NOTE 11 – COMMITMENTS AND CONTINGENCIES

Legal Proceedings

From time to time, the Company is involved in legal proceedings. The Company records a liability for those legal proceedings when it determines it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company discloses a loss contingency when it is reasonably possible that a material loss may have been incurred, together with an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made. From time to time, the Company may enter into discussions regarding settlement of these matters, and may enter into settlement agreements, if it believes settlement is in the best interest of the Company and its shareholders.

Boustead Securities, LLC Settlement Agreement

On March 22, 2024, the Company filed a complaint in the Supreme Court of the State of New York against Boustead Securities, LLC (“Boustead”), for breach of contract, unjust enrichment, and a declaratory judgment. Several weeks later, Boustead brought an arbitration against the Company seeking to collect alleged unpaid compensation for financial services plus shares and warrants pursuant to two agreements. The Company made an application to the arbitration panel requesting an order staying the arbitration proceeding pending the court’s final determination of the issues raised in the Supreme Court case, which was granted on September 12, 2024. Prior to the court’s determination of which venue (the Supreme Court or FINRA Dispute Resolution) is proper to hear the dispute, Boustead agreed to withdraw the arbitration. During 2024, the Company recorded an accrual for a potential arbitration loss. With the withdrawal of the arbitration, the Company reversed that accrual in 2025. In February 2026, Boustead moved to dismiss the Company’s claims and the motion was argued in July 2026. In October 2026, the Company and Boustead entered into a settlement agreement under which the Company agreed to pay Boustead $250,000 in exchange for mutual releases and the dismissal of the action with prejudice. The Company accrued the $250,000 settlement as of September 30, 2026 (see Note 15). 

Operating Lease

On June 17, 2026, the Company entered into a lease agreement with 200 CT LLC for approximately 3,516 rentable square feet of office space at 200 Connecticut Avenue, Suite 400, Norwalk, Connecticut, which serves as the Company’s corporate headquarters. The lease commenced on July 1, 2026 and expires on June 30, 2031. Base rent is $7,325 per month in the first lease year and increases by 3% on each anniversary of the commencement date. The Company also pays a fixed electricity charge of $879 per month during the first lease year, which may increase thereafter only to the extent of increases in utility rates, and its pro rata share of increases in real estate taxes over the 2026 base year. The lease includes an option to renew for one additional five-year term at 95% of fair market rent and an option to terminate the lease effective in or after the 43rd month upon nine months’ prior written notice and payment of a termination fee of $11,000, reduced by $600 per month thereafter. The Company is not reasonably certain to exercise either option. The Company paid a security deposit of $14,650, which is included in prepaid expenses and other current assets (Note 5).

At commencement, the Company recognized an operating lease ROU asset and operating lease liability of $363,926, measured using an incremental borrowing rate of 10.0%. Operating lease cost was $23,334 for each of the three and nine months ended September 30, 2026. Cash paid for amounts included in the measurement of operating lease liabilities, included in operating cash flows, was $21,975 for each of the three and nine months ended September 30, 2026. As of September 30, 2026, the remaining lease term was 4.75 years and the discount rate was 10.0%. Leases of the Company’s discontinued operations are included in liabilities of discontinued operations, held for sale (see Note 3).

Maturities of the operating lease liability as of September 30, 2026 were as follows: