Note 2 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Lokahi Therapeutics Inc. and effective December 1, 2025, MindWave Innovations Inc. All intercompany balances and transactions have been eliminated in consolidation. The results of operations MindWave are included in the consolidated financial statements from the date of acquisition, December 1, 2025, through December 31, 2025. Prior-period amounts reflect the operations of the BioBusiness only.

(b) Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, but are not limited to, the fair value of consideration transferred and net assets acquired in the Merger, the fair value of digital assets, the fair value of stock-based compensation awards, the fair value of warrants, the valuation allowance on deferred tax assets, and the assessment of the Company’s ability to continue as a going concern. Actual results could differ materially from those estimates.

(c) Segment Reporting

In accordance with ASC 280, Segment Reporting, the Company has determined that it operates as two segments: (i) the BioBusiness segment, which advances the Company’s lead product candidate, Apitox, and related preclinical and translational research activities; and (ii) the Digital Assets segment, which encompasses the Company’s digital asset holdings (Bitcoin, Tether, and NILA Tokens) acquired in connection with the MindWave acquisition and the activities associated with the MindWaveDAO ecosystem. The Company’s chief operating decision maker (“CODM”), who is the Chief Executive Officer, regularly reviews discrete financial information for each segment, including key segment expenses, and segment loss, for purposes of making operating decisions, allocating resources, and evaluating financial performance.

The following tables present the Company’s segmented results for the years ended December 31, 2025. The Company has two reportable segments: The BioBusiness segment and the Digital Assets segment. Prior to the merger transaction (See note 4), the Company operated entirely as a biopharmaceutical entity, therefore all activity operating expenses before the date December 1, 2025, have been consolidated to the BioBusiness segment of operations. In accordance with transaction accounting (See note 4), The segmented results below reflect the results of MindWave Innovations Inc. from December 1, 2025, the date of acquisition, with all pre-acquisition equity balances eliminated in consolidation.

For the Year ended December 31, 2025

(d) Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. Cash and cash equivalents consist primarily of amounts held in demand deposit accounts.

(e) Digital Assets

Digital assets consist of Bitcoin (“BTC”), Tether (“USDT”), and MindWaveDAO NILA tokens (“NILA Tokens”). Effective upon the adoption of ASU 2023-08, Accounting for and Disclosure of Crypto Assets, the Company accounts for in-scope crypto assets that meet the definition of an intangible asset and are fungible as follows:

The Company is not a broker-dealer, exchange, or investment company. Digital asset activities are limited to the holding, sale, and conversion of tokens acquired in the Merger accordingly, the digital assets are classified as noncurrent in the accompanying consolidated balance sheet.

(f) Fair Value Measurements

The Company follows a three-level hierarchy for fair value measurements as follows:

Level 1 Quoted prices in active markets for identical assets or liabilities that the Company can access at the measurement date

Level 2 Observable inputs other than quoted prices in Level 1

Level 3 Unobservable inputs requiring management estimates

(g) Mergers and Acquisitions

The Company accounts for mergers and acquisitions in accordance with ASC 805, Business Combinations. Under this standard, the Company determines whether the acquiree meets the requirements to constitute a business in accordance with ASC 805-10-55-5A. If the acquiree meets the requirements to constitute a business, the acquisition method of accounting is applied, whereby the results of operations of acquired businesses are included in the consolidated financial statements from the date of acquisition. The identifiable assets acquired and liabilities assumed are recognized at their estimated fair value at the acquisition date. Regarding the merger transaction dated December 1, 2025, the acquiree, MindWave Innovations Inc, maintains substantially all fair value of gross assets in a singular identifiable asset category. Therefore, the transaction is accounted for as an asset acquisition wherein the fair value of the net assets assumed by the company was determined to be equivalent to the Series A Convertible Preferred Stock issued as consideration. In accordance with an asset acquisition, no goodwill was recorded (See note 4).

(h) Stock-Based Compensation

The Company accounts for stock-based compensation using the fair value of equity awards measured at the grant date and recognized as expense over the requisite service period. Stock-based compensation issued to the employees of subsidiaries is recognized as a capital contribution from the Company to the respective subsidiaries (See note 8).

(i) Warrants

The Company classifies warrants as either equity or liabilities. Warrants that are indexed to the Company’s own stock and meet the criteria for equity classification are recorded in stockholders’ equity. Warrants previously classified as liabilities are measured at fair value each reporting period, with changes recognized within “Change in fair value of warrant liabilities” in the consolidated statement of operations.

(j) Revenue Recognition

The Company has not generated revenue from its biopharmaceutical operations. Proceeds from the sale of cryptocurrencies maintained by the Company, inclusive of USDT; BTC; and NILA Tokens, are recognized as realized gains or losses on sale of digital assets and are not considered revenue.

(k) Leases

The Company classifies its leases as either operating or financing. For operating leases with terms greater than 12 months, at the commencement date, the Company recognizes a right-of-use (“ROU”) asset and a corresponding lease liability. The lease liability is measured at the present value of future lease payments, discounted using the Company’s incremental borrowing rate when the rate implicit in the lease is not readily determinable. For finance leases, the Company will recognize an asset as property and equipment and a corresponding liability.

(l) Income Taxes

The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax effects of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities. A valuation allowance is established when it is more likely than not that some or all of the deferred tax assets will not be realized.

(m) Loss Per Share

Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is computed similarly, except that the denominator includes potentially dilutive securities when their effect is dilutive. For all periods presented, diluted loss per share is the same as basic loss per share because the Company was in a net loss position, and the inclusion of potentially dilutive securities would be anti-dilutive.

(n) Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash deposits and digital assets. Cash is maintained at financial institutions in amounts that may exceed federally insured limits. The Company has not experienced any losses on such accounts.

(o) Deferred Offering Costs

Costs directly attributable to a proposed offering of equity securities are deferred and recorded as an asset and charged against the proceeds of the offering. In the event debt offering costs are deferred, the unamortized balance is reflected as a debt discount to the principal value of the debt issued. If the offering is abandoned, deferred offering costs are charged to expense (See note 7).