Stablecoin Development (NBY) restates 2025 results, pivots to SKY token strategy
Stablecoin Development Corporation is restating its 2025 financial statements after misapplying anti-dilution provisions on October 2025 pre-funded warrants, which increased the related warrant liability by $608.6 million. This drove a 2025 net loss of $630.8 million, versus $7.2 million in 2024, largely from non-cash warrant-related losses.
The company has exited its legacy eyecare and skincare businesses and repositioned as an on-chain holding company focused on the Sky protocol ecosystem. By March 16, 2026 it held about 2.1 billion SKY tokens and had deployed approximately $70.7 million to acquire around 1.1 billion SKY tokens.
Management identified a material weakness in internal controls over equity-linked instruments, linked to the warrant error, and acknowledges related control remediation needs. Despite the large accounting losses, cash and cash equivalents were $8.0 million at December 31, 2025, and together with roughly $25.0 million from a January 2026 private placement and $13.5 million from a 2026 ATM program, are expected to fund operations at least through March 19, 2027.
Positive
- Extended liquidity runway: Cash and cash equivalents of $8.0 million at December 31, 2025, plus approximately $25.0 million from a January 2026 private placement and $13.5 million from a 2026 ATM program, are expected to fund operating expenses at least through March 19, 2027.
- Strategic repositioning to digital assets: The company completed divestitures of legacy pharmaceutical businesses and adopted a capital allocation strategy focused on blockchain-based digital assets, including substantial exposure to the Sky protocol ecosystem.
Negative
- Large restatement and warrant-driven losses: Misaccounting for October 2025 pre-funded warrants led to restated 2025 results, including a $608.6 million increase in warrant-related losses and a $641.9 million net loss from continuing operations.
- Material weakness in internal controls: Management identified a material weakness over reviewing contractual terms and triggering events for equity-linked instruments, indicating elevated risk of future reporting errors until remediation is completed.
- Concentrated digital-asset risk: By March 16, 2026 the company held about 2.1 billion SKY tokens and had deployed roughly $70.7 million to acquire about 1.1 billion SKY, concentrating exposure in a single volatile digital asset.
Insights
Massive non-cash warrant losses and a restatement dominate 2025 results.
The company’s 2025 figures are overwhelmed by the October 2025 pre-funded warrants. Anti-dilution features increased shares issuable to 22,664,040 at an exercise price of $0.002385, driving a $608.6M increase in warrant-related losses.
These non-cash items produced a net loss from continuing operations of $641.9M, compared with $8.8M in 2024, while operating expenses were only $8.4M. A material weakness in controls over equity-linked contracts underscores process risk, particularly around complex anti-dilution provisions.
Because warrant valuation is highly sensitive to stock price and terms, future results may remain volatile as long as large warrant liabilities exist. Subsequent filings describing remediation of this material weakness and any remaining warrant overhang will help clarify ongoing financial risk.
Strategy pivots to SKY tokens, concentrating risk in one digital asset.
The company has transformed into an on-chain holding company centered on the Sky protocol. As of March 16, 2026, it held about 2.1 billion SKY tokens and had spent roughly $70.7M to buy about 1.1 billion SKY after a January 2026 private placement.
Liquidity improved: cash and cash equivalents reached $8.0M at year-end 2025, supplemented by $25.0M of gross proceeds from the January 2026 private placement and $13.5M from a 2026 ATM program. Management believes this funds operations at least through March 19, 2027.
However, concentrating assets in SKY exposes the balance sheet to token price volatility, evolving digital-asset regulation, and accounting-model choices under ASU 2023-08. Future disclosures on SKY valuation, custody, and any staking or governance income will be important for understanding earnings variability.
Key Figures
Key Terms
pre-funded warrants financial
anti-dilution adjustment provisions financial
warrant liability financial
material weakness financial
discontinued operations financial
private placement financial
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
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Securities Registered Pursuant to Section 12(b) of the Act:
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Securities Registered Pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
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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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The aggregate market value of the voting common stock held by non-affiliates of the registrant, computed by reference to the last sale price of the common stock on June 30, 2025 on the NYSE American, was approximately $
As of March 16, 2026, there were
STABLECOIN DEVELOPMENT CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2025
EXPLANATORY NOTE
TABLE OF CONTENTS
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PART I |
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ITEM 1A. |
RISK FACTORS |
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PART II |
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ITEM 7. |
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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ITEM 8. |
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
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ITEM 9A. |
CONTROLS AND PROCEDURES |
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PART III |
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ITEM 12. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
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ITEM 13. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
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PART IV |
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ITEM 15. |
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
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In addition, subsequent to December 31, 2025, on February 20, 2026, we effected a 1-for-5 reverse stock split of our common stock (the “Reverse Stock Split”). Except as otherwise specifically noted, all share numbers, share prices, exercise/conversion prices and per share amounts in this annual report have been adjusted, on a retroactive basis, to reflect the Reverse Stock Split. On April 2, 2026, the Company’s legal name change became effective, and the transition to the new trading symbol reflects the Company’s previously announced strategic repositioning as an on-chain holding company focused on protocol-aligned digital asset ecosystems, with an initial focus on the Sky protocol ecosystem.
Background of the Restatement
On April 27, 2026, the audit committee of the board of directors and management of the Company concluded that the Company’s previously issued audited consolidated financial statements for the year ended December 31, 2025, should no longer be relied upon because of an error in the Company’s accounting for certain outstanding common stock warrants, which we refer to as the October 2025 Pre-Funded Warrants in this Amendment.
The error relates to the determination of the number of shares of common stock issuable upon exercise of the October 2025 Pre-Funded Warrants that were issued by the Company in October 2025, which contain certain anti-dilution adjustment provisions with respect to subsequent issuances of common stock by the Company related to the conversion of certain convertible securities. At the time of issuance on October 16, 2025, the October 2025 Pre-Funded Warrants represented the right to purchase 1,081,082 shares of common stock at a per share exercise price of $0.05. In the Company's Form 10-K for the year ended December 31, 2025, the Company did not correctly account for the impact of the anti-dilution adjustment provisions contained in the October 2025 Pre-Funded Warrants triggered by dilutive issuances of securities from the Series D Preferred and Series E Preferred conversion subsequent to the issuance of the October 2025 Pre-Funded Warrants. Specifically, the Company failed to correctly reflect both (i) the decrease in the exercise price of such warrants to $0.002385 per share, and (ii) the increase in the number of shares issuable upon exercise of such warrants, each as required by the anti-dilution adjustment provisions. As a result of such provisions, the number of shares of common stock issuable upon exercise of October 2025 Pre-Funded Warrants increased to 22,664,040 shares.
The cumulative effect of the restatement on the Company's financial statements is an increase in the warrant liability balance and corresponding increases in (i) loss from the change in fair value of warrant liabilities and (ii) loss on fair value of warrant liability in excess of proceeds, aggregating to $608.6 million at December 31, 2025. Refer to Item 8, Note 3, “Restatement of Consolidated Financial Statements” for further details regarding the amounts of the adjustments. These adjustments are non-cash and do not impact the Company's operating expenses, operating income, net cash flows or cash and cash equivalents as previously reported.
This Amendment amends the Original Filing only to the extent necessary to reflect the restatement. The following items in the Original Filing have been amended by the Amendment to reflect the restatement:
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Part I - Item 1A. Risk Factors |
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Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations; |
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Part II - Item 8. Financial Statements and Supplementary Data; |
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Part II - Item 9A. Controls and Procedures; |
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Part III - Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters; |
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Part III - Item 13. Certain Relationships and Related Transactions, and Director Independence; and |
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Part IV - Item 15. Exhibits and Financial Statement Schedules |
This Amendment also includes as exhibits, the required officer certifications from our Chief Executive Officer and Chief Financial Officer dated as of the date of the Amendment.
Items in the Original Filing that have not been amended have been omitted from this Amendment. This Amendment is as of the date of the Original Filing on the Form 10-K and has not been updated to reflect events occurring subsequent to the date of the Original Filing other than those associated with the restatement of the Company’s audited consolidated financial statements.
ITEM 1A. RISK FACTORS.
There are no changes to Item 1A as disclosed in our originally filed Annual Report on Form 10-K for the year ended December 31, 2025 except for the addition of the following risk factor.
Risks Related to Our Common Stock
We have identified a material weakness in our internal control over financial reporting that resulted in the restatement of our consolidated financial statements included in this Annual Report on Form 10-K/A. This material weakness, uncorrected, could continue to affect adversely our ability to report our results of operations and financial condition accurately and in a timely manner.
Our management is responsible for maintaining internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with GAAP. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025, and identified a material weakness in our controls over the review of the contractual terms of our outstanding equity-linked financial instruments and the identification of triggering events under those instruments. As a result of this material weakness, our management concluded that our internal control over financial reporting and our disclosure controls and procedures were not effective as of December 31, 2025. See Part II - Item 9A, “Controls and Procedures.”
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. The effectiveness of any controls or procedures is subject to certain limitations, and as a result, there can be no assurance that our controls and procedures will detect all errors or fraud. A control can provide only reasonable, not absolute, assurance that the objectives of the control system will be attained. We also cannot assure you that other material weaknesses will not arise as a result of our past failure to maintain adequate internal controls and procedures or that circumvention of those controls and procedures will not occur. Additionally, even improved controls and procedures may not be adequate to prevent or identify errors or irregularities or ensure that our financial statements are prepared in accordance with generally accepted accounting principles. If we cannot maintain and execute adequate internal control over financial reporting or implement required new or improved controls that provide reasonable assurance of the reliability of the financial reporting and preparation of our financial statements for external use, we could suffer harm to our reputation, fail to meet our public reporting requirements on a timely basis, or be unable to report properly on our business and the results of our operations, and the market price of our securities could be materially adversely affected.
PART II
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
This Management’s Discussion and Analysis (“MD&A”) is intended to provide an understanding of our financial condition, results of operations and cash flows by focusing on changes in certain key measures from year to year. This discussion should be read in conjunction with the consolidated financial statements and related notes in Item 8 of this Report.
Restatement
As discussed in the Explanatory Note to this Amended Filing, the Company is amending and restating its audited consolidated financial statements and related disclosures as of and for the years ended December 31, 2025, as included in Item 8, Note 3, “Restatement of Consolidated Financial Statements”. The Original Filing was filed with the SEC on March 19, 2026.
Cautionary Statement Regarding Forward-looking Statements
Our MD&A contains forward-looking statements that discuss, among other things, future expectations and projections regarding future developments, operations and financial condition. All forward-looking statements are based on management’s existing beliefs about present and future events outside of management’s control and on assumptions that may prove to be incorrect. If any underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or intended. We undertake no obligation to publicly update or revise any forward-looking statements to reflect actual results, changes in expectations or events or circumstances after the date of this Report is filed.
Digital Asset Holdings – SKY
As of March 16, 2026, the Company held approximately 2.1 billion SKY tokens. SKY tokens are a network-native digital asset that may be held and transferred through blockchain-based wallets and may be exchanged on trading venues that support SKY trading pairs.
The Sky Protocol is a decentralized, non-custodial software protocol built around the USDS stablecoin and governed by Sky ecosystem participants through on-chain governance processes. The protocol is implemented through open-source smart contracts deployed on the Ethereum blockchain. The Sky Protocol includes two primary native tokens: USDS, a collateral-backed stablecoin designed to maintain a soft peg to the U.S. dollar, and SKY, the protocol token used in governance and certain protocol-level economic mechanisms.
The market price of SKY is determined by supply and demand across network-based markets and may be volatile. Prices may fluctuate due to factors including protocol changes, governance decisions, market sentiment, macroeconomic conditions, and broader digital asset market dynamics.
Custody and Safeguarding of Digital Assets
We safeguard our digital assets through a combination of third-party custodial services and internally controlled wallet infrastructure. A portion of our SKY is held in custody accounts with a regulated digital asset custodian that serves as custodian of record under applicable law.
We also utilize internally controlled wallet infrastructure to manage private keys and execute on-chain transactions, including staking and other protocol interactions. Digital assets held through this infrastructure are controlled by the Company rather than held in trust by a third-party custodian.
Digital assets maintained outside of custodial accounts are generally limited to amounts necessary to facilitate protocol participation and transactional activity and are subject to internal controls designed to mitigate loss.
Governmental, Regulatory, and Accounting Considerations
The regulatory framework applicable to blockchain-based networks and digital assets continues to evolve in the United States and internationally. Regulatory developments affecting trading venues, custodians, or service providers may impact access, liquidity, or pricing of digital assets held by the Company. We monitor regulatory developments and adjust our policies, counterparties, and controls as appropriate.
Digital assets held by the Company will be subject to evolving accounting standards, and changes in market value and protocol participation may result in volatility in the Company’s financial results.
Discontinued Operations
As part of the comprehensive realignment of our business during 2024 and 2025, we completed the Avenova Asset Divestiture, the PhaseOne Divestiture, and the DERMAdoctor Divestiture, and decided to exit our involvement in the China NeutroPhase product line. The historical financial results of these businesses are reflected as discontinued operations in the Consolidated Financial Statements included in this annual report. See Notes 14, “Avenova Asset Divestiture and Bridge Loan,” 15 “PhaseOne Divestiture”, 16, “DERMAdoctor Divestiture” and 17, “Summary of Discontinued Operations” to the Consolidated Financial Statements in Part II, Item 8 of this annual report for additional details.
Financial Overview and Outlook
Based on funds available as of December 31, 2025, aggregate gross cash proceeds of approximately $25.0 million from the January 2026 Private Placement, net cash generated from the conversion of the stablecoins received in the January 2026 Private Placement into U.S. dollars, and $13.5 million in gross cash proceeds from issuances under the 2026 ATM Program between January 20, 2026 and March 16, 2026, management believes that the Company’s existing cash and cash equivalents will be sufficient to fund its planned operating expenses at least through March 19, 2027.
All of the stablecoins received in the January 2026 Private Placement were converted into U.S. dollars to support operating liquidity, and a significant portion was deployed to acquire additional SKY tokens. Subsequent to the January 2026 Private Placement and through March 16, 2026, the Company deployed approximately $70.7 million in cash to acquire approximately 1.1 billion SKY tokens.
Critical Accounting Estimates
Our Consolidated Financial Statements have been prepared in accordance with U.S. GAAP. The preparation of these Consolidated Financial Statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements, as well as the reported revenues and expenses during the reporting periods. In preparing these Consolidated Financial Statements, management has made its best estimates and judgments of certain amounts, giving due consideration to materiality. On an ongoing basis, we evaluate our estimates and judgments. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances. Actual results may differ from these estimates.
While our significant accounting policies are more fully described in Note 2, “Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this annual report, we believe that the following accounting estimates are most critical to fully understanding and evaluating our reported financial results as discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, particularly taking into account the significant changes that occurred to our business as a result of the closing of the Avenova Asset Divestiture and the PhaseOne Divestiture in January 2025.
Common Stock Warrant Liabilities
For warrants that are classified as liabilities, the Company records the fair value of the warrants upon issuance and remeasures the warrants at each balance sheet date, with changes in estimated fair value recorded as a non-cash gain or loss in the Consolidated Statements of Operations.
The fair value of warrant liabilities is determined in accordance with ASC 820 using valuation techniques that are appropriate based on the specific terms and economic characteristics of each warrant instrument. Depending on the nature of the warrants, valuation techniques may include option pricing models, such as the Black-Scholes option pricing model, or intrinsic value calculations.
Warrants that contain nominal exercise prices are economically similar to common stock, and do not require assumptions related to volatility, expected term, or other option-pricing inputs are generally measured based on intrinsic value, calculated as the excess of the Company’s common stock price over the exercise price, multiplied by the number of warrant shares outstanding. Other warrant instruments may require the use of option pricing models that incorporate assumptions such as expected volatility, risk-free interest rates, expected term, and dividend yield.
Certain of our outstanding warrants contain anti-dilution adjustment provisions that adjust the per-share exercise price and the number of shares issuable upon exercise for the warrants upon the occurrence of specified dilutive issuances of securities by the Company. The application of these provisions requires us to identify triggering events, calculate the resulting adjustments in accordance with the contractual formula, and reflect the adjusted share count and exercise price in the measurement of the related warrant liability at each reporting date. The number of shares issuable upon exercise for such warrants and, accordingly, the fair value of the related warrant liability, can change materially as a result of these adjustments. See Note 10 for additional information regarding our outstanding warrants and the related anti-dilution adjustment provisions.
The determination of the appropriate valuation technique and the related assumptions requires significant judgment. Changes in the Company’s stock price, volatility, or other valuation inputs could materially affect the recorded fair value of warrant liabilities and the related non-cash gains or losses recognized in the Consolidated Statements of Operations. See additional information in Note 10, “Common Stock Warrants and Warrant Liabilities” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this annual report.
Impairment of Assets
We review long-lived assets for impairment at least annually or whenever events or changes in business circumstances indicate that any such asset may be impaired, that the carrying amount of any such asset may not be fully recoverable or that the useful life of the asset, if applicable, is no longer appropriate. Management uses judgment in making critical assumptions and estimates in determining when an impairment assessment should be recorded, if more frequent than annually, or in the completion of any such assessment. This includes cash flow projections that look several years into the future and assumptions on variables such as economic conditions, probability of success, and discount rates. Changes in judgments with respect to these assumptions and estimates could impact any such impairments recorded during 2025 as further described in Notes 2, “Summary of Significant Accounting Policies;” and 7, “Commitments and Contingencies” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this annual report.
Digital Assets
The Company did not hold any digital assets as of and during the years ended December 31, 2025 and 2024. Subsequent to December 31, 2025, in January 2026, the Company entered into the January 2026 Private Placement pursuant to which it received digital assets, including stablecoins and SKY tokens, and subsequently engaged in purchases and sales of such digital assets.
Digital assets acquired in connection with the January 2026 Private Placement and subsequent transactions will be accounted for in accordance with applicable U.S. GAAP and other authoritative accounting guidance in effect at the time, including Accounting Standards Update No. 2023-08, Accounting for and Disclosure of Crypto Assets, which established Subtopic 350-60 within ASC 350, Intangibles—Goodwill and Other, where applicable. Depending on the nature of the digital assets held and the Company’s specific facts and circumstances—including the Company’s activities (such as staking or other yield-generating activities), the contractual terms of related arrangements, and the Company’s relationships with counterparties—the Company may apply different accounting models. Such models could include digital assets held at fair value with changes in fair value recognized in earnings under applicable crypto-asset guidance or, if such guidance is not applicable, accounting under other relevant U.S. GAAP models, including accounting for certain digital assets as indefinite-lived intangible assets measured at historical cost and evaluated for impairment. The applicable accounting framework may differ depending on the specific facts and circumstances, and the resulting classification, measurement, and presentation could materially affect the Company’s financial position and results of operations, including potential variability in reported results.
Results of Operations
Comparison of years ended December 31, 2025 and 2024 (in thousands)
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For the years ended December 31, |
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Statement of Operations |
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2024 |
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Operating expenses: |
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General and administrative |
$ | 7,585 | $ | 7,379 | 206 | 3 | % | |||||||||
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Impairment of long-lived assets |
854 | — | 854 | — | ||||||||||||
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Total operating expenses |
8,439 | 7,379 | 1,060 | 14 | % | |||||||||||
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Operating loss |
(8,439 | ) | (7,379 | ) | (1,060 | ) | 14 | % | ||||||||
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Non-cash (loss) gain on changes in fair value of warrant liability |
(509,940 | ) | 114 | (510,054 | ) | (447,416 | %) | |||||||||
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Non-cash loss on fair value of warrant liability in excess of proceeds at issuance |
(123,185 | ) | — | (123,185 | ) | (100 | %) | |||||||||
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Accretion of interest and amortization of discounts on convertible notes |
(277 | ) | (904 | ) | 627 | (69 | %) | |||||||||
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Other expense, net |
(20 | ) | (581 | ) | 561 | (97 | %) | |||||||||
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Net loss from continuing operations |
(641,861 | ) | (8,750 | ) | (633,111 | ) | 7,236 | % | ||||||||
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Net income from discontinued operations, net of taxes |
11,081 | 1,527 | 9,554 | 626 | % | |||||||||||
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Net loss |
$ | (630,780 | ) | $ | (7,223 | ) | $ | (623,557 | ) | 8,633 | % | |||||
Impact of Divestitures
Financial results related to divested assets from the Avenova Asset Divestiture and the PhaseOne Divestiture and the China NeutroPhase product line for the years ended December 31, 2025 and 2024 and from the DERMAdoctor Divestiture for the year ended December 31, 2024 have been aggregated and reported for each of these periods in the line item titled “Net income from discontinued operations, net of taxes” in the table above. Prior-period amounts have been revised to correct the presentation of the loss on the DERMAdoctor Divestiture and related divestiture proceeds, which were previously presented within continuing operations and are now reflected within discontinued operations. This revision did not affect total net loss, total net loss per share, total cash flows, or the Company’s financial position. See additional information in Notes 14, “Avenova Asset Divestiture and Bridge Loan;” 15, “PhaseOne Divestiture”, 16, “DERMAdoctor Divestiture” and 17, “Summary of Discontinued Operations” in Notes to the Consolidated Financial Statements in Part II, Item 8 of this annual report for additional details regarding these financial results for the periods presented. The discussions below and throughout this section apply only to results from our continuing operations except as otherwise noted.
General and administrative
General and administrative expenses increased $0.2 million, or 3%, to $7.6 million for the year ended December 31, 2025, from $7.4 million for the year ended December 31, 2024. The increase was due primarily to higher legal costs associated with non-recurring strategic initiatives during the year ended December 31, 2025.
Impairment of Long-Lived Assets
During the year ended December 31, 2025, the Company recorded an impairment of $854 thousand related primarily to right-of-use assets and fixed assets associated with excess leased office capacity resulting from our strategic realignment. This impairment reflects actions taken to reduce our office space and streamline our cost structure following the realignment. No comparable impairment was recorded during the year ended December 31, 2024.
Non-cash (loss) gain on changes in fair value of warrant liability
Adjustments to the fair value of warrant liabilities resulted in a non-cash loss of $509.9 million for the year ended December 31, 2025 and a non-cash gain of $0.1 million for the year ended December 31, 2024. The warrant liability recorded during the year ended December 31, 2025 related to the October 2025 Pre-Funded Warrants. The warrant liability recorded during the year ended December 31, 2024 related to the December 2023 Warrants and the March 2024 Warrants. For additional information regarding warrant liabilities and their valuation, please see Note 10, “Common Stock Warrants and Warrant Liabilities,” in the Notes to Consolidated Financial Statements, in Part II, Item 8 of this annual report.
Non-cash loss on fair value of warrant liability in excess of proceeds at issuance
For the year ended December 31, 2025, the Company recognized a non-cash loss of $123.2 million with no comparable results for the year ended December 31, 2024. The issuance-date fair value of the October 2025 Pre-Funded Warrants exceeded the cash proceeds received, resulting in a non-cash loss on warrant issuance. For additional information, please see Note 10, "Common Stock Warrants and Warrant Liabilities," in the Notes to Consolidated Financial Statements in Part II, Item 8 of this annual report.
Accretion of interest and amortization of discounts on convertible notes
Accretion of interest and amortization of discounts on convertible notes was $0.3 million for the year ended December 31, 2025, compared to $0.9 million for the year ended December 31, 2024. The decrease reflects the elimination of the Secured Convertible Notes, which were outstanding during 2024 and carried higher interest and discount amortization, with only the Unsecured Convertible Notes outstanding during 2025. See additional discussion in Note 9, “Convertible Notes,” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this annual report.
Other expense, net
Other expense, net was $20 thousand for the year ended December 31, 2025, compared to $0.6 million for the year ended December 31, 2024. The amounts recorded in each period primarily relate to separate and unrelated financing activities. The higher expense in 2024 reflects non-recurring financing-related costs incurred during that period.
Financial Condition, Liquidity and Capital Resources
We have incurred net losses and generated negative cash flows from operations since inception and expect to incur losses as we pursue our strategic initiatives. Our net losses from continuing operations were $641.9 million and $8.8 million for the years ended December 31, 2025 and 2024, respectively. The net loss from continuing operations for the year ended December 31, 2025 included aggregate non-cash warrant-related losses of $633.1 million in connection with the October 2025 Pre-Funded Warrants, consisting of a $123.2 million loss on issuance and a $509.9 million loss from changes in fair value of warrant liabilities. As of December 31, 2025, our cash and cash equivalents were $8.0 million, compared to $0.4 million as of December 31, 2024.
Based on funds available as of December 31, 2025, aggregate gross cash proceeds of approximately $25.0 million from the January 2026 Private Placement, net cash generated from the conversion of all stablecoins received in the January 2026 Private Placement into U.S. dollars, and $13.5 million in gross cash proceeds from issuances under the 2026 ATM Program between January 20, 2026 and March 16, 2026, management believes that the Company’s existing cash and cash equivalents will be sufficient to fund its planned operating expenses at least through March 19, 2027.
All of the stablecoins received in the January 2026 Private Placement were converted into U.S. dollars to support operating liquidity, and a significant portion was deployed to acquire additional SKY tokens. Subsequent to the January 2026 Private Placement and through March 16, 2026, the Company deployed approximately $70.7 million in cash to acquire approximately 1.1 billion SKY tokens.
Cash Used in Operating Activities, Continuing Operations
Net cash used in operating activities from continuing operations was $8.4 million for the year ended December 31, 2025, which consisted primarily of a net loss from continuing operations of $641.9 million, adjusted by stock-based compensation expenses related to employee and director stock awards of $29 thousand, non-cash loss on changes in fair value of warrant liabilities of $509.9 million, non-cash loss on fair value of warrant liability in excess of proceeds at issuance of $123.2 million, non-cash right-of-use amortization of $0.1 million, right-of-use impairment of $0.9 million, accretion of interest and amortization of debt discounts on convertible notes of $0.2 million, and a net increase of $1.0 million in our net operating assets and liabilities of continuing operations.
Net cash used in operating activities from continuing operations was $7.5 million for the year ended December 31, 2024, which consisted primarily of a net loss from continuing operations of $8.8 million, adjusted by stock-based compensation expenses related to employee and director stock awards of $0.1 million, non-cash loss on extinguishment of Secured Convertible Note of $13 thousand, non-cash expense incurred to obtain consent of Secured Convertible Note (as defined in Note 9, “Convertible Notes”) holders to release collateral for the DERMAdoctor Divestiture of $0.4 million, non-cash loss on modifications of warrants of $69 thousand, non-cash gain on changes in fair value of warrant liabilities of $0.1 million, non-cash loss on changes in fair value of embedded derivative liability of $18 thousand, non-cash right-of-use amortization of $0.3 million, accretion of interest and amortization of debt discounts on convertible notes of $0.9 million, and a net increase of $0.5 million in our net operating assets and liabilities of continuing operations.
Cash Used in Investing Activities, Continuing Operations
The Company reported no cash used in or provided by investing activities for the years ended December 31, 2025 and 2024.
Cash Provided by Financing Activities, Continuing Operations
Net cash provided by financing activities from continuing operations was $4.6 million for the year ended December 31, 2025, which included net proceeds of $5.8 million from the 2025 Preferred Stock Purchase Agreement (as defined in Note 8, “Financing Activities”), net proceeds of $5.9 million from the October 2025 Pre-Funded Warrants, repurchase of warrants of $2.0 million, repayment of $0.5 million for the Bridge Loan, net proceeds of $0.9 million from exercise of warrants, payment on redemption of Series F Preferred Stock of $0.2 million and payment of a Special Dividend of $4.8 million.
Net cash provided by financing activities from continuing operations was $1.5 million for the year ended December 31, 2024, which included repayment of $2.0 million for the Secured Convertible Notes, net proceeds of $2.9 million from the 2024 Public Offering (as defined in Note 8, “Financing Activities”), net proceeds of $0.2 million from the 2024 Warrant Reprice transaction, and the Bridge Loan of $0.5 million.
Additional information on Financing Activities can be found in Notes 7 to 10 in the Notes to Consolidated Financial Statements, in Part II, Item 8 of this annual report.
Net Operating Losses and Tax Credit Carryforwards
We believe that we experienced an ownership change during 2025 and, as a result, our pre-change net operating loss (“NOL”) carryforwards became subject to significant limitations under Section 382 of the Internal Revenue Code. As of December 31, 2025, we had federal and state NOL carryforwards of approximately $2.9 million and $348 thousand, respectively, primarily generated subsequent to the 2025 ownership change. Our federal NOLs may be carried forward indefinitely but are generally limited to offsetting 80% of taxable income in any given year. The state NOL carryforwards begin to expire in 2045. As of December 31, 2025, we had no federal or state tax credit carryforwards.
Future changes in our stock ownership, including transactions completed subsequent to year end such as the January 2026 Private Placement, could result in an additional ownership change under Section 382, which could further limit our ability to utilize our remaining tax attributes. Any such limitation could result in the expiration of carryforwards before they are utilized.
Inflation
Our costs and operating expenses are subject to fluctuations, particularly due to changes in the cost of labor and service providers. Under our digital asset strategy, our exposure to inflationary pressures is reduced relative to our prior pharmaceutical operations; however, inflation may affect general and administrative costs, third-party service fees, and the broader economic environment in which digital asset markets operate. Failure to manage these fluctuations could adversely impact our results of operations or cash flows.
Known Trends and Uncertainties
Our shift to a digital asset strategy introduces exposure to certain known trends and uncertainties that may materially affect our financial condition and results of operations in future periods. These include: (i) volatility in the market price of SKY and other digital assets, which could result in significant fluctuations in the reported fair value of our digital asset holdings; (ii) evolving regulatory frameworks applicable to digital assets, stablecoins, and related activities, which could impose new compliance obligations or restrict certain activities; (iii) uncertainty regarding the accounting treatment of digital assets as well as staking rewards and protocol participation income; and (iv) liquidity risk associated with converting digital asset holdings to cash or cash equivalents. We continue to monitor these trends and uncertainties and may adjust our strategy, capital allocation, or operations as circumstances warrant. See “Risk Factors” in Part I, Item 1A for additional discussion of these and other risks.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements at December 31, 2025 or December 31, 2024 as defined in Item 303(b) of SEC Regulation S-K.
Contractual Obligations
In the normal course of business, we have historically entered into contracts and commitments that obligate us to make payments in the future and we expect to enter into contracts and commitments on behalf of the Company in connection with pursuing other strategic alternatives.
|
ITEM 8. |
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
The financial statements required by this Item 8 are set forth below. Our financial information is set forth in Item 7 of this annual report and is hereby incorporated into this Item 8 by reference.
|
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS |
|
|
Page |
|
|
Report of Independent Registered Public Accounting Firm (PCAOB ID: |
13 |
|
Report of Independent Registered Public Accounting Firm (PCAOB ID: 100) |
14 |
|
Consolidated Balance Sheets as of December 31, 2025 and 2024 |
16 |
|
Consolidated Statements of Operations for the Years Ended December 31, 2025 and 2024 |
17 |
|
Consolidated Statements of Stockholders’ Deficit for the Years Ended December 31, 2025 and 2024 |
18 |
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024 |
19 |
|
Notes to Consolidated Financial Statements |
21 |
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors of
Stablecoin Development Corporation (f/k/a NovaBay Pharmaceuticals, Inc.)
Opinion on the Financial Statements
We have audited the accompanying balance sheet of Stablecoin Development Corporation (f/k/a NovaBay Pharmaceuticals, Inc.) (the “Company”) as of December 31, 2025, the related statements of operations, stockholders’ deficit and cash flows for the year ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, based on our audit, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
We also have audited the adjustments to the 2024 financial statements to retrospectively apply the discontinued operations reclassifications related to the dispositions of Avenova and PhaseOne, as described in Notes 14 and 15, and the retrospective adjustments to share and per share data as a result of the reverse stock split, as described in Note 1. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2024 financial statements of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2024 financial statements taken as a whole.
We also have audited the adjustments described in Note 16 that were applied to revise the 2024 financial statements to correct an error. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2024 financial statements of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2024 financial statements taken as a whole.
Emphasis of Matter – Restatement
As described in Note 3 to the financial statements, the accompanying financial statements as of and for the year ended December 31, 2025, have been restated.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ CBIZ CPAs P.C.
We have served as the Company’s auditor since 2026.
March 19, 2026, except for the effects of the restatement described in Note 3 to the financial statements as to which the date is April 29, 2026.
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors of
NovaBay Pharmaceuticals, Inc.
Opinion on the Consolidated Financial Statements
We have audited, before the effects of the adjustments to retrospectively apply the discontinued operations reclassifications related to the dispositions of Avenova and PhaseOne described in Notes 14 and 15, the retrospective adjustments to share and per share data as a result of the reverse stock split as described in Note 1, as well as the correction of the error described in Note 16, the accompanying consolidated balance sheet of NovaBay Pharmaceuticals, Inc. and subsidiaries (the “Company”) as of December 31, 2024, and the related consolidated statements of operations, stockholders’ (deficit) equity, and cash flows for the year ended December 31, 2024 (collectively referred to as the “consolidated financial statements”) (the consolidated financial statements before the effects of the adjustments discussed in Notes 1, 14, 15, and 16 are not presented herein). In our opinion, except for the error described in Note 16, the consolidated financial statements, before the effects of the adjustments to retrospectively apply the discontinued operations reclassifications related to the dispositions of Avenova and PhaseOne described in Notes 14 and 15 and the retrospective adjustments to share and per share data as a result of the reverse stock split as described in Note 1, present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the discontinued operations reclassifications related to the dispositions of Avenova and PhaseOne described in Notes 14 and 15 or the retrospective adjustments to share and per share data as a result of the reverse stock split as described in Note 1 and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by CBIZ CPAs P.C.
We were not engaged to audit, review, or apply any procedures to the adjustments for the correction of the error described in Note 16 and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by CBIZ CPAs P.C.
Emphasis of Matter
As discussed in Note 1 to the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2024, the Company is seeking approval from its stockholders to dissolve and distribute all remaining assets to stockholders. Management has determined that it is in the best interest of the Company and its stockholders to continue pursuing the voluntary Dissolution pursuant to the Plan of Dissolution and management’s plans regarding these matters are also described in Note 1 to the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2024. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements; and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Allowances for Product Returns
Description of the Matter
As described in Note 2 of the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2024, when recognizing revenue from product sales, the Company makes an estimate of the amount of consideration the Company expects to be entitled to receive. Upon recognition of these product sales, the Company records an estimate for variable consideration consisting of service fees, discounts, rebates, and product returns, resulting in a reduction in product revenue. The variable consideration provisions are recorded within accrued liabilities in the same period that the related revenue is recognized. Liabilities related to the allowance for product returns involve the use of significant assumptions and judgments in their calculation. These significant assumptions and judgments include historical sales and return rates and inventory levels in the distribution channel, as well as existing return policies with customers.
The Company’s estimated allowance for product returns requires a high degree of judgment and is subject to change based on various quantitative and qualitative factors. Accordingly, extensive audit effort and a high degree of auditor judgment were needed to evaluate management’s estimates and assumptions used in the determination of the allowance for product returns. Therefore, we identified the Company’s allowance for product returns as a critical audit matter.
How We Addressed the Matter in Our Audit
We obtained an understanding of and evaluated the design of controls relating to the Company’s processes for estimating the allowance for product returns. We evaluated the significant accounting policies relating to product returns, as well as management’s application of the policies, for appropriateness and reasonableness.
We obtained the Company’s allowance for product returns analysis and performed testing procedures on the underlying data that was used in management’s development of the product returns estimate. We compared the significant assumptions used by management to customer contract information, tested the historical returns data used in the analysis, and reviewed subsequent product return activity. In addition, we performed sensitivity analyses of significant assumptions used in the analysis to determine what changes in assumptions are particularly sensitive when calculating the amount of the allowance for product returns. Additionally, we tested the mathematical accuracy of management’s calculation of revenue, net of product sales allowances, and the associated timing of revenue recognition, in the consolidated financial statements.
/s/ WithumSmith+Brown, PC
New York, New York
April 2, 2025
We served as the Company’s auditor from 2010 through January 2026.
PCAOB ID Number 100
STABLECOIN DEVELOPMENT CORPORATION
(F/K/A NOVABAY PHARMACEUTICALS, INC.)
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value amounts)
|
As of December 31, |
||||||||
|
2025 (As Restated) |
2024 |
|||||||
|
ASSETS |
||||||||
|
Current assets: |
||||||||
|
Cash and cash equivalents |
$ | $ | ||||||
|
Prepaid expenses and other current assets |
||||||||
|
Current assets, discontinued operations |
||||||||
|
Total current assets |
||||||||
|
Operating lease right-of-use assets |
||||||||
|
Other assets |
||||||||
|
Other assets, discontinued operations |
||||||||
|
TOTAL ASSETS |
$ | $ | ||||||
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
||||||||
|
Liabilities: |
||||||||
|
Current liabilities: |
||||||||
|
Accounts payable |
$ | $ | ||||||
|
Accrued liabilities |
||||||||
|
Bridge Loan |
||||||||
|
Unsecured Convertible Notes, net of discounts |
||||||||
|
Operating lease liabilities |
||||||||
|
Current liabilities, discontinued operations |
||||||||
|
Total current liabilities |
||||||||
|
Warrant liabilities, at fair value |
||||||||
|
Operating lease liabilities-non-current |
||||||||
|
Total liabilities |
||||||||
|
Commitments and contingencies (Note 7) |
|
|
||||||
|
Mezzanine (temporary) equity: |
||||||||
|
Preferred stock, $ |
||||||||
|
Series F Preferred Stock; |
||||||||
|
Stockholders’ deficit: |
||||||||
|
Preferred stock, $ |
||||||||
|
Series B Preferred Stock; |
||||||||
|
Common stock, $ |
||||||||
|
Additional paid-in capital* |
||||||||
|
Accumulated deficit |
( |
) | ( |
) | ||||
|
Total stockholders’ deficit |
( |
) | ( |
) | ||||
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |
$ | $ | ||||||
* After giving retroactive effect to a 1-for-5 reverse stock split that became effective February 20, 2026.
The accompanying notes are an integral part of these Consolidated Financial Statements.
STABLECOIN DEVELOPMENT CORPORATION
(F/K/A NOVABAY PHARMACEUTICALS, INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
|
For the years ended December 31, |
||||||||
|
2025 (As Restated) |
2024 (As Revised) |
|||||||
|
Operating expenses |
||||||||
|
General and administrative |
$ | $ | ||||||
|
Impairment of long-lived assets |
||||||||
|
Total operating expenses |
||||||||
|
Operating loss |
( |
) | ( |
) | ||||
|
Non-cash (loss) gain on changes in fair value of warrant liability |
( |
) | ||||||
|
Non-cash loss on fair value of warrant liability in excess of proceeds at issuance |
( |
) | ||||||
|
Accretion of interest and amortization of discounts on convertible notes |
( |
) | ( |
) | ||||
|
Other expense, net |
( |
) | ( |
) | ||||
|
Net loss from continuing operations |
$ | ( |
) | $ | ( |
) | ||
|
Net income from discontinued operations, net of taxes |
||||||||
|
Net loss |
$ | ( |
) | $ | ( |
) | ||
|
Less: Increase to accumulated deficit due to adjustment to common stock warrants exercise price |
( |
) | ||||||
|
Less: Increase to accumulated deficit due to adjustment to Preferred Stock conversion prices |
( |
) | ||||||
|
Net loss attributable to common stockholders |
$ | ( |
) | $ | ( |
) | ||
|
Weighted-average shares of common stock used in computing net loss per share attributable to common stockholders (basic and diluted)* |
||||||||
|
Basic and diluted net loss per share |
||||||||
|
Basic loss per share from continuing operations* |
$ | ( |
) | $ | ( |
) | ||
|
Basic earnings per share from discontinued operations* |
||||||||
|
Basic (loss) earnings per share attributable to common stockholders* |
$ | ( |
) | $ | ( |
) | ||
* After giving retroactive effect to a 1-for-5 reverse stock split that became effective February 20, 2026.
The accompanying notes are an integral part of these Consolidated Financial Statements.
STABLECOIN DEVELOPMENT CORPORATION
(F/K/A NOVABAY PHARMACEUTICALS, INC.)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
(in thousands)
| Total | ||||||||||||||||||||||||||||||||||||
| Stockholders’ | ||||||||||||||||||||||||||||||||||||
|
Redeemable |
Additional |
Accumulated |
Equity |
|||||||||||||||||||||||||||||||||
|
Preferred Stock |
Preferred Stock |
Common Stock |
Paid-In |
Deficit |
(Deficit) (As |
|||||||||||||||||||||||||||||||
|
Shares |
Amount |
Shares |
Amount |
Shares* |
Amount* |
Capital* |
(As Restated) |
Restated) |
||||||||||||||||||||||||||||
|
Balance at December 31, 2023 |
$ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||||||||||
|
Net loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||
|
Conversion of Series B Preferred Stock to common stock |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||
|
Conversion of Series C Preferred Stock to common stock |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||
|
Adjustment of Series C Preferred Stock conversion price |
— | — | — | — | — | ( |
) | |||||||||||||||||||||||||||||
|
Modification of common stock warrants in connection with 2024 Warrant Reprice Transaction |
— | — | — | — | ||||||||||||||||||||||||||||||||
|
Issuance of common stock in connection with 2024 Warrant Reprice Transaction, net of offering costs |
— | — | ||||||||||||||||||||||||||||||||||
|
Reclassification of December 2023 Warrants from liability |
— | — | — | — | ||||||||||||||||||||||||||||||||
|
Reclassification of March 2024 Warrant from liability |
— | — | — | — | ||||||||||||||||||||||||||||||||
|
Reclassification of embedded derivative liability |
— | — | — | — | ||||||||||||||||||||||||||||||||
|
Shares issued for |
— | — | ||||||||||||||||||||||||||||||||||
|
Issuance of common stock and pre-funded warrants in the 2024 Public Offering, net of issuance cost |
— | — | ||||||||||||||||||||||||||||||||||
|
Exercise of pre-funded warrants |
— | — | ||||||||||||||||||||||||||||||||||
|
Adjustment to common stock warrant exercise price |
— | — | — | — | — | — | ( |
) | ||||||||||||||||||||||||||||
|
Stock-based compensation expense related to employee and director stock awards |
— | — | — | — | ||||||||||||||||||||||||||||||||
|
Balance at December 31, 2024 |
— | $ | — | $ | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||
|
Net loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||
|
Issuance of Series D Preferred Stock, net of offering costs |
— | — | ||||||||||||||||||||||||||||||||||
|
Conversion of Series D Preferred Stock to common stock |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
|
Issuance of Series E Preferred Stock, net of offering costs |
— | — | ||||||||||||||||||||||||||||||||||
|
Conversion of Series E Preferred Stock to common stock |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
|
Issuance of Series F Preferred Stock and Cancellation of Warrants in conjunction with Series F Agreements |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
|
Deemed Capital Contribution pursuant to Series F Agreements |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
|
Redemption of Series F Preferred Stock |
( |
) | ( |
) | — | — | ||||||||||||||||||||||||||||||
|
Conversion of Unsecured Convertible Notes to common stock |
— | — | ||||||||||||||||||||||||||||||||||
|
Exercise of warrants |
— | — | ||||||||||||||||||||||||||||||||||
|
Repurchase of Warrants |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||
|
Stock-based compensation expense related to employee and director stock awards |
— | — | — | — | ||||||||||||||||||||||||||||||||
|
Vesting of director RSU awards |
— | — | ||||||||||||||||||||||||||||||||||
|
Dividend Paid ($ |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||
|
Balance at December 31, 2025 |
$ | $ | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||
* After giving retroactive effect to a 1-for-5 reverse stock split that became effective February 20, 2026.
The accompanying notes are an integral part of these Consolidated Financial Statements.
STABLECOIN DEVELOPMENT CORPORATION
(F/K/A NOVABAY PHARMACEUTICALS, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
For the years ended December 31, |
||||||||
|
2025 (As Restated) |
2024 (As Revised) |
|||||||
|
Operating activities: |
||||||||
|
Net loss |
$ | ( |
) | $ | ( |
) | ||
|
Net income from discontinued operations, net of taxes |
( |
) | ( |
) | ||||
|
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
|
Stock-based compensation expense related to employee and director stock awards |
||||||||
|
Non-cash loss on extinguishment of Secured Convertible Note |
||||||||
|
Non-cash expense incurred to obtain consent of Secured Convertible Note holders |
||||||||
|
Non-cash loss (gain) on changes in fair value of warrant liability |
( |
) | ||||||
|
Non-cash loss on fair value of warrant liability in excess of proceeds at issuance |
||||||||
|
Non-cash loss on changes in fair value of embedded derivative liability |
||||||||
|
Non-cash loss on modifications of warrants |
||||||||
|
Non-cash right-of-use amortization |
||||||||
|
Non-cash impairment of long-lived assets |
||||||||
|
Amortization of debt discounts on convertible notes |
||||||||
|
Changes in operating assets and liabilities: |
||||||||
|
Prepaid expenses and other current assets |
( |
) | ( |
) | ||||
|
Other assets |
( |
) | ||||||
|
Accounts payable and accrued liabilities |
( |
) | ( |
) | ||||
|
Operating lease liabilities |
( |
) | ( |
) | ||||
|
Net cash used in operating activities, continuing operations |
( |
) | ( |
) | ||||
|
Financing activities: |
||||||||
|
Net proceeds from issuance of Series D Preferred Stock |
||||||||
|
Net proceeds from issuance of Series E Preferred Stock |
||||||||
|
Cash payment pursuant to warrant exchange |
( |
) | ||||||
|
Proceeds from Warrants Exercise |
||||||||
|
Proceeds from issuance of October 2025 pre-funded warrants |
||||||||
|
Proceeds from issuance of common stock and pre-funded warrants the 2024 Public Offering, net of issuance costs |
||||||||
|
Proceeds from Bridge Loan |
||||||||
|
Payment on Bridge Loan |
( |
) | ||||||
|
Payments on Secured Convertible Notes |
( |
) | ||||||
|
Payments on warrants purchase |
( |
) | ||||||
|
Payment on redemption of Series F Preferred Stock |
( |
) | ||||||
|
Dividend paid |
( |
) | ||||||
|
Cash debt issuance cost |
( |
) | ||||||
|
Net cash provided by financing activities, continuing operations |
||||||||
|
Net decrease in cash, cash equivalents, and restricted cash, continuing operations |
( |
) | ( |
) | ||||
|
Net increase in cash and cash equivalents, discontinued operations |
||||||||
|
Net decrease in cash, cash equivalents and restricted cash, consolidated |
( |
) | ||||||
|
Cash, cash equivalents and restricted cash, beginning of year |
||||||||
|
Cash, cash equivalents and restricted cash of continuing operations, end of year |
$ | $ | ||||||
|
For the years ended December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
Supplemental disclosure of cash flow information: |
||||||||
|
Interest paid in continuing operations |
$ | $ | ||||||
|
For the years ended December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
Supplemental disclosure of non-cash information: |
||||||||
|
Conversions of preferred stock to common stock |
$ | $ | ||||||
|
Cancellation of Common Stock Warrants pursuant to Series F Agreements |
||||||||
|
Deemed Capital Contribution pursuant to Series F Agreements |
||||||||
|
Conversion of Unsecured Convertible Notes to common stock |
||||||||
|
Down round feature adjustments related to common stock warrants |
||||||||
|
Down round feature adjustments related to preferred stock |
||||||||
|
Warrant liabilities transferred to equity |
||||||||
|
Derivative liability related to Unsecured Convertible Notes transferred to equity |
||||||||
|
Issuance of derivative liability in conjunction with Unsecured Convertible Notes |
||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
STABLECOIN DEVELOPMENT CORPORATION
(F/K/A NOVABAY PHARMACEUTICALS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025
NOTE 1. ORGANIZATION
Stablecoin Development Corporation (f/k/a NovaBay Pharmaceuticals, Inc.) (the “Company” or “our,” “we,” or “us”) was previously focused on the development and sale of eyecare, wound care, and skin care products.
|
● |
The Avenova Asset Divestiture closed on January 17, 2025 in which we sold our primary eyecare business (see Note 14, “Avenova Asset Divestiture and Bridge Loan”); |
|
|
● |
The PhaseOne Divestiture closed on January 8, 2025 in which we sold our PhaseOne trademark (see Note 15, “PhaseOne Divestiture”); and |
|
|
● |
The DERMAdoctor Divestiture closed on March 12, 2024 in which we sold our primary skin care business (see Note 16, “DERMAdoctor Divestiture”). |
During 2025, the Company completed a comprehensive realignment of its business and adopted a capital allocation approach focused on acquiring and holding digital assets that enable participation in decentralized financial networks, subject to applicable risk, liquidity, governance, and regulatory considerations. As part of this strategy, the Company intends to accumulate and hold digital assets for participation in blockchain-based networks, which may involve staking, governance participation, or other protocol-level activities. Such activities, when undertaken, may generate protocol-defined incentives or rewards in accordance with network rules.
The Company is incorporated under the laws of the State of Delaware. The Company has one operating and reportable segment encompassing its consolidated operations as of December 31, 2025.
Subsequent to December 31, 2025, on February 20, 2026, we effected a 1-for-
Discontinued Operations
Historical financial results related to each of the businesses and assets divested above are now presented as discontinued operations in our Consolidated Financial Statements (see Note 14, “Avenova Asset Divestiture and Bridge Loan”; Note 15, “PhaseOne Divestiture”; Note 16, “DERMAdoctor Divestiture” and Note 17, “Summary of Discontinued Operations”).
Liquidity
Based on funds available as of December 31, 2025, aggregate gross cash proceeds of approximately $
All of the stablecoins received in the January 2026 Private Placement were converted into U.S. dollars to support operating liquidity, and a significant portion was deployed to acquire additional SKY tokens. Subsequent to the January 2026 Private Placement and through March 16, 2026, the Company deployed approximately $
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. GAAP and are expressed in U.S. dollars.
Principles of Consolidation
The accompanying Consolidated Financial Statements include the accounts of the Company and its former wholly owned subsidiary, DERMAdoctor, which was fully divested on March 12, 2024, as of and for the year ended December 31, 2024. All significant intercompany balances and transactions have been eliminated in consolidation. See also Note 16, “DERMAdoctor Divestiture.” The accompanying Consolidated Financial Statements include only the accounts of the Company as of and for the year ended December 31, 2025.
Assets Held for Sale
The Company classifies long-lived assets or disposal groups as held for sale when management commits to a plan to sell and all criteria in ASC 360 are met, including availability for immediate sale, active marketing, and probable sale within one year. If shareholder approval is required, the held-for-sale criteria are not considered met until such approval is obtained. Assets and liabilities classified as held for sale are presented separately in the consolidated balance sheets. Prior periods are reclassified to conform to current presentation.
Discontinued Operations
A component of the Company is reported as a discontinued operation when it has been disposed of or classified as held for sale and the disposal represents a strategic shift that has, or will have, a major effect on the Company’s operations and financial results in accordance with ASC 205-20. Results of discontinued operations, including any gain or loss on disposal, are presented separately from continuing operations in the consolidated statements of operations for all periods presented. Prior periods are reclassified to conform to current presentation.
Financial Statement Reclassification
Certain account balances from prior periods have been reclassified in these Consolidated Financial Statements to conform to current period classifications.
Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results may differ significantly from those estimates. Significant estimates made by management include, but are not limited to, assumptions for valuing warrants, assumptions for valuing derivative liabilities, long-lived asset impairments, stock-based compensation, income taxes and other contingencies.
These estimates are based on management’s best estimates and judgment. Actual results may differ from these estimates. Estimates, judgments, and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions, judgments and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Segment Information
The Company has one operating and reportable segment encompassing its consolidated operations as of December 31, 2025 and 2024. The Company’s chief operating decision maker (“CODM”) is its chief executive officer. The measurement of segment profit or loss is the net loss from continuing operations, as reported in the consolidated statements of operations. The measurement of segment assets is total consolidated assets, as reported on the consolidated balance sheet. The CODM allocates resources and assesses performance on a consolidated basis and is not regularly provided with disaggregated actual expense information beyond that included in the consolidated financial statements.
Cash, Cash Equivalents, and Highly Liquid Restricted Cash
The Company considers all highly-liquid instruments with a stated maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents are stated at cost, which approximates fair value. As of December 31, 2025 and 2024, the Company’s cash and cash equivalents were held in major financial institutions in the United States.
The following table provides a reconciliation of the cash, cash equivalents, and restricted cash reported in the Consolidated Balance Sheets (in thousands):
|
As of December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
Cash and cash equivalents |
$ | $ | ||||||
|
Restricted cash included in other assets |
||||||||
|
Total cash, cash equivalents, and restricted cash in the Consolidated Statements of Cash Flows |
$ | $ | ||||||
The restricted cash amount included in other assets on the Consolidated Balance Sheets represents amounts held as certificates of deposit for long-term financing and lease arrangements as contractually required by our financial institution and landlord.
Concentrations of Credit Risk and Major Partners
Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash, cash equivalents and restricted cash. The Company maintains deposits of cash, cash equivalents and restricted cash with major financial institutions in the United States.
The Company has a significant amount of its cash balances at a major financial institution which exceed the federally insured limit of $250,000. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows.
The Company did not hold any digital assets as of December 31, 2025. Subsequent to year end, in connection with the January 2026 Private Placement and related transactions, the Company acquired and accumulated a significant position in SKY tokens. The concentration of the Company’s assets in SKY tokens increases the Company’s exposure to price volatility and other risks associated with the SKY token. See Note 20, “Subsequent Events,” for additional information regarding these transactions and related activities.
Fair Value of Financial Assets and Liabilities
The Company’s financial instruments include cash and cash equivalents, restricted cash, accounts payable, accrued liabilities and warrant liabilities. The Company’s cash and cash equivalents, restricted cash, accounts payable, and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments.
The Company follows Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures, with respect to assets and liabilities that are measured at fair value on a recurring basis and nonrecurring basis. Under this standard, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The standard also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. There are three levels of inputs that may be used to measure fair value:
Level 1 – quoted prices in active markets for identical assets or liabilities;
Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable; and
Level 3 – inputs that are unobservable (for example, cash flow modeling inputs based on assumptions).
Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
See additional information in Note 4, “Fair Value Measurements.”
Digital Assets
The Company did not hold any digital assets as of and during the years ended December 31, 2025 and 2024. Subsequent to December 31, 2025, in January 2026, the Company entered into the January 2026 Private Placement pursuant to which it received digital assets, including stablecoins and SKY tokens, and subsequently engaged in purchases and sales of such digital assets.
Digital assets acquired in connection with the January 2026 Private Placement and subsequent transactions will be accounted for in accordance with applicable U.S. GAAP and other authoritative accounting guidance in effect at the time, including Accounting Standards Update No. 2023-08, Accounting for and Disclosure of Crypto Assets, which established Subtopic 350-60 within ASC 350, Intangibles—Goodwill and Other, where applicable. Depending on the nature of the digital assets held and the Company’s specific facts and circumstances—including the Company’s activities (such as staking or other yield-generating activities), the contractual terms of related arrangements, and the Company’s relationships with counterparties—the Company may apply different accounting models. Such models could include digital assets held at fair value with changes in fair value recognized in earnings under applicable crypto-asset guidance or, if such guidance is not applicable, accounting under other relevant U.S. GAAP models, including accounting for certain digital assets as indefinite-lived intangible assets measured at historical cost and evaluated for impairment. The applicable accounting framework may differ depending on the specific facts and circumstances, and the resulting classification, measurement, and presentation could materially affect the Company’s financial position and results of operations, including potential variability in reported results.
Impairment of Long-Lived Assets
The Company’s long-lived assets are reviewed for impairment in accordance with ASC 360, Property, Plant and Equipment, which requires that companies consider whether events or changes in facts and circumstances, both internally and externally, may indicate that an impairment of long-lived assets held for use are present. The Company reviews long-lived assets for impairment at least annually or whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. In the event that such cash flows are not expected to be sufficient to recover the carrying amount of the asset, the assets are written down to their estimated fair values and the loss is recognized in the Consolidated Statements of Operations. The Company recorded $
Leases
At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use assets may be required for items such as initial direct costs paid or incentives received.
The Company has elected to combine lease and non-lease components as a single component. This will potentially result in the initial and subsequent measurement of the balances of the right-of-use assets and lease liability for leases being greater than if the policy election was not applied. Leases include variable components (e.g., common area maintenance) that are paid separately from the monthly base payment based on actual costs incurred and therefore were not included in the right-of-use assets and lease liability but are reflected as an expense in the period incurred.
The lease expense is recognized over the expected term on a straight-line basis. Operating leases are recognized in the Consolidated Balance Sheets as right-of-use assets, operating lease liabilities current and operating lease liabilities non-current.
The Company recorded $
Common Stock Warrants
The Company accounts for common stock purchase warrants issued in connection with its equity offerings in accordance with the provisions of ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging (ASC 815).
The Company classifies as equity any warrants that (i) require physical share settlement or net-share settlement or (ii) give the Company a choice of net-cash settlement (physical share settlement or net-share settlement). The Company classifies as liabilities any warrants that (i) require net-cash settlement, (ii) give the counterparty a choice of net-cash physical settlement or net-share settlement. In accordance with ASC 815, the Company also classifies as liabilities any warrants for which the shares underlying the contract are subject to stockholder approval before the warrant can be exercised.
For warrants that are classified as liabilities, the Company records the fair value of the warrants upon issuance and at each balance sheet date with changes in the estimated fair value recorded as a non-cash gain or loss in the Consolidated Statements of Operations. Warrants that contain nominal exercise prices are economically similar to common stock, and do not require assumptions related to volatility, expected term, or other option-pricing inputs are generally measured based on intrinsic value, calculated as the excess of the Company’s common stock price over the exercise price, multiplied by the number of warrant shares outstanding. The fair values of other warrants are determined using the Black-Scholes option pricing model and subject to a significant degree of management’s judgment. See Note 4, “Fair Value Measurements,” subheading “Black Scholes Valuation Models and Assumptions” and Note 10, “Common Stock Warrants and Warrant Liabilities,” subheading “Summary of Common Stock Warrant Liabilities.”
Preferred Stock
Preferred stock that is redeemable at the option of the holder or upon events not solely within the control of the Company is classified as mezzanine (temporary) equity in accordance with ASC 480-10-S99-3A. Such instruments are initially recorded at fair value, net of issuance costs, and are not accreted to redemption value unless redemption becomes probable.
Terms of the Company’s Preferred Stock have historically included a ratchet whereby the applicable conversion price could be adjusted (as defined and described in Note 11, “Stockholders’ Deficit”). The applicable ratchet provisions of the Company’s outstanding Series B Preferred Stock terminated during the year ended December 31, 2024. When a conversion price for outstanding Preferred Stock is adjusted under the ratchet, the Company records a deemed dividend as a reduction to income available to common stockholders. In accordance with ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), the deemed dividend was measured as the difference between (1) the fair value of the Preferred Stock immediately prior to the conversion price adjustment (but without the ratchet anti-dilution protection feature) and (2) the fair value of the Preferred Stock immediately after the conversion price adjustment (but without the ratchet anti-dilution protection feature). These fair values were determined using the Black Scholes option pricing model. These values are subject to a significant degree of management’s judgment. See also Note 4, “Fair Value Measurements,” subheading “Black Scholes Valuation Models and Assumptions.”
Stock-Based Compensation
The Company’s stock-based compensation includes grants of stock options and restricted stock units (“RSUs”) to employees, consultants and non-employee directors. The expense associated with these grants is recognized in the Company’s Consolidated Statements of Operations based on their fair values as they are earned under the applicable vesting terms. For stock options granted, the fair value of the stock options is estimated using a Black-Scholes option pricing model. The Company accounts for RSUs issued to employees and non-employees (directors, consultants and advisory board members) based on the fair market value of the Company’s common stock on the date of issuance. See Note 12, “Stock-Based Compensation” for further information regarding stock-based compensation expense and the assumptions used in estimating the expense.
Income Taxes
The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion or the entire deferred tax asset will not be recognized.
Uncertain Tax Positions
The Company accounts for uncertainty in income taxes in accordance with ASC 740-10. The Company recognizes the financial statement effects of a tax position only when it is more likely than not, based on the technical merits of the position, that the position will be sustained upon examination by the relevant taxing authority. For tax positions meeting the more-likely-than-not threshold, the amount recognized is measured as the largest amount of tax benefit that is greater than 50 percent likely to be realized upon ultimate settlement. The Company recognizes any interest and penalties related to uncertain tax positions as a component of income tax expense. Accrued interest and penalties are included in the related tax liability line in the consolidated balance sheets.
Income Tax Payments
Income taxes paid are presented as operating cash flows in the consolidated statements of cash flows. Refunds received are also presented within operating activities.
Net Loss per Share
The Company computes net loss per share by presenting both basic and diluted loss per share (“EPS”) as shown in the Company’s Consolidated Statements of Operations.
Basic EPS is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period, including stock options and warrants, using the treasury stock method. In computing diluted EPS, the average stock price for the period is used to determine the number of shares assumed to be purchased from the exercise of stock options or warrants. Potentially dilutive common share equivalents are excluded from the diluted EPS computation in net loss periods if their effect would be anti-dilutive.
The following table provides a reconciliation of the numerator used for basic and diluted (loss) earnings per share (in thousands):
|
For the years ended December 31, |
||||||||
|
2025 (As Restated) |
2024 |
|||||||
|
Numerator for basic and diluted income (loss) per share: |
||||||||
|
Net loss from continuing operations |
$ | ( |
) | $ | ( |
) | ||
|
Less: Increase to accumulated deficit due to adjustment to common stock warrants exercise price |
||||||||
|
Less: Increase to accumulated deficit due to adjustment to Preferred Stock conversion price |
||||||||
|
Net loss from continuing operations attributable to common stockholders |
$ | ( |
) | $ | ( |
) | ||
|
Net income from discontinued operations, net of taxes |
||||||||
|
Net loss |
$ | ( |
) | $ | ( |
) | ||
The following outstanding Unsecured Convertible Notes, Preferred Stock, stock options and stock warrants were excluded from the diluted EPS computation as their effect would have been anti-dilutive:
|
As of December 31, |
||||||||
|
2025* (As Restated) |
2024* |
|||||||
|
Shares issuable upon conversion of Unsecured Convertible Notes |
||||||||
|
Common stock equivalent of Series B Non-Voting Convertible Preferred Stock (the “Series B Preferred Stock”) |
||||||||
|
Stock options and RSUs |
||||||||
|
Stock warrants |
||||||||
* After giving retroactive effect to a 1-for-
Revenue Recognition
The Company’s product revenue recognition policies are established in accordance with ASC 606, Revenue from Contracts with Customers, in accordance with the following five steps:
|
i. |
identify the contract(s) with a customer; |
|
ii. |
identify the performance obligations in the contract; |
|
iii. |
determine the transaction price; |
|
iv. |
allocate the transaction price to the performance obligations in the contract; and |
|
v. |
recognize revenue when (or as) the entity satisfies performance obligations. |
Revenue is recognized in accordance with the amount of consideration which the Company expects to receive when control of the goods is transferred to the customer, which generally occurs upon delivery of the products to a third-party carrier who is delivering the products to the customer. The Company defers recognition for pre-payments until the Company’s performance obligations are satisfied.
Cost of Goods Sold
Cost of goods sold includes third-party manufacturing costs, shipping and handling costs, third-party fulfillment fees, and other costs associated with products sold. Cost of goods sold also includes any necessary allowances for excess and obsolete inventory as well as lower of cost and estimated net realizable value.
Recent Accounting Pronouncements
In December 2025, the FASB issued Accounting Standards Update (“ASU”) No. 2025-11, Narrow-Scope Improvements (“ASU 2025-11”). ASU 2025-11 is effective for annual reporting periods beginning after December 15, 2027. Early adoption is permitted. While the adoption of ASU 2025-11 is not expected to have an effect on our Consolidated Financial Statements, it is expected to result in incremental disclosures within the notes to our Consolidated Financial Statements. The Company is currently evaluating ASU 2025-11.
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 is intended to increase transparency and provide investors with more detailed information about the nature of expenses reported on the face of the statements of operations. ASU 2024-03 does not change the requirements for the presentation of expenses on the face of the statements of operations. Under ASU 2024-03, entities are required to disaggregate, in tabular format, expenses presented on the face of the statements of operations if they include any of the following expense categories: employee compensation, depreciation, intangible asset amortization, and depreciation or depletion. For any remaining items within each relevant expense caption, entities must provide a qualitative description of the nature of those expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. While the adoption of ASU 2024-03 is not expected to have an effect on our Consolidated Financial Statements, it is expected to result in incremental disclosures within the notes to our Consolidated Financial Statements. The Company is currently evaluating ASU 2024-03.
In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the transparency and disaggregation of income tax disclosures. The amendments primarily require (i) expanded income tax rate reconciliation disclosures using prescribed categories and (ii) disaggregation of income taxes paid, net of refunds, by federal, state and foreign jurisdictions, among other disclosure enhancements. The amendments do not change the recognition or measurement of income taxes under ASC 740. The Company adopted ASU 2023-09 effective January 1, 2025 on a prospective basis. The adoption did not have a material impact on the Company’s financial position, results of operations or cash flows, but resulted in expanded income tax disclosures in the accompanying notes to the consolidated financial statements.
In November 2023, the FASB issued ASU 2023-08, Intangibles — Goodwill and Other — Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). The adoption had no impact on the Company’s financial statements for the year ended December 31, 2025, as the Company held no crypto assets during the fiscal year. As described in Note 20, “Subsequent Events”, in January 2026 the Company entered into the January 2026 Private Placement pursuant to which it received digital assets, including stablecoins and SKY tokens, and subsequently engaged in purchases and sales of digital assets. Digital assets acquired in connection with the January 2026 Private Placement and subsequent transactions will be accounted for in accordance with ASU 2023-08. Depending on the nature of the digital assets held and the Company’s specific facts and circumstances—including the Company’s activities (such as staking or other yield-generating activities), the contractual terms of related arrangements, and the Company’s relationships with counterparties—the Company may apply different accounting models. Such models could include digital assets held at fair value with changes in fair value recognized in earnings under applicable crypto-asset guidance or, if such guidance is not applicable, accounting under other relevant U.S. GAAP models, including accounting for certain digital assets as indefinite-lived intangible assets measured at historical cost and evaluated for impairment. The applicable accounting framework may differ depending on the specific facts and circumstances, and the resulting classification, measurement, and presentation could materially affect the Company’s financial position and results of operations, including potential variability in reported results.
NOTE 3. RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS
On April 27, 2026, the audit committee of the board of directors and management of the Company concluded that the Company’s previously issued audited consolidated financial statements for the year ended December 31, 2025, should no longer be relied upon because of an error in the Company’s accounting for certain outstanding common stock warrants, which are referred to as the October 2025 Pre-funded Warrants herein. The error relates to the determination of the number of shares of common stock issuable upon exercise of the October 2025 Pre-funded Warrants that were issued by the Company in October 2025, which contain certain anti-dilution adjustment provisions with respect to subsequent issuances of common stock by the Company related to the conversion of certain convertible securities. At the time of issuance, the October 2025 Pre-funded Warrants represented the right to purchase
The cumulative effect of the restatement on the Company’s financial statements is a $
The effects of the restatement on the consolidated balance sheets are summarized in the following table:
|
As of December 31, 2025 |
||||||||||||
|
As Originally Reported |
Adjustments |
As Restated |
||||||||||
|
Warrant liabilities |
||||||||||||
|
Total liabilities |
||||||||||||
|
Accumulated deficit |
( |
) | ( |
) | ( |
) | ||||||
|
Total stockholders’ equity |
( |
) | ( |
) | ( |
) | ||||||
The effects of the restatement on the consolidated statements of operations and comprehensive income/loss are summarized in the following table:
|
For the Year Ended December 31, 2025 |
||||||||||||
|
As Originally Reported |
Adjustments |
As Restated |
||||||||||
|
Non-cash loss on changes in fair value of warrant liabilities |
( |
) | ( |
) | ( |
) | ||||||
|
Non-cash loss on fair value of warrant liability in excess of proceeds at issuance |
( |
) | ( |
) | ||||||||
|
Net income (loss) from continuing operations |
( |
) | ( |
) | ( |
) | ||||||
|
Net loss |
( |
) | ( |
) | ( |
) | ||||||
|
Net loss attributable to common stockholders |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
|
Weighted-average shares of common stock used in computing net loss per share attributable to common stockholders (basic and diluted) |
||||||||||||
|
Basic and diluted net loss per share |
||||||||||||
|
Basic loss per share from continuing operations |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
|
Basic earnings per share from discontinued operations |
||||||||||||
|
Basic (loss) earnings per share attributable to common stockholders |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
The effects of the restatement on the consolidated statement of stockholders’ (deficit) equity are summarized in the following table:
|
For the Year Ended December 31, 2025 |
||||||||||||
|
As Originally Reported |
Adjustments |
As Restated |
||||||||||
|
Accumulated Deficit |
||||||||||||
|
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
|
Balance at December 31, 2025 |
( |
) | ( |
) | ( |
) | ||||||
|
For the Year Ended December 31, 2025 |
||||||||||||
|
As Originally Reported |
Adjustments |
As Restated |
||||||||||
|
Total Stockholders' Equity (Deficit) |
||||||||||||
|
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
|
Balance at December 31, 2025 |
( |
) | ( |
) | ( |
) | ||||||
The effects of the restatement on the consolidated statement of cash flows are summarized in the following table:
|
For the Year Ended December 31, 2025 |
||||||||||||
|
As Originally Reported |
Adjustments |
As Restated |
||||||||||
|
Operating activities: |
||||||||||||
|
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
|
Non-cash loss on changes in fair value of warrant liabilities |
||||||||||||
|
Non-cash loss on fair value of warrant liabilities in excess of proceeds at issuance |
||||||||||||
NOTE 4. FAIR VALUE MEASUREMENTS
The following tables present the Company’s financial instruments measured at fair value on a recurring basis as of December 31, 2025 and 2024 (in thousands):
|
Fair Value Measurements Using |
||||||||||||||||
|
Quoted |
||||||||||||||||
|
Prices in |
||||||||||||||||
|
Active |
||||||||||||||||
|
Markets |
Significant |
|||||||||||||||
|
for |
Other |
Significant |
||||||||||||||
|
As of |
Identical |
Observable |
Unobservable |
|||||||||||||
|
December |
Items |
Inputs |
Inputs |
|||||||||||||
|
31, 2025 |
(Level 1) |
(Level 2) |
(Level 3) |
|||||||||||||
|
Assets |
||||||||||||||||
|
Restricted cash held as a certificate of deposit |
$ | $ | $ | $ | ||||||||||||
|
Liabilities |
||||||||||||||||
|
Warrant liability |
$ | $ | $ | $ | ||||||||||||
|
Fair Value Measurements Using |
||||||||||||||||
|
Quoted |
||||||||||||||||
|
Prices in |
||||||||||||||||
|
Active |
||||||||||||||||
|
Markets |
Significant |
|||||||||||||||
|
for |
Other |
Significant |
||||||||||||||
|
As of |
Identical |
Observable |
Unobservable |
|||||||||||||
|
December |
Items |
Inputs |
Inputs |
|||||||||||||
|
31, 2024 |
(Level 1) |
(Level 2) |
(Level 3) |
|||||||||||||
|
Assets |
||||||||||||||||
|
Restricted cash held as a certificate of deposit |
$ | $ | $ | $ | ||||||||||||
The Company’s restricted cash held as a deposit is classified within Level 1 of the fair value hierarchy because it is valued using quoted market prices in active markets, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency.
The warrant liability is measured at fair value based on the intrinsic value of the warrants, which is determined using the quoted market price of the Company’s common stock at the measurement date. Because the warrants themselves are not actively traded and the valuation relies on observable market inputs other than quoted prices for identical instruments, the liability is classified within Level 2 of the fair value hierarchy.
Black Scholes Valuation Models and Assumptions
The Company utilizes a Black Scholes model for various valuations as outlined throughout this report. The following tables summarize the assumptions utilized for valuations impacting results for the periods reported.
Warrant Liabilities
Certain of the Company’s warrants were subject to stockholder approval upon issuance or amendment and prior to exercise. Warrants requiring stockholder approval are recorded as a liability at fair value upon issuance or amendment and continue to be recorded as a liability at fair value at each reporting date until stockholder approval occurs at which time they are transferred to stockholders’ equity at their fair value on the date of approval.
For warrants with substantive exercise prices, fair value is determined using a Black-Scholes option pricing model as outlined below. Pre-funded warrants with a nominal exercise price are considered to be substantially intrinsic value instruments, as the exercise price is de minimis relative to the fair value of the underlying common stock. Accordingly, the fair value of such pre-funded warrants is based on the market price of the Company’s common stock less the nominal exercise price. See Note 10, “Common Stock Warrants” for additional information and the definitions of the Company’s warrants.
|
December 2023 Warrants |
||||
|
Measurement event |
Stockholder Approval |
|||
|
Date |
May 28, 2024 |
|||
|
Total Value (in millions) |
$ | |||
|
Gain (Loss) (in thousands) |
$ | ( |
) | |
|
Assumptions: |
||||
|
Exercise price |
$ | |||
|
Market price |
$ | |||
|
Volatility |
% | |||
|
Risk-free rate |
% | |||
|
Dividend yield |
% | |||
|
Term (years) |
||||
|
March |
March |
|||||||
|
2024 |
2024 |
|||||||
|
Warrant |
Warrant |
|||||||
|
Measurement event |
Reporting Date |
Stockholder Approval |
||||||
|
Date |
March 31, 2024 |
May 28, 2024 |
||||||
|
Total Value (in millions) |
$ | $ | ||||||
|
Gain (Loss) (in thousands) |
$ | $ | ||||||
|
Assumptions: |
||||||||
|
Exercise price |
$ | $ | ||||||
|
Market price |
$ | $ | ||||||
|
Volatility |
% | % | ||||||
|
Risk-free rate |
% | % | ||||||
|
Dividend yield |
% | % | ||||||
|
Term (years) |
||||||||
Warrant Modifications
Amendments to warrant terms are recorded as a non-cash gain (or loss) on modification of common stock warrants. The gain or loss represents the decrease or increase in the fair value of the amended warrants when comparing the value immediately before and after amendment using the Black Scholes option pricing model. Fair value was determined using a Black Scholes model as outlined below.
|
September 2022, November 2022, and May 2023 Warrants |
||||||||||||
|
Measurement event |
Prior to amendment |
After amendment |
||||||||||
|
Date |
June 14, 2024 |
June 14, 2024 |
||||||||||
|
Total Value (in thousands) |
$ | $ | ||||||||||
|
Loss (in thousands) |
not applicable |
$ | ||||||||||
|
Assumptions: |
||||||||||||
|
Exercise price |
$ |
- |
$ |
|||||||||
|
Market price |
$ |
$ |
||||||||||
|
Volatility |
% |
% |
||||||||||
|
Risk-free rate |
- |
% |
- |
% |
||||||||
|
Dividend yield |
% |
% |
||||||||||
|
Term (years) |
- | - |
% |
|||||||||
Warrant Down Round Feature Adjustment
Terms of the Company’s outstanding 2024 July Warrants included a down round feature adjustment whereby the applicable exercise price was automatically adjusted (see Note 8, “Financing Activities”). When the exercise price was adjusted, the Company recorded a deemed dividend as a reduction to income available to common stockholders. In accordance with ASC 820, the deemed dividend is measured as the difference between (1) the fair value of the 2024 July Warrants immediately prior to the conversion price adjustment and (2) the fair value of the 2024 July Warrants immediately after the conversion price adjustment. Fair value was determined using a Black Scholes model, as outlined below.
|
Series F-1 |
||||||||
|
Measurement event |
Prior to adjustment |
After adjustment |
||||||
|
Date |
September 27, 2024 |
September 27, 2024 |
||||||
|
Total value (in millions) |
$ | $ | ||||||
|
Deemed dividend (in millions) |
not applicable |
$ | ||||||
|
Assumptions: |
||||||||
|
Exercise price |
$ | $ | ||||||
|
Market price |
$ | $ | ||||||
|
Volatility |
% | % | ||||||
|
Risk-free rate |
% | % | ||||||
|
Dividend yield |
% | % | ||||||
|
Term (in years) |
||||||||
|
Series F-2 |
||||||||
|
Measurement event |
Prior to adjustment |
After adjustment |
||||||
|
Date |
September 27, 2024 |
September 27, 2024 |
||||||
|
Total value (in millions) |
$ | $ | ||||||
|
Deemed dividend (in millions) |
not applicable |
$ | ||||||
|
Assumptions: |
||||||||
|
Exercise price |
$ | $ | ||||||
|
Market price |
$ | $ | ||||||
|
Volatility |
% | % | ||||||
|
Risk-free rate |
% | % | ||||||
|
Dividend yield |
% | % | ||||||
|
Term (in years) |
||||||||
|
Series F-3 |
||||||||
|
Measurement event |
Prior to adjustment |
After adjustment |
||||||
|
Date |
September 27, 2024 |
September 27, 2024 |
||||||
|
Total value (in millions) |
$ | $ | ||||||
|
Deemed dividend (in millions) |
not applicable |
|||||||
|
Assumptions: |
||||||||
|
Exercise price |
$ | $ | ||||||
|
Market price |
$ | $ | ||||||
|
Volatility |
% | % | ||||||
|
Risk-free rate |
% | % | ||||||
|
Dividend yield |
% | % | ||||||
|
Term (in years) |
||||||||
Preferred Stock Conversion Price Adjustments
Terms of the Company’s outstanding Series C Preferred Stock historically included a ratchet whereby the applicable conversion price could be adjusted (see Note 11, “Stockholders’ Deficit”). The applicable ratchet provisions of the Company’s outstanding Preferred Stock terminated during the year ended December 31, 2024. Prior to its termination, when a conversion price for outstanding Preferred Stock was adjusted under the ratchet, the Company recorded a deemed dividend as a reduction to income available to common stockholders. In accordance with ASC 820, the deemed dividend is measured as the difference between (1) the fair value of the Preferred Stock immediately prior to the conversion price adjustment (but without the ratchet anti-dilution protection feature) and (2) the fair value of the Preferred Stock immediately after the conversion price adjustment (but without the ratchet anti-dilution protection feature). Fair value was determined using a Black Scholes model as outlined below.
|
Series C Preferred Stock |
||||||||
|
Measurement event |
Prior to ratchet |
After ratchet |
||||||
|
Date |
March 24, 2024 |
March 24, 2024 |
||||||
|
Total value (a) (in millions) |
$ | $ | ||||||
|
Deemed dividend (in millions) |
not applicable |
$ | ||||||
|
Assumptions: |
||||||||
|
Exercise price |
$ | $ | ||||||
|
Market price |
$ | $ | ||||||
|
Volatility |
% | % | ||||||
|
Risk-free rate |
% | % | ||||||
|
Dividend yield |
% | % | ||||||
|
Term (in years) |
||||||||
|
(a) |
|
Derivative liability Issued in Conjunction with Unsecured Convertible Notes
Upon issuance in March 2024, the Unsecured Convertible Notes contained a lender’s conversion option which represented an embedded call option requiring bifurcation as an embedded derivative liability at fair value (see Note 9, “Convertible Notes” for additional discussion). Fair value was determined using a Black Scholes model as outlined below.
|
Unsecured Convertible Notes derivative |
Unsecured Convertible Notes derivative |
|||||||
|
Measurement event |
Issuance |
Shareholder Approval |
||||||
|
Date |
March 25, 2024 |
May 28, 2024 |
||||||
|
Total value (in millions) |
$ | $ | ||||||
|
Gain (Loss) (in thousands) |
not applicable |
$ | ( |
) | ||||
|
Assumptions: |
||||||||
|
Exercise price |
$ | $ | ||||||
|
Market price |
$ | $ | ||||||
|
Volatility |
% | % | ||||||
|
Risk-free rate |
% | % | ||||||
|
Dividend yield |
% | % | ||||||
|
Term (years) |
||||||||
NOTE 5. PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consisted of the following (in thousands):
|
As of December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
Prepaid insurance |
$ | $ | ||||||
|
Deferred financing costs |
||||||||
|
Other |
||||||||
|
Total prepaid expenses and other current assets |
$ | $ | ||||||
NOTE 6. ACCRUED LIABILITIES
Accrued liabilities consisted of the following (in thousands):
|
As of December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
Taxes |
$ | $ | ||||||
|
Interest on Unsecured Convertible Notes |
||||||||
|
Employee payroll and benefits |
||||||||
|
Other |
||||||||
|
Total accrued liabilities |
$ | $ | ||||||
NOTE 7. COMMITMENTS AND CONTINGENCIES
Indemnification Agreements
As permitted under Delaware law and in accordance with its bylaws, the Company indemnifies its officers and directors for certain events or occurrences while the officer or director is or was serving at the Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum amount of potential future indemnification is unlimited; however, the Company has a director and officer insurance policy that limits its exposure and may enable it to recover a portion of any future payments. The Company believes the fair value of these indemnification agreements is minimal. Accordingly, it has not recorded any liabilities for these agreements as of December 31, 2025 or December 31, 2024.
In the normal course of business, the Company provides indemnification of varying scope under its agreements with other entities, typically its suppliers and others, including in connection with capital raises transactions. Additionally, the Company provided for certain indemnification in conjunction with the Avenova Asset Divestiture (see Note 14, “Avenova Asset Divestiture and Bridge Loan”). Pursuant to these agreements, it generally indemnifies, holds harmless, and agrees to reimburse the indemnified parties for losses suffered or incurred by the indemnified parties in connection with the use or testing of its products or product candidates or with any U.S. patent or any copyright or other intellectual property infringement claims by any third party with respect to its products. The term of these indemnification agreements is generally perpetual. The potential future payments the Company could be required to make under these indemnification agreements are unlimited. Historically, costs related to these indemnification provisions have been immaterial. The Company also maintains various liability insurance policies that limit its exposure. As a result, it believes the fair value of these indemnification agreements is minimal. Accordingly, the Company has not recorded any liabilities for these agreements as of December 31, 2025 or December 31, 2024.
Legal Matters
From time to time, the Company is subject to various legal proceedings, as well as demands, claims and threatened litigation, which arise in the normal course of our business. The ultimate outcome of any litigation or other legal dispute is uncertain. When a loss related to a legal proceeding or claim is probable and reasonably estimable, the Company accrues its best estimate for the ultimate resolution of the matter. If one or more legal matters are resolved against the Company in a reporting period for an amount above expectations, the Company’s financial condition and operating results for that period may be adversely affected. As of December 31, 2025 and December 31, 2024, there were no legal matters that, in the opinion of management, would ultimately result in liability that would have a material adverse effect on the Company’s financial position, results of operations or cash flows. Any outcome, whether favorable or unfavorable, may materially and adversely affect the Company due to legal costs and expenses, diversion of management attention and other factors. The Company cannot provide assurance that additional contingencies of a legal nature or contingencies having legal aspects will not be asserted against it in the future, and these matters could relate to prior, current, or future transactions or events.
Leases
The Company leases office space for its corporate headquarters located in Emeryville, California. The current lease term expires on July 31, 2027. The Company recorded $
Lease costs for the years ended December 31, 2025 and 2024 were as follows (in thousands):
|
For the years ended |
||||||||
|
2025 |
2024 |
|||||||
|
Operating lease – expense |
$ |
$ | ||||||
|
Operating lease – included in operating cash flow |
||||||||
The Company has measured its operating lease liabilities as the present value of minimum lease payments using its incremental borrowing rate over the remaining term for each operating lease. The weighted average remaining lease term and the weighted average discount rate for operating leases from continuing operations are summarized as follows:
|
For the years ended |
||||||||
|
2025 |
2024 |
|||||||
|
Weighted-average remaining lease term (in years) |
||||||||
|
Weighted-average discount rate |
% |
% |
||||||
Future lease payments under non-cancelable leases as of December 31, 2025 were as follows (in thousands):
|
2026 |
||||
|
2027 |
||||
|
Total future minimum lease payments |
||||
|
Less: Imputed interest |
( |
) |
||
|
Total |
$ | |||
|
Reported as: |
||||
|
Operating lease liability |
$ | |||
|
Operating lease liability- non-current |
||||
|
Total |
$ |
NOTE 8. FINANCING ACTIVITIES
October 2025 Pre-Funded Warrants
On October 16, 2025, the Company issued and sold pre-funded warrants (the "October 2025 Pre-Funded Warrants") to purchase an aggregate of
The October 2025 Pre-Funded Warrants were classified as a liability under ASC 815 from issuance through the receipt of stockholder approval subsequent to December 31, 2025, on March 12, 2026. The issuance-date fair value of the warrants exceeded the cash proceeds received, resulting in the recognition of a non-cash loss on fair value of warrant liability in excess of proceeds at issuance of $123.2 million during the year ended December 31, 2025. See Note 10, "Common Stock Warrants and Warrant Liabilities," for additional information.
2025 Preferred Stock Purchase Agreement
On August 19, 2025, the Company entered into a securities purchase agreement (the “2025 Preferred Stock Purchase Agreement”) that provides for the Company to sell in a private placement (i) an aggregate of
The purchase of the
Since the Common Stock is currently listed on the NYSE American, and among these requirements are Section 713(a) and (b) of the NYSE American Company Guide. Section 713(a) of the Company Guide requires stockholder approval in connection with any transaction, other than a public offering, involving the sale, issuance, or potential issuance, of common stock or securities convertible into common stock, equal to 20.0% or more of presently outstanding stock for less than the greater of book or market value. Section 713(b) of the Company Guide requires stockholder approval of a transaction, other than a public offering, involving the sale, issuance or potential issuance by an issuer of common stock (or securities convertible into, or exercisable for, common stock) when the issuance or potential issuance of additional shares may result in a change of control of the issuer. As a result of the significant number of shares of Common Stock that may be issued upon the future conversion of the Series D Preferred Stock and Series E Preferred Stock compared to the currently issued and outstanding shares of Common Stock as provided above, the Company was required to obtain stockholder approval in accordance with the Company Guide Rule 713(a) and Rule 713(b) for the future conversion of the Series D Preferred Stock and the Series E Preferred Stock (the “Conversion Approval”) which the Company received in October 2025.
In October 2025, after the Conversion Approval, each share of Series D Preferred Stock automatically converted into
On October 16, 2025, after the Conversion Approval, pursuant to the 2025 Preferred Stock Purchase Agreement, the Company filed the certificate of designations relating to the Series E Preferred Stock and issued
2025 Warrant Exchange and Issuance of Series F Preferred Stock
On August 19, 2025, simultaneous with the signing of the 2025 Preferred Stock Purchase Agreement, the Company entered into warrant exchange agreements (the “Series F Agreements”) with each of Anson Investments Master Fund LP, Hudson Bay Capital Management LP and Armistice Capital, LLC (collectively, the “Series F Holders”). The Series F Agreements provide for the irrevocable surrender and cancellation of all warrants beneficially owned by the Series F Holders, in exchange for the Company issuing (i) an aggregate of
Because the book value of the Common Stock Warrants cancelled in conjunction with the Series F Agreements exceeded the total cash payment made and carry value of the Series F Preferred Stock issued, the Company recorded a deemed capital contribution of $
2024 Public Offering
On July 26, 2024, the Company entered into an underwriting agreement with Ladenburg Thalmann & Co., Inc., as the sole underwriter (the “Underwriter”), relating to the issuance and sale in a public offering of: (i)
The Series F-1 Warrants had an exercise price of $
The July 2024 Warrants include a down round feature adjustment where the exercise price was automatically reset to a price equal to the lesser of (i) the then exercise price and (ii)
The exercise price and number of shares of common stock issuable upon exercise of the July 2024 Warrants is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting the common stock and the exercise price. Subject to limited exceptions, a holder may not exercise any portion of its July 2024 Warrants to the extent that the holder would beneficially own more than
In addition, the Company granted the Underwriter a
The Underwriter partially exercised this option on July 26, 2024, for (i)
The 2024 Public Offering closed on July 29, 2024, and the Company received gross proceeds of $
2024 Warrant Reprice Transaction
In June 2024, the Company entered into a warrant reprice transaction (the “2024 Warrant Reprice Transaction”) with certain existing holders of (i) warrants issued in September 2022 to purchase common stock, (ii) Series A-1 warrants issued in November 2022 to purchase common stock, (iii) Series B-1 Warrants issued in May 2023 to purchase common stock, and (iv) Series B-2 Warrants issued in May 2023 to purchase common stock (collectively (i) through (iv), the “Participant Warrants”). The participants agreed to exercise a portion of their Participant Warrants at a reduced exercise price of $
The Company also issued participants in the 2024 Warrant Reprice Transaction a new June 2024 Warrant to purchase a number of shares of common stock equal to 100% of the shares of common stock exercised. The June 2024 Warrants are substantially similar to the Participant Warrants, except that the June 2024 Warrants will (i) be initially exercisable on the six-month anniversary of the date of issuance; (ii) have an exercise price of $
The Company incurred total issuance costs of $
NOTE 9. CONVERTIBLE NOTES
Unsecured Convertible Notes
On March 24, 2024, in connection with completing certain required conditions to close the DERMAdoctor Divestiture (see Note 16, “DERMAdoctor Divestiture”), the Company and the holders of the Secured Convertible Notes (as defined below) entered into a First Amendment (the “First Amendment”) to the Company’s Security Agreement, dated April 27, 2023 (the “Security Agreement”), to remove all of the DERMAdoctor membership units and any assets of DERMAdoctor as collateral for the Company’s obligations pursuant to the Secured Convertible Notes and for DERMAdoctor to be removed as a party to the Security Agreement, and a Consent and Release (the “Subsidiary Guarantee Consent”), to terminate the Subsidiary Guarantee, dated April 7, 2023 (the “Subsidiary Guarantee”) (collectively, the “2024 Subsidiary Guarantee Termination”).
The Company issued $
Upon issuance in March 2024, the lender’s conversion option under the Unsecured Convertible Notes represented an embedded call option requiring bifurcation as an embedded derivative liability because the common stock underlying the option required stockholder approval before the option could be exercised. The fair value of the embedded derivative was determined to be $
Upon issuance, the discount to the note recorded for the embedded derivative liability and debt issuance costs were amortized to interest expense using the effective interest rate method over the term of the Unsecured Convertible Notes, assuming that the Unsecured Convertible Notes will be redeemed for cash of $
In December 2025, certain holders elected to convert $
As of December 31, 2025, the remaining $
Secured Convertible Notes
In May 2023, the Company issued $
Beginning June 1, 2023, the Company was required to start making a monthly redemption of 1/18th of the original principal amount of the Secured Convertible Notes. Each monthly redemption reduced the outstanding principle of the Secured Convertible Note by $
The Secured Convertible Notes also provided for a redemption equal to up to
The discounts and debt issuance costs were amortized to interest expense using the effective interest rate method over the term of the Secured Convertible Notes. The effective interest rate on the Secured Convertible Notes was
NOTE 10. COMMON STOCK WARRANTS AND WARRANT LIABILITIES
Summary of Outstanding Common Stock Warrants and Related Activity (after giving retroactive effect to a 1-for-5 reverse stock split that became effective February 20, 2026)
|
July 2020 Warrants |
TLF Warrants |
November 2021 Warrants |
September 2022 Warrants |
November 2022 A-1 Warrants |
December 2023 Warrants |
June 2024 Warrants |
July 2024 Pre-Funded Warrants |
July 2024 Series F-1 Warrants |
July 2024 Series F-2 Warrants |
July 2024 Series F-3 Warrants |
October 2025 Pre-Funded Warrants (As Restated) |
Other Warrants |
Total Warrants (As Restated) |
|||||||||||||||||||||||||||||||||||||||||||
|
Outstanding at December 31, 2023 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Warrants granted |
- | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Pre-funded Warrants granted |
- | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
|
Warrants exercised |
( |
) | ( |
) | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||
|
Pre-funded Warrants exercised |
- | - | - | - | - | - | - | ( |
) | - | - | - | - | ( |
) | |||||||||||||||||||||||||||||||||||||||||
|
Warrants expired |
( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Outstanding at December 31, 2024 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Warrants granted |
- | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Pre-funded Warrants granted |
- | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
|
Warrants exercised |
( |
) | - | ( |
) | ( |
) | ( |
) | - | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||
|
Warrants expired |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||||||
|
Warrants exchanged pursuant to Series F Agreements |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||
|
Warrants repurchased |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||||||
|
Outstanding at December 31, 2025 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Weighted Average Exercise Price at December 31, 2025 |
$ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||
|
Expiration Date |
|
|
|
|
|
|
|
|
do not expire |
|||||||||||||||||||||||||||||||||||||||||||||||
The total number of outstanding warrants as of December 31, 2025 was 1,098,239. However, the
October 2025 Pre-Funded Warrants
In October 2025, the Company issued and sold pre-funded warrants (the "October 2025 Pre-Funded Warrants") to purchase an aggregate of
In accordance with ASC 815, the October 2025 Pre-Funded Warrants were initially classified as a liability from the date of issuance and remained classified as a liability as of December 31, 2025 because stockholder approval was required before they could be exercised. The liability is measured at fair value at each reporting date based on the intrinsic value of the October 2025 Pre-Funded Warrants, determined as the quoted market price of the Company's Common Stock less the per-share exercise price, multiplied by the number of common shares issuable upon exercise of the October 2025 Pre-Funded Warrants.
July 2024 Pre-Funded Warrants
In July 2024, in conjunction with the 2024 Public Offering, the Company issued
Series F Warrants
In July 2024, in conjunction with the 2024 Public Offering, the Company issued new July 2024 Warrants.
|
● |
Series F-1 Warrants exercisable for |
|
|
● |
Series F-2 Warrants exercisable for |
|
|
● |
Series F-3 Warrants exercisable for |
The July 2024 Warrants were classified as a component of permanent equity. The July 2024 Warrants down round feature adjustment was triggered on September 27, 2024, resulting in a reduced exercise price of $
In March 2025, the Company entered into three (3) separate confidential settlement and release agreements (collectively, the “Settlement Agreements”) with each of Sabby Volatility Warrant Master Fund, Ltd. (“Sabby”), Bigger Capital Fund, LP (“Bigger”) and District 2 Capital Fund LP (“District 2,” and together with Sabby and Bigger, the “Warrant Holders”) to settle certain disputed matters relating to the July 2024 Warrants held by each of the Warrant Holders. In connection with the Settlement Agreements, Series F-3 Warrants were exercised for
The Settlement Agreements include a “most favored nations” provision for each of the Warrant Holders that would increase the amount paid to the Warrant Holders if any other holder of the Company’s common stock receives a higher amount per underlying warrant, as well as a mutual release of all claims by the Company and the Warrant Holders against each other, without any admission of liability by either party.
During the year ended December 31, 2025, the Company repurchased additional Series F-1 Warrants exercisable for
On August 19, 2025, Series F-1 Warrants exercisable for
June 2024 Warrants
In June 2024, in conjunction with the 2024 Warrant Reprice Transaction, the Company issued new common stock purchase warrants (the “June 2024 Warrants”) exercisable for
On August 19, 2025, June 2024 Warrants exercisable for
March 2024 Warrant
In March 2024, the Company executed the First Amendment and Subsidiary Guarantee Consent as part of the 2024 Subsidiary Guarantee Termination with holders of the Secured Convertible Notes (see Note 9, “Convertible Notes”) in order to satisfy a closing condition for the DERMAdoctor Divestiture (see Note 16, “DERMAdoctor Divestiture”). In exchange for the consent of each holder, the option, at the holder’s election, to receive upon the closing of the DERMAdoctor Divestiture either, a new common stock warrant (the “March 2024 Warrant”), or a new unsecured convertible note (see Note 9, “Convertible Notes”). One holder elected the option to receive a March 2024 Warrant exercisable for
The March 2024 Warrant was initially classified as a liability from the date of issuance until Company stockholder approval on May 28, 2024, at which time it was reclassified to equity.
On August 19, 2025, all remaining March 2024 Warrants exercisable for
December 2023 Warrants
In December 2023, the Company issued new common stock purchase warrants (the “December 2023 Warrants”) exercisable for
The December 2023 Warrants were initially classified as liabilities from the date of issuance until Company stockholder approval was received on May 28, 2024, at which time it was reclassified to equity.
On August 19, 2025, December 2023 Warrants exercisable for
During the year ended December 31, 2025, the Company repurchased December 2023 Warrants exercisable for
May 2023 Warrants
In May 2023, the Company issued the following new common stock purchase warrants (collectively, the “May 2023 Warrants”):
|
● |
May 2023 Series B-1 Warrants exercisable for |
|
● |
May 2023 Series B-2 Warrants exercisable for |
In December 2023, the Company amended certain May 2023 Warrants to reduce their exercise prices to $
November 2022 Warrants
In November 2022, the Company issued the following common stock purchase warrants (collectively, the “November 2022 Warrants”):
|
● |
November 2022 Series A-1 Warrants exercisable for |
|
● |
November 2022 Series A-2 Warrants exercisable for |
In May 2023, the Company amended certain November 2022 Warrants to reduce their exercise prices from $
September 2022 Warrants
In September 2022, the Company issued new common stock purchase warrants (the “September 2022 Warrants”) exercisable for
In May 2023, the Company amended certain September 2022 Warrants exercisable for
November 2021 Warrants
In November 2021, the Company issued new common stock purchase warrants (the “November 2021 Warrants”) exercisable for
In September 2022, the Company amended all November 2021 Warrants to reduce their exercise prices from $
July 2020 Warrants
In July 2020, the Company issued new common stock purchase warrants (the “July 2020 Warrants”) exercisable for
In September 2022, the Company amended certain July 2020 Warrants exercisable for
Summary of Common Stock Warrant Liabilities
The following roll-forward presents the Company’s warrant liabilities measured at fair value as of December 31, 2025 and 2024 (in thousands). The October 2025 Pre-Funded Warrants, which have a nominal exercise price, were recorded based on the market price of the Company’s common stock less the nominal exercise price upon issuance and at December 31, 2025 (as restated).
|
Warrant liabilities as of December 31, 2024 |
$ | |||
|
Fair value of October 2025 Pre-Funded Warrants upon issuance |
||||
|
Increase in fair value of October 2025 Pre-Funded Warrants during period |
||||
|
Warrant liabilities as of December 31, 2025 (as restated) |
$ |
NOTE 11. STOCKHOLDERS' DEFICIT
Authorized Share Capital
Under the Company’s Amended and Restated Certificate of Incorporation, as amended, the Company is authorized to issue up to
Preferred Stock
There were four series of preferred stock of the Company outstanding during the year ended December 31, 2025 – the Series B Non-Voting Convertible Preferred Stock (“Series B Preferred Stock”), Series D Preferred Stock, Series E Preferred Stock and the Series F Voting Retractable Preferred Stock (“Series F Preferred Stock”). The rights and preferences of each are described below.
Series B Preferred Stock
The Company issued
The Series B Preferred Stock does not have any preemptive rights or a preference upon any liquidation, dissolution or winding-up of the Company. Each share of Series B Preferred Stock is convertible into $
Series D Preferred Stock
The Company issued
Series E Preferred Stock
The rights and preferences of the Series E Preferred Stock are identical to those of the Series D Preferred Stock described above except that conversion is at the option of the holder. In October 2025, each share of Series E Preferred Stock was converted into
Series F Preferred Stock
The Series F Preferred Stock is not convertible into Common Stock or any other equity instrument and has no dividend rights. The Series F Preferred Stock has voting rights similar to Common Stock with each share of Series F Preferred Stock representing the voting equivalent of approximately
The Series F Preferred Stock is redeemable at the option of the holder. Accordingly, until redemption election is made, the Series F Preferred Stock is classified as mezzanine equity (temporary equity) on the Company’s Consolidated Balance Sheet, between liabilities and stockholders’ equity, at its redemption value. The Company will not accrete the carrying value of the Series F Preferred Stock to its redemption amount since they are equivalent. In October 2025, the Company obtained the Conversion Approval and
Dividends
On August 26, 2025, the Special Transaction Committee of the Board of Director and the Company’s Board of Directors declared a special cash dividend of $
NOTE 12. STOCK-BASED COMPENSATION
Equity Compensation Plans
In October 2007, the Company adopted the 2007 Omnibus Incentive Plan (the “2007 Plan”) to provide for the grant of equity awards, such as stock options, unrestricted and restricted common stock, stock units, dividend equivalent rights, and stock appreciation rights to employees, directors and outside consultants, as determined by the Board. The 2007 Plan expired on March 15, 2017. Upon expiration, new awards cannot be issued pursuant to the 2007 Plan, but outstanding awards continue to be governed by its terms. Stock options granted under the 2007 Plan expire no later than ten years from the date of grant. All stock options outstanding under the 2007 Plan were fully vested as of December 31, 2025.
In March 2017, the Company adopted the 2017 Omnibus Incentive Plan (the “2017 Plan”), which was approved by stockholders on June 2, 2017, to provide for the grant of equity awards, such as nonqualified stock options (“NQSOs”), incentive stock options (“ISOs”), restricted stock, performance shares, stock appreciation rights (“SARs”), RSUs and other share-based awards to employees, directors, and consultants, as determined by the Board. The 2017 Plan does not affect awards previously granted under the 2007 Plan. Upon adoption, the 2017 Plan allowed for awards of up to
Under the terms of the 2017 Plan, the exercise price of NQSOs, ISOs and SARs may not be less than
Summary of Outstanding Equity Awards
The following table summarizes information about the Company’s stock options and RSUs outstanding at December 31, 2025, and activity during the year ended December 31, 2025 (in thousands except per share and years):
|
(in thousands, except years |
Awards* |
Weighted- Average Exercise Price* |
Weighted- Average Remaining Contractual Life (years) |
Aggregate Intrinsic Value |
||||||||||||
|
Outstanding at December 31, 2024 |
$ | $ | ||||||||||||||
|
Restricted stock units vested |
( |
) | ||||||||||||||
|
Restricted stock units granted |
||||||||||||||||
|
Options forfeited/cancelled |
(— | ) | ||||||||||||||
|
Outstanding at December 31, 2025 |
||||||||||||||||
|
Vested and expected to vest at December 31, 2025 |
||||||||||||||||
|
Vested and exercisable at December 31, 2025 |
— | |||||||||||||||
Aggregate intrinsic value is calculated as the difference between the closing market price of the Company’s common stock as quoted on the NYSE American and the exercise price of the underlying stock options as of the applicable measurement date for option awards that have an exercise price that is lower than the market price. There were no stock option awards exercised during the years ended December 31, 2025 or 2024.
As of December 31, 2025, the total unrecognized compensation cost related to unvested stock options and RSUs was approximately $
Equity Awards to Employees and Directors
The Company grants options to purchase common stock to its employees and directors at prices equal to or greater than the market value of the stock on the dates the options are granted. The Company has estimated the value of stock option awards as of the date of grant by applying the Black-Scholes option pricing model using the single-option valuation approach. The application of this valuation model involves assumptions that are judgmental and subjective in nature. See Note 2, “Summary of Significant Accounting Policies,” for a description of the accounting policies that the Company applied to value its stock-based awards.
During each of the years ended December 31, 2025 and 2024, the Company did not grant any stock options to employees and directors to purchase shares of the Company’s common stock.
Forfeitures are estimated at the time of grant and reduce compensation expense ratably over the vesting period. This estimate is adjusted periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate.
During each of the years ended December 31, 2025 and 2024, the Company granted
For the years ended December 31, 2025 and 2024, the Company recognized stock-based compensation expense of $
Stock-Based Awards to Non-Employees
The Company did not grant options or restricted stock to non-director non-employees during the years ended December 31, 2025 and 2024.
For the year ended December 31, 2024, the Company recognized stock-based compensation expense of $
Stock-Based Compensation Expense
Total stock-based compensation expense recognized for the years ended December 31, 2025 and 2024 was approximately $
Of these amounts, approximately $
For the year ended December 31, 2024, the remaining stock-based compensation expense relates to employees and non-employees associated with the Company’s discontinued operations. No stock-based compensation expense was recognized for employees or non-employees associated with discontinued operations during the year ended December 31, 2025.
The Company’s equity compensation plans are administered on a centralized, corporate basis and the related awards result in an increase to consolidated equity. Management determined that allocating stock-based compensation expense to discontinued operations components would not provide meaningful information to investors. Accordingly, stock-based compensation is presented within continuing operations in the Consolidated Financial Statements.
NOTE 13. EMPLOYEE BENEFIT PLAN
The Company has a 401(k) plan covering all eligible employees. The Company provides matching contributions equal to
NOTE 14. AVENOVA ASSET DIVESTITURE AND BRIDGE LOAN
On January 17, 2025, the Company completed the sale of its eyecare products sold under the Avenova brand and related assets (the “Avenova Assets”) to PRN Physician Recommended Nutriceuticals, LLC, a Delaware limited liability company (“PRN”), which constituted substantially all of the Company’s revenue generating and operating assets (the “Avenova Asset Divestiture”). The Avenova Asset Divestiture was consummated pursuant to the Asset Purchase Agreement, dated September 19, 2024, as amended by Amendment No. 1 to the Asset Purchase Agreement, dated November 5, 2024 (as so amended, the “Purchase Agreement”). The Purchase Agreement provided for, among other terms, a base purchase price of $
In accordance with the Purchase Agreement, at the closing of the Avenova Asset Divestiture the Company received the cash purchase price equal to $
In connection with the closing of the Avenova Asset Divestiture on January 17, 2025, the Company entered into a Transition Services Agreement, dated January 17, 2025 with PRN, pursuant to which the Company agreed to provide services to PRN with respect to specified accounting, marketing, sales, customer service, regulatory and operational support for a period of four (
The accounting requirements for reporting results related to the Avenova Assets as discontinued operations were met during the first quarter of 2025. Accordingly, the Consolidated Financial Statements and Notes to the Consolidated Financial Statements reflect the results related to the Avenova Assets as a discontinued operation for the periods presented.
In accordance with the provisions of ASC 205-20, the Company has separately reported the assets and liabilities of the discontinued operations in the Consolidated Balance Sheets. The assets and liabilities related to the Avenova Assets have been reflected as discontinued operations in the Consolidated Balance Sheets as of December 31, 2024, and consist of the following (in thousands):
|
As of December 31, 2024 |
||||
|
ASSETS |
||||
|
Current assets: |
||||
|
Accounts receivable, net |
$ | |||
|
Inventory, net |
||||
|
Prepaid expenses and other current assets |
||||
|
Total current assets, discontinued operations |
||||
|
Property and equipment, net, discontinued operations |
||||
|
Total assets, discontinued operations |
$ | |||
|
LIABILITIES |
||||
|
Liabilities: |
||||
|
Current liabilities: |
||||
|
Accounts payable |
$ | |||
|
Accrued liabilities |
||||
|
Total current liabilities, discontinued operations |
$ | |||
In accordance with the provisions of ASC 205-20, the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the Consolidated Statements of Operations. Results related to the Avenova Asset for the years ended December 31, 2025 and 2024 have been reflected as discontinued operations in the Consolidated Statements of Operations and consist of the following (in thousands):
|
For the years ended December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
Net sales |
$ | $ | ||||||
|
Cost of goods sold |
||||||||
|
Gross profit |
||||||||
|
Operating expenses: |
||||||||
|
Research and development |
||||||||
|
Sales and marketing |
||||||||
|
Total operating expenses |
||||||||
|
Operating income |
||||||||
|
Gain on divestiture |
||||||||
|
Net income from discontinued operations before income taxes |
||||||||
|
Provision for income taxes |
||||||||
|
Net income from discontinued operations, net of taxes |
$ | $ | ||||||
In accordance with the provisions of ASC 205-20, the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the Consolidated Statements of Cash Flows. Results related to the Avenova Asset for the years ended December 31, 2025 and 2024 have been reflected as discontinued operations in the Consolidated Statements of Cash Flows and consist of the following (in thousands):
|
For the years ended December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
Operating activities: |
||||||||
|
Net income from discontinued operations, net of taxes |
$ | $ | ||||||
|
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
|
Non-cash gain on divestiture |
( |
) | ||||||
|
Changes in operating assets and liabilities: |
||||||||
|
Accounts receivable |
( |
) | ||||||
|
Inventory |
( |
) | ||||||
|
Prepaid expenses and other current assets |
( |
) | ||||||
|
Other assets |
||||||||
|
Accounts payable and accrued liabilities |
( |
) | ||||||
|
Net cash (used in) provided by operating activities, discontinued operations |
( |
) | ||||||
|
Investing activities: |
||||||||
|
Proceeds from divestiture |
||||||||
|
Net cash provided by investing activities, discontinued operations |
||||||||
|
Net increase in cash and cash equivalents, discontinued operations |
$ | $ | ||||||
NOTE 15. PHASEONE DIVESTITURE
On January 3, 2025, the Company entered into a Trademark Acquisition Agreement with its distributor, PhaseOne Health LLC (“PhaseOne”), that provided for the purchase by PhaseOne of two of the Company’s wound care trademarks (the “Wound Care Trademarks”) for a purchase price of $
The accounting requirements for reporting results related to the Wound Care Trademarks as discontinued operations were met during the first quarter of 2025. Accordingly, the Consolidated Financial Statements and Notes to Consolidated Financial Statements reflect the results related to the Wound Care Trademarks as a discontinued operation for the years presented.
In accordance with the provisions of ASC 205-20, the Company has separately reported the assets and liabilities of discontinued operations in the Consolidated Balance Sheets. The assets and liabilities related to the Wound Care Trademarks have been reflected as discontinued operations in the Consolidated Balance Sheets as of December 31, 2024, and consist of the following (in thousands):
|
As of December 31, 2024 |
||||
|
ASSETS |
||||
|
Current assets: |
||||
|
Accounts receivable, net |
$ | |||
|
Inventory |
||||
|
Total current assets, discontinued operations |
$ | |||
|
LIABILITIES |
||||
|
Liabilities: |
||||
|
Current liabilities: |
||||
|
Accounts payable |
$ | |||
|
Total current liabilities, discontinued operations |
$ | |||
In accordance with the provisions of ASC 205-20, the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the Consolidated Statements of Operations. Results related to the Wound Care Trademarks for the years ended December 31, 2025 and 2024 have been reflected as discontinued operations in the Consolidated Statements of Operations and consist of the following (in thousands):
|
For the years ended December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
Net sales |
$ | $ | ||||||
|
Cost of goods sold |
||||||||
|
Gross profit |
||||||||
|
Operating expenses: |
||||||||
|
Research and development |
||||||||
|
Total operating expenses |
||||||||
|
Operating income |
||||||||
|
Gain on divestiture |
||||||||
|
Net income from discontinued operations before income taxes |
||||||||
|
Provision for income taxes |
||||||||
|
Net income from discontinued operations, net of taxes |
$ | $ | ||||||
In accordance with the provisions of ASC 205-20, the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the Consolidated Statements of Cash Flows. Results related to the Wound Care Trademarks for the years ended December 31, 2025 and 2024 have been reflected as discontinued operations in the Consolidated Statements of Cash Flows and consist of the following (in thousands):
|
For the years ended December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
Operating activities: |
||||||||
|
Net income from discontinued operations |
$ | $ | ||||||
|
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
|
Non-cash gain on divestiture |
( |
) | ||||||
|
Changes in operating assets and liabilities: |
||||||||
|
Accounts receivable |
||||||||
|
Inventory |
||||||||
|
Accounts payable and accrued liabilities |
( |
) | ( |
) | ||||
|
Net cash provided by operating activities, discontinued operations |
||||||||
|
Investing activities: |
||||||||
|
Proceeds from divestiture |
||||||||
|
Net cash provided by investing activities, discontinued operations |
||||||||
|
Net increase in cash and cash equivalents, discontinued operations |
$ | $ | ||||||
NOTE 16. DERMADOCTOR DIVESTITURE
On March 12, 2024, the Company entered into an agreement to sell
Revision of Prior-Period Financial Statements
During the preparation of the Company’s consolidated financial statements for the year ended December 31, 2025, the Company identified an error in the presentation of the loss on the DERMAdoctor Divestiture and related divestiture proceeds in its previously issued consolidated financial statements for the year ended December 31, 2024. The loss on divestiture of approximately $
Results of DERMAdoctor’s operations
In accordance with the provisions of ASC 205-20, Presentation of Financial Statements: Discontinued Operations (“ASC 205-20”), the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the Consolidated Statements of Operations. The results of DERMAdoctor’s operations for the years ended December 31, 2025 and 2024 have been reflected as discontinued operations in the Consolidated Statements of Operations and consist of the following (in thousands):
|
For the years ended December 31, |
||||||||
|
2025 |
2024 (As Revised) |
|||||||
|
Net sales |
$ | $ | ||||||
|
Cost of goods sold |
||||||||
|
Gross profit |
||||||||
|
Operating expenses: |
||||||||
|
Research and development |
||||||||
|
Sales and marketing |
||||||||
|
General and administrative |
||||||||
|
Total operating expenses |
||||||||
|
Operating loss |
( |
) | ||||||
|
Loss on divestiture |
( |
) | ||||||
|
Net loss from discontinued operations |
$ | $ | ( |
) | ||||
In accordance with the provisions of ASC 205-20, the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the Consolidated Statements of Cash Flows. The results of DERMAdoctor for the years ended December 31, 2025 and 2024 have been reflected as discontinued operations in the Consolidated Statements of Cash Flows and consist of the following (in thousands):
|
For the years ended December 31, |
||||||||
|
2025 |
2024 (As Revised) |
|||||||
|
Operating activities: |
||||||||
|
Net loss from discontinued operations |
$ | $ | ( |
) | ||||
|
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
|
Non-cash loss on divestiture |
||||||||
|
Changes in operating assets and liabilities: |
||||||||
|
Accounts receivable |
( |
) | ||||||
|
Inventory |
||||||||
|
Prepaid expenses and other current assets |
( |
) | ||||||
|
Other assets |
||||||||
|
Accounts payable and accrued liabilities |
||||||||
|
Operating lease liabilities |
( |
) | ||||||
|
Net cash used in operating activities, discontinued operations |
( |
) | ||||||
|
Investing activities: |
||||||||
|
Proceeds from divestiture |
||||||||
|
Cash transferred to New Age Investments, LLC |
( |
) | ||||||
|
Net cash provided by investing activities, discontinued operations |
||||||||
|
Net increase in cash and cash equivalents, discontinued operations |
$ | $ | ||||||
NOTE 17. SUMMARY OF DISCONTINUED OPERATIONS
As part of the comprehensive realignment of the Company’s business during 2024 and 2025, the Company completed the Avenova Asset Divestiture, the PhaseOne Divestiture, and the DERMAdoctor Divestiture, and decided to exit its involvement in the China NeutroPhase product line. The historical financial results of these businesses are reflected as discontinued operations in the Consolidated Financial Statements included in this Annual Report.
The following tables summarize the amounts included in discontinued operations in the Consolidated Balance Sheets, Consolidated Statements of Operations and Consolidated Statements of Cash Flows and reconciles those amounts to the individual discontinued operations described in the notes to the Consolidated Financial Statements (in thousands):
|
For the year ended December 31, 2025 |
Avenova Asset Divestiture |
PhaseOne Divestiture |
DERMA doctor Divestiture |
China NeutroPhase product line |
Total |
|||||||||||||||
|
Net income, net of taxes |
$ | $ | $ | $ | $ | |||||||||||||||
|
Net increase in cash, cash equivalents and restricted cash |
||||||||||||||||||||
|
As of and for the year ended December 31, 2024 |
Avenova Asset Divestiture |
PhaseOne Divestiture |
DERMA doctor Divestiture |
China NeutroPhase product line |
Total |
|||||||||||||||
|
Current assets |
$ | $ | $ | $ | $ | |||||||||||||||
|
Other assets |
||||||||||||||||||||
|
Current liabilities |
||||||||||||||||||||
|
Net income (loss), net of taxes |
( |
) | ||||||||||||||||||
|
Net increase (decrease) in cash, cash equivalents and restricted cash |
( |
) | ||||||||||||||||||
Additional information regarding the Avenova Asset Divestiture, the PhaseOne Divestiture, and the DERMAdoctor Divestiture and related results from discontinued operations is provided in Note 14, “Avenova Asset Divestiture and Bridge Loan,” Note 15, “PhaseOne Divestiture,” and Note 16, “DERMAdoctor Divestiture,” respectively.
Following the PhaseOne Divestiture, the Company continued to manufacture wound care products domestically in the United States for export to China through its distribution relationship with Chongqing Pioneer Pharma Holdings Limited (“Pioneer”). In October 2025, as part of the Company’s strategic shift to operate as a digital asset treasury company, the Company decided to exit its involvement in the China NeutroPhase product line, which represented the Company’s remaining legacy wound care activity. The limited results of these activities are included in discontinued operations above.
NOTE 18. INCOME TAXES
For the years ended December 31, 2025 and 2024, loss before provision for income taxes consisted of the following (in thousands):
|
For the years ended December 31, |
||||||||
|
2025 (As Restated) |
2024 |
|||||||
|
United States |
$ | ( |
) |
$ | ( |
) |
||
|
International |
||||||||
| $ | ( |
) |
$ | ( |
) |
|||
For the years ended December 31, 2025 and 2024, the federal and state income tax provision is summarized as follows (in thousands):
|
For the years ended December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
Current |
||||||||
|
Federal |
$ | $ | ||||||
|
State |
||||||||
|
Foreign |
||||||||
|
Other |
||||||||
|
Total current tax expense |
$ | $ | ||||||
|
Deferred |
||||||||
|
Federal |
||||||||
|
State |
||||||||
|
Foreign |
||||||||
|
Other |
||||||||
|
Total deferred tax expense |
$ | $ | ||||||
|
Income tax provision |
$ | $ | ||||||
Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating losses and tax credit carryforwards.
For the year ended December 31, 2025, the Company recorded income tax expense of approximately $
The tax effects of significant items comprising the Company's deferred taxes as of December 31, 2025 and 2024 are as follows (in thousands):
|
For the years ended December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
Deferred tax assets: |
||||||||
|
Net operating losses |
$ | $ | ||||||
|
Stock options |
||||||||
|
Operating lease liabilities |
||||||||
|
Property and equipment |
||||||||
|
Accruals |
||||||||
|
Research and development credits |
||||||||
|
Other deferred tax assets |
||||||||
|
Total deferred tax assets |
||||||||
|
Deferred tax liabilities: |
||||||||
|
Operating lease right-of-use assets |
( |
) | ( |
) | ||||
|
Total deferred tax liabilities |
( |
) | ( |
) | ||||
|
Valuation allowance |
( |
) | ( |
) | ||||
|
Net deferred taxes |
$ | $ | ||||||
ASC 740, Income Taxes, requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on the Company's ability to generate sufficient taxable income within the carryforward period. Because of the Company's history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a valuation allowance.
The valuation allowance decreased by $
Net operating loss and tax credit carryforwards as of December 31, 2025, are as follows (in thousands):
|
Expiration |
|||||
|
Amount |
Years |
||||
|
Net operating losses, federal |
$ |
Does Not Expire |
|||
|
Net operating losses, state |
$ |
Beginning in 2045 |
|||
|
Tax credits, federal |
$ | ||||
|
Tax credits, state |
$ | ||||
A reconciliation of the beginning and ending balances of the unrecognized tax benefits during the below years are as follows (in thousands):
|
For the years ended December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
Unrecognized benefit - beginning of period |
$ | $ | ||||||
|
Change during the period |
( |
) | ||||||
|
Unrecognized benefit - end of period |
$ | $ | ||||||
The entire amount of the unrecognized tax benefits would not impact our effective tax rate if recognized. Accrued interest and penalties related to unrecognized tax benefits are classified as income tax expense and were immaterial for the years ended December 31, 2025 and 2024. The Company files income tax returns in the United States, California and Florida. Other jurisdictions are not significant. The tax years 2005 - 2024 (except 2007 and 2009) remain open in the federal, California and Florida jurisdictions. The Company is not currently under examination by income tax authorities in federal, state or other jurisdictions.
Differences between the statutory tax rate and the Company’s effective tax rate for the year ended December 31, 2025 is presented prospectively in accordance with ASU 2023-09 below (in thousands) (as restated):
|
US Federal Statutory Tax Rate |
$ | ( |
) | % | ||||
|
State and Local income taxes, net of federal income tax effect |
% | |||||||
|
Change in valuation allowance |
( |
) | % | |||||
|
Limitation of net operating losses and credits due to ownership change |
( |
%) | ||||||
|
Nontaxable or non-deductible items: |
||||||||
|
Warrant/equity expenses |
( |
%) | ||||||
|
Other |
( |
%) | ||||||
|
Total |
$ | % |
The effective tax rate of the Company's provision (benefit) for income taxes differs from the federal statutory rate as follows for the year ended December 31, 2024 (prior to the adoption of ASU 2023-09):
|
Statutory rate |
% | |
|
State tax |
% | |
|
Stock-based compensation expense |
( |
%) |
|
Change in valuation allowance |
( |
%) |
|
Warrant/equity expenses |
( |
%) |
|
Expiration of tax attributes |
( |
%) |
|
Total |
% |
In each year presented above, California comprised the majority of the amounts included in the “State and local income taxes, net of federal income tax effect” line in the rate reconciliation above.
Cash paid for income taxes (net of refunds) by jurisdiction during the year ended December 31, 2025 was as follows (in thousands) which is included in other expense, net as part of continuing operations in the Consolidated Statements of Operations:
|
California |
$ | |||
|
New Jersey |
||||
|
South Carolina |
||||
|
New York |
||||
|
Other |
||||
|
Total |
$ |
NOTE 19. RELATED PARTY TRANSACTIONS
R01 Fund LP (“R01”), a significant stockholder of the Company, has provided certain consulting services to the Company through one of its employees. During the year ended December 31, 2025, the Company engaged this individual directly to provide consulting services related to general corporate matters and digital asset treasury operations. The consulting agreement provides for a monthly fee of $
NOTE 20. SUBSEQUENT EVENTS
The Company has evaluated all subsequent events through the filing date of this Form 10-K with the SEC, to ensure that this filing includes appropriate disclosure of events both recognized in the consolidated financial statements as of December 31, 2025, and events which occurred subsequently but were not recognized in the consolidated financial statements. Except as described below, there were no subsequent events which required recognition, adjustment to, or disclosure in, the audited consolidated financial statements.
Reverse Stock Split
On February 20, 2026, we effected a 1-for-
Conversion of Remaining Unsecured Convertible Notes
In January 2026, all remaining outstanding Unsecured Convertible Notes were converted into
Warrant Exercises
In January 2026, warrants were exercised as follows:
|
● |
All remaining December 2023 Warrants were exercised for |
|
● |
All remaining June 2024 Warrants were exercised for |
Conversion of Remaining Series B Preferred Stock
In January 2026, all outstanding shares of Series B Preferred Stock were converted into
January 2026 Private Placement and January 2026 Pre-Funded Warrant Issuance
On January 16, 2026, the Company, entered into a Securities Purchase Agreement (the “January 2026 Private Placement”) with each of R01 Fund LP, Framework Ventures IV L.P., Tether Investments, S.A. de C.V. and Sky Frontier Foundation (together, the “Purchasers”). Pursuant to the January 2026 Private Placement, the Company issued and sold pre-funded warrants (the “January 2026 Pre-Funded Warrants”) to purchase an aggregate of
The January 2026 Private Placement grants to each of the Purchasers a consent right over any material amendment, modification, addition, revocation, or change to the Company’s Digital Asset Strategy for a period of twenty-four (24) months from the date the January 2026 Private Placement was executed, as long as a Purchaser holds at least fifty percent (50%) of the aggregate number of January 2026 Pre-Funded Warrants and/or shares of Common Stock as originally purchased by such Purchaser pursuant to the January 2026 Private Placement.
The January 2026 Pre-Funded Warrants were issued and sold in a transaction exempt from registration under the Securities Act pursuant to Section 4(a)(2) thereof and/or Rule 506 of Regulation D. The investors in this transaction are accredited investors as defined in Rule 501(a) of Regulation D. The securities issued have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
The January 2026 Pre-Funded Warrants required stockholder approval prior to exercise and are therefore classified as a liability upon issuance and measured at fair value until such approval is obtained. Because the warrants were issued with a nominal exercise price and the issuance price implied a value below the market trading price of the Company’s common stock at issuance, the initial fair value of the warrant liability is expected to exceed the proceeds received from the financing, resulting in a non-cash loss recognized upon issuance. On March 12, 2026, the Company’s stockholders approved the issuance of the shares underlying the warrants. As a result, the warrant liability would be reclassified to stockholders’ equity at its fair value on the approval date and would no longer be subject to subsequent remeasurement thereafter.
The January 2026 Private Placement is a non-recognized (Type II) subsequent event under ASC 855 reflecting conditions arising after December 31, 2025.
At-The-Market Offering
On January 20, 2026, the Company entered into an ATM Sales Agreement (the “Sales Agreement”) with Virtu Americas LLC (“Virtu”), pursuant to which the Company may offer and sell shares of its common stock, par value $
The Company received approximately $
Redemption of Series F Preferred Stock
In February 2026, a redemption of
March 2026 Special Meeting of Stockholders
On March 12, 2026, the Company held a Special Meeting of Stockholders at which the Company’s stockholders approved certain proposals previously described in the definitive proxy statement filed with the Securities and Exchange Commission.
At the Special Meeting, stockholders approved:
|
● |
The issuance of shares of common stock upon the exercise of the January 2026 Pre-Funded Warrants; |
|
● |
The issuance of shares of common stock upon the exercise of the October 2025 Pre-Funded Warrants; |
|
● |
An amendment to the Company’s amended and restated certificate of incorporation to increase the number of authorized shares of common stock from |
|
● |
The adoption of the Company’s 2026 Equity Incentive Plan. |
As a result of the foregoing approvals, the contractual limitations on the exercisability of the Company’s outstanding pre-funded warrants related to the required shareholder approval have been satisfied. The warrants remain subject to their respective terms and conditions, including beneficial ownership limitations.
The amendment to increase the authorized shares became effective upon the filing of the certificate of amendment with the Secretary of State of the State of Delaware on March 12, 2026.
Purchases and Sales of Digital Assets
The Company sold
Subsequent to December 31, 2025 and through March 16, 2026, the Company deployed approximately $
Legal Proceedings and Threatened Legal Proceedings Related to the January 2026 Private Placement
In connection with the January 2026 Private Placement and following the filing of the definitive proxy statement filed with the SEC on February 10, 2026 (the “Definitive Proxy Statement”), the Company received a class action complaint on behalf of a purported Company stockholder (the “Stockholder Complaint”) alleging breach of fiduciary duty related to claimed deficiencies regarding the disclosures contained in the Definitive Proxy Statement. This purported stockholder has requested that the Company reimburse their attorneys’ fees allegedly incurred in connection with the Stockholder Complaint. While the Company believes that the disclosures set forth in the Definitive Proxy Statement complied fully with all applicable law and denies the allegations in the Stockholder Complaint, in order to moot the purported stockholder’s disclosure claims, avoid nuisance and possible expense and disruption to the January 2026 Private Placement, and provide additional information to its stockholders, the Company voluntarily supplemented certain disclosures in the Definitive Proxy Statement on March 2, 2026. On March 17, 2026, the Company filed a motion to dismiss the Stockholder Complaint. The outcome of this matter is uncertain, and the Company cannot reasonably estimate the possible loss or range of loss, if any, at this time. The event is a non-recognized (Type II) subsequent event under ASC 855 reflecting conditions arising after December 31, 2025.
|
ITEM 9A. |
CONTROLS AND PROCEDURES |
Restatement of Consolidated Financial Statements
On April 27, 2026, the audit committee of the board of directors and management of the Company concluded that the Company’s previously issued audited consolidated financial statements for the year ended December 31, 2025, should no longer be relied upon because of an error in the Company’s accounting for the October 2025 Pre-Funded Warrants. As previously described, the error relates to the determination of the number of shares of common stock issuable upon exercise of the October 2025 Pre-Funded Warrants as of December 31, 2025 as a result of certain anti-dilution adjustment provisions contained in the October 2025 Pre-Funded Warrants. This Amendment restates the Company’s audited consolidated financial statements for the year ended December 31, 2025 to correctly account for the anti-dilution adjustment provisions contained in the October 2025 Pre-Funded Warrants.
Evaluation of Disclosure Controls and Procedures (Restated)
As of the end of the period covered by this annual report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based upon that evaluation, as restated, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2025, our disclosure controls and procedures were not effective at the reasonable assurance level, due to the material weakness in internal control over financial reporting described below.
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Assessing the costs and benefits of such controls and procedures necessarily involves the exercise of judgment by management. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.
Restatement Background
As described in Note 3, "Restatement of Consolidated Financial Statements," to the consolidated financial statements included in this Annual Report on Form 10-K/A, we have restated our previously issued consolidated financial statements for the year ended December 31, 2025. The restatement resulted from an error in the accounting for the October 2025 Pre-Funded Warrants, specifically the failure to give effect to the anti-dilution adjustment provisions contained in those warrants that were triggered by the conversions of the Company's Series D Preferred Stock and Series E Preferred Stock during the year ended December 31, 2025. As a result, the number of shares of Common Stock issuable upon exercise of the October 2025 Pre-Funded Warrants, the related warrant liability measured at fair value as of December 31, 2025, and the corresponding non-cash losses recognized in the consolidated statement of operations were not properly reflected in our previously issued financial statements, resulting in an understatement of the warrant liability and accumulated deficit of $608.6 million as of December 31, 2025.
Conclusion
In light of the material weakness in internal control over financial reporting described below, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of December 31, 2025, to provide reasonable assurance that information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Management's Report on Internal Control over Financial Reporting. (Restated)
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2025. Our management utilized the criteria set forth in the Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") as the basis for our assessment.
Restatement and Identification of Material Weakness
In connection with the restatement, management reassessed the effectiveness of our internal control over financial reporting as of December 31, 2025 and identified the following material weakness:
We did not design and maintain effective controls over the review of the contractual terms of our outstanding equity-linked financial instruments, including controls to identify when the Company's transactions or other events required the application of contingent provisions in those instruments, such as anti-dilution adjustments. This control deficiency resulted in a material misstatement of the warrant liability, accumulated deficit, loss on fair value of warrant liability in excess of proceeds at issuance, loss on changes in fair value of warrant liability, and net loss that was not prevented or detected on a timely basis.
Restated Conclusion
As a result of the material weakness described above, our management has concluded that, as of December 31, 2025, our internal control over financial reporting was not effective based on the criteria set forth in the COSO Internal Control — Integrated Framework (2013). This conclusion supersedes management's previously issued assessment, which concluded that internal control over financial reporting was effective as of December 31, 2025.
Remediation Plan
Management, with oversight from the Audit Committee, has commenced the design and implementation of remediation measures intended to address the material weakness described above. The remediation measures include, or will include:
|
● |
enhancing our contract review procedures at the issuance of equity-linked instruments to require documented identification and analysis of all anti-dilution, ratchet, and similar adjustment provisions; |
|
● |
implementing a periodic recurring review of all outstanding equity-linked instruments to identify potential triggering events arising from subsequent issuances or other corporate actions, and to confirm the appropriate accounting treatment of any resulting adjustments; and |
|
● |
engaging qualified accounting personnel or external specialists to perform additional review of complex financial instruments, including equity-linked instruments with anti-dilution or similar features, to ensure proper accounting treatment and complete and accurate financial reporting. |
The material weakness will not be considered remediated until the applicable controls are designed, implemented, and operate effectively for a sufficient period of time, and management has concluded, through testing, that the controls are operating effectively. Management is committed to completing remediation as promptly as practicable.
Changes in Internal Control Over Financial Reporting
Other than the remediation activities described above under "Remediation Plan," which were initiated during the period covered by this Amendment, there were no changes in our internal control over financial reporting during the fourth quarter of 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART III
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Security Ownership of Certain Beneficial Owners and Management
The following table indicates information as of March 17, 2026 regarding the beneficial ownership of our securities by:
|
● |
each person who is known by us to beneficially own more than five percent (5%) of our securities; |
|
● |
our current executive officers; |
|
● |
each of our directors; and |
|
● |
all of our directors and executive officers as a group. |
The percentage of shares beneficially owned is based on 26,625,029 shares of common stock outstanding as of March 16, 2026. Except as indicated in the footnotes to this table, and as affected by applicable community property laws, all persons listed have sole voting and investment power for all shares shown as beneficially owned by them and no shares are pledged.
|
Name and Address of Beneficial Owner (1) |
Number of Shares Beneficially Owned |
Percent of Class |
||||||
|
Beneficial Owners Holding More Than 5% |
||||||||
|
R01 Fund LP 1111 Lincoln Road, Suite 500, Miami Beach, FL, 33139 (2) |
11,361,216 | 42.7 | % | |||||
|
Framework Ventures IV L.P. 600 Montgomery Street, Floor 42, San Francisco, CA, 94111 (3) |
11,361,216 | 42.7 | % | |||||
|
Executive Officers and Directors |
||||||||
|
Michael Kazley (2) |
11,361,216 | 42.7 | % | |||||
|
Tommy Law |
6 | * | ||||||
|
Paul E. Freiman, Ph.D. (4) |
207 | * | ||||||
|
Swan Sit (5) |
172 | * | ||||||
|
Yenyou (Jeff) Zheng, Ph.D. (6) |
172 | * | ||||||
|
All directors and executive officers as a group (5 persons) |
11,361,773 | 42.7 | % | |||||
|
* |
Less than one percent (1%). |
|
(1) |
The address for each director and executive officer of Stablecoin Development Corporation listed is c/o Stablecoin Development Corporation, 2000 Powell Street, Suite 1150, Emeryville, CA 94608. The number of shares beneficially owned and percent of class is calculated in accordance with SEC rules. A beneficial owner is deemed to beneficially own shares the beneficial owner has the right to acquire within sixty (60) days of March 17, 2026. For purposes of calculating the percent of class held by a single beneficial owner, the shares that such beneficial owner has the right to acquire within sixty (60) days of March 17, 2026 are also deemed to be outstanding; however, such shares are not deemed to be outstanding for purposes of calculating the percentage ownership of any other beneficial owner. |
|
(2) |
Consists of 11,361,216 shares of Common Stock held by R01 Fund LP. Does not include 11,332,020 shares of Common Stock issuable upon the exercise of the October 2025 Pre-Funded Warrants and 53,670,974 shares of Common Stock issuable upon the exercise of the 2026 Pre-Funded Warrants, as the exercise of such warrants is subject to a 9.9% beneficial ownership limitation that restricts the holder from exercising the warrants to the extent such exercise would result in the holder beneficially owning more than 9.9% of the Company’s outstanding Common Stock and no portion of the 2026 Pre-Funded Warrants becomes exercisable until July 16, 2026. The shares of Common Stock may also be deemed to be beneficially owned by R01 Capital LLC, R01 Capital Manager LLC and Michael Kazley, each of which disclaims beneficial ownership of such shares except to the extent of its or his pecuniary interest therein, if any. R01 Capital LLC is the general partner of R01 Fund LP. R01 Capital Manager LLC is the investment manager for R01 Capital. Michael Kazley is the managing member of R01 Capital Manager LLC.. The 11,361,216 shares attributed to Mr. Kazley in the foregoing table consist of the same shares held by R01 Fund LP, by virtue of Mr. Kazley's status as managing member of R01 Capital Manager LLC, the investment manager of R01 Fund LP. Mr. Kazley does not directly own any shares of Common Stock. |
|
(3) |
Consists of 11,361,216 shares of Common Stock held by Framework Ventures IV L.P. Does not include 11,332,020 shares of Common Stock issuable upon the exercise of the October 2025 Pre-Funded Warrants and 50,109,253 shares of Common Stock issuable upon the exercise of the 2026 Pre-Funded Warrants, as the exercise of such warrants is subject to a 9.9% beneficial ownership limitation that restricts the holder from exercising the warrants to the extent such exercise would result in the holder beneficially owning more than 9.9% of the Company’s outstanding Common Stock and no portion of the 2026 Pre-Funded Warrants becomes exercisable until July 16, 2026. The shares of Common Stock may also be deemed to be beneficially owned by Framework Ventures IV GP LLC, Framework Ventures Management LLC, Michael Anderson and Vance Spencer, each of whom disclaims beneficial ownership of such shares except to the extent of his or its pecuniary interest therein, if any. Framework Ventures IV GP LLC is the general partner of Framework Ventures IV L.P. Framework Ventures Management LLC is the investment manager of Framework Ventures IV LP. Michael Anderson and Vance Spencer are members and managers of Framework Ventures IV GP LLC and the managing members of Framework Ventures Management LLC. |
|
(4) |
Consists of (i) 206 shares of Common Stock held directly by Dr. Freiman and (ii) 1 share of Common Stock held by the Paul Freiman and Anna Mazzuchi Freiman Trust, of which Dr. Freiman and his spouse are trustees (with sole voting power over 1 share, shared voting power over 1 share, sole investment power over no shares and shared investment power over 1 shares). |
|
(5) |
Consists of 172 shares of Common Stock held directly by Ms. Sit. |
|
(6) |
Consists of 172 shares of Common Stock held directly by Dr. Jeff Zheng. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
October 2025 Pre-Funded Warrant Issuance.
On October 16, 2025, the Company issued and sold the October 2025 Pre-Funded Warrants to purchase an aggregate of 1,081,082 shares of the Company's Common Stock (or 540,541 shares to each of R01 Fund LP and Framework Ventures IV L.P.) in two transactions for aggregate gross proceeds of approximately $6,000,000. On the original issuance date, the purchase price was $5.50 per October 2025 Pre-Funded Warrant, representing 110% of the closing price of the common stock on the day before the issuance, less the $0.05 exercise price for each such October 2025 Pre-Funded Warrant. The October 2025 Pre-Funded Warrants are exercisable for shares of common stock at any time after January 1, 2026, subject to receipt of stockholder approval.
Pursuant to the terms of the October 2025 Pre-Funded Warrants, the exercise price and the number of shares issuable thereunder are subject to adjustment upon the occurrence of certain dilutive issuances of securities by the Company, including issuances at a price per share below the then-current exercise price (the "Anti-Dilution Provisions"). The Anti-Dilution Provisions are designed to preserve the economic value of the October 2025 Pre-Funded Warrants by proportionally increasing the number of underlying shares upon any reduction in the exercise price. As a result of dilutive issuances made by the Company during the year ended December 31, 2025, the exercise price of the October 2025 Pre-Funded Warrants was reduced from $0.05 to $0.002385 per share and the aggregate number of shares issuable upon exercise of the October 2025 Pre-Funded Warrants increased from 1,081,082 shares to 22,664,040 shares.
Our Chief Executive Officer and Chairman of our Board of Directors, Michael Kazley, is the managing member of R01 Capital Manager LLC. R01 Capital Manager LLC is the investment manager for R01 Capital LLC, and R01 Capital LLC is the general partner of R01 Fund LP. Accordingly, the issuance of the October 2025 Pre-Funded Warrants to R01 Fund LP, as well as any shares of Common Stock issued to R01 Fund LP upon exercise thereof (including any additional shares resulting from the application of the Anti-Dilution Provisions), constituted a related party transaction. The October 2025 Pre-Funded Warrants were issued and sold in transactions exempt from registration under the Securities Act pursuant to Section 4(a)(2) thereof and/or Rule 506 of Regulation D.
PART IV
|
ITEM 15. |
EXHIBITS, FINANCIAL STATEMENT SCHEDULES |
(a) Documents filed as part of this annual report:
(1) Financial Statements. The financial statements listed in the Index for Item 8 hereof are filed as part of this annual report.
(2) Financial Statement Schedules. All schedules have been omitted because they are not required or the required information is included in our Consolidated Financial Statements and notes thereto in Item 8 above.
(3) Exhibits. The following exhibits are filed as part of this Annual Report on Form 10-K/A:
|
Incorporation by Reference |
Filed Herewith |
|||||||||||
|
Exhibit Number |
Exhibit Description |
Form |
File Number |
Exhibit/ Form 8-K Item Reference |
Filing Date |
|||||||
|
2.1 |
Membership Unit Purchase Agreement dated September 27, 2021, by and among the Company, DERMAdoctor, the Founders and the Sellers (as defined therein) |
8-K |
001-33678 |
2.1 |
9/28/2021 |
|||||||
|
2.2 |
Membership Unit Purchase Agreement dated March 12, 2024, by and among NovaBay Pharmaceuticals, Inc., DERMAdoctor, LLC and New Age Investments, LLC |
8-K |
001-33678 |
2.1 |
03/14/2024 |
|||||||
|
2.3* |
Asset Purchase Agreement, dated September 19, 2024, by and among NovaBay Pharmaceuticals, Inc. and PRN Physician Recommended Nutriceuticals, LLC |
8-K |
001-33678 |
2.1 |
9/20/2024 |
|||||||
|
2.4* |
Amendment No. 1 to Asset Purchase Agreement, dated as of November 5, 2024, between PRN Physician Recommended Nutriceuticals, LLC and NovaBay Pharmaceuticals, Inc. |
8-K |
001-33678 |
2.1 |
11/06/2024 |
|||||||
|
2.5* |
Trademark Acquisition Agreement, dated January 3, 2025, by and between NovaBay Pharmaceuticals, Inc. and Phase One Health, LLC |
8-K |
001-33678 |
2.1 |
1/10/2025 |
|||||||
|
3.1 |
Amended and Restated Certificate of Incorporation of NovaBay Pharmaceuticals, Inc. |
10-K |
001-33678 |
3.1 |
3/21/2018 |
|||||||
|
3.2 |
Amendment to the Amended and Restated Certificate of Incorporation, dated June 4, 2018 |
8-K |
001-33678 |
3.1 |
6/04/2018 |
|||||||
|
3.3 |
Amendment to the Amended and Restated Certificate of Incorporation, as amended, dated May 27, 2020 |
8-K |
001-33678 |
3.1 |
5/28/2020 |
|||||||
|
3.4 |
Amendment to the Amended and Restated Certificate of Incorporation, as amended, dated May 24, 2021 |
8-K |
001-33678 |
3.1 |
5/24/2021 |
|||||||
|
3.5 |
Amendment to the Amended and Restated Certificate of Incorporation, as amended, dated January 31, 2022 |
8-K |
001-33678 |
3.1 |
2/1/2022 |
|||||||
|
3.6 |
Amendment to Amended and Restated Certificate of Incorporation, as amended, dated November 14, 2022 |
8-K |
001-33678 |
3.1 |
11/18/2022 |
|||||||
|
3.7 |
Amendment to the Amended and Restated Certificate of Incorporation, as amended, dated May 30, 2024 |
8-K |
001-33678 |
3.1 |
5/31/2024 |
|||||||
|
3.8 |
Certificate of Designation for the Series B Preferred Stock |
8-K |
001-33678 |
3.1 |
11/1/2021 |
|||||||
|
3.9 |
Certificate of Designation for the Series C Preferred Stock |
8-K |
001-33678 |
3.2 |
11/18/2022 |
|||||||
|
3.10 |
Bylaws, as amended and restated effective June 13, 2023 |
8-K |
001-33678 |
3.1 |
6/14/2023 |
|||||||
|
4.1 |
Description of Securities |
10-K | 001-33678 | 4.1 | 3/19/2026 |
|
||||||
|
4.2 |
Form of Warrant pursuant to the Services Agreement with TLF Bio Innovation Lab, LLC, dated May 13, 2020 |
8-K |
001-33678 |
4.1 |
5/18/2020 |
|||||||
|
4.3 |
Form of July 2020 Warrant |
8-K |
001-33678 |
4.1 |
7/21/2020 |
|||||||
|
4.4 |
Form of Amended July 2020 Warrant |
8-K |
001-33678 |
4.1 |
9/13/2022 |
|||||||
|
4.5 |
Form of Amended November 2021 Warrant |
8-K |
001-33678 |
4.2 |
9/13/2022 |
|||||||
|
4.6 |
Form of September 2022 Warrant (2020 participants) |
8-K |
001-33678 |
4.3 |
9/13/2022 |
|||||||
|
4.7 |
Form of September 2022 Warrant (2021 participants) |
8-K |
001-33678 |
4.4 |
9/13/2022 |
|||||||
|
4.8 |
Form of Series A-1 Long-Term Warrant |
8-K |
001-33678 |
4.5 |
9/13/2022 |
|||||||
|
4.9 |
Form of Series A-2 Short-Term Warrant |
8-K |
001-33678 |
4.6 |
9/13/2022 |
|||||||
|
4.10 |
Form of Original Issue Discount Secured Senior Convertible Debentures |
8-K |
001-33678 |
4.1 |
4/27/2023 |
|||||||
|
4.11 |
Form of Series B-1 Long-Term Warrant |
8-K |
001-33678 |
4.2 |
4/27/2023 |
|||||||
|
4.12 |
Form of Series B-2 Short-Term Warrant |
8-K |
001-33678 |
4.3 |
4/27/2023 |
|||||||
|
4.13 |
Form of Warrant Amendment Agreement |
8-K |
001-33678 |
4.4 |
4/27/2023 |
|||||||
|
4.14 |
Form of Series C Common Stock Warrant |
8-K |
001-33678 |
4.1 |
12/21/2023 |
|||||||
|
4.15 |
Form of Series D Common Stock Warrant |
8-K |
001-33678 |
4.2 |
3/25/2024 |
|||||||
|
4.16 |
Form of Series E Common Stock Warrant |
8-K |
001-33678 |
4.1 |
6/14/2024 |
|||||||
|
4.17 |
Form of Unsecured Convertible Notes |
8-K |
001-33678 |
4.3 |
3/25/2024 |
|||||||
|
4.18 |
Form of Pre-Funded Common Stock Warrant |
8-K |
001-33678 |
4.4 |
7/29/2024 |
|||||||
|
4.19 |
Form of Series F-1 Common Stock Warrant |
8-K |
001-33678 |
4.1 |
7/29/2024 |
|||||||
|
4.20 |
Form of Series F-2 Common Stock Warrant |
8-K |
001-33678 |
4.2 |
7/29/2024 |
|||||||
|
4.21 |
Form of Series F-3 Common Stock Warrant |
8-K |
001-33678 |
4.3 |
7/29/2024 |
|||||||
|
4.22 |
Form of Pre-Funded Warrant |
8-K |
001-33678 |
4.1 |
1/16/2026 |
|||||||
|
4.23 |
Form of October 2025 Pre-Funded Warrant |
8-K |
001-33678 |
4.1 |
10/20/2025 |
|||||||
|
10.1 |
Director and Officer Indemnity Agreement |
10-K |
001-33678 |
10.1 |
3/29/2022 |
|||||||
|
10.2+ |
NovaBay Pharmaceuticals, Inc. 2007 Omnibus Incentive Plan (as amended and restated) |
S-8 |
333-215680 |
99.1 |
1/24/2017 |
|||||||
|
10.3+ |
NovaBay Pharmaceuticals, Inc. 2017 Omnibus Incentive Plan |
S-8 |
333-218469 |
99.1 |
6/02/2017 |
|||||||
|
10.4+ |
NovaBay Pharmaceuticals, Inc. 2017 Omnibus Incentive Plan (Form Agreements to the 2017 Omnibus Incentive Plan) |
S-8 |
333-218469 |
99.2 |
6/02/2017 |
|||||||
|
10.5+ |
Executive Employment Agreement (Employment Agreement of Justin M. Hall) |
8-K |
001-33678 |
10.1 |
2/6/2020 |
|||||||
|
10.6+ |
First Amendment to the Executive Employment Agreement with Justin M. Hall, dated January 26, 2022 |
8-K |
001-33678 |
10.6 |
1/28/2022 |
|||||||
|
10.7+ |
Second Amendment to Executive Employment Agreement with Justin M. Hall, effective December 31, 2023 |
8-K |
001-33678 |
10.3 |
12/11/2023 |
|||||||
|
10.8+ |
Third Amendment to Executive Employment Agreement with Justin M. Hall, effective December 31, 2024 |
8-K |
001-33678 |
10.4 |
1/22/2025 |
|||||||
|
10.9+ |
2024 Non-Employee Director Compensation Plan |
10-K |
001-33678 |
10.8 |
3/26/2024 |
|||||||
|
10.10 |
Office Lease (between the Company and KBSIII Towers at Emeryville, LLC) |
8-K |
001-33678 |
10.1 |
8/26/2016 |
|||||||
|
10.11 |
First Amendment to Office Lease by and between the Company and KBSIII Towers at Emeryville, LLC, dated January 24, 2022 |
8-K |
001-33678 |
10.2 |
1/28/2022 |
|||||||
|
10.12† |
International Distribution Agreement (by and between the Company and Pioneer Pharma Co. Ltd.) |
10-K |
001-33678 |
10.18 |
3/27/2012 |
|||||||
|
10.13 |
Form of Exercise Agreement with Holders of 2019 Domestic Warrants |
8-K |
001-33678 |
10.1 |
7/21/2020 |
|||||||
|
10.14 |
Form of Exercise Agreement with Holders of 2019 Foreign Warrants |
8-K |
001-33678 |
10.2 |
7/21/2020 |
|||||||
|
10.15 |
Form of Reprice Agreement with Ladenburg |
8-K |
001-33678 |
10.3 |
7/21/2020 |
|||||||
|
10.16 |
Form of Securities Purchase Agreement, dated October 29, 2021 |
8-K |
001-33678 |
1.1 |
11/01/2021 |
|||||||
|
10.17 |
Form of Registration Rights Agreement, dated October 29, 2021 |
8-K |
001-33678 |
10.1 |
11/01/2021 |
|||||||
|
10.18* |
Form of 2020 Warrant Reprice Letter Agreement, dated September 9, 2022 |
8-K |
001-33678 |
10.1 |
9/13/2022 |
|||||||
|
10.19* |
Form of 2021 Warrant Reprice Letter Agreement, dated September 9, 2022 |
8-K |
001-33678 |
10.2 |
9/13/2022 |
|||||||
|
10.20 |
Form of Securities Purchase Agreement, dated September 9, 2022 |
8-K |
001-33678 |
10.3 |
9/13/2022 |
|||||||
|
10.21 |
Form of Registration Rights Agreement, dated November 18, 2022 |
8-K |
001-33678 |
10.4 |
9/13/2022 |
|
10.22+ |
Consulting Agreement between the Company and Andrew Jones, dated February 15, 2023 |
10-K |
001-33678 |
10.33 |
3/31/2023 |
|||||||
|
10.23 |
Form of Letter Agreement |
8-K |
001-33678 |
10.1 |
12/21/2023 |
|||||||
|
10.24 |
Form of Securities Purchase Agreement |
8-K |
001-33678 |
10.1 |
4/27/2023 |
|||||||
|
10.25* |
Form of Security Agreement |
8-K |
001-33678 |
10.2 |
4/27/2023 |
|||||||
|
10.26* |
Form of First Amendment to the Security Agreement, dated March 24, 2024 |
8-K |
001-33678 |
10.3 |
3/25/2024 |
|||||||
|
10.27 |
Form of Subsidiary Guarantee |
8-K |
001-33678 |
10.3 |
4/27/2023 |
|||||||
|
10.28* |
Form of Consent and Release, dated March 24, 2024 |
8-K |
001-33678 |
10.4 |
3/25/2024 |
|||||||
|
10.29 |
Form of Voting Commitment |
8-K |
001-33678 |
10.4 |
4/27/2023 |
|||||||
|
10.30 |
Form of Registration Rights Agreement |
8-K |
001-33678 |
10.5 |
4/27/2023 |
|||||||
|
10.31 |
Form of Letter Agreement, dated June 14, 2024 |
8-K |
001-33678 |
10.1 |
6/14/2024 |
|||||||
|
10.32* |
Underwriting Agreement, dated July 26, 2024, by and between the Company and Ladenburg Thalmann & Co., Inc. |
8-K |
001-33678 |
1.1 |
7/29/2024 |
|||||||
|
10.33 |
Warrant Agency Agreement, dated July 29, 2024, by and between the Company and Equiniti Trust Company, LLC |
8-K |
001-33678 |
10.1 |
7/29/2024 |
|||||||
|
10.34* |
Secured Promissory Note, dated as of November 5, 2024, between NovaBay Pharmaceuticals, Inc., as borrower, and PRN Physician Recommended Nutriceuticals, LLC, as lender. |
8-K |
001-33678 |
10.1 |
11/06/2024 |
|||||||
|
10.35 |
Transition Services Agreement, dated as of January 3, 2025, by and between NovaBay Pharmaceuticals, Inc. and Phase One Health, LLC |
8-K |
001-33678 |
10.1 |
1/10/2025 |
|||||||
|
10.36 |
Engagement Agreement, dated March 4, 2025, by and between NovaBay Pharmaceuticals, Inc. and Lucid Capital Markets, LLC |
8-K |
001-33678 |
10.1 |
3/7/2025 |
|||||||
|
10.37* |
Settlement and Release Agreement, dated March 5, 2025, by and between NovaBay Pharmaceuticals, Inc. and Sabby Volatility Warrant Master Fund Ltd. |
8-K |
001-33678 |
10.1 |
3/11/2025 |
|||||||
|
10.38* |
Settlement and Release Agreement, dated March 10, 2025, by and between NovaBay Pharmaceuticals, Inc. and Bigger Capital Fund, LP |
8-K |
001-33678 |
10.2 |
3/11/2025 |
|||||||
|
10.39* |
Settlement and Release Agreement, dated March 10, 2025, by and between NovaBay Pharmaceuticals, Inc. and District 2 Capital Fund LP |
8-K |
001-33678 |
10.3 |
3/11/2025 |
|||||||
|
10.40 |
Amended and Restated Employment Agreement, dated August 19, 2025, by and between the Company and Justin Hall |
8-K |
001-33678 |
10.6 |
8/19/2025 |
|||||||
|
10.41 |
Employment Agreement, dated August 19, 2025, by and between the Company and Tommy Law |
8-K |
001-33678 |
10.7 |
8/19/2025 |
|||||||
|
10.42 |
Settlement Agreement and General and Mutual Release, dated August 19, 2025, by and between the Company and Justin Hall |
8-K |
001-33678 |
10.8 |
8/19/2025 |
|||||||
|
10.43 |
Form of Settlement Agreement and General and Mutual Release with Resigning Non-Employee Directors |
8-K |
001-33678 |
10.9 |
8/19/2025 |
|||||||
|
10.44 |
ATM Sales Agreement, by and between NovaBay Pharmaceuticals, Inc. and Virtu Americas LLC, dated January 20, 2026 |
8-K |
001-33678 |
1.1 |
1/20/2026 |
|||||||
|
10.45 |
Securities Purchase Agreement, by and among NovaBay Pharmaceuticals, Inc., R01 Fund LP, Framework Ventures IV L.P., Tether Investments, S.A. de C.V. and Sky Frontier Foundation, dated January 16, 2026 |
10-K |
001-33678 |
10.45 |
3/19/2026 |
|
||||||
|
10.46 |
Investors’ Rights Agreement, by and among NovaBay Pharmaceuticals, Inc., R01 Fund LP, Framework Ventures IV L.P., Tether Investments, S.A. de C.V. and Sky Frontier Foundation, dated January 16, 2026 |
8-K |
001-33678 |
10.2 |
1/16/2026 |
|||||||
|
10.47 |
Trademark Acquisition Agreement, dated January 3, 2025, by and between NovaBay Pharmaceuticals, Inc. and Phase One Health, LLC |
8-K |
001-33678 |
2.1 |
1/10/2025 |
|||||||
|
10.48+ |
Consulting Agreement between the Company and Henry Blynn, dated October 16, 2025. |
10-K | 001-33678 | 10.48 | 3/19/2026 | |||||||
|
10.49+ |
First Amendment to Consulting Agreement by and between NovaBay Pharmaceuticals, Inc. and Henry Blynn, dated February 3, 2026. |
10-K | 001-33678 | 10.49 | 3/19/2026 |
|
||||||
|
19 |
NovaBay Insider Trading Policy |
10-K | 001-33678 | 19 | 3/19/2026 |
|
||||||
|
21 |
Subsidiaries of the Company |
10-K | 001-33678 | 21 | 3/19/2026 |
|
||||||
|
23.1 |
Consent of WithumSmith+Brown PC |
10-K | 001-33678 | 23.1 | 3/19/2026 |
|
||||||
|
23.2 |
Consent of CBIZ, Inc. |
10-K | 001-33678 | 23.2 | 3/19/2026 |
|
||||||
| 23.3 | Consent of WithumSmith+Brown PC | X | ||||||||||
| 23.4 | Consent of CBIZ, Inc. | X | ||||||||||
|
31.1 |
Certification of the Principal Executive Officer of Stablecoin Development Corporation, as required by Rule 13a-14(a) or Rule 15d-14(a) | 10-K | 001-33678 | 31.1 | 3/19/2026 |
|
||||||
| 31.2 | Certification of the Principal Financial Officer of Stablecoin Development Corporation, as required by Rule 13a-14(a) or Rule 15d-14(a) | 10-K | 001-33678 | 31.2 | 3/19/2026 |
| 31.3 | Certification of the Principal Executive Officer of Stablecoin Development Corporation, as required by Rule 13a-14(a) or Rule 15d-14(a) | X | ||||||||||
| 31.4 | Certification of the Principal Financial Officer of Stablecoin Development Corporation, as required by Rule 13a-14(a) or Rule 15d-14(a) | X | ||||||||||
|
32.1 |
Certification by the Chief Executive Officer of Stablecoin Development Corporation, as required by Rule 13a-14(b) or 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) |
10-K | 001-33678 | 32.1 | 3/19/2026 |
|
||||||
|
32.2 |
Certification by the Chief Financial Officer of Stablecoin Development Corporation, as required by Rule 13a-14(b) or 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) |
10-K | 001-33678 | 32.2 | 3/19/2026 |
|
||||||
| 32.3 | Certification by the Chief Executive Officer of Stablecoin Development Corporation, as required by Rule 13a-14(b) or 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) | X | ||||||||||
| 32.4 | Certification by the Chief Financial Officer of Stablecoin Development Corporation, as required by Rule 13a-14(b) or 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) | X | ||||||||||
|
97 |
NovaBay Pharmaceuticals, Inc. Policy for Recoupment of Incentive Compensation |
10-K |
001-33678 |
97 |
3/26/2024 |
|||||||
|
101.INS |
Inline XBRL Instance Document |
X |
||||||||||
|
101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
X |
||||||||||
|
101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
X |
||||||||||
|
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase |
X |
||||||||||
|
101.LAB |
Inline XBRL Taxonomy Extension Labels Linkbase Document |
X |
||||||||||
|
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
X |
||||||||||
|
104 |
The Cover Page Interactive Data File, formatted in Inline XBRL (included within the Exhibit 101 attachments) |
X |
|
+ |
Indicates a management contract or compensatory plan or arrangement. |
|
† |
Stablecoin Development Corporation has been granted confidential treatment with respect to certain portions of this exhibit (indicated by asterisks), which have been separately filed with the Securities and Exchange Commission. |
|
* |
Certain schedule and exhibits were omitted as well as confidential portions of this exhibit by means of marking such portions with brackets because the confidential portions (i) are not material and the type of information that is typically treated as private or confidential and/or (ii) would be competitively harmful if publicly disclosed. |
|
ITEM 15. |
FORM 10-K SUMMARY |
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
|
Date: April 29, 2026 |
||
|
By: |
/s/ Michael Kazley |
|
|
Michael Kazley Chief Executive Officer, Chairman of the Board (principal executive officer) |
||
|
Date: April 29, 2026 |
||
|
By: |
/s/ Tommy Law |
|
|
Tommy Law Chief Financial Officer (principal financial officer) |
||
|
Date: April 29, 2026 |
||
|
By: |
/s/ Paul E. Freiman |
|
|
Paul E. Freiman, Ph.D (director) |
||
|
Date: April 29, 2026 |
||
|
By: |
/s/ Swan Sit |
|
|
Swan Sit (director) |
||
|
Date: April 29, 2026 |
||
|
By: |
/s/ Yenyou (Jeff) Zheng |
|
|
Yenyou (Jeff) Zheng (director) |
||