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

As of September 30, 2024,2025, excluding deferred financing costs, we had $42,864,000 of indebtedness outstanding, of which $0 becomes due and payable within the next 12 months, $0 matures in 2026, and $42,864,000 matures in 2027. We have $547,707$2,775,444 of interest accrued at September 30, 20242025 related to our outstanding indebtedness. Our significant indebtedness could adversely affect our ability to raise additional capital to fund our operations, make interest payments as they come due, limit our ability to react to changes in the economy or our industry, and prevent us from meeting our obligations under our outstanding debt instruments. See Note 7 to the Consolidated Financial Statements.

During Fiscal 2024,2025, our two top customers accounted for an aggregate of 26%23% of total sales. See Note 2 to the Consolidated Financial Statements. In the event any of our top customers were to terminate their agreements with the Company, our results of operations and financial condition may be adversely affected. On November 1, 2024 we sold our ChileChilean subsidiary, which included our top customer.customer for Fiscal 2024. See Item 1. Business and Note 2.

An overall labor shortage, lack of skilled labor, increased turnover or labor inflation, increase in federal or state minimum wages, or increase in general labor costs, caused by prolonged COVID-19 or as a result of general macroeconomic factors, could have a material adverse impact on our operations, results of operations, liquidity or cash flows.

Our Board of Directors is currently comprised of threetwo members, twoone of which would not be considered independent under the rules of the Nasdaq Capital Market and the OTC Markets. Additionally, we no longer maintain separate audit, compensation or nominating and governance committees, the duties of which are fulfilled by our entire Board of Directors. The rules of the OTC Markets require that companies whose securities are listed for quotation on the OTCQB maintain certain public float percentages and a minimum bid price for the Company’s shares. In the event that we fail to meet these standards, our Common Stock would no longer be eligible for quotation on the OTCQB, resulting in the quotation of our Common Stock on an alternative market, such as the OTC Pink Open Market. Such change may affect the number and type of investors eligible to purchase our Common Stock. As a result, the price of our Common Stock may be adversely affected.

Certain groups or persons, and in particular ETS Limited, who owned 39.7% of our issued and outstanding Common Stock as of December 2, 2024,2025, beneficially own a substantial number of shares of our outstanding Common Stock or securities and debt instruments. As a result, these persons have the ability, acting as a group, to influence substantially our affairs and business, including the election of our directors and subject to certain limitations, of fundamental corporate transactions. This concentration of ownership may also have the effect of delaying or preventing a change of control or making other transactions more difficult or impossible without their support. In addition, these equity holders may have an interest in pursuing acquisitions, divestitures, financing or other transactions that, in their judgment, could enhance their equity investments, even though such transactions may involve significant risk to us or our other stockholders.stockholders, including substantial dilution to existing stockholders where such transactions involve a restructuring of our debt. Additionally, they may make investments in businesses that directly or indirectly compete with us, or may pursue acquisition opportunities that may be complementary to our business and as a result, those acquisition opportunities may not be available to us.

During Fiscal 2024,2025, we had revenue of $36,886,500$35,215,454 compared to revenue of $34,475,865$36,886,500 for Fiscal 2023,2024, ana increasedecrease of $2,410,635,$1,671,046, or approximately 7%.5%. Of this revenue, $35,712,211$32,866,082 and $33,503,687$35,712,211 were from monitoring and other related services revenue during Fiscal 20242025 and Fiscal 2023,2024, respectively, representing ana increasedecrease of $2,208,524$2,846,129 or approximately 7%.8%. The increasedecrease in monitoring revenues is driven principally by ana increasedecrease in people assigned to monitoring for clients in IllinoisVirginia and theWashington Bahamas.D.C., and due to our recently sold Chilean subsidiary. This increasedecrease was partially offset by revenue decreasesincreases for clients in VirginiaIllinois and Chilethe Bahamas who experienced decreasesincreases in the number of people assigned to monitoring. These increases and reductions from all of these locations represent typical fluctuations which occur daily.

Product and other revenue for Fiscal 20242025 increased to $1,174,289$2,349,372 from $972,178$1,174,289 in the same period in 2023,2024, an increase of $202,111$1,175,083 or approximately 21%.100%. The increase in product sales and other revenue was largely due to increased international product sales, principally to a new customercustomers in Brazil,Chile and Saudi Arabia, partially offset by a decrease in product sales to Saudia Arabia.customer in Brazil. We continue to largely focus on recurring subscription-based opportunities as opposed to equipment sales.

During Fiscal 2024,2025, cost of revenue totaled $19,677,456$17,715,806 compared to cost of revenue during Fiscal 20232024 of $19,178,790,$19,677,456, ana increasedecrease of $498,666,$1,961,650, or approximately 3%.10%. The increasedecrease in cost of revenue was largely the result of higherlower device repair costs of $572,527 and higher server costs of $385,832, partially offset by$378,410, lower communication costs of $101,130$428,603 and lower monitoring center costs of $111,785.$1,430,595, partially offset by increased hardware purchases of $163,192 and increased freight costs of $210,018. The decrease in monitoring center costs was primarily due to Chile monitoring center assets being fully expensed in Fiscal 2024 and the sale of our Chilean subsidiary. The decrease in device repair costs was primarily due to handling some of the device repairs internally, which began in January of Fiscal 2025.

Depreciation and amortization included in cost of revenue for Fiscal Years 20242025 and 2023,2024, totaled $3,061,520$2,956,526 and $3,263,490,$3,061,520, respectively, a decrease of $201,970,$104,994, or approximately 6%.3%. These costs represent the depreciation of ReliAlert® and other monitoring devices, as well as the amortization of monitoring software and certain royalty agreements.agreements, and amortization of a patent related to GPS and satellite tracking. The decrease in depreciation and amortization costs is largely due to a decrease in amortization of $262,500$187,500 for fully amortized device royalties.royalties, Amortizationpartially offset by an increase in device depreciation of a patent related to GPS and satellite tracking are also included in depreciation and amortization.$116,101. Devices are depreciated over either a three- or five-year useful life. Monitoring software is amortized over a seven-year life. Royalty agreements are being amortized over a ten-year useful life. The Company believes these lives are appropriate due to changes in electronic monitoring technology and the corresponding potential for obsolescence. Management periodically assesses the useful life of the devices for appropriateness.

During Fiscal 2024,2025, gross profit totaled $17,209,044,$17,499,648, resulting in a 50% gross margin, compared to $17,209,044, or a 47% gross margin, compared to $15,297,075, or a 44% gross margin, during Fiscal 2023.2024. The increase in absolute gross profit of $1,911,969$290,604 is due to ana increasedecrease in revenuemonitoring of $2,410,635, lower communicationcenter costs and lower monitoring centercommunication costs, partially offset by highera devicedecrease repairin costs and higher server costs.revenue.

During Fiscal 2024,2025, our general and administrative expense totaled $11,521,826,$8,780,869, compared to $10,275,695$11,521,826 for Fiscal 2023.2024. The increasedecrease of $1,246,131,$2,740,957 or approximately 12%, in general and administrative cost24% is primarily due to a settlement related to a contract dispute discussed in Note 12 of $1,003,543 and an increasedecrease in payroll, benefits, and payroll taxes of $469,775,$1,183,728 partiallyprimarily offsetdue byto lowerthe outside servicessale of $193,380.our Chilean subsidiary on November 1, 2024 and a settlement expense related to a contract dispute of $1,003,543 in Fiscal 2024.

For Fiscal 2024,2025, our selling and marketing expense was $3,121,239$3,697,980 compared to 2,842,661$3,121,239 for Fiscal 2023.2024. The increase of $278,578$576,741 or approximately 10%18% resulted largely from higher travelbad debt expense of $476,206 due to this previously being recorded in general and entertainmentadministrative of $59,540expense and higher payroll, benefits, and payroll taxes of $311,146,$149,804 partiallydue offsetto byopen lowersales outsideand servicesmarketing ofpositions $57,288.in Fiscal 2024 as well as an increase in bonus accrual for Fiscal 2025.

During Fiscal 2024,2025, we incurred research and development expense of $2,749,218$2,799,720 compared to those costs recognized during Fiscal 20232024 totaling $2,735,060,$2,749,218, an increase of $14,158$50,502 or approximately 1%.2%. The increase was largely due to increased payroll, benefitstraining and payrollrecruiting taxes of $137,882,expense, partially offset by a decrease in outside services of $126,368.services.

Impairment on Assets Held for Sale/Loss on Sale of Subsidiary

As of September 30, 2024 the Company concluded that Track Group Chile met all of the criteria for classification as held for sale. As a result, the Company measured the property as held for sale at its fair value and accordingly recorded an impairment of $757,130. On November 1, 2024, we completed the sale and recognized a loss of $66,483. See Note 14 to Consolidated Financial Statements for additional information.

During Fiscal 2024,2025, total operating expenses increaseddecreased to $16,255,311 compared to $19,093,528 compared to $16,840,888 for Fiscal 2023,2024, ana increasedecrease of $2,252,640,$2,838,217, or approximately 13%.15%. The increasedecrease is primarily due to the factors disclosed above.

During Fiscal 2024,2025, total other expense was $1,786,383$3,023,996 compared to $1,219,845$1,786,383 during Fiscal 2023,2024, an increase of $566,538$1,237,613 or approximately 46%.69%. The increase in other expense is largely due to a decrease innegative currency exchange rate gainmovements of $352,566 between the US Dollar vs. the Chilean Peso, compared to the prior fiscal year$803,988 and an increase in net interest expense of $210,365$313,707 due to the escalating interest rate on the Amended Facility Agreement with Conrent (See Note 7).Conrent.

During Fiscal 2024,2025, income tax expense totaled $104,094 compared to income tax benefit totaledof $589,453 compared to expense of $627,850 during Fiscal 2023.2024. Tax benefit/expense in both fiscal years are income taxes largely related to a foreign jurisdiction.

We had a net loss attributable to common stockholders for Fiscal 20242025 totaling $3,081,414,$1,883,753, compared to net loss of $3,391,508$3,081,414 for Fiscal 2023,2024, a decrease of $310,094.$1,197,661. This decrease in net loss is largely due to higheran grossincrease profit,in operating income, partially offset by increases in interest expense and income tax benefit, partially offset by higher operating expense and higher other expense.

On December 21, 2020, Conrent and the Company signed an amendment to the Amended Facility Agreement which extended the maturity date of the Amended Facility Agreement to July 1, 2024 (“Amended Facility”), capitalized the accrued and unpaid interest, increasing the outstanding principal amount and reduced the interest rate of the Amended Facility from 8% to 4%. On April 26, 2023, the Company and Conrent entered into another amendment to the Amended Facility (the “Amendment”). The Amendment: (i) extended the maturity date from July 1, 2024, to July 1, 2027 (the “Maturity Date”); (ii) amended the applicable interest rate resulting in an escalating interest rate as follows: 4% through June 30, 2024, 5% through June 30, 2025, 5.5% through June 30, 2026, and 6% through the Maturity Date; and (iii) removed section 7.3 “Change of Control” of the Amended Facility Agreement. In return, the Company agreed to pay total fees of EUR 225,000 ($238,000USD at conversion rate at time of signing new agreement in April 2023) in five annual installments to Conrent. As of September 30, 2024, $42,864,000 of principal and $547,707 of interest was owed to Conrent.

During Fiscal 2024,2025, we had cash flows from operating activities of $4,911,208,$4,317,469, compared to cash flows from operating activities of $3,876,800$4,911,208 for Fiscal 2023,2024, representing a $1,034,408$593,739 increase.decrease, or approximately 12%. The increasedecrease in cash from operations was largely the result of increasesa decrease in our gross profit, accounts payable and collections from customers.customers, partially offset by a decrease in payments to vendors.

The Company used $3,840,812$4,380,722 of cash for investing activities during Fiscal 2024,2025, compared to $4,564,202$3,840,812 of cash used during Fiscal 2023,2024. aThe decreaseincrease of $723,390.$539,910 Theor decrease14% was largely the result of aincreased decreasepurchasing of monitoring equipment purchases,and dueparts toof $1,132,031, partially offset by proceeds from the completionsale of replacementour Chilean subsidiary, net of allcash 3G devices with 4G LTE devicesincluded in the U.Ssale inof Fiscal 2023.$748,715.

The Company used $365,070$63,839 of cash for financing activities during Fiscal 2024,2025, which was the result of principal payments on long-term debt and payment of deferred financing fees, compared to $511,474$365,070 of cash used in financing activities during Fiscal 2023. During the Fiscal Years 2024 and 2023, the Company received net proceeds of $0 from borrowings and made principal payments of $326,731 and $467,323 on notes payable, respectively.2024.

As of September 30, 2024 the Company concluded that Track Group Chile met all of the criteria for classification as held for sale. As a result, the Company measured Track Group Chile as held for sale at its fair value and accordingly recorded an impairment of $757,130. See Note 14 to the Consolidated Financial Statements.

ReliAlert®XC4 is our flagship GPS device, which is among the safest and most reliable monitoring devices ever made. ItXC4 is the onlya one-piece GPS device with patented 3-way voice communication to assist intervention efforts, now on the LTE network with increased battery life. This device includes on-board processing, secondary location technology, a 95db siren, embedded RF technology, anti-tampering capabilities, increased battery life and sleep mode.

A description of the Company’s critical accounting policies that affect the preparation of the Company’s financial statements is set forth in the Company’s Annual Report on Form 10-K for the year ended September 30, 2025, filed with the SEC on December 19, 2025. During the sixnine months ended MarchJune 31,30, 2026, there have been no changes to the Company’s critical accounting policies.

Three Months Ended MarchJune 31,30, 2026 compared to Three Months Ended MarchJune 31,30, 2025

For the three months ended MarchJune 31,30, 2026, the Company recognized totalmonitoring and other related services revenue from operations of $8,944,415$8,507,111 compared to $8,352,320$8,071,416 for the three months ended MarchJune 31,30, 2025, an increase of $592,095$435,695 or approximately 7%.5%. The increase in monitoring revenues is driven principally by an increase in people assigned to monitoring for clients in Florida and Illinois.Florida. This increase was partially offset by revenue decreases for clients in Pennsylvania and Puerto RicoIllinois who experienced decreases in people assigned to monitoring. These increases and reductions from all of these locations represent typical fluctuations which occur daily.

Product sales and other revenue for the three months ended MarchJune 31,30, 2026 increaseddecreased to $577,666$578,225 from $484,345$1,020,026 in the same period in 2025, ana increasedecrease of $93,321$441,801 or approximately 19%.43%. The increasedecrease in product and other revenue was largely due to increaseddecreased international product sales, principally to customers in Chile,Saudi Arabia, partially offset by aan decreaseincrease in product sales to customers in Brazil and Saudi Arabia.Chile. We continue to largely focus on recurring subscription-based opportunities as opposed to equipment sales.

During the three months ended MarchJune 31,30, 2026, cost of revenue totaled $4,453,280$4,849,617 compared to cost of revenue during the three months ended MarchJune 31,30, 2025 of $4,238,354,$4,500,001, an increase of $214,926$349,616 or 5%.approximately 8%. The increase in cost of revenue was largely the result of higher device repair costs of $113,773$150,668 (due to an increase in volume and component costs of routine repairs and maintenance on devices). Higher server costs of $61,722$214,118 and higher alcohol monitoring costs of $128,085$141,068 were due to increased volume and expansion of services offered to new and existing customers. Higher software maintenance costs were due to an increased rate as well as increased maintenance needed for older products. These increases were partially offset by a decrease in communicationhardware costspurchases of $88,965$195,072 and a decrease in monitoring center costs of $72,978.$200,553.

Depreciation and amortization included in cost of revenue for the three months ended MarchJune 31,30, 2026 and 2025 totaled $737,953$931,653 and $723,331,$734,301, respectively, an increase of $14,622.$197,352 or approximately 27%. These costs represent the depreciation of ReliAlert® and other monitoring devices, the amortization of monitoring software and certain royalty agreements. Devices are depreciated over a five-year useful life. Monitoring software is amortized over a five to seven-year life. Royalty agreements are being amortized over a ten-year useful life. The Company believes these lives are appropriate due to changes in electronic monitoring technology and the corresponding potential for obsolescence. Management periodically assesses the useful life of the devices for appropriateness.

During the three months ended MarchJune 31,30, 2026, gross profit totaled $4,491,135,$4,235,719, resulting in a gross margin of approximately 50%.47%. During the three months ended MarchJune 31,30, 2025, gross profit totaled $4,113,966,$4,591,441, resulting in a gross margin of approximately 49%.51%. The increasedecrease in absolute gross profit of $377,169$355,722 is due to an increase in revenue, partially offset by an increase in cost of revenue.

During the three months ended MarchJune 31,30, 2026, general and administrative expense totaled $2,244,284$2,232,515 compared to $2,127,145$2,078,417 for the three months ended MarchJune 31,30, 2025. The increase of $117,139$154,098 or approximately 6%7% is due to an increase in legal and professional fees of $81,525, an increase in outside services of $79,305,$58,586, an increase in payroll, benefits, and payroll taxes of $78,302$66,042 due to increased staffing, and an increase in fees and licenses of $51,111.$52,611. These increases were partially offset by a decrease in legaloutside settlementsservices of $180,000 due to a settlement with Commonwealth of Puerto Rico in Fiscal 2025.$52,005.

During the three months ended MarchJune 31,30, 2026, selling and marketing expense totaled $909,981$870,500 compared to $964,743$858,789 for the three months ended MarchJune 31,30, 2025. The decreaseincrease of $54,762$11,711, or approximately 6%1%, resulted largely from lowerhigher badoutside debtservices expenseand ofpayroll, $103,667,benefits and payroll taxes, partially offset by anlower increasebad indebt travel and entertainment of $21,723.expense.

During the three months ended MarchJune 31,30, 2026, research and development expense totaled $699,310$651,205 compared to $750,650$675,861 for the three months ended MarchJune 31,30, 2025. The decrease of $51,340$24,656 or approximately 7%4% resulted largely from a decrease in payroll, benefits, and payroll taxes of $46,211.$27,876.

During the three months ended MarchJune 31,30, 2026, depreciation and amortization expense totaled $228,039$231,650 compared to $227,385$227,568 for the three months ended MarchJune 31,30, 2025, an increase of $654.$4,082.

During the three months ended MarchJune 31,30, 2026, total operating expense increased to $4,081,614$3,985,870 compared to $4,069,923$3,840,635 for the three months ended MarchJune 31,30, 2025, an increase of $11,691.$145,235. The increase is principally due to the factors disclosed above.

During the three months ended MarchJune 31,30, 2026, operating income was $409,521$249,849 compared to $44,043$750,806 for the three months ended MarchJune 31,30, 2025. The increasedecrease of $365,478$500,957 in operating income was principally due to an increase in revenue, partially offset by an increase in cost of revenue and an increase in operating expense.

For the three months ended MarchJune 31,30, 2026, other expenseincome totaled $1,120,909$22,204,365 compared to $531,014$685,190 for the three months ended MarchJune 31,30, 2025, an increase of $589,895.$21,519,175. The increase in other expenseincome is largely due to negativegain currencyon exchangetroubled ratedebt movementsrestructuring of $543,613.$23,464,004.

The Company had net lossincome attributable to common stockholders of $711,388$22,443,021 for the three months ended MarchJune 31,30, 2026, compared to $517,116$1,434,280 for the three months ended MarchJune 31,30, 2025, an increase in net lossincome of $194,272.$21,008,741. This increase in net lossincome is largely due to negativethe currencygain exchangeon ratetroubled movements,debt partially offset by an increase in operating income.restructuring.

SixNine Months Ended MarchJune 31,30, 2026 compared to SixNine Months Ended MarchJune 31,30, 2025

For the sixnine months ended MarchJune 31,30, 2026, the Company recognized totalmonitoring and other related services revenue from operations of $18,061,623$25,581,618 compared to $17,020,648$24,380,699 for the sixnine months ended MarchJune 31,30, 2025, an increase of $1,040,975$1,200,919 or approximately 6%.5%. The increase in monitoring revenues is driven principally by an increase in people assigned to monitoring for clients in Florida, Illinois, Indiana and Canada. This increase was partially offset by a revenue decrease for our Chilean subsidiary, which was sold in November 2025. These increases represent typical fluctuations which occur daily.

Product sales and other revenue for the sixnine months ended MarchJune 31,30, 2026 increaseddecreased to $987,116$1,565,341 from $711,366$1,731,392 in the same period in 2025, ana increasedecrease of $275,750$166,051 or approximately 39%.10%. The increasedecrease in product and other revenue was largely due to increaseddecreased international product sales, principally to customers in Chile,Brazil partiallyand offsetSaudi by a decrease in product sales to customers in Brazil.Arabia. We continue to largely focus on recurring subscription-based opportunities as opposed to equipment sales.

During the sixnine months ended MarchJune 31,30, 2026, cost of revenue totaled $9,302,781$14,152,398 compared to cost of revenue during the sixnine months ended MarchJune 31,30, 2025 of $8,482,340,$12,982,341, an increase of $820,441$1,170,057 or 10%.9%. The increase in cost of revenue was largely the result of higher device repair costs of $274,858$425,526 (due to an increase in volume and component costs of routine repairs and maintenance on devices). Higher server costs of $212,129$426,248 and higher alcohol monitoring costs of $223,933$365,002 were due to increased volume and expansion of services offered to new and existing customers. Higher software maintenance costs of $298,858 were due to an increased rate as well as increased maintenance needed for older products. These increases were partially offset by a decrease in hardware purchases of $166,974, a decrease in communication costs due to efficiencies in pooling plans and removing unnecessary services.

Depreciation and amortization included in cost of revenue for the sixnine months ended MarchJune 31,30, 2026 and 2025 totaled $1,515,840$2,447,493 and $1,458,556,$2,192,857, respectively, an increase of $57,284.$254,636. These costs represent the depreciation of ReliAlert® and other monitoring devices, the amortization of monitoring software and certain royalty agreements. Devices are depreciated over a five-year useful life. Monitoring software is amortized over a five to seven-year life. Royalty agreements are being amortized over a ten-year useful life. The Company believes these lives are appropriate due to changes in electronic monitoring technology and the corresponding potential for obsolescence. Management periodically assesses the useful life of the devices for appropriateness.

During the sixnine months ended MarchJune 31,30, 2026, gross profit totaled $8,758,842,$12,994,561, resulting in a gross margin of approximately 48%. During the sixnine months ended MarchJune 31,30, 2025, gross profit totaled $8,538,308,$13,129,750, resulting in a gross margin of approximately 50%. The increasedecrease in absolute gross profit of $220,534$135,189 is due to an increase in cost of revenue, partially offset by an increase in cost of revenue.

During the sixnine months ended MarchJune 31,30, 2026, general and administrative expense totaled $4,474,179$6,706,694 compared to $4,558,263$6,636,680 for the sixnine months ended MarchJune 31,30, 2025. The decreaseincrease of $84,084$70,014 or approximately 2%1% is due to an increase in payroll, benefits, and payroll taxes of $121,049 due to an increase in staffing, an increase in fees and licenses of $67,678 due to a franchise fee credit in Fiscal 2025, and in increase in insurance expense of $56,474 due to health insurance increases. These increases were partially offset by a decrease in legal settlements of $180,000 due to a settlement with Commonwealth of Puerto Rico in Fiscal 2025, partially offset by an increase in outside services of $65,239.2025.

During the sixnine months ended MarchJune 31,30, 2026, selling and marketing expense totaled $1,868,934$2,739,434 compared to $1,865,932$2,724,721 for the sixnine months ended MarchJune 31,30, 2025. The increase of $3,002$14,713 resulted largely from higher payroll, benefits and payroll taxes and higher travel and entertainment expenses, partially offset by a decrease in bad debt expense and trade show costs.

During the sixnine months ended MarchJune 31,30, 2026, research and development expense totaled $1,393,454$2,044,659 compared to $1,420,040$2,095,901 for the sixnine months ended MarchJune 31,30, 2025. The decrease of $26,586$51,242 or approximately 2% was largely due to decreased payroll, benefits, and payroll taxes of $71,702,$99,578, partially offset by an increase in training and recruiting expense of $23,787.$23,550 and an increase in dues and subscriptions of $27,616.

During the sixnine months ended MarchJune 31,30, 2026, depreciation and amortization expense totaled $456,073$687,723 compared to $454,938$682,506 for the sixnine months ended MarchJune 31,30, 2025, an increase of $1,135.$5,217.

As of September 30, 2024 the Company concluded that Track Group Chile met all of the criteria for classification as held for sale. As a result, the Company measured the property as held for sale at its fair value and accordingly recorded an impairment of $757,130. On November 1, 2024, we completed the sale and recognized a loss of $66,483 during the sixnine months ended MarchJune 31,30, 2025.

On November 7, 2025, Track Group International Ltd. was dissolved. The Company wrote-off the associated assets and liabilities of this entity as of the date of dissolution and reported a pre-tax gain of $630,472 during the sixnine months ended MarchJune 31,30, 2026.

During the sixnine months ended MarchJune 31,30, 2026, total operating expense decreased to $7,562,168$11,548,038 compared to $8,365,656$12,206,291 for the sixnine months ended MarchJune 31,30, 2025, a decrease of $803,488$658,253 or approximately 10%.5%. The decrease is principally due to the factors disclosed above.

During the sixnine months ended MarchJune 31,30, 2026, operating income was $1,196,674$1,446,523 compared to $172,652$923,459 for the sixnine months ended MarchJune 31,30, 2025. The increase of $1,024,022$523,064 in operating income was principally due to an increase in revenue and a decrease in operating expense, partially offset by an increase in cost of revenue.

For the sixnine months ended MarchJune 31,30, 2026, other expenseincome totaled $1,325,588$20,878,778 compared to $2,599,236other expense of ($1,914,047) for the sixnine months ended MarchJune 31,30, 2025, aan decreaseincrease of $1,273,648.$22,792,825. The decreaseincrease in other expenseincome is largely due to again decreaseon introubled currencydebt exchange rate lossrestructuring of $1,378,505, partially offset by an increase in interest expense of $105,934.$23,464,004.

The Company had income attributable to common stockholders of $22,246,292 for the nine months ended June 30, 2026, compared to a net loss attributable to common stockholders of $196,729$1,093,685 for the sixnine months ended MarchJune 31, 2026, compared to $2,527,965 for the six months ended March 31,30, 2025, aan decreaseincrease in net lossincome of $2,331,236.$23,339,977. ThisThe decreaseincrease in net lossincome is largely due to anthe increasegain inon operatingtroubled incomedebt and decrease in currency exchange rate loss.restructuring.

Management believes that its existing cash and its future cash flow from operations will be sufficient to meet the cash requirements of its existing business for the foreseeable future. Management’s belief assumes that the Company and Conrent can negotiate a further extension regarding the payment of interest on the Company’s debt owed to Conrent. See “Risk Factors” below.

No borrowings or sales of equity securities other than as noted above occurred during the sixnine months ended MarchJune 31,30, 2026 or during the year ended September 30, 2025.

During the sixnine months ended MarchJune 31,30, 2026, we had cash flows from operating activities of $3,497,018,$4,497,315, compared to cash flows from operating activities of $271,134$3,055,920 during the sixnine months ended MarchJune 31,30, 2025, representing a $3,225,884$1,441,395 increase. The increase in cash from operations was largely the result of ahigher decreaseoperating in net lossincome and an increase in collections from customers.

Net Cash Flows Used in Investing Activities.Activities

The Company used $2,430,041$3,322,658 of cash from investing activities during the sixnine months ended MarchJune 31,30, 2026, compared to $1,013,132$2,325,538 used during the sixnine months ended MarchJune 31,30, 2025. The increase of $1,416,909$997,120 or 140%43% was largely the result of increased capitalized software costs of $904,633 and proceeds from the sale of our Chilean subsidiary, net of cash included in the sale of $748,715 in November 2024.$903,912.

Net Cash Flows UsedProvided inby Financing Activities.

The Company usedwas $58,969provided $3,130,863 of cash forfrom financing activities during sixnine months ended MarchJune 31,30, 2026, which was the payment of deferred financing fees,2026 compared to ($63,839) of cash used in financing activities during the sixnine months ended MarchJune 31,30, 2025. The increase of $3,194,702 was largely the result of net proceeds from common stock and warrants, partially offset by payment of deferred financing fees.