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(formerly Reticulate Micro, Inc.) was incorporated on June 23, 2022, in Nevada and changed its name to RMX Industries, Inc. (“RMX” or the “Company”) on August 1, 2025. The Company maintains offices in Dallas and Leander, Texas. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">RMX is a technology company focused on building intelligence architecture for real-world physical environments where operational data is created, decisions need to be made, and reliance on centralized cloud processing alone is not sufficient. The Company refers to this focus as physical-edge intelligence.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The Company’s foundational technology originated in high-efficiency video compression and transport, developed under the Video Adaptive Systems Technology (VAST™) platform. VAST was originally built to move high-quality video across constrained, low-bandwidth networks — an environment that required extreme efficiency, resilience, and edge-side operation. Building on that provenance, the Company has evolved from a video compression company into a physical-edge intelligence company, delivered through its proprietary platform, QuantrusX™. QuantrusX incorporates VAST as an underlying video and data-transport capability rather than as a separately marketed product line, alongside proprietary internal intelligence capabilities that support model refinement and lower-latency reasoning at the edge. In June 2026, the Company commenced its inaugural QuantrusX deployment at a training and operations facility in Texas, generating the Company’s first commercial platform revenue.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">In 2024, the Company achieved quotation on the OTCQB® Venture Market of OTC Markets Group, Inc. under the symbol “RMXI,” with trading beginning in January 2025. The Company is preparing for a planned senior exchange uplisting.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><i><span style="text-decoration:underline">Reverse Stock Split</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> On July 22, 2026, the Company filed with the Secretary of State of the State of Nevada a Certificate of Change, pursuant to Nevada Revised Statutes 78.209, to effect a one-for-three (1-for-3) reverse stock split (the “Reverse Split”) of the Company’s issued and outstanding shares of class A common stock, $0.001 par value per share (the “Class A Common Stock”), and class B common stock, $0.001 par value per share (the “Class B Common Stock”). The Reverse Split was effective as of 5:00 p.m. Eastern Time on July 24, 2026. Pursuant to the Nevada Revised Statutes 78.207, a company’s board of directors has the authority to effect a reverse stock split without stockholder approval if the number of authorized shares of common stock and the number of outstanding shares of common stock are proportionally reduced. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> Prior to the Reverse Split, the Company was authorized to issue 200,000,000 shares of common stock, consisting of 196,400,000 shares of Class A Common Stock and 3,600,000 shares of Class B Common Stock. As a result of the Reverse Split, each three (3) pre-split shares of Class A Common Stock or Class B Common Stock outstanding were automatically combined into one (1) new share of Class A Common Stock or Class B Common Stock, respectively, without any action on the part of the holders, and the Company is now authorized to issue 66,666,666 shares of common stock, consisting of 65,466,666 shares of Class A Common Stock and 1,200,000 shares of Class B Common Stock. The number of shares of preferred stock that the Company is authorized to issue was not impacted. As a result of the Reverse Split, the number of outstanding shares of Class A Common Stock was reduced from 30,045,216 to approximately 10,015,190 and the number of outstanding shares of Class B Common Stock was reduced from 1,000,000 to approximately 333,334. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">All share and per share information in these unaudited condensed consolidated financial statements (“financial statements”) retroactively reflect this reverse stock split.</p> 2022-06-23 one-for-three 0.001 0.001 200000000 196400000 3600000 66666666 65466666 1200000 30045216 10015190 1000000 333334 <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.25in; text-align: justify;"><span style="font-size: 10pt;"><span style="font-weight: bold;">2.</span></span></td> <td><span style="font-size: 10pt;"><span style="font-weight: bold;">SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</span></span></td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i><span style="text-decoration:underline">Going Concern</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> Since inception, the Company has incurred losses, resulting in an accumulated deficit of $57,916,272 as of June 30, 2026, with further losses expected as it continues to develop its business. For the six months ended June 30, 2026, the Company used $1,812,972 in cash for operating activities. As of June 30, 2026, the Company had $2,161,653 in cash and cash equivalents, including $1,913,320 of restricted cash. The Company estimates that it will require approximately $4.0 million to fund operations for the twelve months following the issuance of these financial statements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the financial statements are issued. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><span style="font-weight: bold;">Management’s Plans</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> The Company has applied for an uplisting of its Class A Common Stock on NYSE American. Upon approval of such uplisting, a total of approximately $5.0 million will become available to the Company, consisting of (i) the release of the $1.9 million of restricted cash currently reflected on the Company’s balance sheet, and (ii) an approximate $3.0 million deposit to be made by an institutional investor (the “Investor”) pursuant to the executed securities purchase agreement between the Company and the Investor. Of the approximately $5.0 million, approximately $3.0 million will be immediately unrestricted and available for general corporate purposes, with the remainder becoming available upon satisfaction of the conditions set forth in the Investor agreements. In addition, the Company maintains a contingent financing facility with the Investor providing for up to $45.0 million of additional financing (the “Credit Facility”), pursuant to the securities purchase agreement and subject to the terms and conditions thereof, which management believes would be available to fund any shortfall in the Company’s working capital requirements. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">In June 2026, the Company commenced commercial deployment of its QuantrusX edge intelligence platform. The Company’s commercial model provides for fixed-fee, prepaid multi-year subscription arrangements, under which contract consideration is collected at or near contract inception and recognized as revenue ratably over the subscription term. Accordingly, executed customer agreements generate cash proceeds in advance of revenue recognition. The Company executed its initial multi-year prepaid QuantrusX subscription agreement in June 2026 and maintains an active pipeline of prospective customers, which management expects to contribute to liquidity over the next twelve months.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The amounts becoming available upon uplisting are conditioned upon approval of the Company’s NYSE American listing application, which is not within the Company’s control, and availability under the Credit Facility is subject to conditions that may not be satisfied. There can be no assurance that the Company’s listing application will be approved, that amounts under the Credit Facility will be available when needed or on acceptable terms, or as to the timing or volume of future customer agreements. Accordingly, management has concluded that these plans do not alleviate the substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><i><span style="text-decoration:underline">Basis of Presentation</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The accompanying financial statements of the Company are expressed in United States dollars and are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and the rules and regulations of the Securities and Exchange Commission (the “SEC”). The Company has adopted a December 31 fiscal year end.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i><span style="text-decoration:underline">Use of Estimates</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to revenue recognition and contingencies. The Company bases its estimates on historical experience, known or expected trends, and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i><span style="text-decoration:underline">Cash and Cash Equivalents</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and money market funds, the fair value of which approximates cost. The Company maintains its cash balances with a high-credit-quality financial institution. At times, such cash may be more than the Federal Deposit Insurance Corporation-insured limit of $250,000. The Company has not experienced any losses in such accounts, and management believes the Company is not exposed to any significant credit risk on its cash and cash equivalents. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i> </i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i><span style="text-decoration:underline">Fair Value Measurements</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">FASB ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><i>Level 1</i> - Quoted prices in active markets for identical assets or liabilities.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><i>Level 2</i> - Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><i>Level 3</i> - Unobservable inputs that are supported by little or no market activity, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2026 and 2025. The Company uses the market approach to measure fair value for its Level 1 financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The respective carrying value of certain balance sheet financial instruments approximates its fair value. These financial instruments include cash, accounts payable, and accrued liabilities. Fair values were estimated to approximate carrying values for these financial instruments since they are short term in nature, and they are receivable or payable on demand.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The estimated fair value of assets and liabilities acquired in business combinations and reporting units and long-lived assets used in the related asset impairment tests utilize inputs classified as Level 3 in the fair value hierarchy.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><i><span style="text-decoration:underline">Research and Development</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><i> </i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> Research and development costs are expensed as incurred. For the three months ended June 30, 2026 and 2025, research and development expense was $134,527 and $80,030, respectively. For the six months ended June 30, 2026 and 2025, research and development expense was $174,127 and $158,319, respectively. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><i><span style="text-decoration:underline">Share-Based Compensation</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><i> </i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">ASC 718, “Compensation – Stock Compensation”, prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their grant date fair values. That expense is recognized over the period when an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period) or the straight-line attribution method.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">Under 718-10-30-20D the determination of whether a valuation method is reasonable, or whether an application of a valuation method is reasonable, shall be made based on the facts and circumstances as of the measurement date. Factors to be considered under a reasonable valuation method include, as applicable:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.25in;"> </td> <td style="width: 0.25in;"><span style="font-size: 10pt;">a.</span></td> <td style="text-align: justify;"><span style="font-size: 10pt;">The value of tangible and intangible assets of the nonpublic entity</span></td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.25in;"> </td> <td style="width: 0.25in;"><span style="font-size: 10pt;">b.</span></td> <td style="text-align: justify;"><span style="font-size: 10pt;">The present value of anticipated future cash flows of the nonpublic entity</span></td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.25in;"> </td> <td style="width: 0.25in;"><span style="font-size: 10pt;">c.</span></td> <td style="text-align: justify;"><span style="font-size: 10pt;">The market value of stock or equity interests in similar corporations and other entities engaged in trades or businesses substantially similar to those engaged in by the nonpublic entity for which the stock is to be valued, the value of which can be readily determined through nondiscretionary, objective means (such as through trading prices on an established securities market or an amount paid in an arm’s-length private transaction)</span></td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;">Share-based compensation expense for the three and six months ended June 30, 2026 and 2025 was as follows:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold;"> </td> <td colspan="6" style="font-weight: bold; text-align: center;">Three Months Ended</td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold;"> </td> <td colspan="6" style="font-weight: bold; text-align: center;">Six Months Ended</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">June 30,</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">June 30,</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 52%; text-align: left;">Issuance of options for services</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">649,416</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">633,212</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">765,792</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">1,207,169</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td>Issuance of shares for services</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1079738246;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">525,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">63,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">525,000</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">Issuance of warrants for services</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">899,564</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,026,513</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">906,813</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,935,364</td> <td style="text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i> </i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i><span style="text-decoration:underline">Basic and Diluted Net Income (Loss) Per Share</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The Company computes net income (loss) per share in accordance with ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common stockholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common stock outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i> </i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i><span style="text-decoration:underline">Revenue Recognition</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The Company has adopted revenue recognition policies for its principal revenue types, including subscription and license fees, usage-based fees, professional and other services, and hardware. Prior to fiscal year 2026, the Company's revenue was derived from software license, hardware, and professional services activity. Beginning in the second quarter of 2026, the Company introduced QuantrusX, an edge intelligence platform, and revenue has since primarily consisted of QuantrusX subscription fees; other revenue streams described below have not been material during the periods presented.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i>QuantrusX — Edge Intelligence Platform</i>. During the second quarter of 2026, the Company introduced QuantrusX, an edge intelligence platform designed to bring computation, data interpretation, and decision support closer to the physical edge, where data is created and decisions must be made in real time. QuantrusX incorporates proprietary internal intelligence capabilities that support model refinement, governed learning from field inputs, and lower-latency reasoning within the platform environment. These internal capabilities are not sold as standalone customer products. In June 2026, the Company moved QuantrusX into its first commercial deployment, representing the Company’s initial transition of the platform from development to a revenue-generating, in-field deployment.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i>Inferencing and Usage-Based Fees</i>. As part of its QuantrusX commercial model, the Company earns usage-based fees tied to the volume of inferences processed and computational usage of the platform as it interprets field data and generates decision support in real time. These fees are billed based on customer consumption during the period and revenue is recognized under the Company’s variable consideration policy as the underlying usage occurs, consistent with ASC 606’s guidance on usage-based royalties and consumption-based pricing. Because inferencing volume can fluctuate with deployment activity and field conditions, revenue from this stream may vary period to period as QuantrusX scales across additional sites and customers.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i> </i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i>Software license and subscription revenues</i> include software license revenues from the sales of software licenses and subscription fees from customers accessing the Company’s services. Revenue is recognized upon transfer of control of promised products and services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. If the consideration promised in a contract includes a variable amount, for example, overage fees, contingent fees or service level penalties, the Company includes an estimate of the amount it expects to receive for the total transaction price if it is probable that a significant reversal of cumulative revenue recognized will not occur.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The Company determines the amount of revenue to be recognized through the application of the following steps:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt;" width="100%"><tbody><tr style="vertical-align: top;"><td style="width: 0.25in;"></td> <td style="width: 0.25in;"><span style="font: normal 10pt Times New Roman, Times, Serif;">●</span></td> <td style="text-align: justify;">identification of the contract, or contracts, with a customer;</td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in;"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt;" width="100%"><tbody><tr style="vertical-align: top;"><td style="width: 0.25in;"></td> <td style="width: 0.25in;"><span style="font: normal 10pt Times New Roman, Times, Serif;">●</span></td> <td style="text-align: justify;">identification of the performance obligations in the contract;</td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in;"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt;" width="100%"><tbody><tr style="vertical-align: top;"><td style="width: 0.25in;"></td> <td style="width: 0.25in;"><span style="font: normal 10pt Times New Roman, Times, Serif;">●</span></td> <td style="text-align: justify;">determination of the transaction price;</td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in;"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt;" width="100%"><tbody><tr style="vertical-align: top;"><td style="width: 0.25in;"></td> <td style="width: 0.25in;"><span style="font: normal 10pt Times New Roman, Times, Serif;">●</span></td> <td style="text-align: justify;">allocation of the transaction price to the performance obligations in the contract; and</td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in;"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt;" width="100%"><tbody><tr style="vertical-align: top;"><td style="width: 0.25in;"></td> <td style="width: 0.25in;"><span style="font: normal 10pt Times New Roman, Times, Serif;">●</span></td> <td style="text-align: justify;">recognition of revenue when or as the Company satisfies the performance obligations.</td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i>Professional Services and Other Revenues. </i>The Company’s professional services contracts are either on a time and materials, fixed price or subscription basis. These revenues are recognized as the services are rendered for time and materials contracts, on a proportional performance basis for fixed price contracts or ratably over the contract term for subscription professional services contracts. Other revenues consist primarily of training revenues recognized as such services are performed.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i>Hardware</i>. Our hardware is generally highly dependent on, and interrelated with, the underlying operating system and cannot function without the operating system. In these cases, the hardware and software license are accounted for as a single performance obligation and revenue is recognized at the point in time when ownership is transferred to resellers or directly to end customers through retail stores and online marketplaces.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i><span style="text-decoration:underline">Property and Equipment</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> Property and equipment over $2,500 are stated at cost less accumulated depreciation, and depreciated using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The estimated useful lives of our property and equipment are generally as follows: computer software developed or acquired for internal use, three years; computer equipment, three to five years; leasehold improvements, shorter of lease term or estimated useful life; and furniture and equipment, <span style="-sec-ix-hidden:fc_16005538;">one</span> to 10 years. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i><span style="text-decoration:underline">Going Concern</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> Since inception, the Company has incurred losses, resulting in an accumulated deficit of $57,916,272 as of June 30, 2026, with further losses expected as it continues to develop its business. For the six months ended June 30, 2026, the Company used $1,812,972 in cash for operating activities. As of June 30, 2026, the Company had $2,161,653 in cash and cash equivalents, including $1,913,320 of restricted cash. The Company estimates that it will require approximately $4.0 million to fund operations for the twelve months following the issuance of these financial statements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the financial statements are issued. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><span style="font-weight: bold;">Management’s Plans</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> The Company has applied for an uplisting of its Class A Common Stock on NYSE American. Upon approval of such uplisting, a total of approximately $5.0 million will become available to the Company, consisting of (i) the release of the $1.9 million of restricted cash currently reflected on the Company’s balance sheet, and (ii) an approximate $3.0 million deposit to be made by an institutional investor (the “Investor”) pursuant to the executed securities purchase agreement between the Company and the Investor. Of the approximately $5.0 million, approximately $3.0 million will be immediately unrestricted and available for general corporate purposes, with the remainder becoming available upon satisfaction of the conditions set forth in the Investor agreements. In addition, the Company maintains a contingent financing facility with the Investor providing for up to $45.0 million of additional financing (the “Credit Facility”), pursuant to the securities purchase agreement and subject to the terms and conditions thereof, which management believes would be available to fund any shortfall in the Company’s working capital requirements. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">In June 2026, the Company commenced commercial deployment of its QuantrusX edge intelligence platform. The Company’s commercial model provides for fixed-fee, prepaid multi-year subscription arrangements, under which contract consideration is collected at or near contract inception and recognized as revenue ratably over the subscription term. Accordingly, executed customer agreements generate cash proceeds in advance of revenue recognition. The Company executed its initial multi-year prepaid QuantrusX subscription agreement in June 2026 and maintains an active pipeline of prospective customers, which management expects to contribute to liquidity over the next twelve months.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The amounts becoming available upon uplisting are conditioned upon approval of the Company’s NYSE American listing application, which is not within the Company’s control, and availability under the Credit Facility is subject to conditions that may not be satisfied. There can be no assurance that the Company’s listing application will be approved, that amounts under the Credit Facility will be available when needed or on acceptable terms, or as to the timing or volume of future customer agreements. Accordingly, management has concluded that these plans do not alleviate the substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.</p> -57916272 -1812972 2161653 1913320 4000000 5000000 1900000 3000000 5000000 3000000 45000000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><i><span style="text-decoration:underline">Basis of Presentation</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The accompanying financial statements of the Company are expressed in United States dollars and are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and the rules and regulations of the Securities and Exchange Commission (the “SEC”). The Company has adopted a December 31 fiscal year end.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i><span style="text-decoration:underline">Use of Estimates</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to revenue recognition and contingencies. The Company bases its estimates on historical experience, known or expected trends, and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i><span style="text-decoration:underline">Cash and Cash Equivalents</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks and money market funds, the fair value of which approximates cost. The Company maintains its cash balances with a high-credit-quality financial institution. At times, such cash may be more than the Federal Deposit Insurance Corporation-insured limit of $250,000. The Company has not experienced any losses in such accounts, and management believes the Company is not exposed to any significant credit risk on its cash and cash equivalents. </p> 250000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i><span style="text-decoration:underline">Fair Value Measurements</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">FASB ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><i>Level 1</i> - Quoted prices in active markets for identical assets or liabilities.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><i>Level 2</i> - Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify;"><i>Level 3</i> - Unobservable inputs that are supported by little or no market activity, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2026 and 2025. The Company uses the market approach to measure fair value for its Level 1 financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The respective carrying value of certain balance sheet financial instruments approximates its fair value. These financial instruments include cash, accounts payable, and accrued liabilities. Fair values were estimated to approximate carrying values for these financial instruments since they are short term in nature, and they are receivable or payable on demand.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The estimated fair value of assets and liabilities acquired in business combinations and reporting units and long-lived assets used in the related asset impairment tests utilize inputs classified as Level 3 in the fair value hierarchy.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><i><span style="text-decoration:underline">Research and Development</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><i> </i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> Research and development costs are expensed as incurred. For the three months ended June 30, 2026 and 2025, research and development expense was $134,527 and $80,030, respectively. For the six months ended June 30, 2026 and 2025, research and development expense was $174,127 and $158,319, respectively. </p> 134527 80030 174127 158319 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><i><span style="text-decoration:underline">Share-Based Compensation</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><i> </i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">ASC 718, “Compensation – Stock Compensation”, prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their grant date fair values. That expense is recognized over the period when an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period) or the straight-line attribution method.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">Under 718-10-30-20D the determination of whether a valuation method is reasonable, or whether an application of a valuation method is reasonable, shall be made based on the facts and circumstances as of the measurement date. Factors to be considered under a reasonable valuation method include, as applicable:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.25in;"> </td> <td style="width: 0.25in;"><span style="font-size: 10pt;">a.</span></td> <td style="text-align: justify;"><span style="font-size: 10pt;">The value of tangible and intangible assets of the nonpublic entity</span></td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.25in;"> </td> <td style="width: 0.25in;"><span style="font-size: 10pt;">b.</span></td> <td style="text-align: justify;"><span style="font-size: 10pt;">The present value of anticipated future cash flows of the nonpublic entity</span></td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.25in;"> </td> <td style="width: 0.25in;"><span style="font-size: 10pt;">c.</span></td> <td style="text-align: justify;"><span style="font-size: 10pt;">The market value of stock or equity interests in similar corporations and other entities engaged in trades or businesses substantially similar to those engaged in by the nonpublic entity for which the stock is to be valued, the value of which can be readily determined through nondiscretionary, objective means (such as through trading prices on an established securities market or an amount paid in an arm’s-length private transaction)</span></td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;">Share-based compensation expense for the three and six months ended June 30, 2026 and 2025 was as follows:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold;"> </td> <td colspan="6" style="font-weight: bold; text-align: center;">Three Months Ended</td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold;"> </td> <td colspan="6" style="font-weight: bold; text-align: center;">Six Months Ended</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">June 30,</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">June 30,</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 52%; text-align: left;">Issuance of options for services</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">649,416</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">633,212</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">765,792</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">1,207,169</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td>Issuance of shares for services</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1079738246;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">525,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">63,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">525,000</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">Issuance of warrants for services</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">899,564</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,026,513</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">906,813</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,935,364</td> <td style="text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i> </i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;">Share-based compensation expense for the three and six months ended June 30, 2026 and 2025 was as follows:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold;"> </td> <td colspan="6" style="font-weight: bold; text-align: center;">Three Months Ended</td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold;"> </td> <td colspan="6" style="font-weight: bold; text-align: center;">Six Months Ended</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">June 30,</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">June 30,</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 52%; text-align: left;">Issuance of options for services</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">649,416</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">633,212</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">765,792</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">1,207,169</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td>Issuance of shares for services</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1079738246;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">525,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">63,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">525,000</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">Issuance of warrants for services</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">899,564</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,026,513</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">906,813</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,935,364</td> <td style="text-align: left;"> </td> </tr></tbody></table> 649416 633212 765792 1207169 525000 63000 525000 899564 1026513 906813 1935364 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i><span style="text-decoration:underline">Basic and Diluted Net Income (Loss) Per Share</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The Company computes net income (loss) per share in accordance with ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common stockholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common stock outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i><span style="text-decoration:underline">Revenue Recognition</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The Company has adopted revenue recognition policies for its principal revenue types, including subscription and license fees, usage-based fees, professional and other services, and hardware. Prior to fiscal year 2026, the Company's revenue was derived from software license, hardware, and professional services activity. Beginning in the second quarter of 2026, the Company introduced QuantrusX, an edge intelligence platform, and revenue has since primarily consisted of QuantrusX subscription fees; other revenue streams described below have not been material during the periods presented.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i>QuantrusX — Edge Intelligence Platform</i>. During the second quarter of 2026, the Company introduced QuantrusX, an edge intelligence platform designed to bring computation, data interpretation, and decision support closer to the physical edge, where data is created and decisions must be made in real time. QuantrusX incorporates proprietary internal intelligence capabilities that support model refinement, governed learning from field inputs, and lower-latency reasoning within the platform environment. These internal capabilities are not sold as standalone customer products. In June 2026, the Company moved QuantrusX into its first commercial deployment, representing the Company’s initial transition of the platform from development to a revenue-generating, in-field deployment.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i>Inferencing and Usage-Based Fees</i>. As part of its QuantrusX commercial model, the Company earns usage-based fees tied to the volume of inferences processed and computational usage of the platform as it interprets field data and generates decision support in real time. These fees are billed based on customer consumption during the period and revenue is recognized under the Company’s variable consideration policy as the underlying usage occurs, consistent with ASC 606’s guidance on usage-based royalties and consumption-based pricing. Because inferencing volume can fluctuate with deployment activity and field conditions, revenue from this stream may vary period to period as QuantrusX scales across additional sites and customers.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i> </i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i>Software license and subscription revenues</i> include software license revenues from the sales of software licenses and subscription fees from customers accessing the Company’s services. Revenue is recognized upon transfer of control of promised products and services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. If the consideration promised in a contract includes a variable amount, for example, overage fees, contingent fees or service level penalties, the Company includes an estimate of the amount it expects to receive for the total transaction price if it is probable that a significant reversal of cumulative revenue recognized will not occur.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The Company determines the amount of revenue to be recognized through the application of the following steps:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt;" width="100%"><tbody><tr style="vertical-align: top;"><td style="width: 0.25in;"></td> <td style="width: 0.25in;"><span style="font: normal 10pt Times New Roman, Times, Serif;">●</span></td> <td style="text-align: justify;">identification of the contract, or contracts, with a customer;</td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in;"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt;" width="100%"><tbody><tr style="vertical-align: top;"><td style="width: 0.25in;"></td> <td style="width: 0.25in;"><span style="font: normal 10pt Times New Roman, Times, Serif;">●</span></td> <td style="text-align: justify;">identification of the performance obligations in the contract;</td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in;"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt;" width="100%"><tbody><tr style="vertical-align: top;"><td style="width: 0.25in;"></td> <td style="width: 0.25in;"><span style="font: normal 10pt Times New Roman, Times, Serif;">●</span></td> <td style="text-align: justify;">determination of the transaction price;</td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in;"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt;" width="100%"><tbody><tr style="vertical-align: top;"><td style="width: 0.25in;"></td> <td style="width: 0.25in;"><span style="font: normal 10pt Times New Roman, Times, Serif;">●</span></td> <td style="text-align: justify;">allocation of the transaction price to the performance obligations in the contract; and</td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in;"> </p> <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt;" width="100%"><tbody><tr style="vertical-align: top;"><td style="width: 0.25in;"></td> <td style="width: 0.25in;"><span style="font: normal 10pt Times New Roman, Times, Serif;">●</span></td> <td style="text-align: justify;">recognition of revenue when or as the Company satisfies the performance obligations.</td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i>Professional Services and Other Revenues. </i>The Company’s professional services contracts are either on a time and materials, fixed price or subscription basis. These revenues are recognized as the services are rendered for time and materials contracts, on a proportional performance basis for fixed price contracts or ratably over the contract term for subscription professional services contracts. Other revenues consist primarily of training revenues recognized as such services are performed.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i>Hardware</i>. Our hardware is generally highly dependent on, and interrelated with, the underlying operating system and cannot function without the operating system. In these cases, the hardware and software license are accounted for as a single performance obligation and revenue is recognized at the point in time when ownership is transferred to resellers or directly to end customers through retail stores and online marketplaces.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i><span style="text-decoration:underline">Property and Equipment</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> Property and equipment over $2,500 are stated at cost less accumulated depreciation, and depreciated using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The estimated useful lives of our property and equipment are generally as follows: computer software developed or acquired for internal use, three years; computer equipment, three to five years; leasehold improvements, shorter of lease term or estimated useful life; and furniture and equipment, <span style="-sec-ix-hidden:fc_16005538;">one</span> to 10 years. </p> 2500 P10Y <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.25in; text-align: justify;"><span style="font-size: 10pt;"><span style="font-weight: bold;">3.</span></span></td> <td style="text-align: justify;"><span style="font-size: 10pt;"><span style="font-weight: bold;">REVENUES</span></span></td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><i> </i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> Revenue is attributed to the region of the contracting entity, which may differ from the customer’s location. All revenue attributed to the Americas was generated in the United States. Revenue was $1,440 and $12,592 for the three months ended June 30, 2026 and 2025, respectively, and $1,440 and $38,792 for the six months ended June 30, 2026 and 2025, respectively. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><span style="font-weight: bold;">Deferred Revenue</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><span style="font-weight: bold;"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> Deferred revenue represents amounts invoiced or received from customers in advance of the Company satisfying its related performance obligations under ASC 606, Revenue from Contracts with Customers. Deferred revenue is recognized as revenue as the Company transfers control of the promised products or services to the customer. The current portion of deferred revenue represents amounts expected to be recognized as revenue within twelve months of the balance sheet date; the long-term portion represents amounts expected to be recognized beyond twelve months, based on the performance and delivery terms of the underlying contracts. Short-term deferred revenue totaled $9,128 and $<span style="-sec-ix-hidden:fc_54880507;">0</span> respectively as of June 30, 2026 and 2025. Long-term deferred revenue totaled $17,496 and $<span style="-sec-ix-hidden:fc_2007089435;">0</span> as of June 30, 2026 and 2025 respectively. </p> 1440 12592 1440 38792 9128 17496 <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.25in; text-align: justify;"><span style="font-size: 10pt;"><span style="font-weight: bold;">4.</span></span></td> <td style="text-align: justify;"><span style="font-size: 10pt;"><span style="font-weight: bold;">PREPAID EXPENSES</span></span></td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> As of June 30, 2026 and 2025, the prepaid balance was $1,950 and $1,101 respectively. Expenses were primarily due to timing of operational cost recognition. </p> 1950 1101 <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.25in; text-align: justify;"><span style="font-size: 10pt;"><span style="font-weight: bold;">5.</span></span></td> <td style="text-align: justify;"><span style="font-size: 10pt;"><span style="font-weight: bold;">PROPERTY AND EQUIPMENT</span></span></td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">As of</td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">As of</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">June 30,</td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">December 31,</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: left; text-indent: 10pt;">Computers, equipment and software</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">65,339</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">65,339</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt; text-indent: 10pt;">Leasehold improvements</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_1533053022;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_1707763042;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">Property and equipment gross</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">65,339</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">65,339</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt; text-indent: 10pt;">Less accumulated depreciation and amortization</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(50,272</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(39,341</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 4pt;">Property and equipment, net</td> <td style="padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">15,067</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">25,998</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> Depreciation and amortization expense totaled $107,626 and $15,407 for the three months ended June 30, 2026 and 2025, respectively, and $122,945 and $30,725 for the six months ended June 30, 2026 and 2025, respectively. </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">As of</td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">As of</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">June 30,</td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">December 31,</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: left; text-indent: 10pt;">Computers, equipment and software</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">65,339</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">65,339</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt; text-indent: 10pt;">Leasehold improvements</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_1533053022;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_1707763042;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">Property and equipment gross</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">65,339</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">65,339</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt; text-indent: 10pt;">Less accumulated depreciation and amortization</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(50,272</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(39,341</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 4pt;">Property and equipment, net</td> <td style="padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">15,067</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">25,998</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> </tr></tbody></table> 65339 65339 65339 65339 50272 39341 15067 25998 107626 15407 122945 30725 <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.25in; text-align: justify;"><span style="font-size: 10pt;"><span style="font-weight: bold;">6.</span></span></td> <td style="text-align: justify;"><span style="font-size: 10pt;"><span style="font-weight: bold;">INTANGIBLE ASSET – PROPERTY LICENSE</span></span></td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">As of</td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">As of</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">June 30,</td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">December 31,</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: left;">Intangibles (net of amortization)</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">3,645,121</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">104,826</td> <td style="width: 1%; text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> On March 14, 2023, the Company entered into an intellectual property purchase agreement with Basestones Capital Ltd., for the purchase of US Patent No. 9,451,291 (Fast DWT-Based Intermediate Codec Optimized For Massively Parallel Architecture), issued on September 20, 2016, and the developed source code related to the patent. The Company made a one-time payment of $200,000 for the patent. The Company recorded $205,100 as an intangible asset. Starting in July 2023, the Company began amortizing the $200,000 intangible assets. As of June 30, 2026, the Company recorded $120,110 of accumulated depreciation. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> On May 8, 2026, the Company entered into an intellectual property purchase agreement with Apollo Group Enterprises, LLC, pursuant to which the Company acquired two software platforms 1) ODIN, AI video intelligence/surveillance system and 2) VSDD/Semaphore-X, AI meeting agent and infrastructure — plus related trade secrets, know-how, and data assets, paying 500,000 shares of Class A Common Stock valued at $3,652,350 ($7.30 per share). The acquired assets do not meet the definition of a business because no organized workforce or other substantive process was acquired. Accordingly, the transaction is accounted for as an asset acquisition. The full transaction cost is capitalized to the single software intangible asset at cost, with no goodwill recognized. As of June 30, 2026, the Company recorded $88,057 accumulated amortization. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> The Company evaluates the recoverability of long-lived assets whenever events or changes in circumstances indicate that an asset’s carrying amount may not be recoverable. Such circumstances could include, but are not limited to, (1) a significant decrease in the market value of an asset, (2) a significant adverse change in the extent or manner in which an asset is used, or (3) an accumulation of costs significantly in excess of the amount originally expected for the acquisition of an asset. The Company compares the carrying amount of the asset against the estimated undiscounted future cash flows associated with it. Should the sum of the expected future net cash flow be less than the carrying value of the asset being evaluated, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying value of the asset exceeds its estimated fair value. Impairment loss on long-lived assets for six months ended June 30, 2026, and 2025 was $0. </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">As of</td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">As of</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">June 30,</td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">December 31,</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: left;">Intangibles (net of amortization)</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">3,645,121</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">104,826</td> <td style="width: 1%; text-align: left;"> </td> </tr></tbody></table> 3645121 104826 200000 205100 200000 120110 500000 3652350 7.3 88057 0 0 <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.25in; font-size: 10pt; text-align: justify;"><span style="font-size: 10pt;"><span style="font-weight: bold;">7.</span></span></td> <td style="font-size: 10pt; text-align: justify;"><span style="font-size: 10pt;"><span style="font-weight: bold;">BUSINESS COMBINATION AND GOODWILL</span></span></td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> On April 15, 2025, the Company completed the acquisition of RMX Industries Inc. (“TX Sub”) and issued 2,851,798 shares of Class A Common Stock in exchange for 100% of the outstanding equity of TX Sub. The acquisition supports the Company’s strategy to commercialize and expand long-term revenue opportunities. The transaction was accounted for as a business combination under ASC 805, Business Combinations, with the Company identified as the accounting acquirer, as it issued the equity consideration, retained governance control, and its management team continued post-acquisition. The total purchase consideration was measured at fair value on the acquisition date and consisted solely of equity consideration valued at $29.9 million. As a result of the acquisition, the Company recorded goodwill of $29.9 million, representing the excess of the purchase consideration over the fair value of net identifiable assets acquired. The goodwill reflects expected future economic benefits from commercialization of the Company’s technology and anticipated synergies and market opportunities. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">Goodwill is not deductible for income tax purposes and is assigned to the Company’s reporting unit. We test goodwill for impairment annually at the reporting unit level, primarily using a discounted cash flow methodology with a peer-based, risk-adjusted weighted average cost of capital. We believe use of a discounted cash flow approach is the most reliable indicator of the fair values of the businesses. No instances of impairment were identified in our December 31, 2025 tests.</p> 2851798 1 29900000 29900000 <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.25in; font-size: 10pt; text-align: justify;"><span style="font-size: 10pt;"><span style="font-weight: bold;">8. </span></span></td> <td style="font-size: 10pt; text-align: justify;"><span style="font-size: 10pt;"><span style="font-weight: bold;">ACCOUNTS PAYABLE AND ACCRUED LIABILITIES</span></span></td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> Trade payables are initially recorded at the transaction price and measured at the undiscounted expected payment amount. Accrued expenses reflect the estimated amount needed to settle obligations. Accounts payable totaled $1,044,126 as of June 30, 2026, and $1,005,611 as of December 31, 2025. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> As of June 30, 2026, the Company owed $600,000 to Boustead Securities, LLC in connection with the termination of its prior engagement agreement. In addition, the Company owed approximately $370,000 to Bevilacqua PLLC for regulatory and corporate legal services, with the remainder owed to various vendors. </p> 1044126 1005611 600000 370000 <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.25in; font-size: 10pt; text-align: justify;"><span style="font-size: 10pt;"><span style="font-weight: bold;">9.</span></span></td> <td style="font-size: 10pt; text-align: justify;"><span style="font-size: 10pt; font-variant: small-caps;"><span style="font-weight: bold;">STOCKHOLDERS’ EQUITY</span></span></td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i><span style="text-decoration:underline">Common Stock</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> The Company is authorized to issue 65,466,666 shares of Class A Common Stock at a par value of $0.001 and had 10,015,190 and 7,380,426 shares of Class A Common Stock issued and outstanding as of June 30, 2026, and December 31, 2025, respectively. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> The Company is authorized to issue 1,200,000 shares of Class B Common Stock at a par value of $0.001 and voting rights of 100 votes per share. The Company had 333,334 shares of Class B Common Stock issued and outstanding June 30, 2026, and 666,668 as of December 31, 2025. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i><span style="text-decoration:underline">Common Stock Issued for Services</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> The Company issued 4,167 shares of Class A Common Stock, at a price of $10.50 per share, for services provided to the Company during the six months ended June 30, 2026. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i><span style="text-decoration:underline">Common Stock Issued for Cancellation and Exchange of Notes Payable and Related Interest Through Exercise of Warrants</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> During the six months ended June 30, 2026, the Company issued 1,797,164 shares of Class A Common Stock upon the exercise of warrants in connection with the cancellation and exchange of notes and accrued interest at a weighted average price of $2.01. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i><span style="text-decoration:underline">Common Stock Issued for Purchase of Intellectual Property</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> The Company acquired intellectual property by paying 500,000 shares of Class A Common Stock valued at $3,652,350 or $7.30 per share. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i><span style="text-decoration:underline">Conversion of Class B Common Stock to Class A Common Stock </span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> During the six months ended June 30, 2026, 333,334 shares of Class B Common Stock were converted into shares of Class A Common Stock. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><i><span style="text-decoration:underline">Preferred Stock</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> The Company is authorized to issue up to 10,000,000 shares of preferred stock with a par value of $0.001 per share. The Company filed a Certificate of Designation with the Secretary of State of the State of Nevada on October 13, 2025, designating 1,000 shares of the Company’s preferred stock as “Series X Convertible Preferred Stock” (the “Series X Preferred Stock”) and setting forth the voting and other powers, preferences and relative, participating, optional or other rights of the Series X Preferred Stock. Each share of Series X Preferred Stock has an initial stated value of $3.85 per share. On March 31, 2026, the Company filed a Certificate of Amendment to Designation with the Secretary of State of the State of Nevada increasing the designated shares of Series X Preferred Stock to 6,000. Additionally, on March 31, 2026, the Company issued 5,000 shares of Series X Preferred Stock to Karl Kit, who serves as the Company’s Chief Executive Officer, President, and member of the board of directors. Each share of Series X Preferred Stock is convertible into one (1) share of Class A Common Stock and entitles the holder to 15,000 votes per share. The Company had 6,000 and 1,000 shares of Series X Preferred Stock issued and outstanding as of June 30, 2026, and December 31, 2025, respectively. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i><span style="text-decoration:underline">Options</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> During the six months ended June 30, 2026, the Company issued 333,334 stock options with weighted average strike price of $7.48. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> Of the 1,662,577 options outstanding as of June 30, 2026, 333,334 options will only vest upon listing on any national securities exchange. This performance condition is not considered probable until it occurs. As such, the expense for these awards would only be recognized upon listing on any national securities exchange. The total Black-Scholes valuation for the outstanding options as of June 30, 2026, is $2,244,350. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> The Company recognizes compensation cost on a straight-line basis over the total requisite service period of the entire award and accounts for forfeitures as they occur. Total expenses of $649,416 and $765,792 were recognized during the three months and six months ended June 30, 2026, respectively. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The following table reflects a summary of Class A Common Stock options outstanding and option activity during the six months ended June 30, 2026:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Underlying<br/> Shares</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Weighted<br/> Average<br/> Exercise<br/> Price</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Weighted<br/> Average<br/> Terms<br/> (Years)</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 64%;">Options outstanding at December 31, 2025</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">1,768,345</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">5.61</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">8.4</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td>Granted</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">333,334</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">7.48</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td>Exercised</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1349967740;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1328547103;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td>Forfeited</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_2008523625;">(321,878</span></td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1181669066;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-bottom: 1.5pt;">Cancelled</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(117,224</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_518968940;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">-</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td>Options outstanding at June 30, 2026</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,662,577</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">7.46</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">8.4</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-bottom: 4pt;">Options exercisable at June 30, 2026</td> <td style="padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;"> </td> <td style="border-bottom: Black 4pt double; text-align: right;">839,970</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt; text-align: right;">6.84</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt; text-align: right;">7.9</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> The intrinsic value of options outstanding as of June 30, 2026, was $1,411,285. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i><span style="text-decoration:underline">Warrants</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> During the six months ended June 30, 2026, the Company issued a total of 1,474,932 warrants at a weighted average exercise price of $1.70 with a range between $1.50 and $5.40 per share, which vested immediately. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> The Company conducted private placements of units, with each unit consisting of an unsecured promissory note with an interest rate of 18% and a five-year warrant to purchase shares of Class A Common Stock, with a number of investors. The Company raised $1,980,000 and issued 1,320,024 warrants with a $1.50 weighted average exercise price. The Company issued 74,074 warrants to Boustead Securities, LLC in connection with the termination of its prior engagement agreement. The remaining 80,834 warrants were issued to advisors and partners. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> On the dates of the grants, the Company valued warrants granted at $1,088,498 using the Black-Scholes option pricing model with the following assumptions: stock price between $7.77 and $10.50 per share, an expected life of the warrants of 5 years, expected volatility of 72%, an average risk-free rate of 3.8%, and no dividend yield. The warrants were expensed at the time of issuance and an expense of $906,813 was recognized. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The following table reflects a summary of warrants outstanding and activity during the six months ended June 30, 2026:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Underlying <br/> Shares</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Weighted <br/> Average <br/> Exercise <br/> Price</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Weighted <br/> Average <br/> Terms <br/> (Years)</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 64%; text-align: left;">Warrants outstanding at December 31, 2025</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">1,433,409</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">3.44</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">3.87</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Granted</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,474,932</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1.70</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">5.00</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">Exercised</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(1,609,195</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1574283868;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Forfeited</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_762468849;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_708368186;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt;">Cancelled</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_1723185400;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_1766941105;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">-</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Warrants outstanding at June 30, 2026</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,299,146</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">4.44</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">3.87</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">Warrants exercisable at June 30, 2026</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,299,146</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">4.44</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">3.87</td> <td style="text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> The intrinsic value of warrants outstanding as of June 30, 2026, was $3,307,536. </p> 65466666 65466666 0.001 0.001 10015190 10015190 7380426 7380426 1200000 1200000 0.001 0.001 100 333334 333334 666668 666668 4167 10.5 1797164 2.01 500000 3652350 7.3 333334 10000000 0.001 1000 3.85 6000 5000 1 15,000 6000 6000 1000 1000 333334 7.48 1662577 333334 2244350 649416 765792 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The following table reflects a summary of Class A Common Stock options outstanding and option activity during the six months ended June 30, 2026:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Underlying<br/> Shares</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Weighted<br/> Average<br/> Exercise<br/> Price</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Weighted<br/> Average<br/> Terms<br/> (Years)</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 64%;">Options outstanding at December 31, 2025</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">1,768,345</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">5.61</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">8.4</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td>Granted</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">333,334</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">7.48</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td>Exercised</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1349967740;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1328547103;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td>Forfeited</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_2008523625;">(321,878</span></td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1181669066;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-bottom: 1.5pt;">Cancelled</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(117,224</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_518968940;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">-</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td>Options outstanding at June 30, 2026</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,662,577</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">7.46</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">8.4</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-bottom: 4pt;">Options exercisable at June 30, 2026</td> <td style="padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;"> </td> <td style="border-bottom: Black 4pt double; text-align: right;">839,970</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt; text-align: right;">6.84</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt; text-align: right;">7.9</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> </tr></tbody></table> 1768345 5.61 P8Y4M24D 333334 7.48 117224 1662577 7.46 P8Y4M24D 839970 6.84 P7Y10M24D 1411285 1474932 1.7 1.5 5.4 0.18 1980000 1320024 1.5 74074 80834 1088498 7.77 10.5 P5Y 0.72 0.038 906813 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The following table reflects a summary of warrants outstanding and activity during the six months ended June 30, 2026:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Underlying <br/> Shares</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Weighted <br/> Average <br/> Exercise <br/> Price</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Weighted <br/> Average <br/> Terms <br/> (Years)</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 64%; text-align: left;">Warrants outstanding at December 31, 2025</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">1,433,409</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">3.44</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">3.87</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Granted</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,474,932</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1.70</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">5.00</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">Exercised</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(1,609,195</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1574283868;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Forfeited</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_762468849;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_708368186;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt;">Cancelled</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_1723185400;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_1766941105;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">-</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Warrants outstanding at June 30, 2026</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,299,146</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">4.44</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">3.87</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">Warrants exercisable at June 30, 2026</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,299,146</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">4.44</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">3.87</td> <td style="text-align: left;"> </td> </tr></tbody></table> 1433409 3.44 P3Y10M13D 1474932 1.7 P5Y 1609195 1299146 4.44 P3Y10M13D 1299146 4.44 P3Y10M13D 3307536 <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.25in; font-size: 10pt;"><span style="font-size: 10pt;"><span style="font-weight: bold;">10.</span></span></td> <td style="font-size: 10pt;"><span style="font-size: 10pt;"><span style="font-weight: bold;">OPERATING LEASE</span></span></td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> The current lease contracts for offices in Texas have initial terms of one year. The Company leases certain vehicles under non-cancelable operating lease agreements. These leases have initial terms of three years. The Company does not have any finance leases. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">As of June 30, 2026, the Company’s operating lease right of use assets and corresponding liabilities are as follows:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 88%; text-align: left;">Right of use asset</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">78,552</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Lease liability - current</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">29,773</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">Lease liability - non current</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">40,579</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Total operating lease liabilities</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">70,352</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td>Weighted average remaining lease term</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2.40</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td>Weighted average discount rate</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">7.50</td> <td style="text-align: left;">%</td> </tr></tbody></table> <p style="margin: 0;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom; background-color: White;"><td style="font-weight: bold; text-align: left; width: 88%;">Maturities of the Company’s lease liabilities are as follows:</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 9%;"> </td> <td style="text-align: left; width: 1%;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">2026</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">14,791</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">2027</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">31,294</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">2028</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">24,266</td> <td style="text-align: left;"> </td> </tr></tbody></table> P1Y P3Y <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">As of June 30, 2026, the Company’s operating lease right of use assets and corresponding liabilities are as follows:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 88%; text-align: left;">Right of use asset</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">78,552</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Lease liability - current</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">29,773</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">Lease liability - non current</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">40,579</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Total operating lease liabilities</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">70,352</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td>Weighted average remaining lease term</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2.40</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td>Weighted average discount rate</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">7.50</td> <td style="text-align: left;">%</td> </tr></tbody></table> 78552 29773 40579 70352 P2Y4M24D 0.075 <p style="margin: 0;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom; background-color: White;"><td style="font-weight: bold; text-align: left; width: 88%;">Maturities of the Company’s lease liabilities are as follows:</td> <td style="width: 1%;"> </td> <td style="text-align: left; width: 1%;"> </td> <td style="text-align: right; width: 9%;"> </td> <td style="text-align: left; width: 1%;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">2026</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">14,791</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">2027</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">31,294</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">2028</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">24,266</td> <td style="text-align: left;"> </td> </tr></tbody></table> 14791 31294 24266 <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.25in; font-size: 10pt; text-align: justify;"><span style="font-size: 10pt;"><span style="font-weight: bold;">11.</span></span></td> <td style="font-size: 10pt; text-align: justify;"><span style="font-size: 10pt;"><span style="font-weight: bold;">CONVERTIBLE NOTES, PROMISSORY NOTES PAYABLE AND DEBT EXTINGUISHMENT</span></span></td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The following table summarizes outstanding convertible notes and promissory notes payable as of June 30, 2026, and December 31, 2025.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="padding-left: 0pt; text-indent: 0pt;"> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">June 30,</td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">December  31,</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td style="padding-left: 0pt; padding-bottom: 1.5pt; text-indent: 0pt;"> </td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td style="padding-left: 0pt; text-indent: 0pt;">Convertible Notes - Maturity Date</td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-left: 0.25in; width: 76%; text-indent: 0pt;">March 31, 2026 (15% per annum)</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;"><span style="-sec-ix-hidden:fc_1385675492;">-</span></td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">2,020,000</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-left: 0.25in; text-indent: 0pt;">August 31, 2026 (15% per annum)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1909427132;">2,020,000</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td style="padding-left: 0pt; text-align: left; text-indent: 0pt;">Promissory Notes - Maturity Date</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-left: 0.25in; text-indent: 0pt;">January 31, 2026 (18% per annum)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_195753222;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">550,000</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-left: 0.25in; text-indent: 0pt;">June 30, 2026 (12% per annum)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_289202823;">500,000</span></td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-left: 0.25in; text-indent: 0pt;">April 30, 2026 (8% per annum)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">125,000</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-left: 0.25in; text-indent: 0pt;">June 30, 2026 (12% per annum)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,117,500</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-left: 0.25in; text-indent: 0pt;">August 31, 2026 (12% per annum)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">75,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_260650664;">-</span></td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-left: 0.25in; text-indent: 0pt;">August 31, 2026 (18% per annum)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">625,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_469941939;">-</span></td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-left: 0.25in; text-indent: 0pt;">December 31, 2026 (12% per annum)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">225,000</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_281031488;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt; text-indent: 0pt;">Total Notes Payable</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">925,000</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">2,292,500</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-left: 0pt; text-align: left; text-indent: 0pt;">Total Convertible and Promissory Notes Payable</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,945,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,292,500</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-left: 0.375in; text-indent: 0pt;">Unamortized debt discount</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">-</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(1,982,244</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-left: 0pt; text-align: left; text-indent: 0pt;">Net Debt</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,945,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,330,256</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-left: 0.375in; text-align: left; padding-bottom: 1.5pt; text-indent: 0pt;">Current portion</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(2,945,000</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(2,330,256</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-left: 0.375in; text-align: left; text-indent: 0pt;">Net long-term portion</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1854520128;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1434274900;">-</span></td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-left: 0pt; text-align: left; text-indent: 0pt;">Interest Payable</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">313,212</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">265,350</td> <td style="text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> During six months ended June 30, 2026, the Company completed private placements, raising $1,980,000 with each unit consisting of an unsecured promissory note of 18% interest and five-year warrants for Class A Common Stock; 1,320,000 warrants were issued at a weighted average exercise price of $1.50. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i><span style="text-decoration:underline">Repayment of Debt</span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> During the six months ended June 30, 2026, the Company repaid $25,000 of outstanding principal and $3,447 of accrued interest on its promissory notes, for total cash payments of $28,447. These repayments reduced the Company’s outstanding notes payable balance and were made in accordance with the terms of the applicable note agreements. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><i><span style="text-decoration:underline">Debt Extinguishment and Common Stock Issued </span></i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> During the six months ended June 30, 2026, the Company converted $3,322,500 in principal and $288,085 in interest into equity through warrant exercises, issuing 1,797,164 of Class A Common Stock shares at a $1.83 average price. The Company recorded a $10,420,483 conversion loss, reflecting the difference between market value and exercise price. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">These amounts are presented as supplemental disclosure in the “Non-Cash Investing and Financing Activities” section of the Condensed Consolidated Statement of Cash Flows.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The relative fair value of the warrants issued in conjunction with the notes payable was treated as a debt discount, with a corresponding offsetting credit to Additional Paid-in Capital (APIC). This discount is being amortized to interest expenses over the term of the notes.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><span style="font-weight: bold;"><i>Derivative Liabilities</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> The fair values of the conversion option of outstanding convertible notes payable were determined to be derivative liabilities under ASC 815 due to the default on convertible notes payable disclosed above, which resulted in a variable conversion price on the outstanding convertible note payable. The fair value of the derivative liabilities was $1,974,046 as of December 31, 2025, estimated using the Black-Scholes option pricing model with the following assumptions: stock price of $3.50 per share, an expected life of 9 months, expected volatility of 73%, an average risk-free rate of 3.5% and <span style="-sec-ix-hidden:fc_2098153058;">no</span> dividend yield. During the six months ended June 30, 2026, the Company recorded a gain on change in fair value of derivative liability of $1,335,664, remeasuring the derivative liability to $638,382 as of June 30, 2026, using the Black-Scholes option pricing model with the following assumptions: stock price of $2.29 per share, an expected life of 2 months, expected volatility of 71.93%, an average risk-free rate of 3.71% and <span style="-sec-ix-hidden:fc_1953235904;">no</span> dividend yield. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;">The following table summarizes outstanding convertible notes and promissory notes payable as of June 30, 2026, and December 31, 2025.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="padding-left: 0pt; text-indent: 0pt;"> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">June 30,</td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">December  31,</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td style="padding-left: 0pt; padding-bottom: 1.5pt; text-indent: 0pt;"> </td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td style="padding-left: 0pt; text-indent: 0pt;">Convertible Notes - Maturity Date</td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-left: 0.25in; width: 76%; text-indent: 0pt;">March 31, 2026 (15% per annum)</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;"><span style="-sec-ix-hidden:fc_1385675492;">-</span></td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">2,020,000</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-left: 0.25in; text-indent: 0pt;">August 31, 2026 (15% per annum)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1909427132;">2,020,000</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td style="padding-left: 0pt; text-align: left; text-indent: 0pt;">Promissory Notes - Maturity Date</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-left: 0.25in; text-indent: 0pt;">January 31, 2026 (18% per annum)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_195753222;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">550,000</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-left: 0.25in; text-indent: 0pt;">June 30, 2026 (12% per annum)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_289202823;">500,000</span></td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-left: 0.25in; text-indent: 0pt;">April 30, 2026 (8% per annum)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">125,000</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-left: 0.25in; text-indent: 0pt;">June 30, 2026 (12% per annum)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">-</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">1,117,500</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-left: 0.25in; text-indent: 0pt;">August 31, 2026 (12% per annum)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">75,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_260650664;">-</span></td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-left: 0.25in; text-indent: 0pt;">August 31, 2026 (18% per annum)</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">625,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_469941939;">-</span></td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-left: 0.25in; text-indent: 0pt;">December 31, 2026 (12% per annum)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">225,000</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_281031488;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt; text-indent: 0pt;">Total Notes Payable</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">925,000</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">2,292,500</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-left: 0pt; text-align: left; text-indent: 0pt;">Total Convertible and Promissory Notes Payable</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,945,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,292,500</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-left: 0.375in; text-indent: 0pt;">Unamortized debt discount</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">-</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(1,982,244</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-left: 0pt; text-align: left; text-indent: 0pt;">Net Debt</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,945,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,330,256</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-left: 0.375in; text-align: left; padding-bottom: 1.5pt; text-indent: 0pt;">Current portion</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(2,945,000</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(2,330,256</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-left: 0.375in; text-align: left; text-indent: 0pt;">Net long-term portion</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1854520128;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1434274900;">-</span></td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-left: 0pt; text-align: left; text-indent: 0pt;">Interest Payable</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">313,212</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">265,350</td> <td style="text-align: left;"> </td> </tr></tbody></table> 0.15 2020000 0.15 0 0.18 550000 0.12 0 0.08 0 125000 0.12 0 1117500 0.12 75000 0.18 625000 0.12 225000 925000 2292500 2945000 2292500 0 -1982244 2945000 2330256 2945000 2330256 313212 265350 1980000 0.18 1320000 1.5 25000 3447 28447 3322500 288085 1797164 1.83 10420483 1974046 3.5 P9Y 73 3.5 1335664 638382 2.29 P2M 71.93 3.71 <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: top;"><td style="width: 0.25in; font-size: 10pt; text-align: justify;"><span style="font-size: 10pt;"><span style="font-weight: bold;">12.</span></span></td> <td style="font-size: 10pt; text-align: justify;"><span style="font-size: 10pt;"><span style="font-weight: bold;">SUBSEQUENT EVENTS</span></span></td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> On July 22, 2026, the Company conducted a closing of a private placement of units, with each unit consisting of an unsecured 18% promissory note and a five-year warrant to purchase shares of Class A Common Stock, and entered into a subscription agreement with an accredited investor as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws. Pursuant to the agreement, we sold 1 unit at a price of $25,000 per unit for gross proceeds of $25,000 and issued 16,667 warrants with an exercise price of $1.50 per share. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> On July 24, 2026, the Company executed a one-for-three (1-for-3) reverse stock split affecting both the authorized and issued and outstanding amounts of its Class A Common Stock and Class B Common Stock. These financial statements reflect the impact of this reverse stock split. </p> 0.18 P5Y 1 25000 25000 16667 1.5 one-for-three false false false false