v3.26.1
Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2026
Accounting Policies [Abstract]  
Basis of Accounting, Policy [Policy Text Block]

Nature of Operations and Basis of Presentation

 

Imricor Medical Systems, Inc. is a U.S.-based medical device company that, along with its wholly-owned subsidiary incorporated in the Netherlands, Imricor B.V. (together, “Imricor” and the “Company”), seeks to address the current issues with traditional x-ray-guided ablation procedures through the development of magnetic resonance ("MR") imaging guided technology. Incorporated in the State of Delaware in 2006, the Company’s principal focus is the design, manufacturing, sale, and distribution of MR-compatible products for use in interventional cardiac magnetic resonance (“iCMR”) guided ablation procedures. Imricor’s technology utilizes an intellectual property (“IP”) portfolio that includes technology developed in-house, as well as IP originating from Johns Hopkins University, Koninklijke Philips N.V., and livetec Ingenieurbuero, GmbH. The Company is headquartered in Burnsville, Minnesota, where it has development and manufacturing facilities. 

 

The Company has prepared the accompanying unaudited condensed consolidated financial statements and notes in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which include normal recurring adjustments, necessary to fairly present the Company’s unaudited condensed consolidated interim financial information. The accompanying unaudited condensed consolidated balance sheet at  December 31, 2025 has been derived from the audited financial statements at that date but does not include all of the information and disclosures required by U.S. GAAP for annual financial statements. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended  December 31, 2025, as included in the Company's Registration Statement on Form 10-12G filed with the Securities and Exchange Commission (the “SEC”) on March 18, 2026, as amended by Amendment No. 1, filed on April 24, 2026, and Amendment No. 2, filed on May 15, 2026, and effective as of May 18, 2026.

 

The unaudited condensed consolidated financial statements and notes include the accounts of Imricor Medical Systems, Inc. and its wholly-owned subsidiary, Imricor B.V. All intercompany transactions and balances have been eliminated in consolidation.

 

The Company’s unaudited condensed consolidated financial statements and notes are presented in United States dollars, unless otherwise noted, which is also the functional currency.

 

Use of Estimates, Policy [Policy Text Block]

Estimates

 

The preparation of unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

 

Cash and cash equivalents consist of funds in depository accounts, money market funds, and time deposits. The Company considers cash invested in highly liquid financial instruments with original maturities of three months or less at the date of purchase to be cash equivalents. The Company holds cash with high quality financial institutions and, at times, such balances are in excess of federal insurance limits.

 

Cash and cash equivalents consisted of the following:

 

 

 

June 30,

 

 

December 31,

 

 

 

2026

 

 

2025

 

Cash and cash equivalents

 

 

 

 

 

 

Cash

 

$

5,665,948

 

 

$

1,637,496

 

Money market funds

 

 

40,794,601

 

 

 

7,472,940

 

Time deposits

 

 

14,078,598

 

 

 

10,391,912

 

Total cash and cash equivalents

 

$

60,539,147

 

 

$

19,502,348

 

 

Marketable Securities, Policy [Policy Text Block]

Marketable Securities

 

The Company’s marketable securities consist of investments in U.S. Treasury bills with original maturities greater than three months from the date of purchase. These securities are classified as held-to-maturity debt securities because the Company has the positive intent and ability to hold them to maturity. Held-to-maturity securities are recorded at amortized cost, adjusted for any allowance for credit losses, with securities having remaining maturities of less than one year classified as current on the unaudited condensed consolidated balance sheets.

 

The Company evaluates held-to-maturity securities for expected credit losses using a qualitative assessment methodology. As of  June 30, 2026 and  December 31, 2025, no allowance for credit losses was required. U.S. Treasury bills are backed by the full faith and credit of the U.S. government and are considered to have minimal credit risk.

 

The Company excludes accrued interest from the amortized cost basis of held-to-maturity debt securities. Accrued interest totaled $59,111 and $117,949 as of  June 30, 2026 and  December 31, 2025, respectively. Accrued interest is included in prepaid expenses and other current assets on the unaudited condensed consolidated balance sheets. The Company recognizes interest income through accretion of the discount from the purchase price to par value over the holding period. Discount accretion is recognized in interest income on the unaudited condensed consolidated statements of operations.

 

The following tables summarize the gross unrealized gains and losses related to the Company’s held-to-maturity marketable securities:

 

 

 

As of June 30, 2026

 

 

 

 

 

 

Gross Unrealized

 

 

Gross Unrealized

 

 

 

 

 

 

Amortized Cost

 

 

Gains

 

 

(losses)

 

 

Fair Value

 

Marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury bills

 

$

6,922,222

 

 

$

56,550

 

 

$

-

 

 

$

6,978,772

 

Total marketable securities

 

$

6,922,222

 

 

$

56,550

 

 

$

-

 

 

$

6,978,772

 

 

As of December 31, 2025

Gross Unrealized

Gross Unrealized

Amortized Cost

Gains

(losses)

Fair Value

Marketable securities

U.S. Treasury bills

$

21,277,609

$

98,006

$

-

$

21,375,615

Total marketable securities

$

21,277,609

$

98,006

$

-

$

21,375,615

 

Fair value is measured using Level 2 inputs (prices for similar assets or liabilities that are directly or indirectly observable in the marketplace). All held-to-maturity U.S. Treasury bills had remaining maturities of less than one year as of  June 30, 2026. Purchases and maturities of held-to-maturity securities are presented within cash flows from investing activities on the unaudited condensed consolidated statements of cash flows.

 

Accounts Receivable and Concentration Risk, Percentage [Policy Text Block]

Accounts Receivable and Customer Concentrations

 

Accounts receivable are unsecured, are recorded net of amounts expected for credit losses, and do not bear interest except if a revenue transaction has a significant financing component. The Company reviews the allowance for credit losses by considering factors such as historical experience and current economic conditions that may affect a customer’s ability to pay as of the balance sheet date. For current accounts receivable arising from revenue transactions, the Company assumes these factors do not change over the remaining life of the accounts receivable. Payment is generally due 30 days from the invoice date. When all collection efforts have been exhausted, the account is written off against the related allowance. To date the Company has not experienced any significant write-offs or significant deterioration of its accounts receivable aging, and therefore, no allowance for credit losses was considered necessary as of  June 30, 2026 or  December 31, 2025.

 

As of  June 30, 2026 and  December 31, 2025, the Company had total current and long-term accounts receivable of $350,288 and $336,539, respectively, of which $95,673 was included in long-term accounts receivable as of both  June 30, 2026 and  December 31, 2025. Accounts receivable includes unbilled receivables of $45,757 as of both  June 30, 2026 and  December 31, 2025, which represents the current portion of minimum royalties due to the Company within the next 12 months from the respective balance sheet date. The long-term accounts receivable relates to minimum royalties due to the Company beyond 12 months from the respective balance sheet date.

 

The following table sets forth information related to accounts receivable for the six months ended  June 30:

 

 

 

Six Months Ended June 30,

 

 

 

2026

 

 

2025

 

 

 

 

 

 

 

 

Balance at January 1

 

$

336,539

 

 

$

486,772

 

Decrease from accounts receivable collected

 

 

(39,995

)

 

 

(149,102

)

Increase for accounts receivable not yet collected

 

 

53,744

 

 

 

58,485

 

Balance at June 30

 

$

350,288

 

 

$

396,155

 

 

During the six months ended June 30, 2026, the Company had sales to 4 customers that individually accounted for 46%, 16%, 13%, and 10% of sales recognized for the period. During the six months ended June 30, 2025, the Company had sales to 2 customers that individually accounted for 53% and 32% of sales recognized for the period. As of  June 30, 2026, the Company had accounts receivable from 3 customers that represented 61%, 18%, and 13% of the accounts receivable balance, compared to 3 customers that represented 65%, 19%, and 15% of the accounts receivable balance as of  December 31, 2025.

 

Inventory, Policy [Policy Text Block]

Inventories

 

Inventories are stated at the lower of cost or net realizable value, with cost determined on the first-in, first-out (“FIFO”) method. The establishment of allowances for excess and obsolete inventories is based on historical usage and estimated exposure on specific inventory items. Inventories consisted of the following:

 

 

 

June 30,

 

 

December 31,

 

 

 

2026

 

 

2025

 

 

 

 

 

 

 

 

Inventories - Current Portion

 

 

 

 

 

 

Raw materials

 

$

298,834

 

 

$

292,566

 

Work in process

 

 

211,260

 

 

 

103,215

 

Finished goods

 

 

835,662

 

 

 

700,284

 

Total Inventories - Current Portion

 

 

1,345,756

 

 

 

1,096,065

 

Inventories - Long-term

 

 

 

 

 

 

Raw materials

 

 

512,565

 

 

 

415,383

 

Finished goods

 

 

552,836

 

 

 

-

 

Total Inventories - Long-term

 

 

1,065,401

 

 

 

415,383

 

Total Inventories

 

$

2,411,157

 

 

$

1,511,448

 

 

Raw materials include components used to manufacture the Company’s capital equipment and consumable products. Long-term inventories represent raw materials and finished goods that the Company does not expect to consume in production or sell within twelve months. The inventories currently classified as long-term are not subject to expiration.
 

The Company utilizes significant estimates in determining the realizable value of its inventories, including the future revenue forecasts that will result in product sales. These estimates have a corresponding impact on the inventory values recorded as of  June 30, 2026 and  December 31, 2025. Management continually evaluates the likelihood of future sales based on current economic conditions, expiration timing of products, and product design changes prior to sale of product on hand. If actual conditions are less favorable than those the Company has projected, it may need to increase its reserves for excess and obsolete inventories. Any increases in the Company’s reserves will adversely impact its results of operations. The establishment of a reserve for excess and obsolete inventories establishes a new cost basis in the inventory. Future sales of inventory on hand at  June 30, 2026 will result in recognition of cost of sales based on initial inventory costs, net of reserves taken for expected realization values. For the three months ended  June 30, 2026 and 2025, the Company recorded inventory reserve expense of $213,758 and $214,719, respectively. For the six months ended June 30, 2026 and 2025, the Company recorded inventory reserve expense of $269,566 and $214,719, respectively. 

 

Property, Plant, and Equipment [Policy Text Block]

Property and Equipment

 

Property and equipment are stated at cost. Additions and improvements that extend the lives of assets are capitalized, while expenditures for repairs and maintenance are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Amortization of leasehold improvements is computed on a straight-line basis over the shorter of the estimated useful lives of the related assets or life of the lease.

 

The standard estimated useful lives of property and equipment are as follows:

 

Office furniture and equipment (years)

5

Lab and production equipment (years)

5

Computer equipment (years)

3 - 5

MR scanner (years)

7

Leasehold improvements

Lesser of useful life or remaining lease term

 

The Company reviews property and equipment and right-of-use (“ROU”) assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the impairment tests indicate that the carrying value of the asset, or asset group, is greater than the expected undiscounted cash flows to be generated by such asset or asset group, further analysis is performed to determine the fair value of the asset or asset group. To the extent the fair value of the asset or asset group is less than its carrying value, an impairment loss is recognized equal to the amount the carrying value of the asset or asset group exceeds its fair value. The Company generally measures fair value by considering sale prices for similar assets or asset groups, or by discounting estimated future cash flows from such assets or asset groups using an appropriate discount rate. Considerable management judgment is necessary to estimate the fair value of assets or asset groups, and accordingly, actual results could vary significantly from such estimates. Assets to be disposed of would be reported at the lower of the carrying amount or fair value less costs to sell. To date, the Company has not recognized any impairment loss for property and equipment and ROU assets.

 

Lessee, Leases [Policy Text Block]

Leases

 

At the inception of a contract, the Company determines whether the contract is or contains a lease based on all relevant facts and circumstances. Leases with a term greater than 12 months are recognized on the unaudited condensed consolidated balance sheets as ROU assets and corresponding current and non-current lease liabilities. Amounts expected to be paid within 12 months are classified as current lease liabilities, with the remainder classified as non-current lease liabilities. The Company has elected not to recognize leases with terms of 12 months or less on the unaudited condensed consolidated balance sheets. Lease payments for short-term leases are recognized as an expense on a straight-line basis over the lease term. The Company includes lease option extensions in the assessment of the lease arrangement when it is reasonably certain the option will be exercised.

 

ROU assets and the corresponding lease liabilities are recorded based on the present value of lease payments to be made over the lease term. The discount rate used to calculate the present value is the rate implicit in the lease, or if not readily determinable, the Company’s incremental borrowing rate. The Company’s incremental borrowing rate is the rate of interest that the Company would have to pay 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 ROU asset may be required for items such as initial direct costs or incentives received. See Note 5 for additional disclosure on leases.

 

For all asset classes of its leases, the Company has elected to account for the lease and non-lease components together for all classes of underlying assets.

 

Research and Development Expense, Policy [Policy Text Block]

Research and Development Costs

 

The Company expenses research and development costs as incurred.

 

Other Assets [Policy Text Block]

Other Assets

 

Other assets on the unaudited condensed consolidated balance sheets include security deposits related to the Company’s operating leases, an equity investment, and a derivative asset. Other assets consisted of the following:
 

 

 

June 30,

 

 

December 31,

 

 

 

2026

 

 

2025

 

 

 

 

 

 

 

 

Security deposit

 

$

41,097

 

 

$

60,488

 

Equity investment

 

 

69,560

 

 

 

69,560

 

Derivative asset

 

 

-

 

 

 

56,243

 

 

 

$

110,657

 

 

$

186,291

 

 

The equity investment of $69,560 is held at cost. There have been no impairment losses or observable price changes recognized for the six months ended June 30, 2026 and 2025.

 

Intangible Assets, Finite-Lived, Policy [Policy Text Block]

Patents

 

Expenditures for patent costs are charged to operations as incurred.

 

Income Tax, Policy [Policy Text Block]

Income Taxes

 

Income taxes are recorded under the liability method. Deferred income taxes are provided for temporary differences between financial reporting and tax bases of assets and liabilities. Deferred tax assets are reduced by a valuation allowance to the extent the realization of the related deferred tax asset is not assured.

 

The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than not threshold, the amount recognized in the unaudited condensed consolidated financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

 

Earnings Per Share, Policy [Policy Text Block]

Loss per Share

 

Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period, after taking into consideration the exercise and issuance of all potential common stock equivalents in computing the weighted-average number of common shares outstanding, unless their effect is anti-dilutive. Potentially dilutive securities include stock options and warrants, which are evaluated using the treasury stock method, and convertible notes, which are evaluated using the if-converted method. 

 

The following table presents the computation of basic and diluted net loss per share for the three and six months ended  June 30:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Net loss for basic calculation

 

$

(7,381,761

)

 

$

(7,795,322

)

 

$

(25,138,772

)

 

$

(13,141,353

)

Adjustments for change in fair value of

 

 

 

 

 

 

 

 

 

 

 

 

option and warrant liabilities

 

 

(295,934

)

 

 

-

 

 

 

-

 

 

 

-

 

Net loss for diluted calculation

 

$

(7,677,695

)

 

$

(7,795,322

)

 

$

(25,138,772

)

 

$

(13,141,353

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding — basic

 

 

340,251,459

 

 

 

320,381,058

 

 

 

330,652,571

 

 

 

296,574,416

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

Stock options

 

 

3,394,385

 

 

 

-

 

 

 

-

 

 

 

-

 

Warrants

 

 

1,018,816

 

 

 

-

 

 

 

-

 

 

 

-

 

Weighted-average shares outstanding — diluted

 

 

344,664,661

 

 

 

320,381,058

 

 

 

330,652,571

 

 

 

296,574,416

 

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.02

)

 

$

(0.02

)

 

$

(0.08

)

 

$

(0.04

)

Diluted

 

$

(0.02

)

 

$

(0.02

)

 

$

(0.08

)

 

$

(0.04

)

 

The following table presents potentially dilutive securities that were excluded from the calculation of diluted net loss per share for the three and six months ended  June 30 because their inclusion would have been anti-dilutive:

 

Three Months Ended June 30,

Six Months Ended June 30,

2026

2025

2026

2025

Exercise of stock options

35,936,577

39,331,086

40,988,116

39,331,086

Conversion of convertible notes (related party)

26,020,693

23,570,817

26,020,693

23,570,817

Exercise of warrants

3,115,590

5,216,158

5,216,158

5,216,158

Total

65,072,860

68,118,061

72,224,967

68,118,061

 

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign Currency Exchange (Losses) Gains

 

As of  June 30, 2026 and  December 31, 2025, the Company had cash accounts denominated in Euros and Australian dollars, accounts payable that are denominated in Euros and Australian dollars, lease liabilities denominated in Euros, and accounts receivable denominated in Euros and Hungarian forint. These assets and liabilities have been remeasured into U.S. dollars at period-end exchange rates. Foreign currency exchange (loss) gain of $(683,434) and $1,285,261 for the three months ended  June 30, 2026 and 2025, respectively, and $(281,024) and $1,159,493 for the six months ended June 30, 2026 and 2025, respectively, are included on the unaudited condensed consolidated statements of operations within other income (expense).

 

Revenue [Policy Text Block]

Revenue Recognition

 

In order for an arrangement to be considered a contract, it must be probable that the Company will collect the consideration to which it is entitled for goods or services to be transferred. The Company then assesses the goods or services promised within the contract to determine whether each promised good or service is a performance obligation. Performance obligations are promises in a contract to transfer a distinct good or service to the customer that (i) the customer can benefit from on its own or together with other readily available resources, and (ii) is separately identifiable from other promises in the contract.

 

The Company determines the transaction price based on the amount of consideration the Company expects to receive for providing the promised goods or services in the contract. Consideration may be fixed, variable, or a combination of both.

 

At contract inception for arrangements that include variable consideration, the Company estimates the probability and extent of consideration it expects to receive under the contract utilizing either the most likely amount method or expected amount method, whichever best estimates the amount expected to be received. The Company then considers any constraints on the variable consideration and includes in the transaction price variable consideration to the extent it is deemed probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

 

The Company’s product revenue is derived from sales of both capital equipment and single use consumables used in iCMR-guided cardiac ablation procedures. Capital equipment includes the Company’s systems such as the Advantage-MR EP Recorder/Stimulator System and NorthStar Mapping System as well as related third party equipment, while consumables primarily comprise the Company’s catheters, including the Vision-MR Ablation Catheter and Vision-MR Diagnostic Catheter, and related accessories.

 

For equipment and consumable product sales that contain a single performance obligation, the Company recognizes revenue when control is transferred to the customer. This occurs at a point in time when title to the goods and risk of loss transfers. The transaction price is based on invoice price, net of any variable consideration.

 

When accounting for a contract that contains multiple performance obligations, the Company must develop judgmental assumptions to determine the estimated standalone selling price (“SSP”) for each performance obligation identified in the contract. The Company utilizes the observable SSP when available, which represents the price charged for the promised product or service when sold separately. When the SSP for the Company’s products or services are not directly observable, the Company determines the SSP using relevant information available and applies suitable estimation methods including, but not limited to, the cost-plus margin approach. The Company then allocates the transaction price to each performance obligation based on the relative SSP and recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) control is transferred to the customer and the performance obligation is satisfied.

 

Revenue from service contracts is recognized over the contract period on a straight-line basis, as the customer benefits from the services throughout the service contract period.

 

Revenue is derived from both domestic and foreign countries. Sales tax and value added taxes in foreign jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales. Product sales include shipment and handling fees charged to customers. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of goods sold.

 

As of  June 30, 2026, $129,794 of a contract’s transaction price was allocated to an unsatisfied performance obligation. The Company expects to recognize the revenue related to this performance obligation during 2027.

 

Royalties, Revenue Recognition [Policy Text Block]

Royalties

 

On June 1, 2012, the Company licensed certain intellectual property to a customer which included a royalty of 3% of product sales, subject to a minimum of $50,000 per year through 2028. The minimum guaranteed royalties were recognized upon the execution of the license agreement as these proceeds were not variable consideration. The remaining minimum royalty payments to be received, less the portion which represents future interest expected to be received within 12 months is included in Accounts receivable and the amounts expected to be received in future periods beyond 12 months are included in Accounts receivable, long term. Any royalties received in the future which are more than the minimum guaranteed royalty will be recognized when they are earned.

  

Contract Liabilities [Policy Text Block]

Contract Liabilities

 

In 2013, the Company licensed certain intellectual property to a customer in exchange for an upfront non-refundable license fee and milestone payments, which can total up to $7,000,000. The Company collected $6,000,000 of these milestone payments, including the non-refundable license fee, on or before October 2016. A total of $373,333 of this amount is deferred as of  June 30, 2026 and  December 31, 2025. The customer sold the portion of the business which held this license in May 2018, and the license has been assigned to the purchaser. The project is still on hold with no plans to work on final development during the next 12 months, and therefore, the contract liability is included in long-term liabilities on the unaudited condensed consolidated balance sheets as of  June 30, 2026 and  December 31, 2025.

 

The Company invoices its customers for product revenue based on the billing schedules in its sales arrangements. Service contracts are billed in advance, prior to the services having been performed, and the associated deferred revenue is recognized over the term of the service contract period.

 

Amounts received prior to satisfying the above revenue recognition criteria are recorded as contract liabilities on the unaudited condensed consolidated balance sheets, with the contract liabilities to be recognized beyond one year being classified as non-current contract liabilities. As of  June 30, 2026 and  December 31, 2025, the Company had total current and long-term contract liabilities of $1,116,132 and $1,119,788, respectively, of which $1,085,753 was included in long-term liabilities as of  June 30, 2026 and  December 31, 2025. As of  June 30, 2026, the Company expects to recognize the balance included in long-term liabilities at an indeterminable time because a portion of the balance relates to milestone payments for a project that is currently on hold, as discussed above, while recognition of the remaining balance is contingent upon obtaining certain regulatory approvals. The decrease in contract liabilities is due to recognition of revenue for completion of performance obligations that were included in contract liabilities at the beginning of the period.

 

The following table sets forth information related to the contract liabilities for the six months ended June 30:

 

 

 

Six Months Ended June 30,

 

 

 

2026

 

 

2025

 

 

 

 

 

 

 

 

 

 

Balance at January 1

 

$

1,119,788

 

 

$

1,158,052

 

Decrease from revenue recognized for completion of performance obligations that were included in contract liabilities at the beginning of the period included in:

 

 

 

 

 

 

 

 

Service revenue

 

 

(22,501)

 

 

 

(28,396)

 

Increase for revenue deferred as the performance obligation has not been satisfied related to:

 

 

 

 

 

 

 

 

Product revenue

 

 

3,324

 

 

 

-

 

Service revenue

 

 

15,521

 

 

 

3,159

 

Balance at June 30

 

$

1,116,132

 

 

$

1,132,815

 

 

Derivatives, Policy [Policy Text Block]

Derivative Asset, Option Liabilities, and Warrant Liabilities

 

The Capital Commitment Agreement (“Agreement”) with GEM Global Yield LLC SCS (“GGY”) (discussed further in Note 8) meets the definition of a derivative and was recorded upon issuance within other assets on the unaudited condensed consolidated balance sheets at fair value. The derivative asset is revalued at each balance sheet date, with changes in fair value recorded on the unaudited condensed consolidated statements of operations as other income (expense). The Company estimates the fair value of the asset using the Monte Carlo Simulation model.

 

Also, in connection with the Agreement with GGY, the Company issued 5,700,000 options which were determined to qualify as liabilities in accordance with Accounting Standards Codification (“ASC”) 480-10, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging. Additionally, the Company issued warrants in connection with the equity raises in August and October 2023 (Note 9), where 2,100,568 warrants were determined to qualify as liabilities due to the exercise price being denominated in a currency other than the Company’s functional currency. The result of this accounting treatment is that the options and warrants are recorded upon issuance as liabilities on the unaudited condensed consolidated balance sheets at fair value and are revalued at each balance sheet date, with the change in fair value recorded on the unaudited condensed consolidated statements of operations as other income (expense). The Company estimates the fair value of the liabilities using the Black-Scholes pricing model.

 

See Notes 8 and 9 for further details and assumptions used in the Black-Scholes pricing model and Monte Carlo Simulation model.

 

Share-Based Payment Arrangement [Policy Text Block]

Stock-Based Compensation

 

The Company measures and records compensation expense using the applicable accounting guidance for share-based payments related to equity awards granted to directors and employees. The fair value of stock options, including performance awards, without a market condition is estimated at the date of grant, using the Black-Scholes option-pricing model. The fair value of stock options with a market condition is estimated at the date of grant using the Monte Carlo Simulation model. The Black-Scholes and Monte Carlo Simulation valuation models incorporate assumptions as to stock price volatility, the expected life of options or awards, a risk-free interest rate, and dividend yield.

 

The Company’s policy is to account for forfeitures as they occur and compensation expense is recognized on a straight-line basis over the vesting period for awards with service and market conditions; for awards with performance conditions, expense is recognized over the requisite service period for awards for which the performance condition is considered probable of being achieved. Compensation expense is recognized for all awards over the vesting period to the extent the employees or directors meet the requisite service requirements, whether or not the award is ultimately exercised. Conversely, when an employee or director does not meet the requisite service requirements and forfeits the award prior to vesting, any compensation expense previously recognized for the award is reversed.

 

See Note 9 for further details and assumptions used in the Black-Scholes pricing model.

 

Fair Value Measurement, Policy [Policy Text Block]

Fair Value Measurement

 

ASC 820, Fair Value Measurements, (“ASC 820”) provides guidance on the development and disclosure of fair value measurements. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

 

The accounting guidance classifies fair value measurements in one of the following three categories for disclosure purposes:

 

 

Level 1: 

Quoted prices in active markets for identical assets or liabilities.

 

Level 2: 

Inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace.

 

Level 3: 

Unobservable inputs which are supported by little or no market activity and values determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

 

The Company evaluates assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level at which to classify them for each reporting period. This determination requires significant judgments to be made by the Company.

 

The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. The Company had no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis, based on the fair value hierarchy:

 

 

 

As of June 30, 2026

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Current Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Current portion of convertible notes (related party)

 

$

-

 

 

$

-

 

 

$

33,186,900

 

 

$

33,186,900

 

Option liabilities

 

$

-

 

 

$

-

 

 

$

4,286,736

 

 

$

4,286,736

 

Total Current Liabilities

 

$

-

 

 

$

-

 

 

$

37,473,636

 

 

$

37,473,636

 

Long-term Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Warrant liabilities

 

$

-

 

 

$

-

 

 

$

2,256,802

 

 

$

2,256,802

 

Total Long-term Liabilities

 

$

-

 

 

$

-

 

 

$

2,256,802

 

 

$

2,256,802

 

 

As of December 31, 2025

Level 1

Level 2

Level 3

Total

Other Assets

Derivative asset

$

-

$

-

$

56,243

$

56,243

Total Other Assets

$

-

$

-

$

56,243

$

56,243

Current Liabilities

Current portion of convertible notes (related party)

$

-

$

-

$

11,745,700

$

11,745,700

Option liabilities

$

-

$

-

$

3,157,717

$

3,157,717

Total Current Liabilities

$

-

$

-

$

14,903,417

$

14,903,417

Long-term Liabilities

Convertible notes, net of current portion (related party)

$

-

$

-

$

13,268,500

$

13,268,500

Warrant liabilities

$

-

$

-

$

1,828,677

$

1,828,677

Total Long-term Liabilities

$

-

$

-

$

15,097,177

$

15,097,177

 

The convertible notes (related party) (Note 7), the derivative asset and option liabilities (Note 8), and the warrant liabilities (Note 9) are recognized at fair value on a recurring basis at  June 30, 2026 and  December 31, 2025, and are all classified as Level 3. There have been no transfers between levels. The Company estimates the fair value of the asset or liabilities using the Monte Carlo Simulation model or Black-Scholes pricing model.

 

See Notes 7, 8, and 9 for further details and assumptions used in the respective pricing model.

 

As of  June 30, 2026 and  December 31, 2025, the recorded values of cash and cash equivalents, prepaid expenses, accounts payable, and accrued expenses and other liabilities approximate their fair values due to the short-term nature of these items.

 

Government Assistance [Policy Text Block]

Bioscience Innovation Grant

 

In August 2023, the Company received a $1,158,000 grant from the North Dakota Department of Agriculture as part of the department’s Bioscience Innovation Grant (“BIG") program. The grant money is obtained by submitting requests for reimbursement of specific expenses incurred to support the remaining approval process of the Company’s products in the US.

 

The Company has elected to account for the reimbursement as a government grant. U.S. GAAP does not currently include grant accounting guidance that is in effect related to transfers of assets from governments to business entities, therefore, the Company has elected to follow the grant accounting model in International Accounting Standard (“IAS”) 20, Accounting for Government Grants and Disclosure of Government Assistance. In accordance with IAS 20, the Company cannot recognize any income from the grant until there is reasonable assurance (similar to the “probable” threshold in U.S. GAAP) that any conditions attached to the grant will be met and that the grant will be received. Once it is reasonably assured that the grant conditions will be met and that the grant will be received, grant income is recorded on a systematic basis over the periods in which the Company incurred the reimbursable expenses for which the grant is intended to compensate. Income from the grant can be presented as either other income or as a reduction in the expenses for which the grant was intended to compensate.

 

The grant program ended on June 30, 2025. Income of $248,373 for the three months ended June 30, 2025, and $658,546 for the six months ended June 30, 2025, was included in government grant income on the unaudited condensed consolidated statements of operations.

 

The Dutch Research and Development Act Grant

 

In March 2026, the Company received a $34,814 grant from the Dutch Research and Development Act ("WBSO"). The WBSO provides compensation for a part of research and development wages and other costs through a reduction in payroll taxes. 

 

The Company has elected to account for the reimbursement as a government grant. U.S. GAAP does not currently include grant accounting guidance that is in effect related to transfers of assets from governments to business entities, therefore, the Company has elected to follow the grant accounting model in International Accounting Standard (“IAS”) 20, Accounting for Government Grants and Disclosure of Government Assistance. In accordance with IAS 20, the Company cannot recognize any income from the grant until there is reasonable assurance (similar to the “probable” threshold in U.S. GAAP) that any conditions attached to the grant will be met and that the grant will be received. Once it is reasonably assured that the grant conditions will be met and that the grant will be received, grant income is recorded on a systematic basis over the periods in which the Company incurred the reimbursable expenses for which the grant is intended to compensate. Income from the grant can be presented as either other income or as a reduction in the expenses for which the grant was intended to compensate.

 

Income of $34,814 was included in government grant income on the unaudited condensed statements of operations for the three and six months ended June 30, 2026.

 

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Adopted Accounting Pronouncements

 

The Company considers the applicability and impact of all Accounting Standard Updates (“ASUs”). ASUs not discussed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company’s unaudited condensed consolidated financial statements and related notes.

 

In July 2025, the Financial Accounting Standards Board (“FASB”) issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient for entities estimated expected credit losses on current accounts receivable and current contract assets arising from transactions under Topic 606. The practical expedient permits an entity to assume current conditions as of the balance sheet date that do not change for the remaining life of the current accounts receivable and current contract assets. The Company adopted this standard as of January 1, 2026, on a prospective basis and elected the practical expedient for all in scope current trade receivables and current contract assets. Adoption of the ASU did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

 

In November 2024, the FASB issued ASU 2024-04, Debt – Debt with Conversion and Other Options (Subtopic 470-20), which amends ASC 470-20 to clarify the circumstances in which an entity is required to account for a settlement of a debt instrument as an induced conversion. The Company adopted this standard as of January 1, 2026, prospectively. Adoption of the ASU did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

 

Recent Accounting Pronouncements

 

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40). The amendment requires disaggregated disclosure of income statement expenses for public business entities (“PBEs”). The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. The standard is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently assessing the potential impact of adopting this new guidance on our unaudited condensed consolidated financial statements and related disclosures.

 

In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, which establishes recognition, measurement, and presentation guidance for government grants received by business entities, distinguishing between grants related to assets and grants related to income. The guidance requires a government grant to be recognized when it is probable that the entity will comply with the conditions of the grant and that the grant will be received. The standard is effective for fiscal years beginning after December 15, 2028, for public business entities, and after December 15, 2029, for all other entities, with early adoption permitted. The Company is currently assessing the potential impact of adopting this new guidance on our interim unaudited condensed consolidated financial statements and related disclosures.

 

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies interim disclosure requirements and the applicability of Topic 270, resulting in a consolidated list of all interim disclosures required by U.S. GAAP. The amendments include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The standard is effective for interim periods within fiscal years beginning after December 15, 2027, for public business entities, and after December 15, 2028, for all other entities, with early adoption permitted. The Company is currently assessing the potential impact of adopting this new guidance on our interim unaudited condensed consolidated financial statements and related disclosures.