NOTE 16 - STOCKHOLDERS’ EQUITY

Reverse Stock Split

On January 8, 2026, the Company effected a one-for-three reverse stock split of its outstanding common stock, proportionately reducing the number of authorized shares of common stock from 200,000,000 to 66,666,667. On April 22, 2026, the Company effected a one-for-five reverse stock split, proportionately reducing the number of authorized shares of common stock from 66,666,667 to 13,333,333 (the “April 2026 Split”). The number of authorized shares of preferred stock was not affected by either split.

The April 2026 Split became effective on April 22, 2026, reducing the number of outstanding shares of common stock from 2,633,063 to 526,860, including the effect of the rounding up of fractional shares, and was implemented to comply with the minimum bid price requirement for continued listing on Nasdaq. Issuances of common stock under the Company’s equity line of credit subsequent to that date increased the number of outstanding shares to 2,856,860 as of June 30, 2026.

No fractional shares were issued in connection with either reverse stock split; stockholders otherwise entitled to a fractional share were entitled to receive one whole share in lieu thereof, at the participant level. Each reverse stock split had a proportionate effect on all outstanding options and warrants. All share and per-share amounts throughout these condensed consolidated financial statements have been retroactively adjusted to reflect both reverse stock splits as if they had occurred as of the earliest period presented.

Committed Equity Financing (ELOC)

On September 15, 2025, the Company entered into a Common Stock Purchase Agreement (the “ELOC Purchase Agreement”) with an institutional investor (the “ELOC Investor”), providing a committed equity financing facility of up to $25 million over a 36-month term, under which the Company may, at its sole discretion and subject to certain conditions and limitations, direct the ELOC Investor to purchase shares of common stock from time to time. See the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for additional information regarding the terms of the facility.

During the three months ended June 30, 2026, the Company issued 2,330,000 shares of common stock under the ELOC Purchase Agreement for aggregate gross proceeds of $2,336,409. Amortization of deferred issuance costs of $256,308 was charged against additional paid-in capital during the period, resulting in a net credit to stockholders’ equity of $2,080,101.

During the six months ended June 30, 2026, the Company issued an aggregate of 2,607,000 shares under the ELOC Purchase Agreement for aggregate gross proceeds of $4,642,941, of which $4,004,659 was received in cash and $638,282 was withheld at the source by the ELOC Investor in respect of transaction fees and the remaining commitment fee. The withheld commitment fee is recorded within prepaid offering costs and amortized to additional paid-in capital as draws occur; such amortization totaled $502,528 for the six months ended June 30, 2026. As of June 30, 2026, remaining availability under the facility was $20.4 million.

In connection with the ELOC Purchase Agreement, the Company agreed to pay a commitment fee of 3% of the facility, or $750,000, of which $227,792 was satisfied during 2025 through the issuance of 22,802 shares of common stock. The remaining $522,208 was satisfied during the six months ended June 30, 2026 through deductions from cash proceeds otherwise payable to the Company, fully satisfying the commitment fee obligation.

2025 Senior Secured Convertible Notes Conversion

During the three months ended March 31, 2026, the holders of the 2025 Secured Notes converted the entire $1,070,000 outstanding principal balance into 111,608 shares of common stock. In connection with the conversions, the bifurcated conversion feature derivative liability and the remaining unamortized debt discount were reclassified to additional paid-in capital, resulting in an aggregate increase to additional paid-in capital of $1,357,253, as reflected in the condensed consolidated statements of stockholders’ equity. No balance remains outstanding under the 2025 Secured Notes. See Note 9, Debt Obligations, and Note 10, Fair Value Measurement.

Nobility Healthcare Disposition

In connection with the disposition of Nobility Healthcare on January 8, 2026, the Company recorded aggregate adjustments of $4,343,217 directly to equity during the three months ended March 31, 2026, presented on the “Disposition of Nobility Healthcare” line in the condensed consolidated statements of stockholders’ equity, consisting of the derecognition of the $1,885,802 non-controlling interest deficit in Nobility Healthcare and a $2,457,415 adjustment to accumulated deficit. The Company has no remaining non-controlling interests as of June 30, 2026. See Note 22, Discontinued Operations, for additional information regarding the disposition.

February 2025 Public Equity Offering

On February 14, 2025, the Company closed an underwritten public offering generating aggregate net proceeds of $14,308,300, reflected in the 2025 comparative periods. See Note 15, Common Stock Purchase Warrants, and the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for additional information.

Stock-Based Compensation

During the three and six months ended June 30, 2026, the Company recognized stock-based compensation expense of $63,615 and $112,586, respectively, which was recorded as an increase to additional paid-in capital. See Note 14, Stock-Based Compensation.

Nasdaq Notifications

As previously disclosed, on October 17, 2025, the Company regained compliance with the Nasdaq minimum bid price requirement (the “Minimum Bid Price Requirement”) and the minimum stockholders’ equity requirement under Nasdaq Listing Rule 5550(b)(1), which requires stockholders’ equity of at least $2,500,000 (the “Stockholders’ Equity Requirement”), and Nasdaq placed the Company under a one-year discretionary panel monitor (the “Discretionary Panel Monitor”), under which the Company is not permitted to request additional time to regain compliance with any deficiency occurring during the monitoring period with respect to the periodic filing rules or the Minimum Bid Price Requirement. The monitoring period expired on July 31, 2026 with respect to the periodic filing rules and on September 2, 2026 with respect to the Minimum Bid Price Requirement. As of the date of this Report, the Company is not aware of any noncompliance with the periodic filing rules or the Minimum Bid Price Requirement.

As of June 30, 2026, the Company’s stockholders’ equity was $2,275,454, which was below the minimum $2,500,000 stockholders' equity requirement for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(b)(1). Stockholders' equity as of that date reflects a non-recurring charge of $984,000 recorded during the three months ended June 30, 2026 in connection with the Kustom 440 - Former Consultant matter described in Note 13, Commitments and Contingencies, which the Company settled on August 6, 2026. Because the settlement is a result of a matter that existed prior to June 30, 2026, the settlement was treated as a recognized subsequent event and the related loss was accrued as of June 30, 2026.

Subsequent to June 30, 2026, the Company completed the sale of its Video Solutions business for a gain, issued 1,025,000 shares of common stock under the ELOC for net proceeds of $975,039, and issued 2,625,000 shares of common stock for services, debt satisfaction, and acquisitions as described above.

The Company will reflect the financial impact of these transactions, including the gain on the sale of the Video Solutions business and the equity additions from share issuances—in its consolidated condensed financial statements for the three months ending September 30, 2026. Based on these subsequent events, management believes that the Company has restored compliance with the Nasdaq continued listing equity requirement as of August 14, 2026, and expects to remain in compliance as of September 30, 2026. See Note 23, Subsequent Events.

Noncontrolling Interests

The noncontrolling interest in Nobility Healthcare was derecognized in connection with its disposition during the three months ended March 31, 2026, as described above. The Company has no noncontrolling interests as of June 30, 2026. Noncontrolling interest activity presented in the 2025 comparative periods relates to Nobility Healthcare prior to its disposition. See Note 22, Discontinued Operations.