SCHEDULE: PharmaCyte discloses 74% stake in Q/C Tech

PharmaCyte Biotech reports 74.00% beneficial ownership of Q/C Technologies via preferred stock and warrants following shareholder approval.

Summary

• PharmaCyte Biotech, Inc. reports beneficial ownership of 8,475,368 shares (74.00%) of Q/C Technologies’ common stock on an as-converted, as-exercised basis.
• Ownership components: 2,542,936 shares issuable upon conversion of Series G preferred; 889,865 shares issuable upon conversion of Series H preferred at a $3.3713 conversion price; and 5,042,567 warrant shares (including 889,865 warrants at $3.3713).
• A Securities Purchase Agreement dated September 2, 2025 provided $3,000,000 in consideration for Series H preferred and associated warrants; initial $5.00 conversion/exercise prices reset to $3.3713 under anti-dilution adjustments.
• Warrants are exercisable after stockholder approval obtained on November 14, 2025 and expire on November 14, 2030; exercise price is $3.3713 with full-ratchet anti-dilution.
• Series H preferred pays a 7.0% per annum dividend, compounded monthly; upon a Triggering Event the dividend increases to 15% per annum, and the holder can require cash redemption at a defined premium.
• Registration Rights Agreement requires the issuer to file a resale registration covering 200% of the conversion and warrant shares within 30 days of closing and to maintain effectiveness by the specified Effectiveness Date.
• Voting: the holder votes with common stock on an as-converted basis, calculated at a $3.3713 assumed conversion price; sole voting power: 0; shared voting power: 8,475,368.
• Outstanding common shares were 2,977,672 as of October 2, 2025 (per the issuer’s Form S-3 on October 3, 2025); all share figures reflect a 1-for-100 reverse split effected at 4:05 p.m. ET on August 29, 2025.
• Participation right: PharmaCyte can participate in future equity or equity-linked financings until the later of Series H no longer outstanding or its maturity date.

Sentiment

Score: 5

Explanation: Neutral overall: the company received $3 million and cleared Nasdaq approval, but the structure includes significant dilution potential, full-ratchet anti-dilution, ongoing dividend obligations, and cash redemption rights upon Triggering Events.

Positives

• $3,000,000 in capital provided through the Series H preferred and warrants financing.
• Shareholder approval on November 14, 2025 enabled issuance above the Nasdaq 19.99% threshold, clearing the way for warrant exercisability.
• Registration rights granted for resale of 200% of conversion and warrant shares, targeting post-transaction liquidity.
• Voting structured on an as-converted basis, aligning the investor’s economic and governance interests.

Negatives

• Substantial dilution potential: 3,432,801 shares issuable from preferred plus 5,042,567 warrant shares versus 2,977,672 common shares outstanding as of October 2, 2025.
• Full-ratchet anti-dilution on warrants and price-based adjustments on preferred can reset prices lower in future down-rounds, increasing dilution.
• Cash dividend burden of 7% per annum (compounded monthly) on Series H; rises to 15% upon a Triggering Event.
• Triggering Events permit the holder to require cash redemption at a premium, creating potential cash strain.

Risks

• Failure to file and maintain an effective resale registration statement constitutes a Triggering Event, increasing the dividend to 15% and enabling cash redemption at a premium.
• Failure to pay amounts due to the holder is a Triggering Event with similar remedies.
• Conversion and exercise prices are subject to price-based adjustment (Series H) and full-ratchet anti-dilution (warrants), which may reset lower upon future issuances below the then-applicable prices.
• Limitations on settling conversions and dividend make-whole in shares could necessitate cash payments under certain conditions.

Future Outlook

PharmaCyte holds significant governance influence via 74% as-converted, as-exercised ownership, with the option to convert preferred and exercise warrants through November 14, 2030. Registration obligations aim to facilitate resale liquidity, and PharmaCyte has rights to participate in future equity or equity-linked financings until the later of the Series H no longer outstanding or its maturity date. No additional plans or proposals beyond these contractual rights are indicated.

Industry Context

This is a control-level stake in a Nasdaq micro-cap supported by a structured financing using convertible preferred stock with price-based adjustments and full-ratchet warrants—terms commonly used in small-cap capital raises to attract investors while increasing dilution risk for existing holders. Shareholder approval under Nasdaq’s 19.99% cap aligns with standard listing compliance for large issuances.

Comparison to Industry Standards

• Dividend terms: A 7% per annum dividend (compounded monthly) on convertible preferred is within the 6–12% range frequently seen in micro-cap structured financings; the 15% step-up upon default is typical for downside protection.
• Anti-dilution: Full-ratchet protection on warrants is more investor-favorable (and more dilutive) than weighted-average adjustments commonly seen in larger-cap deals, but is not uncommon in distressed or higher-risk micro-cap issuances.
• Ownership concentration: A 74% as-converted, as-exercised position represents control-level influence, which is atypical for passive PIPE investors and aligns more with strategic or change-of-control style positions in small-caps.
• Registration rights: The requirement to register 200% of conversion and warrant shares for resale is consistent with robust resale coverage often negotiated in micro-cap financings to ensure market availability after adjustments.

Corporate Governance

Stakeholder Impact

• Existing shareholders face potential dilution from 3,432,801 as-converted preferred shares and 5,042,567 warrant shares, materially exceeding current outstanding common shares.
• Dividend obligations (7% per annum, compounding monthly; 15% upon default) and possible cash redemptions may pressure issuer liquidity if Triggering Events occur.
• PharmaCyte’s 74% as-converted, as-exercised stake implies control-level influence over voting outcomes.
• Registration obligations aim to provide liquidity for resale, potentially increasing trading float once effective.

Next Steps

• Maintain an effective resale registration statement covering 200% of the conversion and warrant shares per the Registration Rights Agreement.
• Facilitate warrant exercises (now permitted post-stockholder approval) through November 14, 2030.
• Honor PharmaCyte’s participation rights in future equity or equity-linked financings while monitoring price-based adjustment provisions.
• Manage dividend and redemption obligations under the Series H terms to avoid Triggering Events.

Key Dates

Recommendation

A control-level stake with strong investor protections, full-ratchet anti-dilution, and sizable warrant overhang signals substantial dilution risk and potential cash obligations, offset by the $3 million capital infusion and regulatory clearance via shareholder approval. Without operating results or guidance, a neutral stance is warranted pending execution on registration, financing plans, and governance outcomes.

Keywords

Schedule 13D, beneficial ownership, Q/C Technologies, PharmaCyte Biotech, Series H Convertible Preferred, Series G Convertible Preferred, warrants, full ratchet anti-dilution, registration rights, reverse stock split, Nasdaq 19.99% rule, dividend, Triggering Event, cash redemption, QCLS