Note 7 - Proposed Acquisition of G3

Non-Binding Term Sheet

On July 2, 2026, the Company entered into a non-binding term sheet regarding a proposed acquisition of G3 Vision Labs, Inc. (“G3”), a private New Jersey corporation that operates CLIA-certified and CAP-accredited national medical laboratories. On July 31, 2026, the Company entered into the Option Agreement described below, which superseded the non-binding term sheet.

Option Agreement to Acquire G3

On July 31, 2026, the Company entered into an option agreement (the “Option Agreement”) with stockholders of G3 (the “Sellers”). The Option Agreement gives the Company the right, but not the obligation, to acquire 100% of G3’s outstanding equity securities (the “G3 Call Option”).

As consideration for the G3 Call Option and as an advance of a portion of the total consideration for the G3 equity securities, the Company issued 50,280 shares of common stock (as adjusted for the August Reverse Stock Split) and 52,903.566 shares of Series A Non-Voting Convertible Preferred Stock (the “Initial Consideration”), which is nonrefundable. If the Company exercises the option, it will issue an additional 53,918.113 shares of Series A Non-Voting Convertible Preferred Stock (the “Option Exercise Consideration”).

The Company’s ability to exercise the G3 Call Option is subject to the satisfaction of various closing conditions, including (i) the Company or G3 completing, or obtaining binding commitments for, financings with aggregate gross proceeds of at least $30.0 million; (ii) refinancing, repayment, or lender consent for certain G3 indebtedness; (iii) the Company’s stockholder and Nasdaq approvals; (iv) continued Nasdaq listing of the Company’s common stock; (v) release of the Sellers from certain obligations relating to certain G3 indebtedness; and (vi) execution of definitive acquisition documents. The G3 Call Option expires 90 days after G3 delivers specified audited and reviewed financial information to the Company. As of September 30, 2026, G3 has not delivered all specified financial information to the Company. In October 2026, the Company received audited financial statements of G3 and its consolidated entities as of December 31, 2024 and 2025, along with interim reviewed financial statements through June 30, 2026.

If the Company exercises the G3 Call Option and closes the acquisition, it must file a registration statement within 75 days (the “filing deadline”) to register the resale of the common stock issued and the common stock underlying the Series A Non-Voting Convertible Preferred Stock issued for the Initial Consideration, and cause the registration statement to become effective within 90 days after the filing deadline. If the Company fails to meet either deadline, it must pay each Seller liquidated damages of 1% of the value of that Seller’s shares per 30-day period, up to a maximum of 6%. The shares issued as consideration are not subject to a lock-up.

Under its Certificate of Designation, the Series A Non-Voting Convertible Preferred Stock is not redeemable. However, if the acquisition closes and stockholder approval of the conversion has not been obtained 18 months after the closing date, and the Company fails to deliver the underlying common stock when due (subject to certain exceptions), each Seller may require the Company to redeem the Series A Non-Voting Convertible Preferred Stock issued as Option Exercise Consideration for cash at the fair value of the common stock issuable on conversion. The right does not apply to the Initial Consideration. As of September 30, 2026, the Company had not exercised the G3 Call Option, and no shares subject to this redemption right were outstanding.

See Note 8 for additional information regarding the common stock and Series A Non-Voting Convertible Preferred Stock issued.

The G3 Call Option did not meet the definition of a derivative as it did not meet the net settleable criteria. The Company recorded the G3 Call Option as an non-current asset at the fair value of the Initial Consideration at $28.3 million, with an offsetting credit to additional paid-in capital. The G3 Call Option was classified as a non-current asset because it represents a right to acquire a business for long-term strategic purposes and is not expected to be realized in cash or converted into current assets within the Company’s normal operating cycle. If the Company exercises the G3 Call Option, the carrying amount will be remeasured to fair value and will be included in the consideration transferred; if the option expires unexercised, the carrying amount will be charged to expense. The Company assessed the asset for impairment at September 30, 2026 and concluded that no impairment existed.

During the three and nine months ended September 30, 2026, the Company incurred $2.8 million in transaction costs for the Option Agreement, of which $1.1 million were payable in cash and approximately $1.7 million were settled through the issuance of 3,177.567 shares of Series A Non-Voting Convertible Preferred Stock. The transaction fees consist of financial advisor success fees of $2.2 million, employee-bonuses of $0.1 million, and $0.5 million of legal and other professional fees. These costs were expensed and are included in general and administrative expenses in the condensed consolidated statements of operations.