pro rata basis based on additional megawatts of energized power capacity secured by SkyCore prior to closing (with the full $4 million payable upon securement of 18 megawatts), for maximum aggregate consideration of $22 million. The key terms of the Series B Convertible Preferred Stock contemplated by the SkyCore LOI include a $1,000 stated value per share; an 8% cash dividend or 10% payment-in-kind dividend, at the Company’s election; conversion at a 10% premium to the 20-day volume weighted average price of the Company’s common stock at signing of the definitive purchase agreement; a seven-year mandatory redemption; an annual holder put right beginning in year two, capped at 20% per year of the original holdings; and a $500,000 break-up fee payable by the Company. The parties have agreed to a 90-day exclusivity period. The SkyCore Acquisition is expected to close within 60 days following execution of a definitive purchase agreement, subject to customary closing conditions, including negotiation and finalization of definitive agreements, the filing of a Certificate of Designation establishing the rights, preferences, and privileges of the Series B Convertible Preferred Stock with the Delaware Secretary of State, and approval by the Company’s board of directors of the issuance and the terms of the Series B Convertible Preferred Stock. There can be no assurance that the SkyCore Acquisition will be consummated on the terms contemplated by the SkyCore LOI, or at all. If consummated, the issuance and outstanding presence of the Series B Convertible Preferred Stock would (i) subordinate the rights of holders of the Company’s common stock to the aggregate liquidation preference in the event of a liquidation, dissolution, or change of control, (ii) potentially dilute the voting and economic interests of common stockholders on conversion of the Series B Convertible Preferred Stock into common stock, (iii) impose cash dividend or payment-in-kind dividend obligations on the Company, (iv) subject the Company to substantial cash redemption obligations on the mandatory redemption date and on exercise of the annual holder put right, and (v) restrict the Company’s ability to issue other securities ranking senior to or pari passu with the Series B Convertible Preferred Stock or to take certain other corporate actions.
The Company faces meaningful execution and integration risk from the Transactions and the pending strategic transactions described above.
Concurrent integration of the Merger, the Spin-Out, the SkyCore Acquisition, and any other strategic transactions undertaken by the Company will place significant demands on management’s time and attention, operational and financial systems, and capital resources. Failure to successfully integrate these transactions could prevent the Company from realizing the anticipated benefits, divert management’s attention from existing operations, result in unforeseen liabilities or operational disruptions, and materially adversely affect the Company’s business, financial condition, and results of operations.
The Company has limited or no operating history in the power generation, data center development, and high-performance compute hosting businesses.
In addition to its existing digital asset mining operations, the Company has identified power generation, data center development, and high-performance compute (“HPC”) hosting as adjacent business lines for strategic expansion. The Company has limited or no operating history in any of these business lines, and the management expertise, capital resources, regulatory relationships, supplier relationships, and operational capabilities required to compete in these businesses differ materially from those required in the Company’s digital asset mining business. The Company may be unable to develop the necessary expertise internally, hire and retain qualified personnel with relevant experience, secure required regulatory approvals and counterparty relationships, or commit the levels of capital required to make any of these business lines successful. As a result, the Company’s expansion into these business lines may not generate the anticipated revenue or strategic benefits, may distract management from the operation of the existing digital asset mining business, and may materially adversely affect the Company’s business, financial condition, and results of operations.
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Power generation, data center development, and HPC hosting are capital-intensive business lines that may require the Company to raise substantial additional capital on terms that are unfavorable or unavailable.
Each of power generation, data center development, and HPC hosting requires substantial capital investment for site acquisition, construction or build-out, equipment procurement, regulatory and permitting compliance, and ongoing operations. Power generation facilities and data centers, in particular, are characterized by long development cycles and significant capital commitments before revenue is generated. The Company may be required to raise substantial additional capital through equity issuances (which would dilute existing stockholders), debt financings (which would impose servicing obligations and restrictive covenants), project finance arrangements (which may pledge specific assets and constrain operational flexibility), joint ventures, or other arrangements. There can be no assurance that such capital will be available to the Company on acceptable terms, or at all. If the Company is unable to access sufficient capital, the Company may be required to scale back, delay, or abandon planned expansion into one or more of these business lines, which could materially adversely affect the Company’s business, financial condition, and results of operations.
The Company’s planned power generation business is subject to extensive federal and state regulatory requirements and exposure to volatile energy and commodity markets.
The development, ownership, and operation of power generation facilities in the United States are subject to extensive federal regulation by the Federal Energy Regulatory Commission (“FERC”) and the North American Electric Reliability Corporation (“NERC”), state regulation by public utility commissions, and a complex framework of environmental laws and regulations administered by the U.S. Environmental Protection Agency and state environmental agencies. Operation of generation assets within organized wholesale electricity markets, including the markets operated by ERCOT and other regional transmission organizations and independent system operators, exposes the Company to additional regulatory and market participation requirements. The Company’s planned power generation business will also be subject to material commodity-price exposure (including with respect to natural gas, fuel oil, and other inputs), wholesale electricity price volatility, transmission constraints, curtailment risk, weather-driven supply and demand imbalances, and forced-outage and equipment-failure risk. Any failure to obtain or maintain required regulatory approvals, comply with applicable environmental laws, or manage commodity-price and market-participation risks could materially adversely affect the Company’s power generation operations and the broader business.
The Company’s planned data center development business faces significant site, construction, permitting, and customer-acquisition risk, and competes against well-capitalized incumbents.
The development of data center facilities involves site identification and acquisition, securing adequate and reliable electric power capacity (which in many U.S. markets requires multi-year utility interconnection queues), water access for cooling, fiber and network connectivity, local and state permitting (including environmental review, water-use approvals, and zoning), construction of substantial physical infrastructure, and the procurement and integration of cooling, power distribution, fire suppression, and physical and cyber security systems. The Company’s data center development efforts will compete against established hyperscale cloud providers, dedicated colocation and data-center operators, and other digital infrastructure companies, many of which have substantially greater capital resources, longer operating histories, established customer relationships, dedicated development teams, and existing positions in scarce power and connectivity markets. The Company may not be able to secure adequate sites, power capacity, or financing on competitive terms, may experience cost overruns or construction delays, may be unable to attract sufficient hosting customers at acceptable pricing, and may face declining demand or pricing pressure as a result of overbuild in the industry.
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The Company’s planned HPC hosting business is dependent on continued strong demand for artificial intelligence and machine learning compute capacity, access to scarce specialized hardware, and the ability to compete with established providers.
The Company’s planned high-performance compute hosting business is intended to serve customers requiring graphics processing unit (“GPU”), tensor processing unit, and other specialized compute capacity for artificial intelligence, machine learning, scientific computing, and similar workloads. This business line is subject to a number of specific risks, including: (i) the level and durability of customer demand for HPC capacity, which is presently driven substantially by demand for artificial intelligence and machine learning training and inference workloads and may decline or become more cyclical as the market matures; (ii) access to specialized hardware, which is currently constrained by the supply chain and allocation policies of a small number of dominant suppliers; (iii) the technical requirements of HPC hosting (including high power densities, liquid cooling, and high-bandwidth networking), which differ materially from the requirements of digital asset mining and conventional data center hosting and may require the Company to retrofit or purpose-build facilities to support HPC workloads; (iv) the credit risk, contract negotiating leverage, and customer concentration risk associated with large hyperscale and artificial-intelligence-focused customers; and (v) competition from established HPC and artificial intelligence hosting providers and the hyperscale cloud providers, many of which have greater scale, longer-standing customer relationships, and existing access to scarce hardware. The Company may not be able to compete effectively in this business line, and the financial returns from the business line may be lower than anticipated or may not be realized.
Concurrent pursuit of digital asset mining, power generation, data center development, and HPC hosting may strain the Company’s management, capital, and operational resources.
The Company’s strategic plan contemplates building integrated operations across digital asset mining, power generation, data center development, and HPC hosting. While these business lines are intended to be complementary in certain respects (for example, owned power generation can supply mining and data center operations, and existing mining infrastructure may, in certain cases, be repurposable for HPC hosting), the simultaneous pursuit of multiple distinct business lines will require the Company to allocate management attention, capital, and operational resources across competing demands. The Company’s failure to set appropriate priorities, allocate capital efficiently, identify and retain qualified personnel for each business line, develop the operational capabilities needed to support multiple business lines, or execute on each business plan could prevent the Company from achieving its strategic objectives in any of these business lines and could materially adversely affect the Company’s business, financial condition, and results of operations.
Risks Related to the Company’s Capital Structure
Holders of the Company’s common stock have experienced and may continue to experience significant dilution.
In connection with the closing of the Merger, the Company issued an aggregate of 43,877,497 shares of common stock to the former stockholders of Z Squared, increasing the Company’s outstanding shares of common stock from 6,553,996 at March 31, 2026 to 51,431,493 at May 12, 2026. This represents substantial dilution to the holders of the Company’s common stock prior to the Merger. Additional dilution may result from (i) the conversion of any Series B Convertible Preferred Stock issued in connection with the SkyCore Acquisition, (ii) sales of common stock under the Company’s existing Standby Equity Purchase Agreement (the “SEPA”), (iii) the issuance of bonus shares of common stock to Group 10 Holdings LLC pursuant to the Second Amendment to the consulting agreement between the Company and Group 10 Holdings LLC, (iv) the issuance of common stock under the Company’s 2025 Incentive Compensation Plan and any other equity plans of the Company, (v) the exercise of outstanding warrants (including legacy Public Warrants and Private Placement Warrants outstanding since the Company’s predecessor’s initial public offering in November 2020), (vi) the exercise of outstanding stock options, and (vii) the issuance of common stock in connection with any future financings, acquisitions, or strategic transactions. The market price of the Company’s common stock could decline as a result of any such dilution or anticipated dilution.
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The Company’s common stock is subject to significant concentration of ownership, and a small number of stockholders may have the ability to influence matters submitted to the stockholders for approval.
Following the Merger, a substantial portion of the Company’s outstanding common stock is held by the former stockholders of Z Squared, including Group 10 Holdings LLC. Group 10 Holdings LLC is also entitled to receive an additional 200,000 shares of common stock pursuant to the Second Amendment to its consulting agreement with the Company in connection with the closing of the Merger. The concentration of ownership of the Company’s common stock may have the effect of (i) delaying, deferring, or preventing a change of control of the Company, (ii) influencing the outcome of matters submitted to the Company’s stockholders for approval, including the election of directors and significant corporate transactions, and (iii) discouraging unsolicited acquisition proposals or offers for the Company’s common stock that other stockholders may consider favorable.
Existing material warrants of the Company’s predecessor remain outstanding and may dilute holders of the Company’s common stock.
As of March 31, 2026, the Company had outstanding (i) 375,000 public warrants exercisable in the aggregate to acquire 187,500 shares of the Company’s common stock at an exercise price of $230.00 per share, issued in connection with the November 2020 initial public offering of Bull Horn Holdings Corp., the Company’s predecessor (the “Public Warrants”), and (ii) 187,500 private placement warrants exercisable in the aggregate to acquire 187,500 shares of the Company’s common stock at the same exercise price, issued to the sponsor and underwriters in that initial public offering (the “Private Placement Warrants”). Each of the Public Warrants and the Private Placement Warrants will expire by their terms in October 2027. Although the exercise prices currently exceed the trading price of the Company’s common stock, any future increase in the trading price above the exercise price could result in exercises and consequent additional dilution.
Risks Related to Tax and Regulatory Matters
The Company’s ability to utilize its net operating loss carryforwards may be substantially limited as a result of the Merger.
As of December 31, 2025, the Company (then Coeptis Therapeutics Holdings, Inc.) had significant net operating loss carryforwards for U.S. federal and state income tax purposes. The Merger constituted an “ownership change” within the meaning of Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). As a result, the Company’s ability to use its pre-Merger net operating loss carryforwards and certain other tax attributes to offset future taxable income will be substantially limited under Section 382, which could result in increased future tax liability and reduced cash flow. In addition, as discussed in the Registration Statement and in Notes 16 and 17, the Spin-Out was intended to be treated as a distribution under Section 301 of the Code, and any amount in excess of the Company’s earnings and profits will be applied against and reduce a holder’s basis in its common stock, with any amount in excess of basis treated as gain. The ultimate tax characterization of the Spin-Out, the related basis allocation, and the limitations on use of net operating loss carryforwards are subject to factual determinations and the application of complex tax rules, and the actual tax consequences to the Company and its stockholders may differ from those described in the Registration Statement.
The Company’s continued holding of GEAR Therapeutics, Inc. exposes the Company to regulatory, clinical, and intellectual property risks associated with the biopharmaceutical industry that are inconsistent with the Company’s principal business of digital asset mining.
The Company’s interest in GEAR Therapeutics, Inc. was not included in the Spin-Out and continues to be held by the Company following the Merger. As a result, the Company remains exposed to the regulatory, clinical, intellectual property, competitive, and capital-requirements risks associated with the biopharmaceutical industry, as further described under the captions “Risks Related to Coeptis – Related to the Development and Regulatory Approval of Our Product Candidates” and “Risks Related to Coeptis – Risks Related to Regulation” in the Registration Statement, to the extent those risks apply to the operations of GEAR Therapeutics, Inc. These residual biopharmaceutical risks are inconsistent with the Company’s principal business of digital asset mining and may result in the Company allocating management attention and capital to operations that are not aligned with the Company’s primary strategic focus.
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The applicable filer status of the Company under SEC rules may change in future periods, which could increase the Company’s compliance costs and the timing requirements of its periodic reports.
The Company is currently a non-accelerated filer and smaller reporting company under Rule 12b-2 of the Securities Exchange Act of 1934. If the aggregate worldwide market value of the Company’s common equity held by non-affiliates as of the last business day of the Company’s second fiscal quarter exceeds applicable thresholds in future periods, the Company may become an accelerated filer or large accelerated filer and may cease to qualify as a smaller reporting company. Such a change in filer status would, among other things, accelerate the Company’s periodic-report filing deadlines, impose auditor attestation requirements on the Company’s internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act, and increase the Company’s compliance costs.
Additional Considerations.
The risk factors described above and incorporated by reference herein are not exhaustive. Additional risks and uncertainties not currently known to the Company, or that the Company currently deems to be immaterial, may also materially adversely affect the Company’s business, financial condition, and results of operations.
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
All prior sales of unregistered securities have been properly disclosed in prior SEC filing.
| Item 3. | Defaults Upon Senior Securities |
Not applicable.
| Item 4. | Mine Safety Disclosures |
Not applicable.
| Item 5. | Other Information |
On May 14, 2026, the Board of Directors of the Company approved and adopted the Second Amended and Restated Bylaws of the Company (the "Second A&R Bylaws"), which became effective immediately. The Second A&R Bylaws amend and restate the Amended and Restated Bylaws of the Company as previously in effect (the "Prior Bylaws") solely to reflect the change in the Company's corporate name from "Coeptis Therapeutics Holdings, Inc." to "Z Squared Inc." effected in connection with the closing of the Merger. The Second A&R Bylaws did not amend, alter, or supplement any of the substantive provisions of the Prior Bylaws. A copy of the Second A&R Bylaws is filed as Exhibit 3.1 to this Quarterly Report on Form 10-Q and is incorporated herein by reference. The foregoing description of the Second A&R Bylaws is qualified in its entirety by reference to the full text of the Second A&R Bylaws.
During the three months ended March 31, 2026,
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| Item 6. | Exhibits |
The following exhibits are attached hereto or incorporated by reference herein (numbered to correspond to Item 601(a) of Regulation S-K, as promulgated by the Securities and Exchange Commission) and are filed as part of this Form 10-Q:
| 3.1 |
Amended and Restated Certificate of Incorporation of Z Squared, Inc. (formerly Coeptis Therapeutics Holdings, Inc.) (incorporated by reference to Exhibit 3.1 of Coeptis Therapeutics Holdings, Inc.’s Form 8-K, filed with the SEC on November 3, 2022). |
| 3.2 |
Amendment to Amended and Restated Certificate of Incorporation of Z Squared Inc. (formerly Coeptis Therapeutics Holdings, Inc.) (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed with the SEC on April 30, 2026) |
| 3.3* | Second Amended and Restated Bylaws of Z Squared Inc. |
| 31.1* | Rule 13a-14(a)/15(d)-14(a) Certification of David Halabu, Co-Chief Executive Officer, and Co-Principal Executive Officer |
| 31.2* | Rule 13a-14(a)/15(d)-14(a) Certification of Michelle Burke, Co-Chief Executive Officer, and Co-Principal Executive Officer. |
| 31.3* | Rule 13a-14(a)/15(d)-14(a) Certification of the Chief Financial Officer and Principal Financial Officer. |
| 32.1* | Section 1350 Certification of Principal Executive Officers. Filed herewith. |
| 32.2* | Section 1350 Certification of Principal Financial Officer. Filed herewith. |
| 97.1 | Z Squared Inc. (formerly Coeptis Therapeutics Holdings, Inc.) Clawback Policy (incorporated by reference to Exhibit 97 to Amendment No. 1 to the Form 10-K/A filed with the SEC on June 3, 2025). |
| 101.INS* | XBRL Instance Document |
| 101.SCH* | XBRL Taxonomy Extension Schema |
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase |
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase |
| 101.LAB* | XBRL Taxonomy Extension Label Linkbase |
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase |
| * | Filed Herewith |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Z SQUARED INC. | ||
| Registrant | ||
| Date: May 15, 2026 | By: | /s/ David Halabu |
| David Halabu | ||
| Co-Chief Executive Officer, Co-Principal Executive Officer | ||
|
Date: May 15, 2026 |
By: | /s/ Michelle Burke |
| Michelle Burke | ||
| Co-Chief Executive Officer, Co-Principal Executive Officer | ||
| Date: May 15, 2026 | By: | /s/ Brian Cogley |
| Brian Cogley | ||
| Chief Financial Officer, Principal Financial and Accounting Officer | ||
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