Note 12 - Subsequent Events

The Company has evaluated subsequent events through the date these financial statements were issued and identified the following events requiring disclosure:

San Antonio Lease Settlement

Subsequent to June 30, 2026, on July 28, 2026, the Company executed a Mutual Release and Settlement Agreement resolving a dispute with the landlord of its former San Antonio, Texas premises. Under the settlement, the Company agreed to pay an additional $17,820, in installments through October 2026, in addition to the $10,000 security deposit previously forfeited.

Securities Purchase Agreement

On July 24, 2026, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an institutional investor (the “Investor”). Pursuant to the Purchase Agreement, the Company agreed to sell, and the Investor agreed to purchase, a senior secured convertible note of the Company, in the aggregate original principal amount of $2,000,000 (the “Note”), which is convertible into shares of common stock of the Company (the “Conversion Shares”). The closing of the transaction contemplated under the Purchase Agreement occurred on July 24, 2026. Upon the closing, the Company issued the Note and received gross proceeds of approximately $1.8 million. The Company intends to use the net proceeds from the sale of the Note for general corporate purposes and working capital requirements.

Pursuant to the Purchase Agreement, the Company agreed not to issue any equity, equity-linked securities, debt or preferred shares in any Subsequent Placement (as defined in the Purchase Agreement) so long as the Note is outstanding, subject to certain exceptions. The Company also agreed to provide the Investor with a right of participation in 100% of any Subsequent Placement until the later of the four-month anniversary of the closing date and the date the Note is no longer outstanding.

Note

The Note bears interest at a rate of 12% per annum and will mature on October 24, 2026. From and after the occurrence and during the continuance of any Event of Default (as defined in the Note), the interest rate will increase by 9% until such Event of Default is subsequently cured. The maturity date may be extended for an additional three months by mutual written consent of the Company and the Investor or at the option of the Investor, subject to the terms of the Note. On the maturity date, the Company shall pay to the Investor an amount in cash representing the sum of (i) 50% of all outstanding principal (the “Payment Premium”), (ii) all outstanding principal, and (iii) all accrued and unpaid interest and Late Charges (as defined in the Note) on such principal and interest. The Note is convertible at the option of the Investor into Conversion Shares at a fixed conversion price equal to $0.75 per share.

The Company may, at any time and with 30 days’ prior notice, redeem all of the outstanding amount then remaining under the Note for cash in an amount equal to the sum of (i) the Payment Premium, (ii) all outstanding principal, and (iii) all accrued and unpaid interest and Late Charges on such principal and interest as of the applicable redemption date.

Pursuant to the Note, if the Company shall determine to prepare and file with the Securities and Exchange Commission a registration statement or offering statement of any of its equity securities (other than on Form S-4 or Form S-8), then the Company shall deliver to the Investor a written notice of such determination and, if within 15 days after the date of the delivery of such notice, the Investor shall so request in writing, the Company shall include in such registration statement or offering statement all or any number of Conversion Shares and/or any capital stock of the Company issued or issuable with respect to the Conversion Shares or the Note as requested by the Investor.

The Note is secured by the collateral set forth in the Security and Pledge Agreement (as defined below) and is guaranteed by each of the Company’s subsidiaries pursuant to a Guaranty (the “Guaranty”).

Security and Pledge Agreement

In connection with the Purchase Agreement and the Note, on July 24, 2026, the Company, certain subsidiaries of the Company (each a “Grantor” and together with the Company, collectively, the “Grantors”) and the Investor also entered into a security and pledge agreement (the “Security and Pledge Agreement”). Pursuant to the Security and Pledge Agreement, the Grantors have granted a security interest in the Collateral (as defined in the Security and Pledge Agreement), which includes substantially all of the assets of the Company.

CEO and Executive Chairman Employment Agreement

On July 28, 2026, the Company entered into an employment agreement with Michael D. Farkas, the Company’s founder, Executive Chairman and Chief Executive Officer, for an initial three-year term with automatic two-year renewals absent 90 days’ notice. Under the agreement, Mr. Farkas is entitled to an annual base salary of $720,000 and annual equity compensation (“Salary Equity”) of $2,000,000, issuable quarterly, together with an annual equity performance award of up to 100% of Salary Equity. Both the base salary and Salary Equity increase automatically upon the Company achieving specified annual revenue thresholds ranging from $120 million to $1 billion, and Salary Equity is subject to a 30% reduction if the Company does not achieve a $200 million market capitalization within one year of the agreement, reinstated upon subsequent achievement. Mr. Farkas is also entitled to market-capitalization-based bonus issuances of common stock (10% of shares outstanding at each of five market cap thresholds from $500 million to $8 billion) and a signing bonus equal to 1.5 years of base salary, Salary Equity, target annual performance bonus, and target equity performance award (approximately $8,160,000), payable in restricted common stock. The agreement includes customary severance, change-in-control, and Section 280G provisions, and terminates automatically if the Company is delisted from Nasdaq and not relisted within 60 days. The Company is evaluating the accounting and disclosure implications of this agreement, including the impact on future stock-based compensation expense and potential dilution.

Stockholder Written Consent

On July 31, 2026, holders of a majority of the Company’s outstanding voting securities (approximately 53.45%), together with the Board of Directors, approved by written consent the following actions, as further described in a Preliminary Information Statement on Schedule 14C:

These actions were approved by written consent but will not become effective until at least 20 calendar days after the Information Statement is mailed or otherwise furnished to stockholders. No shares had been issued and no reverse split had been effected as of the date these financial statements were issued. The Company will evaluate the accounting impact of the Series C financing and any subsequent reverse stock split at the time such transactions are consummated.

Equity Issuances

Subsequent to June 30, 2026, the Company issued 357,681 shares of common stock, consisting of 34,482 shares issued to an employee and 323,199 shares issued to consultants.