Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Information Regarding and Factors Affecting Forward Looking Statements

The Company is including the following cautionary statement in this Quarterly Report on Form 10-Q to make applicable and take advantage of the safe harbor provision of the Private Securities Litigation Reform Act of 1995 for any forward looking statements made by, or on behalf of the Company. Forward looking statements include statements concerning plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements which are other than statements of historical facts. Certain statements contained herein are forward looking statements and, accordingly, involve risks and uncertainties which could cause actual results or outcomes to differ materially from those expressed in the forward looking statements.

The Company's expectations, beliefs and projections are expressed in good faith and are believed by the Company to have a reasonable basis, including without limitations, management's examination of historical operating trends, data contained in the Company's records and other data available from third parties, but there can be no assurance that management's expectations, beliefs or projections will result or be achieved or accomplished. In addition to other factors and matters discussed elsewhere herein, the following are important factors that, in the view of the Company, could cause actual results to differ materially from those discussed in the forward looking statements: the ability of the Company to attain widespread market acceptance of its systems; the ability of the Company to obtain acceptable forms and amounts of financing to fund future operations; demand for the Company's services; and competitive factors. The Company disclaims any obligation to update any forward looking statements to reflect events or circumstances after the date hereof.

General Overview

Organization

Positron Corporation (the "Company" or "Positron") was incorporated under the laws of the State of Texas in 1983. Unless the context requires otherwise, in this report the terms "we," "us", "our", "the Company", and "Positron" refer to Positron Corporation.

Corporate History

Positron Corporation was incorporated as a Texas corporation in 1983 with its corporate headquarters in North Tonawanda, New York.

Nature of Business. Positron is a medical technology company that co-develops, manufactures and sells PET and PET-CT imaging systems, delivering high-performance, cost-effective molecular imaging solutions that empower healthcare providers to improve the diagnosis and treatment of cardiovascular disease and other critical conditions. By combining proprietary PET and PET-CT systems with comprehensive clinical and technical support, flexible financing, and a focus on operational efficiency, Positron makes advanced diagnostic imaging more accessible and sustainable for hospitals, outpatient centers, and physician practices.

With a specialization in cardiac PET imaging and a growing presence in oncology and neurology, Positron stands at the forefront of innovation in nuclear medicine. Its systems are designed to enhance patient outcomes, maximize system uptime, and reduce total cost of ownership-offering unmatched clinical value and economic advantage in today's healthcare environment.

In 2023, the Company entered an expanded business cooperation / OEM Supply and Distribution / SKD Manufacturer Agreement with Shenyang Intelligent Neuclear Medical Technology Co. a subsidiary of Neusoft Medical Systems' which secured exclusive rights for the North American market to sell/distribute PET,PET-CT and next generation PET-CT scanners in the future.

The Company

Positron Corporation is a medical technology company committed to advancing the PET imaging modality through the development, manufacturing, and commercialization of its state-of-the-art PET and PET-CT (Positron Emission Tomography/Computed Tomography) imaging systems. With a strong focus on cardiac PET-the gold standard in nuclear cardiology-Positron provides cutting-edge solutions that enhance diagnostic accuracy, improve patient outcomes, and drive cost-effective care for healthcare providers across North America.

Positron's imaging portfolio includes a dedicated PET only and 3D PET-CT 64-Slice systems, both designed to expand access to advanced molecular imaging. Additionally, Positron is preparing to introduce its 4D PET-CT 64-Slice scanner, further strengthening its role in the evolution of nuclear cardiology while positioning the company for entry into the oncology imaging market. These innovations, supported by Positron's comprehensive clinical and technical services, enable nuclear cardiologists and imaging specialists to fully leverage PET technology for superior diagnostic capabilities.

Through a strategic partnership with Shenyang Intelligent Nuclear Medical Technology Co. Ltd., a subsidiary of Neusoft Medical Systems, Positron holds exclusive North American distribution rights and FDA 510(k) clearance for the NeuSight PET-CT (3D) system. Additionally, Positron and Neusoft have co-developed the Affinity PET-CT (4D), which Positron will manufacture, distribute, and service. The company plans to amend its existing 510(k) clearance to include the Affinity PET-CT, ensuring regulatory compliance and market readiness upon FDA approval.

Positron's collaboration with Neusoft Medical Systems extends to the production of its Attrius PET system, a foundational technology for its PET-CT advancements. This joint effort has been instrumental in expanding Positron's PET-CT offerings, setting the stage for rapid growth across multiple imaging disciplines. With an emphasis on accessibility, affordability, and technological excellence, Positron is well-positioned to meet the rising demand for PET-CT imaging in nuclear cardiology and oncology, delivering best-in-class solutions that optimize patient care and streamline practice efficiencies.

Positron's Headquarters is in North Tonawanda, NY.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities and related disclosure of contingent assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the applicable period. Actual results may differ from these estimates under different assumptions or conditions.

We define critical accounting policies as those that are reflective of significant judgments and uncertainties, and which may potentially result in materially different results under different assumptions and conditions. In applying these critical accounting policies, our management uses its judgment to determine the appropriate assumptions to be used in making certain estimates. These estimates are subject to an inherent degree of uncertainty. Our critical accounting policies include the following:

Financial Instruments with Characteristics of Both Liabilities and Equity

The Company evaluates equity or liability classification for freestanding financial instruments, including convertible preferred stock, warrants, and options, pursuant to the guidance under FASB ASC Topic 480, Distinguishing Liabilities from Equity ("ASC 480"). The Company classifies as liabilities all freestanding financial instruments that are (i) mandatorily redeemable, (ii) represent an obligation to repurchase the Company's equity shares by transferring assets, or (iii) represent an unconditional obligation (or conditional obligation if the financial instrument is not an outstanding share) to issue a variable number of shares predominantly based on a fixed monetary amount, variations in something other than the fair value of the Company's equity shares, or variations inversely related to changes in fair value of the Company's equity shares.

If a freestanding financial instrument does not represent an outstanding equity share and does not meet liability classification under ASC 480, the Company then assesses whether the freestanding financial instrument is indexed to its own stock and meets equity classification pursuant to FASB ASC 815-40, Derivatives and Hedging ("ASC 815"). The Company further assesses whether the freestanding financial instruments should be classified as temporary equity. Freestanding financial instruments that are redeemable for cash or other assets at a fixed or determinable date, at the option of the holder, or upon the occurrence of an event are classified in temporary equity in accordance with FASB ASC 480. Otherwise, the freestanding financial instruments are classified in permanent equity.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is recognized when or as control of promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company applies the following five-step model:

(i) identify the contract with a customer;

(ii) identify the performance obligations in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligations in the contract; and

(v) recognize revenue when, or as, performance obligations are satisfied.

Nature of Services and Performance Obligations

The Company generates revenue primarily from clinical, technical, and maintenance service contracts that provide customers with ongoing product support and from sales of equipment. These contracts are generally one-year agreements that automatically renew for successive one-year periods unless terminated by either party with at least 90 days' notice. The Company considers only the noncancelable initial term and any renewal periods for which the customer has a material right when determining the contract term and performance obligations.

Each maintenance contract represents a single distinct performance obligation. The various service elements - including priority response, 24/7 clinical and technical support, parts and labor, preventative maintenance, software upgrades, uptime guarantees, remote diagnostic capabilities, daily quality assurance inspections, and applications training - are highly integrated and interdependent. They are not separately identifiable from one another and are accounted for as a single stand-ready performance obligation that is satisfied continuously over the contract term.

Significant Judgments

In applying ASC 606, the Company makes the following significant judgments that affect the timing and amount of revenue recognized:

(i) the Company concluded that all services under each maintenance contract constitute a single performance obligation because they are highly interrelated and provide a combined integrated service to the customer;

(ii) for maintenance contracts, the Company uses a time-based, straight-line output method to measure progress, which it has determined faithfully depicts the Company's performance as the customer simultaneously receives and consumes the benefits of the services; and

(iii) for equipment sales, the Company applies judgment in assessing when control transfers to the customer.

No changes to these judgments have occurred during the periods presented.

Transaction Price and Allocation

The transaction price is the fixed fee stated in each contract. The Company does not offer refunds, rebates, discounts, or variable pricing incentives. Maintenance contract fees are typically billed monthly in advance with payment due within 30 days. As permitted by the practical expedient in ASC 606-10-32-18, the Company does not adjust the transaction price for the effects of a significant financing component when the period between transfer of control of the good or service and customer payment is one year or less. Because each contract contains a single performance obligation, the entire transaction price is allocated to that obligation.

Revenue Recognition - Timing

The Company recognizes revenue either over time or at a point in time depending on the nature of the performance obligation.

Maintenance contract revenue is recognized over time as the customer simultaneously receives and consumes the benefits of the services as they are provided. Revenue is recognized ratably on a straight-line basis over the contract term. Amounts received in advance of services being provided are recorded as deferred revenue and recognized as revenue as the related performance obligations are satisfied.

Equipment sale revenue is recognized at a point in time when control of the equipment transfers to the customer, which occurs upon physical delivery and acceptance of the equipment and where collection is probable. In three months ended March 31, 2026 and 2025, no equipment sale revenue had been recognized, as the conditions for transfer of control had not yet been met.

Principal vs. Agent Considerations

The Company has determined that it acts as a principal in all revenue transactions. The Company controls the services prior to transfer to the customer, is responsible for fulfilling all contractual obligations including uptime guarantees, bears the risk of performance, and has discretion in establishing contract pricing. Accordingly, revenue is recognized on a gross basis.

Contract Balances and Remaining Performance Obligations

The Company's contract liabilities consist of deferred revenue related to maintenance contracts billed in advance and customer deposits on pending equipment sales. These amounts are presented as deferred revenue on the accompanying balance sheets. There were no contract assets as of March 31, 2026 or December 31, 2025.

The Company has elected the practical expedient under ASC 606-10-50-14 not to disclose the aggregate amount of the transaction price allocated to remaining performance obligations for contracts with an original expected duration of one year or less.

All revenue recognized in both periods was derived from maintenance service contracts. No equipment sale revenue has been recognized in either period, as transfer of control of the equipment to the customer had not yet occurred as of each respective balance sheet date.

Deferred Revenue (Contract Liabilities)

Deferred revenue represents consideration received from customers prior to the satisfaction of the related performance obligation.

Maintenance contract amounts represent consideration received from customers prior to the applicable service period and are recognized as revenue ratably as performance obligations are satisfied over the service term.

Related Parties

The Company defines related parties in accordance with ASC 850, "Related Party Disclosures," and SEC Regulation S-X, Rule 4-08(k). Related parties include entities and individuals that, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company.

Related parties include, but are not limited to:

A party is considered related if it has the ability to control or significantly influence the management or operating policies of the Company in a manner that could prevent either party from fully pursuing its own separate economic interests.

The Company discloses all material related party transactions, including:

Disclosures are made in accordance with ASC 850-10-50-1 through 50-6 and SEC Regulation S-X, Rule 4-08(k), which requires registrants to disclose material related party transactions and their effects on the financial position and results of operations.

Results of Operations

Results of operations for the three months ending March 31, 2026 and 2025.

Revenues - Revenues for the three months ended March 31, 2026, were $111,000 as compared to $119,333 for the three months ended March 31, 2025. The slight decrease of $8,333 in revenue was based on a customer opting for time and materials service agreements vs fixed annual services agreement.

Costs of Sales - Costs of sales for the three months ended March 31, 2026, were $637,819, including payments of $220,183 in 2026, for additional equipment to ready a unit for sale, resulting in a corresponding inventory write-down of $220,183, as compared to $377,033 for the three months ended March 31, 2025, due to additional personnel and expenses related to product launch.

General and Administrative Expenses - The Company's operating expenses were $838,138 for the three months ended March 31, 2026, compared to $1,219,799 for the three months ended March 31, 2025 was due to expanded sales and marketing, hardware/software upgrades to existing systems, business development, consultants and corporate operations, including the payment of an NRE fee of $490,000 during the three months ended March 31, 2025. During the three months ended March 31, 2026, the Company recorded $94,500 in stock based compensation for digital marketing services.

Other Expenses - During the three months ended March 31, 2026 and 2025, the Company recorded other expenses - net of $12,812 and $34,883, respectively. Other expenses include interest expense and other income includes interest income.

Interest expense was $23,349 and $34,926 for the three months ended March 31, 2026 and 2025, respectively.

During the three months ended March 31, 2026, and 2025, the Company recorded interest income of $10,537 and $43.

Net Loss - For the three months ended March 31, 2026, the Company had a net loss of $1,377,769, or ($0.04) per share, compared to a net loss of $1,512,382, or ($0.05) per share, for the three months ended March 31, 2025.

Liquidity and Capital Resources

Since inception, the Company has sustained substantial losses. Revenues have also fluctuated significantly from year to year. The Company had an accumulated deficit of $146,314,848 at March 31, 2026. The Company will need to continue to increase sales and/or rental of systems and services to achieve profitability in the future.

The Company's ability to achieve its objectives is dependent on its ability to sustain and enhance its revenue stream and/or to raise capital until such time as the Company achieves profitability. To date, management has been successful in raising capital as needed for the continued operations of the Company. There is no guarantee that management will be able to continue to raise capital if needed in the future, and if able to raise these funds, obtaining this capital may not be on favorable terms.

The Company has cash on hand of $1,406,756 at March 31, 2026. The Company does not expect to generate sufficient revenues and positive cash flow from operations sufficiently to meet its current obligations, including a working capital deficiency of $334,061. However, the Company may seek to raise debt or equity-based capital at favorable terms, though such terms are not certain.

These factors create substantial doubt about the Company's ability to continue as a going concern within the twelve-month period subsequent to the date that these financial statements are issued. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, the financial statements have been prepared on the basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

Management's strategic plans include the following:

At March 31, 2026, the Company had current assets of $2,151,018 and total assets of $2,792,078 compared to March 31, 2025, when current assets were $3,339,186 and total assets were $3,999,649. The decrease in total assets is attributable primarily to a reduction in cash to meet working capital needs, depreciation of property and equipment and usage of prepaid assets expensed in the current period ended March 31, 2026.

Total liabilities at March 31, 2026, were $2,631,525 compared to $2,555,827 at December 31, 2025. Total liabilities were largely comprised of accounts payable and accrued expenses with 3^rd parties and related parties, deferred revenues, notes and other debt as well as its operating lease.

Net cash used in operating activities during the three months ended March 31, 2026, was $788,710 compared to $1,437,760 used in operating activities during the three months ended March 31, 2025.

Net cash used in investing activities during the three months ended March 31, 2026, was $0 compared to $0 used in investing activities during the three months ended March 31, 2025.

Net cash provided by (used in) financing activities was ($325,000) and $5,250,000 for the three months ended March 31, 2026, and 2025, respectively. During the three months ended March 31, 2026, cash from financing activities was comprised of $325,000 to repay debt owed to a related party. For the comparative prior period in 2025, the Company sold stock for cash totaling $8,000,000, repurchased and retired common stock with a third party stockholder for $2,500,000, received cash proceeds of $100,000 from the issuance of debt with a related party and repaid related party debt of $350,000

Off-Balance Sheet Arrangements

We have not entered into any transactions with unconsolidated entities whereby we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support.