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

PharmaCyte Biotech filed an amended Schedule 13D showing 74% beneficial ownership of Q/C Technologies via preferred stock, warrants, and recent $3M financing with anti-dilution protections.

Summary

• PharmaCyte Biotech beneficially owns 8,475,368 shares of Q/C Technologies, representing 74.00% of the class when including as-converted preferred and exercisable warrants.
• The position comprises 2,542,936 shares issuable from Series G Convertible Preferred, 889,865 shares issuable from Series H Convertible Preferred, and warrants to purchase 5,042,567 common shares.
• A $3,000,000 investment on September 2, 2025 secured Series H Preferred and warrants; initial $5.00 conversion/exercise prices reset to $3.3713 per share pursuant to adjustment provisions.
• Series H Preferred pays a 7.0% per annum cash dividend (compounded monthly), rising to 15% upon a Triggering Event, and includes a dividend make-whole on conversion.
• Warrants became exercisable upon shareholder approval on November 14, 2025, and expire on November 14, 2030; warrant pricing is subject to full-ratchet anti-dilution adjustments.
• PharmaCyte has participation rights in future equity and equity-linked offerings until the later of the Series H maturity or when Series H is no longer outstanding.
• Registration rights require the company to file a resale registration statement covering 200% of conversion and warrant shares within 30 days of closing and to obtain effectiveness by the contractual Effectiveness Date.
• Common shares outstanding were 2,977,672 as of October 2, 2025; all share figures reflect the 1-for-100 reverse split effective August 29, 2025 at 4:05 p.m. New York time.
• Voting power is on an as-converted basis at a $3.3713 assumed conversion price; the filer shows zero sole voting/dispositive power and 8,475,368 shared voting/dispositive power.
• The filer states no present plans for actions beyond those disclosed in Item 4 of Schedule 13D (e.g., mergers, asset sales, board changes) other than rights associated with the securities acquired.

Sentiment

Score: 6

Explanation: Positive from a liquidity and support standpoint due to the $3M financing and strategic holder involvement, but offset by heavy potential dilution, full-ratchet protection, dividend obligations, and concentrated control.

Positives

• Secured $3,000,000 in new capital via issuance of Series H Preferred and warrants on September 2, 2025.
• Shareholder approval on November 14, 2025 enabled issuance above Nasdaq’s 19.99% threshold, unlocking warrant exercisability and reducing listing compliance risk.
• Clear long-term funding runway from a strategic holder with rights to participate in future financings, potentially stabilizing capital access.
• Defined conversion/exercise mechanics and timelines: Series H conversion price $3.3713; warrants exercisable until November 14, 2030.

Negatives

• Significant potential dilution to common shareholders from 3,432,801 as-converted preferred shares and 5,042,567 warrant shares held by PharmaCyte.
• Full-ratchet anti-dilution on warrants (and price-based adjustments on preferred) can reset prices downward if future equity is issued below the then-applicable price.
• Cash dividend obligations of 7.0% per annum (15% upon Triggering Event) increase cash outflows.
• Ownership concentration is high at 74.00% beneficial ownership, consolidating control with a single holder.

Risks

• Failure to file or maintain an effective resale registration statement as required by the Registration Rights Agreement constitutes a Triggering Event, enabling cash redemption at a premium.
• Failure to make required payments to the holder constitutes a Triggering Event, with potential cash redemption obligations at a premium.
• Price-based adjustment (full-ratchet on warrants and adjustment on preferred) can increase dilution if equity is issued below the current $3.3713 conversion/exercise price.
• Limitations on settling conversions and dividend make-whole payments with common stock could constrain flexibility.

Future Outlook

PharmaCyte’s rights allow participation in future equity financings, and the Series H Preferred and warrants can be converted/exercised over time (warrants through November 14, 2030). Share count could increase materially upon conversions/exercises, subject to registration and contractual limitations.

Management Comments

• No present plan or proposal to effect actions listed under Item 4(a)-(j) of Schedule 13D beyond the disclosed transaction terms.
• Voting to occur with common shareholders on an as-converted basis using a $3.3713 assumed conversion price.
• Upon a Triggering Event (e.g., failure to file/maintain an effective resale registration statement or failure to pay amounts due), the holder may require cash redemption at a contractual premium.

Industry Context

This structure is typical of microcap Nasdaq issuers using convertible preferred stock and warrants with investor protections (full-ratchet anti-dilution, registration rights) to secure capital post-reverse split for listing compliance. Such terms can support funding access but often create significant overhang and potential dilution compared to larger-cap deals that more commonly use weighted-average anti-dilution.

Comparison to Industry Standards

• Ownership concentration at 74% is higher than typical strategic or PIPE holders in Nasdaq microcaps, indicating effective control.
• Full-ratchet anti-dilution on warrants is more investor-protective (and more dilutive) than the weighted-average adjustments more common in larger-cap or higher-quality financings.
• A 7% cash dividend (15% upon Triggering Event) on convertible preferred is within the upper range for microcap structures and above levels seen in more established issuers.
• Registration rights requiring filing within 30 days and coverage of 200% of resellable shares are stringent compared to many small-cap transactions that register closer to 100–150% coverage.
• A 1-for-100 reverse split is larger than typical reverse splits (often 1-for-5 to 1-for-20), underscoring listing compliance pressures common among small-cap Nasdaq issuers.

Corporate Governance

Stakeholder Impact

• Common shareholders face substantial potential dilution from as-converted preferred and warrant exercises, especially under full-ratchet anti-dilution.
• Cash dividend obligations (7% per annum, 15% upon Triggering Event) and possible cash redemptions could pressure liquidity.
• Concentrated ownership (74%) increases control by a single investor, potentially influencing corporate actions and governance outcomes.
• Suppliers and partners may view the financing and shareholder approval as strengthening capital access, albeit with ongoing overhang from convertible securities.

Next Steps

• File and maintain effectiveness of a resale registration statement covering 200% of the conversion and warrant shares within the contractual timelines.
• Potential conversions of Series H Preferred at $3.3713 per share and warrant exercises through November 14, 2030.
• PharmaCyte may participate in future equity or equity-linked offerings pursuant to its participation rights.
• Monitor for any Triggering Events that could lead to cash redemption obligations at a premium.

Key Dates

Recommendation

The transaction provides needed capital and a supportive strategic holder, but the structure carries significant dilution risk, stringent anti-dilution protections, cash dividend obligations, and concentrated control. Without operating results or guidance, a balanced hold is prudent pending clarity on execution and capitalization outcomes.

Keywords

Schedule 13D, beneficial ownership, Q/C Technologies, PharmaCyte Biotech, Series H Convertible Preferred, Series G Preferred, warrants, Nasdaq 19.99% approval, reverse split, registration rights, full ratchet anti-dilution, dividend make-whole, Triggering Event, capital raise