Z Squared Inc.

Current report

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “Annual Report”), as supplemented and superseded by the risk factors set forth in the “Risk Factors” section of the Company’s Registration Statement on Form S-4 (File No. 333-288329) declared effective by the Securities and Exchange Commission on December 23, 2025 (the “Registration Statement”), and as further updated by the risk factors set forth below. There have been material changes to the risk factors disclosed in the Annual Report as a result of (i) the completion on April 24, 2026 of the business combination (the “Merger”) with Z Squared, Inc., a Wyoming corporation (“Z Squared”), and the related spin-out (the “Spin-Out” and, together with the Merger, the “Transactions”) of substantially all of the Company’s historical biopharmaceutical operations other than those conducted through GEAR Therapeutics, Inc., each as described in the “Recent Business Combination” section of Item 2 of Part I of this Quarterly Report and in Notes 16 and 17 to the accompanying condensed consolidated financial statements; (ii) the resulting change in the Company’s principal business from the biopharmaceutical and technology business conducted by Coeptis Therapeutics Holdings, Inc. and its subsidiaries to the digital asset mining business now conducted through Z Squared and its subsidiaries; (iii) the change in the Company’s management team and board of directors; and (iv) certain new and pending strategic transactions and capital structure matters described below.

Current report

Incorporation by Reference of Risk Factors from the Registration Statement.

Current report

The risk factors set forth in the “Risk Factors” section of the Registration Statement, beginning on page 41 thereof, are incorporated by reference into this Quarterly Report on Form 10-Q, except as follows:

Current report

(a) The risk factors set forth under the caption “Risks Related to the Merger” in the Registration Statement no longer apply, as the Merger was completed on April 24, 2026.

Current report

(b) The risk factors set forth under the caption “Risks Related to Coeptis” in the Registration Statement that relate to the biopharmaceutical and technology businesses conducted through the Spin-Out Subsidiaries are no longer applicable to the Company, as those operations have been distributed to the Company’s stockholders in connection with the Spin-Out. Risks relating to the Company’s continuing interest in GEAR Therapeutics, Inc. (which was not part of the Spin-Out) remain applicable, as do the corporate-level and capital-structure risks set forth under the subheadings “Risks Related to Our Capital Requirements and Capital Structure” and “Risks Related to Our Organization and Structure.”

Current report

(c) The risk factors set forth under the caption “Risks Related to Z Squared” in the Registration Statement remain applicable in all material respects and describe the substantive operational, market, technological, and regulatory risks of the digital asset mining business now conducted by the Company. Investors are urged to read those risk factors carefully.

Current report

(d) The risk factors set forth under the caption “Risks Related to the Combined Company” in the Registration Statement remain applicable in all material respects, except as updated by the risk factors set forth below.

Current report

(e) The risk factors set forth under the caption “Risks Related to the Spin Out Transaction” in the Registration Statement should be read in light of the completion of the Spin-Out on April 24, 2026, but the risks relating to the tax characterization of the Spin-Out, the indemnification arrangements between the Company and the Spin-Out Subsidiaries, and the limitations on use of the Company’s net operating loss carryforwards described therein remain applicable to the Company.

Current report

The risk factors set forth below supplement, update, and (to the extent inconsistent) supersede the risks disclosed in the Annual Report and the Registration Statement.

Current report

Risks Related to the Completed Business Combination and the Resulting Change in Business

Current report

The Company’s historical financial statements do not reflect its current business and are not indicative of its future results.

Current report

The condensed consolidated financial statements as of and for the three months ended March 31, 2026 and 2025 included in this Quarterly Report reflect the historical operations of Coeptis Therapeutics Holdings, Inc. and its consolidated subsidiaries, comprising a biopharmaceutical and technology business, prior to the closing of the Transactions on April 24, 2026. As a result of the Merger and the Spin-Out, the Company’s principal business is now the digital asset mining operations conducted through Z Squared. Investors should not rely on the Company’s historical financial statements as indicative of the Company’s future results of operations, financial position, or cash flows. The Company’s financial statements in subsequent periods will reflect (i) under the reverse acquisition treatment described in Notes 1 and 17, the historical operations of Z Squared as the accounting acquirer, (ii) the disposition of the Spin-Out Subsidiaries, and (iii) the assets and liabilities of the Company (other than those of the Spin-Out Subsidiaries) recorded at their acquisition-date fair value. Pro forma financial information reflecting the Transactions is or will be set forth in the Company’s Current Report on Form 8-K reporting the completion of the Merger.

Current report

The Company has a new management team with limited experience operating the Company as a public company in the digital asset mining business.

Current report

Following the closing of the Merger, the Company’s executive officer team and board of directors were substantially replaced. The new executive officers are drawn principally from the management of Z Squared, which was a privately-held company prior to the Merger. Although the new management team has experience in the digital asset mining industry, the team has limited experience operating as the management of a publicly-traded company subject to the reporting, governance, and compliance requirements of the Securities Exchange Act of 1934, the rules and regulations of the SEC, the listing standards of The Nasdaq Stock Market, and the Sarbanes-Oxley Act. The integration of the new management team into the Company’s existing public-company reporting infrastructure, including its disclosure controls and procedures and internal control over financial reporting, may take time and may give rise to material weaknesses, deficiencies, or compliance failures that could adversely affect the Company’s ability to satisfy its reporting obligations on a timely basis, the accuracy of its financial reporting, and the trading price of its common stock.

Current report

The Company’s internal control over financial reporting may be inadequate as a result of the Transactions, the change in management, and the change in business.

Current report

The Company’s existing system of internal control over financial reporting was designed primarily for the biopharmaceutical and technology business conducted by Coeptis Therapeutics Holdings, Inc. and its subsidiaries prior to the Merger. As a result of the Transactions, the change in the Company’s principal business, the change in management, and the integration of Z Squared’s accounting, treasury, custody, and operational systems (including those relating to digital asset custody, hash rate measurement, energy procurement, and mining revenue recognition), the Company expects to make significant changes to its internal control over financial reporting in the periods following the closing of the Transactions. The Company may identify material weaknesses or significant deficiencies in its internal control over financial reporting as a result of these changes. Any failure to maintain effective internal control over financial reporting could result in material misstatements in the Company’s financial statements, loss of investor confidence, restrictions on the Company’s ability to access the capital markets (including its eligibility to use shelf registration statements on Form S-3), and adverse effects on the trading price of the Company’s common stock.

Current report

Substantial doubt about the Company’s ability to continue as a going concern, as identified in the Annual Report, continues to apply, and Z Squared’s historical financial statements have also reflected substantial doubt about its ability to continue as a going concern.

Current report

The Annual Report and the Company’s audited financial statements for the year ended December 31, 2025 contained an explanatory paragraph from the Company’s independent registered public accounting firm expressing substantial doubt about the Company’s ability to continue as a going concern. As disclosed in the Registration Statement, Z Squared’s historical financial statements have similarly reflected substantial doubt about Z Squared’s ability to continue as a going concern. Neither the Merger nor the Spin-Out, individually, has eliminated those concerns. The Company’s ability to continue as a going concern depends on its ability to achieve and sustain profitability in its digital asset mining business, generate cash flow from operations, and access the capital markets on acceptable terms. There is no assurance that the Company will be able to do so.

Current report

Risks Related to Pending Strategic Transactions

Current report

The Company’s pending acquisition of SkyCore would require the issuance of newly-designated Series B Convertible Preferred Stock with substantial liquidation preference and would result in significant additional dilution to holders of the Company’s common stock.

Current report

On April 29, 2026, the Company entered into a binding letter of intent (the “SkyCore LOI”) to acquire all of the membership interests of Skycore Digital LLC (“SkyCore”) in exchange for newly-designated Series B Convertible Preferred Stock (the “SkyCore Acquisition”). Under the SkyCore LOI, the consideration consists of Series B Convertible Preferred Stock with an $18 million base aggregate non-participating liquidation preference at closing, plus up to an additional $4 million of liquidation preference scaled on a pro rata basis based on additional megawatts of energized power capacity secured by SkyCore prior to closing (with the full $4 million payable upon securement of 18 megawatts), for maximum aggregate consideration of $22 million. The key terms of the Series B Convertible Preferred Stock contemplated by the SkyCore LOI include a $1,000 stated value per share; an 8% cash dividend or 10% payment-in-kind dividend, at the Company’s election; conversion at a 10% premium to the 20-day volume weighted average price of the Company’s common stock at signing of the definitive purchase agreement; a seven-year mandatory redemption; an annual holder put right beginning in year two, capped at 20% per year of the original holdings; and a $500,000 break-up fee payable by the Company. The parties have agreed to a 90-day exclusivity period. The SkyCore Acquisition is expected to close within 60 days following execution of a definitive purchase agreement, subject to customary closing conditions, including negotiation and finalization of definitive agreements, the filing of a Certificate of Designation establishing the rights, preferences, and privileges of the Series B Convertible Preferred Stock with the Delaware Secretary of State, and approval by the Company’s board of directors of the issuance and the terms of the Series B Convertible Preferred Stock. There can be no assurance that the SkyCore Acquisition will be consummated on the terms contemplated by the SkyCore LOI, or at all. If consummated, the issuance and outstanding presence of the Series B Convertible Preferred Stock would (i) subordinate the rights of holders of the Company’s common stock to the aggregate liquidation preference in the event of a liquidation, dissolution, or change of control, (ii) potentially dilute the voting and economic interests of common stockholders on conversion of the Series B Convertible Preferred Stock into common stock, (iii) impose cash dividend or payment-in-kind dividend obligations on the Company, (iv) subject the Company to substantial cash redemption obligations on the mandatory redemption date and on exercise of the annual holder put right, and (v) restrict the Company’s ability to issue other securities ranking senior to orpari passu with the Series B Convertible Preferred Stock or to take certain other corporate actions.

Current report

The Company faces meaningful execution and integration risk from the Transactions and the pending strategic transactions described above.

Current report

Concurrent integration of the Merger, the Spin-Out, the SkyCore Acquisition, and any other strategic transactions undertaken by the Company will place significant demands on management’s time and attention, operational and financial systems, and capital resources. Failure to successfully integrate these transactions could prevent the Company from realizing the anticipated benefits, divert management’s attention from existing operations, result in unforeseen liabilities or operational disruptions, and materially adversely affect the Company’s business, financial condition, and results of operations.

Current report

The Company has limited or no operating history in the power generation, data center development, and high-performance compute hosting businesses.

Current report

In addition to its existing digital asset mining operations, the Company has identified power generation, data center development, and high-performance compute (“HPC”) hosting as adjacent business lines for strategic expansion. The Company has limited or no operating history in any of these business lines, and the management expertise, capital resources, regulatory relationships, supplier relationships, and operational capabilities required to compete in these businesses differ materially from those required in the Company’s digital asset mining business. The Company may be unable to develop the necessary expertise internally, hire and retain qualified personnel with relevant experience, secure required regulatory approvals and counterparty relationships, or commit the levels of capital required to make any of these business lines successful. As a result, the Company’s expansion into these business lines may not generate the anticipated revenue or strategic benefits, may distract management from the operation of the existing digital asset mining business, and may materially adversely affect the Company’s business, financial condition, and results of operations.

Current report

Power generation, data center development, and HPC hosting are capital-intensive business lines that may require the Company to raise substantial additional capital on terms that are unfavorable or unavailable.

Current report

Each of power generation, data center development, and HPC hosting requires substantial capital investment for site acquisition, construction or build-out, equipment procurement, regulatory and permitting compliance, and ongoing operations. Power generation facilities and data centers, in particular, are characterized by long development cycles and significant capital commitments before revenue is generated. The Company may be required to raise substantial additional capital through equity issuances (which would dilute existing stockholders), debt financings (which would impose servicing obligations and restrictive covenants), project finance arrangements (which may pledge specific assets and constrain operational flexibility), joint ventures, or other arrangements. There can be no assurance that such capital will be available to the Company on acceptable terms, or at all. If the Company is unable to access sufficient capital, the Company may be required to scale back, delay, or abandon planned expansion into one or more of these business lines, which could materially adversely affect the Company’s business, financial condition, and results of operations.

Current report

The Company’s planned power generation business is subject to extensive federal and state regulatory requirements and exposure to volatile energy and commodity markets.

Current report

The development, ownership, and operation of power generation facilities in the United States are subject to extensive federal regulation by the Federal Energy Regulatory Commission (“FERC”) and the North American Electric Reliability Corporation (“NERC”), state regulation by public utility commissions, and a complex framework of environmental laws and regulations administered by the U.S. Environmental Protection Agency and state environmental agencies. Operation of generation assets within organized wholesale electricity markets, including the markets operated by ERCOT and other regional transmission organizations and independent system operators, exposes the Company to additional regulatory and market participation requirements. The Company’s planned power generation business will also be subject to material commodity-price exposure (including with respect to natural gas, fuel oil, and other inputs), wholesale electricity price volatility, transmission constraints, curtailment risk, weather-driven supply and demand imbalances, and forced-outage and equipment-failure risk. Any failure to obtain or maintain required regulatory approvals, comply with applicable environmental laws, or manage commodity-price and market-participation risks could materially adversely affect the Company’s power generation operations and the broader business.

Current report

The Company’s planned data center development business faces significant site, construction, permitting, and customer-acquisition risk, and competes against well-capitalized incumbents.

Current report

The development of data center facilities involves site identification and acquisition, securing adequate and reliable electric power capacity (which in many U.S. markets requires multi-year utility interconnection queues), water access for cooling, fiber and network connectivity, local and state permitting (including environmental review, water-use approvals, and zoning), construction of substantial physical infrastructure, and the procurement and integration of cooling, power distribution, fire suppression, and physical and cyber security systems. The Company’s data center development efforts will compete against established hyperscale cloud providers, dedicated colocation and data-center operators, and other digital infrastructure companies, many of which have substantially greater capital resources, longer operating histories, established customer relationships, dedicated development teams, and existing positions in scarce power and connectivity markets. The Company may not be able to secure adequate sites, power capacity, or financing on competitive terms, may experience cost overruns or construction delays, may be unable to attract sufficient hosting customers at acceptable pricing, and may face declining demand or pricing pressure as a result of overbuild in the industry.

Current report

The Company’s planned HPC hosting business is dependent on continued strong demand for artificial intelligence and machine learning compute capacity, access to scarce specialized hardware, and the ability to compete with established providers.

Current report

The Company’s planned high-performance compute hosting business is intended to serve customers requiring graphics processing unit (“GPU”), tensor processing unit, and other specialized compute capacity for artificial intelligence, machine learning, scientific computing, and similar workloads. This business line is subject to a number of specific risks, including: (i) the level and durability of customer demand for HPC capacity, which is presently driven substantially by demand for artificial intelligence and machine learning training and inference workloads and may decline or become more cyclical as the market matures; (ii) access to specialized hardware, which is currently constrained by the supply chain and allocation policies of a small number of dominant suppliers; (iii) the technical requirements of HPC hosting (including high power densities, liquid cooling, and high-bandwidth networking), which differ materially from the requirements of digital asset mining and conventional data center hosting and may require the Company to retrofit or purpose-build facilities to support HPC workloads; (iv) the credit risk, contract negotiating leverage, and customer concentration risk associated with large hyperscale and artificial-intelligence-focused customers; and (v) competition from established HPC and artificial intelligence hosting providers and the hyperscale cloud providers, many of which have greater scale, longer-standing customer relationships, and existing access to scarce hardware. The Company may not be able to compete effectively in this business line, and the financial returns from the business line may be lower than anticipated or may not be realized.

Current report

Concurrent pursuit of digital asset mining, power generation, data center development, and HPC hosting may strain the Company’s management, capital, and operational resources.

Current report

The Company’s strategic plan contemplates building integrated operations across digital asset mining, power generation, data center development, and HPC hosting. While these business lines are intended to be complementary in certain respects (for example, owned power generation can supply mining and data center operations, and existing mining infrastructure may, in certain cases, be repurposable for HPC hosting), the simultaneous pursuit of multiple distinct business lines will require the Company to allocate management attention, capital, and operational resources across competing demands. The Company’s failure to set appropriate priorities, allocate capital efficiently, identify and retain qualified personnel for each business line, develop the operational capabilities needed to support multiple business lines, or execute on each business plan could prevent the Company from achieving its strategic objectives in any of these business lines and could materially adversely affect the Company’s business, financial condition, and results of operations.

Current report

Risks Related to the Company’s Capital Structure

Current report

Holders of the Company’s common stock have experienced and may continue to experience significant dilution.

Current report

In connection with the closing of the Merger, the Company issued an aggregate of 43,877,497 shares of common stock to the former stockholders of Z Squared, increasing the Company’s outstanding shares of common stock from 6,553,996 at March 31, 2026 to 51,431,493 at May 12, 2026. This represents substantial dilution to the holders of the Company’s common stock prior to the Merger. Additional dilution may result from (i) the conversion of any Series B Convertible Preferred Stock issued in connection with the SkyCore Acquisition, (ii) sales of common stock under the Company’s existing Standby Equity Purchase Agreement (the “SEPA”), (iii) the issuance of bonus shares of common stock to Group 10 Holdings LLC pursuant to the Second Amendment to the consulting agreement between the Company and Group 10 Holdings LLC, (iv) the issuance of common stock under the Company’s 2025 Incentive Compensation Plan and any other equity plans of the Company, (v) the exercise of outstanding warrants (including legacy Public Warrants and Private Placement Warrants outstanding since the Company’s predecessor’s initial public offering in November 2020), (vi) the exercise of outstanding stock options, and (vii) the issuance of common stock in connection with any future financings, acquisitions, or strategic transactions. The market price of the Company’s common stock could decline as a result of any such dilution or anticipated dilution.

Current report

The Company’s common stock is subject to significant concentration of ownership, and a small number of stockholders may have the ability to influence matters submitted to the stockholders for approval.

Current report

Following the Merger, a substantial portion of the Company’s outstanding common stock is held by the former stockholders of Z Squared, including Group 10 Holdings LLC. Group 10 Holdings LLC is also entitled to receive an additional 200,000 shares of common stock pursuant to the Second Amendment to its consulting agreement with the Company in connection with the closing of the Merger. The concentration of ownership of the Company’s common stock may have the effect of (i) delaying, deferring, or preventing a change of control of the Company, (ii) influencing the outcome of matters submitted to the Company’s stockholders for approval, including the election of directors and significant corporate transactions, and (iii) discouraging unsolicited acquisition proposals or offers for the Company’s common stock that other stockholders may consider favorable.

Previous report

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.