Note 23. SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the date of issuance of these condensed consolidated financial statements.

Sale of Video Solutions Business

On June 24, 2026, the Company entered into an APA with Cycurion for the sale of substantially all assets of the Video Solutions business, which is classified as held for sale as of June 30, 2026 (see Note 22, Discontinued Operations). On July 23, 2026, the parties entered into Amendment No. 1 to the APA, which extended the closing date, confirmed that all conditions precedent to closing had been satisfied or waived, and replaced the 2,000,000 Cycurion warrants provided for under the original agreement with shares of Cycurion Series H Preferred Stock. In connection with the amendment, Cycurion paid the Company a non-refundable extension payment of $250,000, which was credited against the cash consideration at closing.

The sale was completed on August 3, 2026. At closing, the Company received cash consideration of $1,250,000, including the $250,000 extension payment received in July 2026, and a secured promissory note in the principal amount of $4,250,000 bearing interest at 7% per annum over a three-year term, together with shares of Cycurion’s Series H Preferred Stock. The consideration also includes a revenue-based earn-out and clawback arrangement based on 2026 and 2027 performance, each capped at $500,000 per year and $1,000,000 in the aggregate. The Company will derecognize the assets and liabilities of the Video Solutions business and recognize the resulting gain during the three months ending September 30, 2026. The Company is in the process of determining the fair value of the consideration received. Additional information is included in the Company’s Current Report on Form 8-K filed August 4, 2026.

Committed Equity Financing (ELOC) 

Subsequent to June 30, 2026, the Company delivered purchase notices under its ELOC purchase agreement to issue and sell an aggregate of 1,025,000 shares of common stock, as follows:

These issuances generated aggregate gross proceeds of $1,000,040 (net proceeds of $975,039, after deducting issuance costs). As of August , 2026, $19,357,019 remains available for future drawdowns under the ELOC Purchase Agreement.

Pharmaxx Medical, Inc. Default Judgment

On July 7, 2026, the Superior Court of the State of California, County of Riverside, entered a default judgment in favor of the Company in the aggregate amount of $1,120,004 against Pharmaxx Medical, Inc. and Pharmaxx Inc., jointly and severally. Collection of the judgment remains uncertain, and no amounts have been recognized in respect of the judgment in excess of the previously recorded litigation receivable. See Note 13, Commitments and Contingencies.

Kustom 440 — Former Consultant Settlement

On August 6, 2026, subsequent to the end of the reporting period, Kustom 440, Inc., a wholly owned subsidiary of the Company, entered into a settlement agreement resolving a claim brought by a former consultant. See Note 13, Commitments and Contingencies.

Noota Music, LLC., vs. Kustom 440, Inc., et al.

On July 19, 2026, Noota Music, LLC filed a complaint against Kustom 440, Inc. and the Company in the United States District Court for the District of Kansas. Service of process was effected on August 6, 2026, and the Company’s responsive pleading is due on or before August 27, 2026. The Company intends to defend the matter vigorously. Given the early stage of the proceeding, the Company is unable to estimate the amount or range of reasonably possible loss at this time, and no amounts have been accrued in respect of this matter.

Issuances of Common Stock

On August 7, 2026, the Company issued an aggregate of 3,250,000 shares of common stock to various consultants, advisors, service providers, financing sources, and strategic partners. The shares were issued in consideration for services rendered and to be rendered, the settlement of accrued obligations, asset acquisitions, and debt satisfaction, pursuant to individual agreements between the Company and each recipient.

Of the 3,250,000 shares issued, 2,625,000 shares were issued in private transactions exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), and Rule 506 of Regulation D promulgated thereunder. Each recipient represented that it acquired the securities for investment purposes and not with a view toward distribution. The shares were issued as restricted securities and may not be offered or sold absent registration or an applicable exemption therefrom.

The Company is currently determining the fair value of the common shares issued and the allocation of consideration received across each transaction. Giving effect to these issuances and the ELOC issuances described below, 6,506,860 shares of common stock were issued and outstanding as of August 14, 2026.

Nasdaq Stockholders’ Continued Listing Equity 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.