NOTE 13 – REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS:

Warrants

In connection with the preparation of the consolidated financial statements for the year ended December 31, 2025, management identified an error related to the accounting for warrants issued on June 9, 2021. The warrants were determined to be equity‑classified at issuance; however, the related warrant value was not recorded within additional paid‑in capital at the issuance date.

The warrants were subsequently exercised during 2025. As the warrants were equity‑classified, the correction resulted solely in a reclassification within additional paid‑in capital to recognize the previously unrecorded warrant component. The correction had no impact on total stockholders’ equity, net income (loss), earnings per share, cash flows, or total assets or liabilities for any period presented.

Income Taxes

During the preparation of the Company’s consolidated financial statements for the year ended December 31, 2025, management identified errors in disclosure of income tax returns being unfiled.  Certain tax years remain unfiled as of December 31, 2025, and therefore the statute of limitations for those years remains open.

Leases

During the preparation of the Company’s consolidated financial statements for the year ended December 31, 2025, management identified errors in the accounting for a related-party finance lease recognized under ASC 842, Leases.

The errors primarily related to (i) the use of an incremental borrowing rate derived from financing arrangements entered into in 2023 rather than a contemporaneous secured borrowing rate at the lease commencement date in April 2024, and (ii) the omission of certain leasehold improvement recoupment credits in the initial measurement of the lease liability and corresponding right-of-use (“ROU”) asset. As a result of these errors, certain deferred lease payment obligations were previously recorded within accounts payable – related party rather than being appropriately reflected in the measurement and presentation of the finance lease liability.

The Company assessed the effect of the errors on prior periods under the guidance of Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin No. 99, “Materiality,” codified in ASC 250, Accounting Changes and Error Corrections (“ASC 250”). Based on its assessment, the Company determined that the errors were not material to any previously issued 2024 consolidated financial statements. The lease is related to discontinued operations and accordingly the lease is recorded within the assets and liabilities of discontinued operations and income (loss) from discontinued operations in the accompanying consolidated financial statements.  The following adjustments recorded in the accompanying 2024 consolidated financial statements reflect adjustments made to financial statement classifications before the effects of the discontinued operations adjustments described in Note 2.

Balance Sheet Impact

As of December 31, 2024, the revision resulted in:

Statements of Operations and Cash Flows Impact

For the year ended December 31, 2024:

Stockholders’ Equity Impact

Net loss decreased by approximately $0.1 million. Accumulated deficit and total stockholders’ deficit at December 31, 2024 were adjusted accordingly. There was no impact on common stock or additional paid-in capital.

The following table reflects the corrections of errors on the previously issued consolidated balance sheet line items affected. The revisions were not material to the Company’s previously issued consolidated statements of operations, stockholders’ equity or cash flows.