CDIX 10-K & 10-Q changes, risk factors and insider trading

However, management believes, based on our operating plan, that current working capital and current and expected additional financing should be sufficient to fund operations and satisfy our obligations as they come due for at least one year from the financial statement issuance date.year. However, additional funds from new financing and/or future equity raises are required for continued operations and to execute our business plan and our strategy of acquiring additional businesses. The funds required to execute our business plan will depend on the size, capital structure and purchase price consideration that the seller of a target business deems acceptable in a given transaction. The amount of funds needed to execute our business plan also depends on what portion of the purchase price of a target business the seller of that business is willing to take in the form of seller notes or our equity or equity in one of our subsidiaries. Given these factors, we believe that the amount of outside additional capital necessary to execute our business plan on the low end (assuming target company sellers accept a significant portion of the purchase price in the form of seller notes or our equity or equity in one of our subsidiaries) ranges between $5 million to $10 million. If, and to the extent, that sellers are unwilling to accept a significant portion of the purchase price in seller notes and equity, then the cash required to execute our business plan could be as much as $10 million.

Our typical accounts receivable collection lifecycle is between 1812 and 24 months. This extended period creates several risks relating to our liquidity and cash flow, exposure to badcredit debt,losses, dependence on external financing, negative impact on our financial metrics and operational challenges.

We operatefocus inon theplaintiff-related lien-basedcare medical industry. Weand provide orthopedic healthcare to uninsured patients. Our patients have typically been in an accident and have filed a lawsuit as a plaintiff against the defendant who is allegedly responsible for the accident as the result of negligence or another tort. Since the patient is uninsured, we must wait for payments of amounts owed to us until the patient’s lawyer settles the claim against the defendant’s insurance insurance company or the defendant himself.defendant. As a result of our need to wait for such a settlement, we experience an extended accounts receivable collection period, which typically ranges from 1812 to 24 months. This extended accounts receivable collection period is very different from a traditional product or service business that collects a majority of receivables within 30, 60, and/or 90-day increments. We routinely receive a letter of protection from our patient and its legal counsel which ensures payment in full from insurance settlements. A letter of protection is a legally binding contract that exists between the patient’s personal injury attorney, the patient, and our company, as the healthcare provider. The letter promises that the patient will pay the medical expenses after the patient’s injury claim reaches its settlement.

Historically, we have not maintained systematic processes and resources to manage and monitor the aging of our accounts receivables. The settlement process is complex and ongoing patient care can further complicate the accurate aging of receivables. These complexities may lead to difficulties in assessing the true financial health of our company and in predicting cash flow accurately. Currently, our third-party billing company only captures the first date of service for each patient. This first date of service may be months before surgery or before any significant services have been rendered. The receivable relating to the patient continues to grow over time, which distorts the actual aging of the receivable. With regard to facilities and anesthesiology services, our third-party billing company historically had not captured any first date of service, so we do not have historical data relating to the aging of accounts receivable relating to these services. Recently, we have been working with our third-party billing company to resolve the systematic issue with respect to facilities and anesthesiology services in order to begin to capture the first date of service. We believe that these changes to our financial systems will assist us going forward, but we expect ana 1812 to 24 month lag before we are able to obtain relevant aging data with regard to these receivables.

AsIf we grow,are able to successfully grow our operations, which cannot be assured, we expect to encounter additional challenges to our internal processes, capital commitment process, and acquisition funding and financing capabilities. Our existing operations, personnel, systems, and internal control may not be adequate to support our growth and expansion and may require us to make additional unanticipated investments in our infrastructure. To manage the future growth of our operations, we will be required to improve our administrative, operational, and financial systems, procedures, and controls, and maintain, expand, train, and manage our growing employee base. If we are unable to manage our growth effectively, we may not be able to take advantage of market opportunities, execute our business strategies successfully or respond to competitive pressures. As a result, our business, prospects, financial condition, and results of operations could be materially and adversely affected.

We financehave historically financed acquisitions primarily through additional equity and debt financings. Because the timing and size of acquisitions cannot be readily predicted, we may need to be able to obtain funding on short notice to benefit fully from attractive acquisition opportunities. The sale of additional shares of any class of equity will be subject to market conditions and investor demand for such shares at prices that may not be in the best interest of our stockholders. The sale of additional equity securities could also result in dilution to our stockholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. These risks may materially adversely affect our ability to pursue our acquisition strategy.

We may change our strategy at any time without the consent of our stockholders, which may result in our acquiring businesses or assets that are different from, and possibly riskier than, the strategy described in this report. A change in our strategy may increase our exposure to interest rate and currency fluctuations, subject us to regulation under the Investment Company Act of 1940, as amended, or the Investment Company Act, or subject us to other risks and uncertainties that affect our operations and profitability.

The operational objectives and business plans of our businesses may conflict with our operational and business objectives or with the plans and objectiveobjectives of another business we own and operate.

Our businesses operate in different industries and face different risks and opportunities depending on market and economic conditions in their respective industries and regions. A business’ operational objectives and business plans may not be similar to our objectives and plans or the objectives and plans of another business that we own and operate. This could create competing demands for resources, such as management attention and funding needed for operations or acquisitions, in the future.

Collection of receivables from third-party payors and patients is critical to our operating performance. Our primary collection risks relate to uninsured patients and the portion of the bill that is the patient’s responsibility, which primarily includes co-payments and deductibles. We determine the transaction price based on established billing rates reduced by contractual adjustments provided to third-party payors, discounts provided to uninsured patients and implicit price concessions. Contractual adjustments and discounts are based on contractual agreements, discount policies and historical experience. Implicit price concessions are based on historical collection experience. Significant changes in business office operations, payor mix, economic conditions, or trends in federal and state governmental health coverage could affect our collection of accounts receivable, cash flow and results of operations. If we experience unexpected increases in the growth of uninsured and underinsured patients or in badcredit debt expenses,losses, our results of operations will be harmed.

Billing for healthcare services is an important but complex aspect of our business. In particular, the current practice of providing physician services in advance of payment or, in some cases, irrespective of the patient’s ability to pay for such services, may have significant negative impact on our net revenue, badcredit debt expenselosses and cash flow. We bill numerous and varied payors, such as bodily injury policies, general liability policies, and personal injury protection policies, self-pay patients, managed care payors and Medicare and Medicaid. These different payors typically have different billing requirements that must be satisfied prior to receiving payment for services rendered. Reimbursement is typically conditioned on our documenting medical necessity, the appropriate level of service and correctly applying diagnosis codes. Incorrect or incomplete documentation and billing information could result in non-payment for services rendered.

To the extent that the complexity associated with billing for healthcare services we provide causes delays in our cash collections, we may experience increased carrying costs associated with the aging of our accounts receivable as well as increased potential for badcredit debt expense.losses.

Among these laws are the federal False Claims Act, the Health Insurance Portability and Accountability Act of 1996, or HIPAA and the federal anti-kickback statute and the provision of the Social Security Act commonly known as the “Stark Law.” These laws, and particularly the anti-kickback statute and the Stark Law, impact the relationships that we may have with physicians and other referral sources. We have a variety of financial relationships with physicians who refer patients to our facilities. The Office of the Inspector General of the Department of Health and Human Services, or OIG, has enacted safe harbor regulations that outline practices that are deemed protected from prosecution under the anti-kickback statute. A number of our current arrangements, including financial relationships with physicians and other referral sources, may not qualify for safe harbor protection under the anti-kickback statute. Failure to meet a safe harbor does not mean that the arrangement necessarily violates the anti-kickback statute but may subject the arrangement to greater scrutiny. We cannot assure you that practices that are outside of a safe harbor will not be found to violate the anti-kickback statute. The CMSCenters for Medicare and Medicaid Services published a Medicare self-referral disclosure protocol, which is intended to allow providers to self-disclose actual or potential violations of the Stark Law. Because there are only a few judicial decisions interpreting the Stark Law, there can be no assurance that our facilities will not be found in violation of the Stark Law or that self-disclosure of a potential violation would result in reduced penalties.

State efforts to regulate the construction or expansion of health carehealthcare facilities could impair our ability to expand.

Many states, including Florida, have enacted CONcertificates of need, or CON, laws as a condition prior to capital expenditures, construction, expansion, modernization, or initiation of major new services. Failure to obtain necessary state approval can result in our inability to complete an acquisition, expansion or replacement, the imposition of civil or, in some cases, criminal sanctions, the inability to receive Medicare or Medicaid reimbursement or the revocation of a facility’s license, which could harm our business. In addition, significant CON reforms have been proposed in a number of states that would increase the capital spending thresholds and provide exemptions of various services from review requirements. In the past, we have not experienced any material adverse effects from those requirements, but we cannot predict the impact of these changes upon our operations.

Demand for properties similar to thosethat owned by us is subject to fluctuations that are often due to factors outside our control. We are not able to predict the course of the real estate markets or whether the current favorable trends in those markets can, or will, continue. In the event of an economic downturn, our results of operations may be adversely affected, and we may incur significant impairments and other write-offs and substantial losses from this business.

Adverse weather conditions, natural disasters, and other unforeseen and/or unplanned conditions could disrupthave serious impacts on our ability to develop and market or sell our real estate developments. asset.

Adverse weather conditions and natural disasters, such as hurricanes, tornadoes, earthquakes, floods, droughts, and fires, could have serious impacts on our ability to develop and market or sell our real estate assets.asset. PropertiesOur property may also be affected by unforeseen planning, engineering, environmental, or geological conditions or or problems, including conditions or problems which arise on third party properties adjacent to or in the vicinity of propertiesthe whichproperty we own, and which may result in unfavorable impacts on our properties.property. Any adverse event or circumstance could cause a delay in, prevent the completion completion of, or increase the cost of, onethe development or moresale of our properties expected to be developed and brought to market by us,property, thereby resulting in a negative impact on our operations and financial results.results..

If the market value of our real estate investmentsinvestment decreases, our results of operations will also likely decrease.

The market value of our real estate assetsasset will depend on market conditions. If local and/or global economic conditions deteriorate, or if the demand for our propertiesproperty decreases, we may may not be able to make a profit on such property. As a result of declining economic conditions, we may experience lower than anticipated profits and/or may not be able to recover our costs of a project when a property is brought to market.costs.

Changes in tax laws, taxes or fees may increase the cost of development,development andor suchsale changes could adversely impactof our finances and operational results.property.

Any increase or change in suchtax laws, taxes, or fees, including real estate property taxes, could increase the cost of development and thus have an adverse effect on our operations. Such changes could also negatively impact potential and/or actual users and purchasers of our propertiesproperty because potential buyers may factor factor such changes into their decisions to utilize or purchase a property.

We may incur environmental liabilities with respect to our real estate assets.asset.

Our propertiesproperty areis subject to a variety of local, state, and federal statutes, ordinances, rules and regulations concerning the protection of health and the environment. Environmental laws may result in delays, may cause us to incur substantial compliance and other costs and may prohibit or severely restrict development. Furthermore, under various federal, state, and local laws, ordinances and regulations, an owner of real property may be liable for the costs or removal or remediation of certain hazardous or toxic substances on or in such property. Such laws often impose such liability without regard to whether we knew of, or were responsible for, the presence of such hazardous or toxic substances. The cost of any required remediation and our liability therefor as to our propertiesproperty are generally not limited under such laws and could exceed the value of the property and/or the aggregate assets of our company. The presence of such substances, or the failure to properly remediate contamination from such substances, may adversely affect our ability to sell real estate or to borrow using such property as collateral.

The nature of our activities could expose us to to potential liability for personal injuries and, in certain instances, property damage claims. For instance, there are types of losses, losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, pollution, environmental matters, or extreme weather conditions such as hurricanes, floods, and snowstorms that are uninsurable or not economically insurable, or may be insured subject to limitations, such as large deductibles or co-payments. We may not carry all the usual and customary insurance policies which would be carried by a similarly-positioned company, and we may not be carrying those insurance policies in amounts and types sufficient to cover every risk which may be encountered by our company. Insurance risks associated with potential terrorist acts could sharply increase the premiums we will pay for coverage against property and casualty claims. We cannot assure you that we will have adequate coverage for all losses. If any of our propertiesproperty incurincurs a casualty loss that is not fully covered by insurance, the value of our assets will be reduced by the amount of any such uninsured loss. In addition, other than the capital reserve or other reserves we may establish, we do not expect to have any contingent sources of funding in place to repair or reconstruct any uninsured damaged property, and we cannot assure you that any such sources of funding will be available to us for such purposes in the future. Also, to the extent we must pay unexpectedly large amounts for insurance, we could suffer reduced earnings that would result in a decreased value attributed to our publicly traded stock.

Our common stock is eligible for quotation on the PinkOTCQB Market, which may have an unfavorable impact on our stock price and liquidity.

Our common stock is eligible for quotation on the PinkOTCQB Market operated by OTC Markets Group Inc. The PinkOTCQB Market is a regulated quotation service that displays real-time quotes, last last sale prices and volume information in over-the-counter securities. The PinkOTCQB Market is not an issuer listing service, market, or exchange. exchange. The requirements for quotation on the Pink Market are considerably lower and less regulated than those of an exchange. Because of this, it is possible that fewer brokers or dealers will be interested in making a market in our common stock because the market for such securities is more limited, the stocks are more volatile, and the risk to investors is greater, which may impact the liquidity of our common stock. Even if an active market begins to develop in our common stock, the quotation of our common stock on the PinkOTCQB Market may result in a less liquid market available for existing and potential stockholders to trade common stock, could depress the trading price of our common stock and could have a long-term adverse impact on our ability to raise capital in the future. If an active market is never developed for our common stock, it will be difficult or impossible for you to sell any common stock you purchase.

The market forprice of our common stock mayis likely to be characterized by significant price volatility when compared to seasoned issuers, and we expect that our stock price will be more volatile than a seasoned issuer for the indefinite future. The potential volatility in our stock price is attributabledue to a number of factors. First, as noted above, our common stock mayis likely to be more sporadically and/or thinly traded.traded compared Asto athe consequenceshares of thissuch lacklarger, ofmore liquidity,established the trading of relatively small quantities of shares by our stockholders may disproportionately influence the price of those shares in either direction.companies. The price for our common stock could, for example, decline precipitously in ifthe event that a large number of our shares of common stock areis sold on the market without commensurate demand, as compared to a seasoned issuer that could better absorb those sales without adverse impact on its stock price.demand. Secondly, an investmentwe in us isare a speculative or “risky” investment due to our lack of meaningful profits to date and uncertainty of future profits. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a seasonedlarger, issuer.more established company that has a large public float. Many of these factors are beyond our control and may decrease the market price of our common stock regardless of our operating performance. The market price of our common stock could also be subject to wide fluctuations in response to a broad and diverse range of factors, including the following:

OurTwo officers and directorsstockholders own a significant percentage percentage of our outstanding voting securities which could reduce the ability of minority stockholders to effect certain corporate actions.

OurTwo executivestockholders, officersincluding our Chief Executive Officer and directorsour former Chairman, are collectively able to exercise approximately 84.69%74% of our total voting power. As a result, they will possess significant influence and can elect a majority of our board of directors and authorize or prevent proposed significant corporate transactions without the votes of any other stockholders. They are expected to have significant influence over a decisiondecisions to enter into any corporate transactiontransactions and have the ability to prevent any transaction that requires the approval of stockholders, regardless of whether or not our other stockholders believe that such transaction is in our best interests. Such concentration of voting power could have the effect of delaying, deterring, or preventing a change of control or other business combination, which could, in turn, have an adverse effect on the market price of our common stock or prevent our stockholder from realizing a premium over the then-prevailing market price for their common stock.

Future issuances of our common stock or securities convertible into, or exercisable or exchangeable for, our common stock, orcould theresult expirationin ofsignificant lock-upmarket agreementsvolatility that restrict the issuance of new common stock or the trading of outstanding common stock,and could cause the market price of our common stock to decline. We cannot predict the effect, if any, of future issuances of our securities, or the future expirations of lock-up agreements,securities on the price of our common stock. In all events, future issuances of our common stock would result in the dilution of your holdings. In addition, the perception perception that new issuances of our securities could occur could adversely affect the market price of our common stock.

All of the outstanding common stock held by the present officers, directors, and affiliate stockholders are “restricted securities” within the meaning of Rule 144 under the Securities Act. As restricted shares, these shares may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemptions from registration under the Securities Act and as required under applicable state securities laws. Rule 144 provides in essence that a person who is an affiliate or officer or director who has held restricted securities for six months may, under certain conditions, sell every three months, in brokerage transactions, a number of shares that does not exceed the greater of 1.0% of a company’s outstanding shares of common stock.shares. There is no limitation on the amount of restricted securities that may be sold by a non-affiliate after the owner has held the restricted securities for a period of six months if our company is a current, current reporting company under the Exchange Act. A sale under Rule 144 or under any other exemption from the Securities Act, if available, or or pursuant to subsequent registration of common stock of present stockholders, may have a depressive effect upon the price of our common stock in any market that may develop.

In the future, we may attempt to increase our capital resources by offering debt securities. Upon bankruptcy or liquidation, holders of our debt securities, and lenders with respect to other borrowings we may make, would receive distributions of our available assets prior to any distributions being made to holders of our common stock. Moreover, if we issue preferred stock, the holders of such preferred stock could be entitled to preferences over holders of common stock in respect of the payment of dividends and the payment of liquidating distributions. Because our decision to issue debt or preferred stock in any future offering, or borrow money from lenders, will depend in part on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing,timing or nature of any such future offerings or borrowings. Holders of our common stock must bear the risk that any future offerings we conduct or borrowings we make may adversely affect the level of return, if any, they may be able to achieve from an investment in our common stock.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. If we do not obtain a listing on a national securities exchange and if the price of our common stock is less than $5.00, our common stock could be deemed a penny stock. The penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our common stock, and therefore stockholders may have difficulty selling their shares.

As a smaller reporting company, we will not be required to, and may notnot, include a compensation discussion and analysis section in our proxy statements and we will provide only two years years of financial statements. We also will have other “scaled” disclosure requirements that are less comprehensive than issuers that are not smaller reporting companies.

In addition, our authorized but unissued shares of common stock are available for our board of directors to issue without stockholder approval. We may use these additional shares for a variety of corporate purposes, including raising additional capital, corporate acquisitions,acquisitions and employee stock plans. The existence of our authorized but unissued shares of common stock could render it more difficult or discourage an attempt to obtain control of our company by means of a proxy context, tender offer, merger,merger or other transaction since our board of directors can issue large amounts of capital stock as part of a defense to a take-over challenge. In addition, we have authorized in our amended and restated articles of incorporation 50,000,000 shares of preferred stock. Our board acting alone and without approval of our stockholders can designate and issue one or more series of preferred stock containing super-voting provisions, enhanced economic rights, rights to elect directors, or other dilutive features, that could be utilized as part of a defense to a take-over challenge.

In addition, various provisions of our amended and restated bylaws may also have an anti-takeover effect. These provisions may delay, defer,defer or prevent a tender offer or takeover attempt of our company that a stockholder might consider in his or her best interest, including attempts that might result in a premium over the market price for the shares held by our stockholders. Our amended and restated bylaws may be adopted, amended,amended or repealed only by our board of directors. Our amended and restated bylaws also contain limitations as to who may call special meetings as well as require advance notice of stockholder matters to be brought at a meeting. Additionally, our amended and restated bylaws also provide that no director may be removed by less than a two-thirds vote of the issued and outstanding shares entitled to vote on the removal. Our amended and restated bylaws also permit the board of directors to establish the number of directors and fill any vacancies and newly created directorships. These provisions will prevent a stockholder from increasing the size of our board of directors and gaining control of our board of directors by filling the resulting vacancies with its own nominees.

Our amended and restated bylaws also establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to the board of directors. Stockholders at an annual meeting will only be able to consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the board of directors or by a stockholder who was a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has given us timely written notice, in proper form, of the stockholder’sstockholders’ intention to bring that business before the meeting. Although our amended and restated bylaws do not give the board of directors the power to approve or disapprove stockholder nominations of candidates or proposals regarding other business to be conducted at a special or annual meeting, our amended and restated bylaws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed or may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempting to obtain control of our company.

OnAll current revenue is derived from Nova, which was acquired on May 31, 2021,2021. we acquired Nova, whichIt operates a group of regional primary specialty and ancillary care facilities throughoutacross Florida and Georgia that provide traumatic injury victims with primary care evaluations, interventional pain management, and specialty consultation services.services, including EMC assessments. We currently primarily focus on plaintiff relatedplaintiff-related care areand provide healthcare to uninsured patients. Our patients have typically been in an accident and have filed a highlylawsuit as a plaintiff against the defendant who is allegedly responsible for the efficientaccident provideras the result of EMCnegligence assessments.or another tort. We provide a full range of diagnostic and surgical services for injuries and disorders of the skeletal system and associated bones, joints, tendons, muscles, ligaments, and nerves. From sports injuries, to sprains, strains, and fractures, our doctors are dedicated to helping patients return to active lifestyles.

We also own a real estate company, Edge View, which we acquired on July 16, 2014. Edge View owns five (5) acres zoned medium density residential (MDR) with 12 lots already platted, six (6) acres zoned high-density residential (HDR) that can be platted in various configurations to meet current housing needs, and twelve twelve (12) acres zoned in Lemhi County as Agriculture that is available for further annexation into the City of Salmon for development, as well as a common area for landowners to view wildlife, provide access to the Salmon River and fishing in a two (2) acre pond. Management does hasnot investedcurrently yearshave workingany plans to develop athis newproperty and exciting housing development in Salmon, Idaho and plansexpects to entereventually intosell athe joint venture agreement with a developer for this planned concept development.property.

On November 10, 2023, we sold our financial services (tax resolution) business, Platinum Tax Defenders, or Platinum Tax, that we acquired on July 31, 2018, which was a full-service tax resolution firm located in Los Angeles, California. Through this subsidiarysubsidiary, we provided fee-based tax resolution services to individuals and companies that have federal and state tax liabilities by assisting clients to settle outstanding tax debts. As part of the asset purchase agreement between us and the purchaser, the assets that were purchased included substantially all assets, rights, interests, and licenses, except for bank accounts in place prior to the sale, for the purchase consideration of 15% of cash collected by the purchaser within one year following the sale date.

Cost of sales. Our cost of sales consists of surgical center and laboratory fees, physician and professional fees, salaries and wages and medical supplies. Our total cost of sales increased by $281,004,$487,702, or 7.89%,12.70%, to $4,329,330 for the year ended December 31, 2025 from $3,841,628 for the year ended December 31, 2024. As a percentage of revenue, cost of sales decreased from 46.45% for the year ended December 31, 2024 to 37.53% for the year ended December 31, 2025. Excluding the reductions to revenue of $1,650,474 and $1,005,764 noted above, as a percentage of revenue, cost of sales increased from $3,560,62435.16% for the year ended December 31, 2023.2024 Suchto 37.53% for the year ended December 31, 2025. The increase wasis primarily due attributable to an increase in overallrevenue increasesas noted above, offset by a corresponding increase in healthcarelaboratory costsfees and specificallypersonnel-related costs related to surgical procedures performed due to technology advancements, inflation, and materials and wage increases.fees.

Gross profit. As a result of the foregoing, our total gross profit decreasedincreased by $3,864,144,$2,777,749, or 46.60%,62.72%, to $4,428,498$7,206,247 for the year ended December 31, 20242025 from $8,292,642$4,428,498 for the year ended December 31, 2023.2024. Our total gross margin (percent of revenue) decreasedincreased from 69.96% for the year ended December 31, 2023 to 53.55% for the year ended December 31, 2024 2024.to 62.47% for the year ended December 31, 2025.

DiscontinuedLoss operations.on disposal of fixed assets. For the year ended December 31, 2024,2025, we recordedrecognized a loss fromon discontinued operationsdisposal of $111,312,fixed asassets comparedof to$12,593, $86,520which forresulted from the yearidentification of ended Decembercertain 31,medical 2023.equipment that was no longer functional in our medical facilities.

Net income (loss).loss. As a result of the cumulative effect of the factors described above, our net loss was $5,507,592 for the year ended December 31, 2025, as compared to a net loss of $3,302,999 for the year ended December 31, 2024, as compared to a net incomeincrease of $3,028,394 for the year ended December 31, 2023, a net decrease of $6,331,393,$2,204,593, or 209.07%.66.75%.

As of December 31, 2024,2025, we had $1,188,185$318,535 in cash. To date, we have financed our operations primarily through revenue generated from operations, salesproceeds from issuance of securities, advances from stockholders and third-parties and related party debt.

We monitor outstanding patient cases as they develop through through ongoing discussions with attorneys, doctors and our third-party medical billing company and additionally monitor our settlement realization realization rates over time. We currently have twoone primary methodsmethod of accelerating our cash settlement of our revenue and related accounts receivable. The first is through factoring our receivables, which was done in 2023, but ended prior to April 2023. The second method isreceivable through accepting lower settlement amounts during the final negotiations of the settlement, which is coordinated through our third-party medical billing company. When our third-party medical billing company is provided with a settlement amount of 49% of gross charges or greater they will accept. When presented with a lower amount we will discuss the reasons for the reduced rate and negotiate a higher rate. Shortening our negotiation timeframe time frame will typically result in a lower settlement realization rate, but will accelerate the cash settlement of the outstanding accounts receivable. We began employing this second method in 2024, which reduced our settlement realization rate as described below. We have employed both methods from time to time to accelerate our cash settlement and may employ onethis or bothmethod in the future. The most recent average realization time for accounts receivable was approximately 12 to 24 months from the initial date of service. Typically, a patient will have a series of dates of service over an average of 12 to 16 months.

Prior to fiscal year 2024, we historically realized a 49% settlement rate from total gross billed charges. Accordingly, we had historically recognized net healthcare service revenue as 49% of gross billed amounts. During the year ended December 31, 2024, we underwent efforts to accelerate cash settlement of our accounts receivable to generate cash flow for operations. We did this by shortening our settlement negotiations with insurance companies and accepting lower settlement settlement amounts. Additionally, during the third quarter of 2024, we completed a thorough review of our third-party billing data, including reviewing historical reports and new reporting methods as a part of ourthe updated analysis. Based upon this reviewreview, it was determined that a 24-month lookback period should be used in the analysis of our historical settlement realization rates. As a result of the new efforts to accelerate cash settlementsettlement, and establishing a periodic lookback analysis, during the year ended December 31, 2024, we realized a 44% average settlement rate of our gross billed charges during this time frame, which were historically recorded in accounts receivable and revenue at 49% of gross billings. Accordingly,We we recorded reductionscontinue to netperiodically evaluate revenuethis of $1,005,764 for the year ended December 31, 2024. Additionally, with the reduction in our estimate of ourestimated settlement realization rate fromin 49%accordance with ASC 606. This includes a monthly review of our historical data and settlement realization rates, along with estimates of current and pending settlements through ongoing discussions with attorneys, doctors and third-party medical billing company in order to 44%,determine athe $1,650,474variable changeconsideration under ASC 606 and the net transaction price. During 2025, we continued expanding the historical lookback period to 36 months based on the ongoing expanding data history and the timeframe in accountingwhich collections have recently been occurring. We update the settlement realization rate estimate wasused takenin duringdetermining revenue periodically based on these reviews. As of December 31, 2025, the thirdsettlement quarterrealization ofrate 2024at which revenue is recorded was inat our accounts receivable and revenue.41%.

Our net cash provided by financing activities was $6,068,077$1,983,624 for the year ended December 31, 2024,2025, as compared to $2,369,325$2,975,727 for the year ended December 31, 2023.2024. Net cash provided by financing activities for the year ended December 31, 20242025 consisted of net proceeds from the line of credit of $6,525,892,$2,142,396 and net proceeds from convertible notes payable of $200,000, offset by $125,000 $300,000 paid on a note payable, the payment of $120,997 to a director, $105,079 paid on convertible notes payable, $100,000$50,000 in dividend payments and $6,739$8,772 in payments on the Small Business Administration loan described below. Net cash provided by financing activities for the year ended December 31, 2023 2024 consisted of net proceeds from the line of credit of $2,125,145$3,433,542, andoffset proceedsby from$125,000 paid on a note payable, the payment of $120,997 to a director, $105,079 paid on convertible notes payable ofpayable, $421,375,$100,000 offsetin bydividend repayment of convertible notes payable of $175,000payments and repayments$6,739 toin directorspayments andon officersthe ofSmall $2,195.Business Administration loan described below.

As of December 31, 2024,2025, we had convertible debt outstanding net of amortized debt discount of $105,000.$118,295. During the year ended December 31, 2024, 2025, we madereceived $105,080$200,000 in proceeds from convertible notes and no interest was repaid, we converted $154,049 in principal payments and paidaccrued interest and $1,500 in conversion cost into 64,165 shares of common stock and recognized $145,871 of additional paid-in capital to adjust the fair value for the totaldebt outstanding accrued interest on these notes in the amount of $22,781. We also paid $100,000 of accrued interest to a convertible noteholder. Also,settlement during the year ended December 31, 2024,2025. weDebt discounts convertedassociated $680 in accrued interest and $1,000 in conversion cost into 1,222 shares of common stock. We recognized $1,679 of additional paid-in capital to adjust fair value forwith the convertible debt settlement during the year endedat December 31, 2024.2025 were $131,705.

On January 24, 2017, we issued a convertible promissory promissory note in the principal amount of $80,000 for services rendered, the remaining balance of which maturedwas converted into common stock on JanuaryAugust 26, 24, 2018. This note is currently in default and accrues interest at a default interest rate of 20% per annum.2025. On March 30, 2023, we executed an additional tranche under this note in the principal amount of $25,000. This note is currently in default and accrues interest at a default interest rate of 20% per annum. On August 11, 2023, we executed an additional tranche under this note in the principal amount of $25,000. This note is currently in default and accrues interest at a default interest rate of 20% per annum. On August 11, 2023, we executed an additional tranche under this note in the principal amount of $25,000. This note accrues interest at a rate of 15% per annum. As of December 31, 2025, the outstanding balance of these notes is $50,000 and they have accrued interest of $23,370.

On September 29, 2023, our company and Nova entered into a two-year revolving purchase and security agreement with DML HC Series, LLC, or DML, which was automatically renewed for a term of one year on September 29, 2025, to sell, with recourse, Nova’s accounts receivables for a revolving financing up to a maximum advance amount of $4.5 million. Effective October 22, 2025, we entered into amendment No. 5 with DML, which extends the term of the revolving purchase and security agreement through September 28, 2028. A review is performed on a quarterly basis to assess the adequacy of the maximum amount. If mutually agreed upon by us and DML, the maximum amount may be increased. On April 24, 2024, we entered into amendment No. 1 with DML which increased the maximum advance amount to $8,000,000 and defined the discount fee equal to 2.25% per purchase and claims balance forward on new purchases with a minimum fee to now be $10,000. On June 11, 2024, we entered into amendment No. 2 with DML which further increased the maximum advance amount to $11,000,000. On December 27, 2024, we and Nova entered into amendment No. 3 with DML which further increased the maximum advance amount to $15,000,000. On October 1, 2025, we and Nova entered into amendment No. 4 with DML which further increased the maximum advance amount to $23,000,000. As of December 31, 2024,2025, we had an outstanding balance $8,645,991 $17,209,908 against the revolving receivable line of credit and accrued interest of $315,031.$673,267. The unused line of credit balance as of December 31, 20242025 was $6,354,009. $5,790,092. The revolving purchase and security agreement includes discounts recorded as interest expense on each funding and matures on September 29,28, 2025.2028.

The following discussion relates to critical accounting policies for our consolidated company. The preparation of financial statements in conformity with United States generally accepted accounting principles, or GAAP,GAAP requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements:

Where appropriate, we utilize the expected value method to determine the appropriate amount for estimates of variable consideration, which has been based on a historical 12-monthlookback lookback of our actual settlement realization rates. The estimates of reserves established for variable consideration reflect current contractual requirements, requirements, our historical experience, specific known market events and trends, industry data and forecasted patient data and settlement patterns. patterns. Settlement realization patterns are assessed based on actual settlements and based on expected settlement realization trends obtained obtained from discussions with attorneys, doctors and our third-party medical billing company. Settlement amounts are negotiated, and prolonged prolonged settlement negotiations are not indicative of a greater likelihood of reduced settlement realization or zero settlement.

Prior to fiscal year 2024, we historically realized a 49% settlement rate from total gross billed charges. Accordingly, we had historically recognized net healthcare service revenue as 49% of gross billed amounts. During the year ended December 31, 2024, we underwent efforts to accelerate cash settlement of our accounts receivable to generate cash flow for operations. We did this by shortening our settlement negotiations with insurance companies and accepting lower settlement settlement amounts. Additionally, during the third quarter of 2024, we completed a thorough review of our third-party billing data, including reviewing historical reports and new reporting methods as a part of ourthe updated analysis. Based upon this review, it was determined that a 24-month lookback period should be used in the analysis of our historical settlement realization rates. As a result of the new efforts to accelerate cash settlementsettlement, and establishing a periodic lookback analysis, during the year ended December 31, 2024, we realized a 44% average settlement rate of our gross billed charges during this time frame, which were historically recorded in accounts receivable and revenue at 49% of gross billings. Accordingly,We we recorded reductionscontinue to netperiodically evaluate revenuethis of $1,005,764 for the year ended December 31, 2024. Additionally, with the reduction in our estimate of ourestimated settlement realization rate from 49% to 44%, a $1,650,474 change in accountingaccordance estimatewith wasASC taken606. duringThis the third quarter of 2024 in our accounts receivable and revenue. We will continue to evaluate our estimate of our settlement realization rates in the future, which will includeincludes a monthly review of our trailinghistorical 24-month historicaldata and settlement realization rate,rates, along with estimates of current and pending settlements through ongoing discussions with attorneys, doctors and our third-party medical billing company in order to determine its the variable consideration under ASC 606 and the net transaction price. price.During 2025, we continued expanding the historical lookback period to 36 months based on the ongoing expanding data history and the timeframe in which collections have recently been occurring. We will update ourthe settlement realization rate estimate used in determining our accounts receivable and revenue each quarterperiodically based on thisthese review.reviews. As of December 31, 2025, the settlement realization rate at which revenue is recorded was at 41%.

We have contract fees for amounts earned from our Non-PIP related procedures, typically car accidents, and are settled on a contingency basis. Prior to April 2023, these cases were sold to a factor who bears the risk of economic benefit or loss. Generally, the sale of these cases to a third-party factor resulted in an approximate 54% reduction from the accounts receivables amounts. After selling patient cases to the factor, any additional funds settled by us were remitted to the factor. We evaluated the factored adjustments considering the actual factored amounts per patient on a quarterly interval, and the reductions from accounts receivable that were factored were recorded in finance charges as other expenses on the consolidated statement of operations. As a result of our 1812 to 24 month settlement realization timeframe, we have an accrued liability resulting from the settlement of receivables sold to the third-party factors which fluctuates as settlements are made and remitted to those third-party factors. These accounts receivables sold to these third-party factors are not included in our financial statements accounts receivable balance once sold and therefore are not part of the assessment of the net realizable value of accounts receivable. For the year ended December 31, 2023, we factored a total of $544,196 of our accounts receivable in exchange for cash of $253,750. We ceased factoring of of accounts receivable in the first quarter of 2023.

We do not have a significant exposure to credit losses as we have historically had a less than 1.0% loss rate where we received no settlement amount for our outstanding accounts receivable. Although possible, claims resulting in zero collection upon settlement are rare based on our historical experience and has historically been 0.5% to 1.0% of our outstanding accounts receivable, thereby resulting in a collection rate of 99%. We use the loss rate method to record our allowance for credit losses. We apply the loss rate method by reviewing our zero collection history on a quarterly basis and updating our estimate of credit losses to adjust for changes in loss data. We typically collect on our accounts receivable between 1812 to 24 months after recording. We do not record an allowance for credit losses based on an aging of our accounts receivable as the aging of our receivables do not influence the credit loss rate due to the nature of our business and the letter of protection. We do not adjust our receivables for the effects of a significant financing component at contract inception as the timing of variable consideration is determined by the settlement, which is outside of our control. As of December 31, 20242025 and 2023,2024, our allowance for credit losses was $255,215$400,000 and $122,190,$255,215, respectively. We recognized $266,000$262,928 and $122,190$266,000 of credit loss expense during the years ended December 30,31, 20242025 and 2023,2024, respectively, which is included in selling, general and administrative expenses in the condensed consolidated statement of operations. The balance of accounts receivable, net as of January 1, 20232024 was $6,603,920.$13,305,254. The balance of the allowance for credit losses was $0 $122,190 as of January 1, 2023.2024.

We are focused on the acquisition of orthopedic and related modality practices with strong organic growth plans that are materially cash generative to maximize value and providingprovide greater coverage for our patients, and diversification and risk mitigation for our stockholders.

As of MarchJune 31,30, 2026, we had two reportable operating segments as determined by management using the “management approach” as defined by the authoritative guidance on Disclosures about Segments of an Enterprise and Related Information.

Comparison of Three Months Ended MarchJune 31,30, 2026 and 2025

The following table sets forth key components of our results of operations during the three months ended MarchJune 31,30, 2026 and 2025, both in dollars and as a percentage of our revenue.

Revenue. For the three months ended MarchJune 31,30, 2026 and 20252025, all our revenue was generated by our healthcare segment, which generates revenue through a full range of diagnostic and surgical services. Our total revenue decreased by $693,287,$629,450, or 23.78%,22.57%, to $2,222,280$2,159,557 for the three months ended MarchJune 31,30, 2026 from $2,915,567$2,789,007 for the three months ended MarchJune 31,30, 2025. The decreasedecline in revenue iswas mainly attributabledriven by a lower implicit realization rate on patient case claim settlements, slightly offset by gradually increasing overall patient visits volumes and billed procedures. The realization rate decreased to a41% decrease in surgical procedures services infor the firstsecond quarter of 2026 (unchanged from the firstprior quarter 2026), compared with 43% for the second quarter of 2025 and(unchanged due tofrom the decrease in the realization rate to 41% in the first quarter of 2026 from 44% the firstprior quarter of 2025.2025).

Cost of sales. Our cost of sales consists of surgical center and laboratory fees, physician and professional fees, salaries and wages and medical supplies. Our total cost of sales decreased by $170,809,$116,506, or 15.89%,10.65%, to $904,225$977,242 for the three months ended MarchJune 31,30, 2026 from $1,075,034$1,093,748 for the three months ended endedJune March 31,30, 2025. As a percentage of revenue, cost of sales increased from 36.87%39.22% for the three months ended MarchJune 31,30, 2025 to 40.69%45.25% for for the three months ended MarchJune 31,30, 2026. The increase is attributable to a decrease in revenue as noted above, awhich decreasemore than offset decreases in personnel related expenses and a decrease in laboratory fees.

Gross profit. As a result of the foregoing, our total gross profit decreased by $522,478,$512,944, or 28.39%,30.26%, to $1,318,055$1,182,315 for the three months ended MarchJune 31,30, 2026 from $1,840,533$1,695,259 for the three months ended MarchJune 31,30, 2025. Our total gross margin (as a percentage of revenue) decreased from 63.13%60.78% for the three months ended MarchJune 31,30, 2025 to 59.31%54.75% for the three months ended MarchJune 31,30, 2026.

Depreciation expense. Our depreciation expense was $593,$253, or 0.03%0.01% of revenue, for the three months ended MarchJune 31,30, 2026, as compared to $3,365,$763, or 0.12%0.03% of revenue, for the three three months ended MarchJune 31,30, 2025.

Share basedShare-based compensation expense. Share basedShare-based compensation expense was $664,196$366,939 and $0$97,500 for the three months Marchended 31,June 30, 2026 and 2025, respectively. ShareShare-based compensation based compensation expense in 2026 consisted of expense related to the issuance of common stock to our board of directors, officers and employees, our investor relations firm and other consultants for services provided. Share-based compensation expense in 2025 consisted of expense related to the issuance of common stock to our investor relations firm.

Selling, general and administrative expenses. Our selling, general and administrative expenses consist primarily of accounting, auditing, legal and public reporting expenses, personnel expenses, including employee salaries and bonuses plus related payroll taxes, advertising expenses, professional advisor fees, credit losses, rent expense, insurance and other expenses incurred in connection with general operations. Our selling, general and administrative expenses decreasedincreased by $116,216,$372,447, or 9.07%,37.72%, to $1,164,425$1,359,766 for the three months ended MarchJune 31,30, 2026 from $1,280,641$987,319 for the three months ended endedJune March 31,30, 2025. As a percentage of revenue, our selling, general and administrative expenses were 52.40%62.97% and 43.92%35.40% for the three months months ended MarchJune 31,30, 2026 and 2025, respectively. The decreaseincrease in selling, general and administrative expenses was primarily attributable to to lower billing costs, rent expense and travel expenses. Additional there were no credit losses recorded for the three months ended March 31, 2026. These decreases were partially offset by an increase in professional fees.

Total other (expense) income. We had $2,580,915$1,934,263 in total other expense, net, for the three months ended MarchJune 31,30, 2026, as compared to $994,711$1,836,072 in total other expense, net, for the three months ended MarchJune 31,30, 2025. Total other expense, net, for the three months ended MarchJune 31,30, 2026 consisted of interest expense of $1,910,737, a $668,821 loss from issuance or change in fair value of the derivative liability,$2,137,419 and amortization of debt discounts of $11,438. These expenses were$22,893, offset slightly by othera income$226,049 of $10,081gain from the returnchange in fair value of fundsthe relatedderivative toliability. a fraudulent bank transaction. Other expense, net, for the three months ended MarchJune 31,30, 2025 consisted entirely of interest expense of $993,114 and other expense of $1,597.expense. The increase in interest expense is primarily attributable to the increase in initial and incremental fees charged on the number of existing purchases and claims under the line of credit described below. We recorded a loss on issuance of derivative liability of $1,192,640 related to the bifurcation of conversion options in severalThe convertible notes issued during the first quarter of 2026. This was offset by a $523,819 gain on the revaluation of the derivative liabilityliabilities as of March 31, 2026 for the change in fair value of the derivative liability. The derivative liability isare remeasured at fair value each reporting period using a Monte Carlo simulation model and the commitment shares derivative liability using a Black-Scholes option-pricing model. Changes in assumptions, as well as changes in our stock price during the period, resulted in a decrease in the estimated fair value of the derivative liability and the corresponding loss.gain.

Net loss. As a result of the cumulative effect of the factors described above, our net loss was $3,092,074$2,478,906 for the three months ended MarchJune 31,30, 2026, as compared to $450,777$1,226,395 for the three months ended MarchJune 31,30, 2025, an increase in loss of $2,641,297,$1,252,511, or 585.94%.102.13%.

As of MarchJune 31,30, 2026, we had $683,507$217,654 in cash. To date, we have financed our operations primarily through revenue generated from operations, sales of securities, advances from stockholders and third-party and related party debt.

The financialability statementsof wereour prepared on a going concern basis and do not include any adjustment with respect to these uncertainties. Our abilitycompany to continue as a going concern and the appropriateness of using the going concern basis is dependent upon, among other things, additional cash infusions. We haveManagement has prospective investors and believebelieves the raising of capital will allow us to fund our cash flow shortfalls and pursue new acquisitions. However, Therethere can be no assurance that we will be able to obtain sufficient capital from debt or equity transactions or from operations in the necessary time frame or on terms acceptable to us. Furthermore, the sale of additional equity securities could result in dilution to our stockholders and the incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Should we be unable to raise sufficient funds, we may be required to curtail our operating plans. In addition, increases in expenses may require cost reductions. No assurance can be given that we will be able to operate profitably on a consistent basis, or at all, in the future. Should we not be able to raise sufficient funds, it may cause cessation of operations.

The following table provides detailed information about our net cash flow for the threesix months ended MarchJune 31,30, 2026 and 2025.

Our net cash used in operating activities from continuing operations was $16,730$668,649 for the threesix months ended MarchJune 31,30, 2026, as compared to $491,420$1,889,003 for the threesix months ended MarchJune 30, 31, 2025. The primary drivers of our net cash used in operating activities for the threesix months ended MarchJune 31,30, 2026 are our net loss of $3,092,074 $5,570,980 and an increase of $819,945$1,684,667 in accounts receivable, offset by an increase of $1,955,970$4,165,687 in interest expense from the line of credit, the loss on issuance or change in value of the derivative liability of $668,821,$442,772, stock compensation expense or shares issued for services rendered of $664,196,$1,031,135, andan increase of $224,261$339,108 in accounts payable and other accrued expenses, and an increase in accrued related parties compensation expense of $410,629.$626,247. For the threesix months ended MarchJune 31,30, 2025, the primary drivers of our net cash used in operating activities was our net loss of $450,777$1,677,172 and an increase of $1,680,291$3,371,656 in accounts receivable, offset by increases of $1,137,308 $2,579,283 in interest expense from in the line of credit,credit $230,608balance, $119,855 in accounts payable and other accrued expensesexpenses, $112,468 in accrued related parties compensation, and $101,773$137,211 in accrued interest.

We periodically evaluate our estimated settlement realization rate at which revenue is recorded in accordance with ASC 606. This includes a monthly review of historical data and settlement realization rates, along with estimates of current and pending settlements through ongoing discussions with attorneys, doctors and the Company’s third-party medical billing company in order to determine the variable consideration under ASC 606 and the net transaction price. For the threesix months ended MarchJune 31,30, 2026 and 2025, we realized a 41% and 44%43% average settlement rate of its gross billed charges, respectively.

We had no investing activities for the threesix months ended MarchJune 31,30, 2026 and 2025.

Our net cash provided by financing activities was $381,702$567,768 for the threesix months ended MarchJune 31,30, 2026, as compared to $299,993$1,260,533 for the threesix months ended MarchJune 31,30, 2025. Net cash provided by financing activities for the threesix months ended MarchJune 31,30, 2026 consisted of proceeds from the issuance of convertible notes totaling $1,113,889, $845,000, offset by net payments on the line of credit of $243,705,$236,646, payments of debt issuance costs of $142,400,$195,089, payment of note payable of $75,000 $110,000 and repayments of the Small Business Administration loan described below of $2,193.$4,386. Net cash provided by financing activities for the three six months ended MarchJune 31,30, 2025 consisted of proceeds from line of credit of $427,186,$1,464,919, offset by the payment of note payable of $75,000, $150,000, payment of preferred stock dividends of $50,000 and repayments of the Small Business Administration loan described below of $2,193. $4,386.

As of MarchJune 31,30, 2026, we had convertible debt outstanding, at carrying value, of $279,772.$302,765. During the threesix months ended MarchJune 31,30, 2026, we received $702,600$918,800 in net proceeds from convertible notes and nosettled accrued interest wastotaling repaid.$10,784 in 4,175 shares of our common stock. Debt discounts associated with the convertible debt at MarchJune 31,30, 2026 were $815,228.$1,061,124. Please see Note 98. Convertible Notes Payable to the accompanying unaudited condensed consolidated consolidated financial statements for a description of the terms of our convertible debt.

On March 12, 2009, we issued a debenture in the principal amount of $20,000. The debenture bore interest at 12% per year and matured on September 12, 2009. The balance of the debenture was $10,989 at MarchJune 31,30, 2026 and the accrued interest was $10,513.$10,842. We assigned all our receivables from consumer activations of the rewards program as collateral on this debenture.

On June 2, 2020, we obtained a loan from the Small Business Administration of $150,000 at an interest rate of 3.75% with a maturity date of June 2, 2050. The principal balance and accrued interest at MarchJune 31,30, 2026 was $142,690$141,843 and $0, respectively.

We maintain a revolving purchase and security agreement with DML HC Series, LLC, or DML, which is accounted for as a secured borrowing. Under the facility, eligible accounts receivable are pledged as collateral, and advances of up to 70% of eligible receivables may be requested, subject to a maximum advance amount of $23,000,000. The related accounts receivable remain recorded as assets on our balance sheet, and the amounts drawn are recorded as a liability under ‘Line of Credit’ until repaid. We are required to repurchase or replace certain ineligible or uncollected receivables. Collections on pledged receivables are remitted directly to the lender and applied against outstanding borrowings. The revolving purchase and security agreement includes discounts recorded as interest expense on each funding and matures on September 28, 2028. As of MarchJune 30, 31, 2026, we had an outstanding balance of $18,922,173$21,138,949 against the revolving receivable line of credit and accrued interest of $660,979.$653,551.

On MarchJune 6,30, 2026, we enteredissued intoan aunsecured lock-uppromissory note and compensationin resolutionthe agreementprincipal withamount of $233,333 to Daniel Thompson, our former Chairman of the Board and a significant stockholder, to resolve outstanding outstanding accrued compensation obligations. Under the agreement, we issued an unsecured promissoryThe note inbears the principal amount of $116,667 bearing interest at 10%5% annually, payable interest-only in year oneannually and 50%matures principalon inJune each30, of years two and three, with all amounts due within three years.2028. As of MarchJune 31,30, 2026, we had an outstanding balance of $116,667$233,333 on this note and accrued interest of $23,493.$1,446.

On December 21, 2025, in connection with bonuses earned by certain employees, we issued promissory notes in the aggregate principal amount of $1,085,703, in lieu of cash payment, including a promissory note in the principal amount of $460,000 to Alex Cunningham, our Chairman and Chief Executive Officer, a promissory note in the principal amount of $122,550 to Matthew T. Shafer, our Chief Financial Officer, and a promissory note in the principal amount of $460,000 to Daniel Thompson. These notes bear interest of 5% per annum and maturematured on June 30, 2026. As of MarchJune 31,30, 2026, wethese loans are in default, had an outstanding balance of $1,085,703 on these notes and accrued interest of $15,021.$28,555.