Health In Tech, Inc.

1. Organization

Description of Business

Health in Tech, Inc. (collectively with SMR, Hi Card, ICE, and, beginning April 10, 2026, HITChain (defined below), “HIT” or the “Company”) through its subsidiaries, simplifies sales, service processes and reduces sales cycle time for third-party administrators and brokers. HIT was incorporated in November 2021 in the State of Nevada, and is based in Stuart, Florida. The Company was created with the intention of consolidating each of three standalone entities into a single organization: Stone Mountain Risk, LLC (“SMR”), Health Intelligence Card, LLC (“Hi Card”), and International Captive Exchange, LLC (“ICE”) (the “subsidiaries”).

HITChain Inc. (“HITChain”), was incorporated as a Delaware corporation on January 2, 2026, to develop a blockchain-enabled healthcare insurance claims processing platform. This platform aims to establish an immutable, transparent and efficient claims ecosystem to reduce administrative costs and improve trust across all stakeholders. HITChain completed its initial capitalization on April 10, 2026. The Company contributed $428,571 in exchange for Class A common stock, representing an 85.72% economic interest and 28.58% voting interest. The Company’s Chief Executive Officer and Chief Financial Officer each contributed $35,714 in exchange for Class B common stock, representing a 7.14% economic interest and 35.71% voting interest each. Each share of Class A common stock is entitled toone vote, while each share of Class B common stock is entitled to 15 votes. Except for the differences in voting rights, the Class A and Class B common stock have identical economic rights and other terms, including rights with respect to dividends and distributions and rights upon liquidation.

The Company’s unaudited consolidated financial statements include the accounts of HIT, its wholly owned subsidiaries, and HITChain beginning April 10, 2026, for which the Company has been deemed to be the primary beneficiary under ASC 810 (see Note 2).

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company’s unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial information. Certain information and note disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Annual Report on Form 10-K for the year ended December 31, 2025.

The consolidated balance sheet as of December 31, 2025 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by GAAP.

The accompanying consolidated financial statements reflect all normal recurring adjustments that are necessary to present fairly the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year ending December 31, 2026.

Segments

The Company’s chief operating decision maker (“CODM”), the Chief Executive Officer and executive committee, manages the Company’s business activities as a single operating and reportable segment at the consolidated level. Accordingly, the CODM uses consolidated net income to measure segment profit or loss, allocate resources and assess performance. Further, the CODM reviews and utilizes functional expenses (cost of revenues, sales and marketing, research and development, and general and administrative expenses) at the consolidated level to manage the Company’s operations. As of June 30, 2026 and December 31, 2025, the Company did not have a material balance of long-lived assets located outside of the United States.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise significant judgment. Significant items subject to such estimates and assumptions include, but are not limited to, accounts receivable allowance for revenue billing changes driven by headcount changes during the billable period, allowance for credit losses, useful lives of software, variable consideration of revenues from underwriting modeling and stock-based compensation expense. It is at least reasonably possible that the estimates of the effect of conditions, situations or sets of circumstances that existed at the date of the financial statements, which management considered in formulating its estimates, could change in the near term due to one or more future confirming events. Actual results could differ from those estimates.*** ***

Variable Interest Entity (“VIE”)

The Financial Accounting Standards Board (“FASB”) provides guidance in ASC 810,Consolidation (“ASC 810”) for determining whether an entity is a VIE. VIE’s are defined as entities in which equity investors of the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. A VIE is required to be consolidated by its primary beneficiary, which is the party that (i) has the power to control the activities that most significantly impact the VIE’s economic performance and (ii) has the obligation to absorb losses, or the right to receive benefits, of the VIE that could potentially be significant to the VIE.

The Company determined that HITChain is VIE because its equity investment at risk is not sufficient to finance its expected activities without additional subordinated financial support.

The Company also determined that it is the primary beneficiary of HITChain. This conclusion was based on the following:

HITChain did not meet the definition of a business as of April 10, 2026. Upon initial consolidation of HITChain, the Company recognized a loss of$37,341, primarily attributable to formation-related liabilities incurred by HITChain prior to its initial capitalization.

By the end of May 2026, following an internal business review, the Company transferred certain in-development software assets with a carrying amount of $699,164 to HITChain. The transfer was recorded at carrying value, with no gain or loss recognized. HITChain recorded a corresponding intercompany payable to the Company, which was eliminated in consolidation. Subsequent to the transfer and through June 30, 2026, the Company continued to fund HITChain’s development activities. HITChain recorded the related amounts as an intercompany payable, which was eliminated in consolidation.

The following table summarizes the carrying amounts of the assets and liabilities of HITChain included in the Company’s unaudited consolidated financial statements as of June 30, 2026:

The assets of HITChain can only be used to settle the obligations of HITChain and are not available to satisfy the obligations of the Company. The creditors of HITChain have no recourse to the general credit of the Company.

The Company consolidated HITChain beginning April 10, 2026. The remaining 14.28% economic interest in HITChain is presented as noncontrolling interests in the accompanying unaudited consolidated financial statements.

Cash and Cash Equivalents

Cash and cash equivalents consist of demand deposit with original maturities less than three months, which are unrestricted as to withdrawal or use.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, accounts receivable and loans receivable for financial periods ended June 30, 2026 and December 31, 2025. The Company further manages its credit risk on liquid funds through diversification of investment type and credit exposures. For cash, the Company places cash deposits with large financial institutions. For accounts receivable, the credit risk is managed through the use of mitigating controls, including the use of credit checks and credit limits on customers. For loans receivable, the Company monitors the exposures and counterparty credit risk on a regular basis.

Concentration of customers

Revenues from Stop-Loss Insurance Carriers

For the three and six months ended June 30, 2026 and 2025, one stop-loss insurance carrier (“Carrier A”) individually represented greater than 10% of Company’s total gross revenues. Revenue from Carrier A accounted for 15.7% and 17.0% of the Company’s total gross revenues for the three and six months ended June 30, 2026, respectively. The amount due from Carrier A was approximately 20.6% of accounts receivable as of June 30, 2026. For the three and six months ended June 30, 2025, revenue from Carrier A accounted for 27.4% and 26.5% of the Company’s total gross revenues for the three and six months ended June 30, 2025, respectively. The amount due from Carrier A was approximately 32.8% of accounts receivable as of June 30, 2025. While the Company is working to cooperate with more stop-loss insurance carriers, it may experience temporary service disruptions in the event the Company deems it necessary to cease use of a stop-loss insurance carrier.

Revenues from Business Employer Customers

The Company does not have significant concentration of revenues from any of its business employer customers. The Company has a diversified customer base and did not have any business employer that accounted for more than 2.5% or 1.5% of the Company’s total gross revenues for the three and six months ended June 30, 2026 and 2025, respectively. No individual business employer accounted for more than 4.0% of accounts receivable, net as of June 30, 2026 and 2025.

Concentration of Cost of Revenues Service Providers

For the three months ended June 30, 2026, the Company’s three primary service providers represented 28.3%,17.5% and 14.7% of the Company’s cost of revenues, respectively. For the six months ended June 30, 2026, these three primary service providers accounted for 32.3%,16.3% and 13.3% of the Company’s cost of revenues, respectively. As of June 30, 2026, they accounted for 40.3%,4.7% and 9.7% of accounts payable balance, respectively. For the three months ended June 30, 2025, the Company’s three primary service providers (including one data service provider, disclosed in “Concentration of Data Service Providers from Third Party Artificial Intelligence Providers”) accounted for 80.3%,6.0% and 5.0% of the Company’s cost of revenues, respectively. For the six months ended June 30, 2025, these three primary service providers accounted for 78.8%,6.4% and 5.2% of the Company’s cost of revenues, respectively. As of June 30, 2025, they accounted for 60.3%,2.9% and 0.0% of accounts payable balance, respectively. The Company, if necessary, could utilize others as part of its service offerings with a limited impact on the Company’s operations.

Concentration of Data Service Providers from Third Party Artificial Intelligence Providers

The Company currently utilizes one third-party Artificial Intelligence (“AI”) data service provider. For the three and six months ended June 30, 2026, this provider accounted for 4.4% and 4.3% of the Company’s cost of revenues. As of June 30, 2026, this provider accounted for 1.6% of accounts payable balance. For the three and six months ended June 30, 2025 this provider accounted for 6.0% and 6.4% of the Company’s cost of revenues, respectively. As of June 30, 2025, this provider accounted for 2.9% of accounts payable balance. The Company previously utilized two AI data services companies, as pricing was more advantageous than utilizing other vendors within this sector. While the Company has historically utilized these AI data service companies, the Company believes that, if necessary, it could utilize others as part of its service offerings with a limited impact on the Company’s operations.

Leases

The Company accounts for its leases under the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) ASC 842, Leases (“ASC 842”).

The Company assesses its contracts at inception to determine whether the contract contains a lease, including evaluation of whether the contract conveys the right to control an explicitly or implicitly identified asset for a period of time. The Company recognizes right-of-use assets and lease liabilities that represent the net present value of future lease payments utilizing a discount rate corresponding to the Company’s incremental borrowing rate and amortizing over the remaining terms of the leases, which was determined to be 10% during the three and six months ended June 30, 2026 and 2025. The Company accounts for the leases of less than twelve months as short-term leases and does not recognize right-of-use assets and corresponding lease liabilities. During the year ended December 31, 2025, the Company entered into a 12-month short-term lease agreement with a monthly fixed rent payable, commencing in December of 2025. The Company had one lease classified as short-term leases as of December 31, 2025. During the three months ended March 31, 2026, the Company terminated the short-term lease agreement. The Company hadno leases classified as short-term leases as of June 30, 2026.

Accounts Receivable and Allowance for Credit Losses and for Revenue Billing Adjustments

Accounts receivable are carried at original invoice amount, less any estimate made for doubtful accounts or credit losses. In accordance with ASC 326,Financial Instruments — Credit Losses, the allowance for credit losses is the Company’s best estimate of the amount of expected credit losses in the Company’s existing receivables over the contractual term. The Company evaluates its exposure to credit loss on both a collective and individual basis. The Company evaluates such receivables on an individual customer basis and takes into account any relevant available information, which begins with historical credit loss experience and consideration of current and expected conditions and market trends (such as general economic conditions, other microeconomic and macroeconomic considerations, etc.) and reasonable and supportable forecasts that could impact the collectability of such receivables over the contractual term individually or in the aggregate. Changes in circumstances relating to these factors may result in the need to increase or decrease the allowance for credit losses in the future. The allowance for credit losses was $0 as of June 30, 2026 and December 31, 2025, respectively.

The Company also makes the allowance for revenue billing adjustments, under the consideration of the revenues associated with enrolled customers would have changed during the 12-month contractual term. The final reconciliation with the customers is on the 14 th month. During the year ended December 31, 2025, the Company’s monthly revenue provision was 1.3% of total revenues. The provision for customers ending their 12-month plan as of December 31, 2025 without completion of reconciliation was $143,251. The total provision amounted to $634,982 or 1.7% of total revenues for the year ended December 31, 2025. The balance of accounts receivable allowance for revenue billing adjustments related to current year enrollment adjustment was $287,651 as of December 31, 2025. In the first half year of 2026, the Company completed the reconciliation for customer policies that ended as of December 31, 2025. The balance of accounts receivable allowance for revenue billing adjustments related to prior year enrollment adjustment was $0 as of June 30, 2026. Starting from January 2026, the Company’s monthly revenue provision was 1.7% of total revenues, which was based on the full review of 2025 revenue adjustments. The balance of accounts receivable allowance for revenue billing adjustments related to current year enrollment adjustment was $202,671 as of June 30, 2026. This incorporates three separate categories:

Other Receivables

Certain business customers elect to receive a discount on premiums payable to carriers. In return, carriers can collect and retain these customers’ positive claim fund balance amounts. The positive claim fund is maintained in a designated account specifically earmarked for claims, held by the employer, known as “Deferred Administrative Surplus.” As the platform company, the Company tracks and processes claims for carriers. With necessary information for collection available on our platform, the Company signed an agreement on December 28, 2023 with the third-party Roscommon Captive Management and Roscommon Insurance Company (collectively the “Carrier”), to purchase the rights, title, interest, and collection rights to fees totaling $3,100,000 in Deferred Administrative Surplus for $1,650,000, which is 53% of the total collection rights (the “2023 Purchase”). Additionally, the Company entered into a separate agreement with the Carrier on March 18, 2025, to purchase the final batch of Deferred Administrative Surplus totaling $17,408,421 for $3,481,684, which is 20% of the total collection rights (the “2025 Purchase”). Subsequent to the purchase, following the final review and net of inactive insurance policies, the face value of the 2025 Purchase was approximately $13.8 million. This final batch includes stop-loss insurance policies unexpired as of the date of the 2025 Purchase (“active policies”), which were not present in the 2023 Purchase.

When entering into a stop-loss insurance policy, a business employer can elect to purchase discounted stop-loss insurance policies premiums from the Carrier by agreeing to return any positive balance in claim fund. These claim funds are held in the name of the business employer, and the Carrier has no claim to these funds until the policy and the policy run-out period ends, which is 18 months following commencement of the policy term (the “Policy End Date”). The “run-out period” refers to six-month period after the policy or plan has expired during which claims can still be submitted and processed. After the Policy End Date, any funds remaining in the claim fund belong to the Carrier. The Carrier will provide the business employers with a reconciliation of what amounts are specifically owed. This is based on the amount of funds in the business employers’ claim fund account, and the value of claims incurred during the policy and run-out period (the “Deferred Administrative Surplus”). The Deferred Administrative Surplus is owned by the Carrier and not subject any contingencies other than the ability to collect from the business employer.

As part of the Company’s services to the Carrier, ICE contracted with the Carrier to collect premium and process claims expense. Therefore, in its internal system, the Company can calculate the approximate amount of positive balance in the claims fund. The exact amount will be determined after full reconciliation of the claims fund after completion of the run-out period.

In the case of the 2023 Purchase, the Company purchased the policies with related run-out periods that had lapsed and had positive claim fund balances according to the Company’s internal system. As such, the Company knows the value of the Deferred Administrative Surplus purchased. The 2025 Purchase includes all the remaining policies with deferred administrative surplus as a product feature from the Carrier. Collectively, the Carrier and HIT platform stopped offering this feature in August 2024. Thus, 2025 purchased policies are in different periods and stages, including in the policy coverage period, in the run-out period and the out of run-out periods. For policies in the coverage period and in the run-out periods, the final Deferred Administrative Surplus cannot be determined until the policy completes the run-out period and finalizes the reconciliation. Following the purchase, the Deferred Administrative Surplus was transferred to the Company for collection. After the transfer, the Company performs the relevant reconciliations to demonstrate to the business employers the amount of the Deferred Administrative Surplus now owed to the Company from the claim fund balance. The Company asks the business owners to pay back the Deferred Administrative Surplus within 30 days of the collection requests sent.

The key risks associated with the collection of the Deferred Administrative Surplus relate to the Company’s limited collections experience related to the Deferred Administrative Surplus at the time of purchase from the Carrier. To reduce the Company’s collection risk, the Company negotiated with the Carrier to purchase the Deferred Administrative Surplus at 53% the estimated face value of the 2023 Purchase and 20% of estimated face value of 2025 Purchase. This was due to the Carrier does not have the sufficient resources and procedures to collect the Deferred Administrative Surplus. Moreover, the 2025 Purchase was the final batch of policies with the Deferred Administrative Surplus. The Company would have to collect less than 53% of the Deferred Administrative Surplus balance for the 2023 Purchase to incur a loss, and less than 20% for the 2025 Purchase to incur a loss. As of June 30, 2026, the Company collected $1,272,413 for the 2023 Purchase and $290,283 for the 2025 Purchase. The lower collection amount related to the 2025 Purchase is a result of a substantial majority of the underlying policies remaining in the reconciliation process of the Deferred Administrative Surplus, for which the Company initiates collection requests to business employers only upon the completion of such reconciliations.

The purchase of the Deferred Administrative Surplus does not represent a purchase of a financial asset with credit deterioration as defined in accordance with ASC 326,Financial Instruments — Credit Losses. Furthermore, the Company only has approximately three months of historical collection success rates at the time of entering into the 2023 Purchase contract. These collection success rates are based upon limited experience given the Company has only collected on these types of assets for a short period of time. Moreover, the historical collection success rates for the 2023 Purchase were not applicable for the 2025 Purchase at contract inception, due to the differing components of the two purchases, such as active policies in the 2025 Purchase. As such, the Company has accounted for these assets under a nonaccrual approach. The Company will continue to assess this policy as additional collection information is received and collection trends are identified. The Company recorded the consideration as other receivables both as of June 30, 2026 and as of December 31, 2025. The Company collected $12,224 under the Deferred Administrative Surplus during the six months ended June 30, 2026. The Company collected $165,802 under the Deferred Administrative Surplus during the six months ended June 30, 2025. Payments made for purchases and collections from the Deferred Administrative Surplus are included in the “other receivables” line of operating activities in the Company’s Consolidated Statements of Cash Flows.

Set forth below is an illustrative roll-forward based on actual figures for the three and six months ended June 30, 2026.

The Company separately assessed if an allowance for credit losses was necessary for this Other Receivables. In estimating the allowance, the Company considers factors including the aging and collection history of the receivables, the length of time amounts have remained outstanding, information obtained through the collection process, and other relevant facts and circumstances affecting expected collectability. Other Receivables are written off after all collection attempts have been exhausted. Credit loss expense recognized on Deferred Administrative Surplus, which is presented in General and administrative expenses in the Company’s Consolidated Statements of Operations, was $739,773 for the three and six months ended June 30, 2026 and $0 for the three and six months ended June 30, 2025. The credit loss expense of $739,773 relates to the 2025 Purchase and no credit loss expense was recognized for the three and six months ended June 30, 2026 associated with the 2023 Purchase. No income was recognized on the Deferred Administrative Surplus in any of the periods presented, as collections received did not exceed the carrying value of the receivable. Under the Company’s nonaccrual approach, income is recognized only upon actual cash receipt to the extent that amounts received exceed the carrying value of the receivable at the time of collection.

Loans Receivable, Net

On October 10, 2023, the Company entered into a Promissory Note Agreement with Kang Youle Limited, which constitutes an unsecured lending arrangement. Under this Promissory Note Agreement, the Company agreed to lend $800,000 in principal amount, which bears 8% interest per annum. The note’s maturity date is October 10, 2026. The Company has assessed this receivable for potential credit losses, noting none as of June 30, 2026 and December 31, 2025, respectively. The Company recorded this loan receivable at amortized cost on the consolidated balance sheets. See Note 3.

Software Capitalization

The Company incurs certain costs associated with the development of its Hi-Card, eDIYBS systems and other systems. In accordance with ASC 350-40,Intangibles — Goodwill and Other: Internal-Use Software, the Company capitalizes certain costs associated with the development of its internal-use software after the preliminary project stage is complete and until the design, coding, installation, and testing of the software have been completed. Upgrades and enhancements are capitalized if they will result in added functionality. Capitalized costs are amortized over an expected three-year period. In May of 2023, the Company determined that its eDIYBS system was ready for its intended use. In September 2025, an expansion of the eDIYBS system was also completed and placed into service. As such, the Company has entered the eDIYBS system in the post-implementation phase. The Company has amortized $320,320 and $723,787 of the capitalized costs associated with eDIYBS and other systems for the three and six months ended June 30, 2026, respectively, and $135,983 and $271,966 for the three and six months ended June 30, 2025, respectively, which is included in the cost of revenues line item of the Company’s Consolidated Statements of Operations. During the three and six months ended June 30, 2026, the Company capitalized $809,478 and $1,390,611, respectively, of software development costs, and $919,000 and $1,828,615 during the three and six months ended June 30, 2025, respectively.

Impairment of Long Lived Assets

In accordance with ASC 360,Property, Plant, and Equipment, the Company evaluates the recoverability of amortizable long-lived assets whenever events or changes in circumstances indicate the carrying value of such asset may not be recoverable. Should there be an indication of impairment, the Company tests recoverability by comparing the estimated undiscounted future cash flows expected to result from the use of the asset to the carrying amount of the asset or asset group. If the asset or asset group is determined to be impaired, any excess of the carrying value of the asset or asset group over its estimated fair value is recognized as an impairment loss. There wereno impairment losses recognized on long-lived assets during the three and six months ended June 30, 2026 and 2025.

Revenue Recognition

The objective of ASC 606,Revenue from Contracts with customers (“ASC 606”) is to establish the principles that an entity shall apply to report useful information to users of the financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a contract with a customer. An entity shall recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services, as defined in ASC 606-10-10-1 and ASC 606-10-10-2.

This evaluation under ASC 606 follows a five-step model, including:

In general, ASC 606’s core principle is to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Required disclosures under ASC 606 include qualitative and quantitative information about contracts with customers and significant judgments and estimates as to the application of the 5-step revenue recognition analysis, among others.

The Company accounts for its revenue under the accounting guidance of ASC 606. The Company’s contracts that are within the scope of ASC 606 specifically relate to the services that are associated with customers who purchase self-funded benefits plans. These plans are facilitated through a network of brokers, TPAs, MGUs, carriers, and other third-party agents.

Identification of the Performance Obligations

The Company analyzes each of the deliverables pursuant to its contracts with customers. For each of the deliverables, the Company performs a detailed analysis to determine whether the deliverables are separately identifiable. The Company notes that although the deliverables can vary from day to day, all specifically relate to one kind of service, representing one performance obligation that is provided by each of its subsidiaries (SMR and ICE), as further described below.

SMR Specific Considerations

Program and Platform Management Services (Legacy)

Under SMR’s Program and platform management services, the Company’s insurance marketplace allows brokers to customize an employer’s self-funded benefits plan and stop loss insurance policies. When licensed brokers log in to the Company’s platform, they upload an employee census representing the employee base of the business employer, select which network they wish to use, what plan designs they want to offer to the business employer and then quickly obtain a bindable self-funded medically underwritten stop loss quote they can provide to their business customers. The chosen vendors provide benefit services as outlined on the platform. The fees that the Company and others charge for the service offerings within the quote are outlined and expressly agreed to by the employer. The employer customizes their health insurance plan and executes an annual agreement. This agreement includes a sold case breakdown (SCB) that outlines the individual stop loss insurance and benefits service offerings selected by the employer and the cost of each, including any optional services offered by the Company or other vendors. Through this, the Company is aware of the services that the broker is offering to the employer for the health insurance plan period, which is normally twelve (12) months. This includes each of the performance obligations provided by its subsidiaries as further outlined below. Subsequent to the execution of the initial bindable SCB with its customers, the Company may modify the health insurance plan during the plan period when a non qualified event occurs based on the definition provided by the carriers. For example, if there is a significant fluctuation or changes of enrolled employees (EEs) from the first month.

The Company has business relationships with licensed brokers, as licensed brokers register on the Company’s platform to select and sell benefits plans and stop loss policies to employers as discussed above. However, there is no contractual relationship between the Company or any of its subsidiaries and the brokers. The Company’s platform provides credentialing for licensed brokers, allowing them to access its marketplace to select and sell self-funded benefits plans for the business employer at no cost. Brokers are paid by the businesses, with no contractual relationship between the Company and the brokers, only a credentialing process, and free access is provided.

TPAs are contracted and authorized by the business employers to enter into service contracts with SMR on behalf of the business employers. ASC 606 defines a customer as a party that has contracted with an entity to obtain goods or services that are an output of the ordinary activities of the company in exchange for consideration. SMR is not providing services to the TPAs, but instead, has contracts to collaborate with the TPAs to facilitate the administration of health benefit plans and stop-loss insurance policies to its customers, which are the business employers. The TPA will administer the purchased health benefits plan and manage the multiple service providers associated with the health benefits plan and stop-loss insurance policy. Such service providers are listed on the bindable quotes via the bindable sold case breakdown, which outlines the individual stop loss insurance and benefits service offerings selected by the business and the cost of each. Only the business employer can start or terminate the relationship with SMR. The TPA cannot start or terminate the relationship with SMR. As such, the Company has concluded that the TPAs are not customers and that the business employers are the customers of SMR pursuant to ASC 606.

Effective January 1, 2026, the Company has pivoted its services to offer pre-designed self-funded plans to employers, leveraging years of experience in selecting and managing the vendors that are essential to the plan.

Self-funded Plan Administration Services (Effective January 1, 2026)

SMR develops pre-configured, self-funded health benefit plans that integrate full administrative services and then are bundled with stop-loss insurance for employer clients. SMR delivers a comprehensive, end-to-end self-funded health plan solution spanning plan design and ongoing administration.

SMR curates and onboards a network of specialized administrative vendors, contracting directly and tailoring service configurations based on deep operational experience and sector expertise. This enables consistent execution while maintaining flexibility to meet the specific needs of employers and distribution partners.

As of June 30, 2026, SMR includes more than 100 pre-designed plans that can be efficiently configured and bundled with stop-loss coverage, significantly streamlining implementation.

This model simplifies the complexity of self-funded plan administration, materially improves operational efficiency, and provides a differentiated, flexible solution for both employers and sales agents.

ICE Specific Considerations

ICE has contractual relationships with carriers. ICE underwrites a stop-loss insurance policy and processes claims per the respective carrier’s underwriting guideline and claims processing guideline. In these instances, the carrier is the Company’s customer.

The Company’s performance obligations related to its revenue can be summarized as follows:

Underwriting modeling and risk services: As a part of the Company’s overall insurance marketplace, ICE provides underwriting modelling, machine learning-driven underwriting services, and risk services to its customers. Through its web-based SaaS quoting platform, eDIYBS (Enhance Do It Yourself Benefit System), brokers log in to eDIYBS, upload census, select plans and generate bindable quotes. eDIYBS medically underwrites each employer. ICE continues to assess risks and may re-underwrite based on underwriting risk guidelines provided by carriers. Any enrollment changes in a business can have large fluctuations during a policy period that may trigger a re-underwrite. ICE not only monitors and manages these activities but also facilitates insurance reporting. Revenue related to these services are included in the “Revenues from underwriting modeling” within the Consolidated Statements of Operations. These services are provided by ICE for carriers. Unlike the Company’s other performance obligations, the Company’s agreements for its underwriting modeling and risk performance obligations are with stop loss carriers. Under these agreements, the Company develops and maintains all underwriting models, defines risk criteria based on risk guidelines provided by carriers, manages underwriting of risk, manages claims activity, ensures reinsurance reporting, and handles monthly reinsurance filings. The purpose of these services is to ensure that the stop loss carrier is assuming an appropriate amount of risk when taking on a new insurance policy, and further that the premiums being charged are appropriate based upon the population of the new insurance policy (age, demographic, etc.).

Program and platform management services: As a part of the Company’s overall insurance marketplace, SMR is a program manager specializing in customized self-funded benefits programs for businesses. SMR’s expertise in health benefits enables the Company to analyze, review and select vendors that have sufficient experience, which is an essential component of a health plan that is constantly evolving with its business employers based on factors such as employee headcount and a specific employee’s geographic location. SMR will then design health plans, select networks, and sets up the benefits plan for the business employers. Licensed brokers log in to the marketplace to select and sell self-funded benefits plans to businesses. The Company throughout the contract period is actively working with the TPA to assist administration of the plan specifically due to headcount changes. The Company’s service offerings encompass reference-based pricing, group insurance captives, community health plans, and association health programs. This service is performed for employers to ensure that they have access to a customized health benefits program. For these Program and Platform Management Services, the Company acts as a facilitator and does not control the underlying services prior to transfer to customers. The Company accounts for these services under ASC 606-10-25-14(b) as a series of distinct services that are substantially the same per enrolled employee and have the same pattern of transfer as the delivery of the specified services is satisfied over time, and each service is substantially the same and has the same measure of progress. Revenue related to these services are included in the “Revenues from fees” within the Consolidated Statements of Operations.

Self-funded plan administration services: SMR delivers a comprehensive, end-to-end self-funded health plan solution to business employers, spanning plan design and ongoing administration. SMR establishes independent pricing for services, and acts as the primary party responsible for service fulfillment. The Company acts as the principal under ASC 606 for these Plan administration services, as it controls the services prior to transfer to employers and is primarily responsible for fulfillment. These services are accounted for under ASC 606-10-25-14(b) as a series of distinct services that are substantially the same per enrolled employee and have the same pattern of transfer. Revenue related to these services are included in the “Revenues from fees” within the Consolidated Statements of Operations.

Each of the services above allows for the customers to simultaneously receive and consume the benefits of the Company’s performance as it performs. Services provided by SMR (either program and platform management or self-funded plan administration) and underwriting modeling and risk services provided by ICE (including eDIYBS) are interdependent, as they cannot function effectively without being combined.

As such, the Company has determined that it is appropriate to recognize revenue over a period of the defined contractual term. The Company has determined that the pattern of transfer of control to the customers is commensurate with its right to invoice given the fact that at the end of each reporting period, all performance obligations of the Company have been satisfied and provided to the Company’s customers, and as such, the Company records its revenue based on the sold policy enrollment.

Payments required throughout the duration of the policy start once a policy has become effective, and are subsequently due on policy effective date of the month through the duration of the policy. Given the Company’s policy terms, there are no performance obligations that remain unperformed at the end of each reporting period.

Disaggregation of Revenue

A summary of the Company’s disaggregated revenues is as follows:

Variable Consideration

With the exception of its business relationship with one stop-loss insurance carrier, the Company does not have variable consideration that would require constraint from the transaction price of its contracts with customers as the Company receives monthly payments either based on a fixed percentage of the monthly premiums paid by the carrier, or a fixed dollar amount based on the end users serviced during a given month paid by employers. The Company has reviewed all contracts with its customers and determined that, other than the contract described below, none include terms that could result in the Company refunding amounts to a carrier or receiving variable cash flows.

For this stop-loss insurance carrier, with which the Company’s new policy underwriting otherwise ended in 2024, ICE entered into a Program Manager Agreement (the “Agreement”), effective August 1, 2023. Under the Agreement, ICE provides underwriting modeling and risk program services in connection with self-funded stop-loss policies issued by the carrier and charges the carrier a Manager Fee of up to 12% of gross written premiums. Pursuant to Addendum 3 to the Agreement, the Manager Fee is subject to a Manager Fee Adjustment (the “Adjustment”) that may reduce the fee retained by ICE, ranging from $nil to the full Manager Fee of 12% of gross written premiums. The Manager Fee constitutes variable consideration in its entirety, as the amount ICE is ultimately entitled to retain depends on the Adjustment. The carrier pays ICE the Manager Fee monthly based on gross written premiums collected in the preceding month, with any Adjustment determined and settled separately.

The Agreement covers 11 consecutive policy batches from August 2023 through June 2024 (each group of policies sharing the same effective date month, a “policy batch”). Each policy batch passes through three stages: (i) a 12-month in-effect stage; (ii) a six-month run-out stage, during which claims are submitted — upon completion, claims data for that batch is substantially complete; and (iii) a six-month reconciliation stage, during which submitted claims are reviewed and finalized.

At agreement inception and through December 31, 2024, none of the policy batches had completed their run-out period. Based on the Company’s industry experience and ongoing monitoring of each policy batch’s performance, the performance of the underlying policies was favorable at each reporting date. Accordingly, the Company assessed the probability of any meaningful Adjustment as remote, and the estimated transaction price for each policy batch equaled the full Manager Fee of 12% of gross written premiums. No revenue reduction was recorded in 2023 or 2024.

During 2025, as each policy batch completed its run-out period, the claims data for that batch became substantially complete, providing the Company with updated information to reflect in its transaction price estimates. For policy batches where the updated information indicated adverse performance, the Company concluded that the probability of a meaningful Adjustment was no longer remote and reduced the estimated transaction price accordingly. The Company updates its transaction price estimates at each reporting date to reflect the information then available.

For the three and six months ended June 30, 2026, the Company estimated contra revenue of $0 and $108,402, respectively, and $175,698 and $955,743 for the three and six months ended June 30, 2025, respectively, related to the Adjustment. These amounts reduced revenue from underwriting modeling services provided to the carrier. The cumulative reduction in revenue recorded through June 30, 2026 was$4.0 million, comprising approximately $3.9 million in 2025 and approximately $0.1 million in the first quarter of 2026. As of June 30, 2026 and December 31, 2025, refund liabilities of $0 and $891,598 related to the Adjustment were recorded in other current liabilities, respectively. As of June 30, 2026, the Company has made interim payments of $4,000,000 to the carrier in connection with the Adjustment, subject to final reconciliation. The Company retains the right to recover any overpaid amounts. Subsequent to the completion of the interim payment schedule, the carrier asserted an additional claim of up to approximately $400,000 in connection with the Adjustment during the second quarter of 2026. The Company is currently evaluating the merits of the additional claim and the parties are engaged in ongoing negotiations. Given the early stage of negotiations, the amount of any additional obligation, if any, cannot be reasonably estimated at this time, and no additional provision has been recorded as of June 30, 2026. The Company will continue to update its estimates at each reporting date to reflect the information then available.

Contract Assets and Contract Liabilities

Contract assets represent the Company’s right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time. Contract liabilities represent the Company’s obligation to transfer goods or services to a customer for which the entity has received consideration. As of June 30, 2026 and December 31, 2025, the Company did not have contract assets or liabilities.

Costs to Obtain a Contract

Under ASC 340-40, Other Assets and Deferred Costs — Contracts with Customers (“ASC 340”) incremental costs of obtaining a contract, such as sales commissions and bonus programs afforded to brokers, are capitalized if they are expected to be recovered. The Company elected the practical expedient under ASC 340 to expense the costs to obtain a contract as incurred when the expected amortization period is one year or less. As of June 30, 2026 and December 31, 2025, there were no such capitalized costs. All eligible contract acquisition costs expensed by the Company have been included in sales and marketing expenses on the Company’s Consolidated Statements of Operations for the three and six months ended June 30, 2026 and 2025.

Significant Financing Components

The Company elected the practical expedient that allows the Company to not assess a contract for a significant financing component if the period between the customer’s payment and the transfer of the goods or services is one year or less. There were no significant financing components during the three and six months ended June 30, 2026 and 2025, respectively.

Cost of Revenues

The Company’s cost of revenues primarily consists of direct costs attributable to operating its platform and delivering platform-enabled services, many of which vary with the volume of services delivered, (i) infrastructure costs to operate its platform, such as hosting fees, fees paid to various third-party partners for access to their technology and services, and amortization expenses of the Company’s capitalized internal-use software related to its platform, (ii) costs of plan administrative services provided by the TPA designated in each pre-designed plan and other vendors assigned to each TPA, and (iii) costs related to the captive management activities. The captive management activities include introducing new carriers, conducting due diligence on carriers, conducting feasibility studies to determine the viability to be a stop-loss carrier on the platform, negotiating terms and contracts, coordinating audit requests, managing relationship with unrelated carriers and their regulators and auditor firms to ensure that the risk associated with the Company’s service offerings is minimized. Personnel costs associated with underwriting oversight, claims management, enrollment support and other operational functions are classified as general and administrative expenses. These employees support the Company’s overall operating platform and service infrastructure across its portfolio of carrier and employer relationships, rather than performing activities that are directly identifiable to a specific revenue contract or separately priced service deliverable.

Stock-Based Compensation Expense

In accordance with ASC 718,Compensation — Stock Compensation, the Company’s share-based compensation program provides for the grant of stock options, restricted stock awards (“RSAs”) and unrestricted stock awards to officers, employees, directors and non-employees. The fair value of stock options granted in July 2023 and August 2024 was determined using the binomial option-pricing model. The fair value of RSAs granted before the Company’s initial public offering (the “initial public offering” or the “IPO”) was based on the fair value of the Company’s common stock on the date of the grant, using the discounted cash flow method and back-solve method, respectively. The fair value of unrestricted and restricted stock granted after the IPO is based on the closing market price on the date of the grant.

Effective April 10, 2026, following the consolidation of HITChain, the Company’s stock-based compensation expense also includes equity awards granted under HITChain’s equity incentive plan. HITChain’s share-based compensation program grant awards include stock options and RSAs to officers, directors and non-employees. The fair value of stock options granted was determined using the binomial option-pricing model. The fair value of RSAs granted was based on the fair value of HITChain’s common stock on the date of the grant. See Note 7 for further details.

The Company grants stock options and RSAs that are subject to either service or service and performance-based vesting conditions. Compensation expense for awards to officers, employees and directors with service-based vesting conditions is recognized using the straight-line method over the requisite service period, which is generally the vesting period of the respective award. Forfeitures are estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from those estimates. The Company uses historical data to estimate awards’ forfeitures and records stock-based compensation expense only for those awards that are expected to vest. Compensation expense for awards to non-employees with service-based vesting conditions is recognized in the same manner as if the Company had paid cash in exchange for services, which is generally over the vesting period of the award. Should the Company terminate any of its consulting agreements, the unvested options and RSAs underlying the agreements would be cancelled. Compensation expense for awards to officers, employees, directors and non-employees with service and performance-based vesting conditions is recognized based on the grant-date fair value over the requisite service period on a straight-line basis to the extent achievement of the performance condition is probable. The Company reassesses the probability of achieving the performance condition at each reporting date and begins recognizing expense only when it is probable that the condition will be met.

The Company’s expected stock price volatility assumption is based on the volatility of comparable public companies. The expected term of a stock option granted to employees and directors (including non-employee directors) is based on the average of the contractual term (generally 5 years) and the vesting period. For non-employee options, the expected term is the contractual term. The risk-free interest rate is based on the yield of U.S. Treasury securities consistent with the life of the option. The expected dividend yield was set to zero as the Company does not pay dividends on its common stock and there was no expectation of doing so as of the respective grant dates.

Net Income (Loss) Per Share

Net income (loss) per share is provided in accordance with ASC 260,Earnings per Share. The Company computes basic net income (loss) per share by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. The Company’s Class A Common Stock and Class B common stock, $0.001 par value per share (“Class B Common Stock” and together with the Class A Common Stock, “common stock”), have identical dividend and liquidation rights and are therefore considered a single class for purposes of calculating earnings per share.

Diluted net income (loss) per share includes the potential dilutive effect of common stock equivalents as if such securities were converted or exercised during the period, when the effect is dilutive, including unvested RSAs and outstanding stock options. For the purpose of computing diluted net income (loss) per share, RSAs and options with a performance-based vesting condition are considered contingently issuable, and such contingent shares are included in the denominator for computing diluted net income (loss) per share only once the performance condition is met, and only to the extent such RSAs and options are dilutive. For the three and six months ended June 30, 2026, no diluted shares attributable to RSAs or options were included in the calculation of net loss per share. For the three months ended June 30, 2025, diluted shares attributable to 249,962 RSAs were included in the calculation of net income per share. For the six months ended June 30, 2025, diluted shares attributable to 445,693 RSAs and 1,555,144 options were included in the calculation of net income per share.

The following table sets forth the computation of basic and diluted net income (loss) per share of common stock for the three and six months ended June 30, 2026 and 2025:

The following outstanding stock awards were not considered in the computation of diluted net income (loss) per share attributable to holders of common stock as they had antidilutive effects for the three and six months ended June 30, 2026 and 2025:

Recently Issued Accounting Standards Not Yet Adopted

In November 2024, the FASB issuedASU 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This standard calls for enhanced disclosures about components of expense captions on the face of the income statement. This standard will be effective for fiscal years beginning after December 15, 2026, with the option to apply it retrospectively. Early adoption is allowed. Currently, the Company is assessing the potential impact of this guidance on its consolidated financial statement disclosures.

In September 2025, the FASB issued ASU 2025-06 Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which amends certain aspects of the accounting for and disclosure of software costs under ASC 350-40. The new standard is effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is allowed. The new standard may be applied prospectively, retrospectively, or via a modified prospective transition method. Currently, the Company is assessing the potential impact of this guidance on its consolidated financial statement disclosures.

3. Loans Receivable, Net

On October 10, 2023, the Company entered into a Promissory Note Agreement with Kang Youle Limited, which constitutes an unsecured lending arrangement. Under this Promissory Note Agreement, the Company agreed to lend $800,000 in principal amount, which bears 8% interest per annum. The note’s maturity date is October 10, 2026. As of June 30, 2026 and December 31, 2025, the outstanding principal amount was $800,000. The Company accrued interest that is due and receivable in the amount of $47,993 and $15,995 as of June 30, 2026 and December 31, 2025, respectively. This amount is included within “Loans receivable, net” on the consolidated balance sheets.

Although not part of HIT’s core business, the Company will strategically invest its assets in a manner to maximize risk-adjusted return and promote shareholder wealth. The Company provided the promissory note to Kang Youle Limited, an independent third party with access to a network of insurance sectors internationally.

4. Stockholders’ Equity

The Company has three classes of stock: (1) Class A Common Stock; (2) Class B Common Stock, and (3) Series A Preferred Stock.

The total number of shares of stock that the Company has authority to issue is 220,000,000, consisting of 150,000,000 shares of Class A Common Stock,50,000,000 shares of Class B Common Stock and 20,000,000 shares of Series A Preferred Stock, $0.001 par value per share (“Series A Preferred Stock”).

Holders of Class B Common Stock are entitled toten votes per share while holders of Class A Common Stock are entitled toone vote per share. Both classes of common stock vote collectively with the holders of Series A Preferred Stock. Each share of Series A Preferred Stock is entitled toone vote. In addition, the affirmative vote of a majority of the outstanding Series A Preferred Stock is required to approve certain fundamental corporate actions, including mergers, liquidations, the issuance of senior or parity equity securities, and any amendments to the Company’s governing documents that would adversely affect the rights of holders of Series A Preferred Stock.

Holders of Class A Common Stock and Class B Common Stock are entitled to dividends when, and if, declared at the discretion of the Company. However, holders of Series A Preferred Stock are entitled to receive non-cumulative dividends prior and in priority to any dividends declared on the common stock. Accordingly, no dividends may be paid on common stock unless all declared dividends on the Series A Preferred Stock have been paid or set aside for payment.

On March 27, 2026, the Company completed a public equity financing (the “PIPE”) through which it issued and sold 5,600,000 shares of Class A Common Stock, at a price of $1.25 per share. The Company received net proceeds of $6,381,000 in the PIPE after deducting placement agent fees and escrow agent fees of $619,000.

On June 15, 2026, the Company issued 95,238 RSAs outside of its equity incentive plans to a consulting firm in reliance upon the exemption from the securities registration requirements of the Securities Act of 1933, as amended, afforded by the provisions of Section 4(a)(2) thereof and the rules and regulations promulgated thereunder, in exchange for consulting services. For further details regarding the related stock-based compensation, please refer to Note 7.

As of June 30, 2026 and December 31, 2025,53,858,083 and 46,006,000 shares of Class A Common Stock were issued and outstanding, respectively. As of both June 30, 2026 and December 31, 2025,11,700,000 shares of Class B Common Stock were issued and outstanding. As of both June 30, 2026 and December 31, 2025, no shares of Series A Preferred Stock were issued and outstanding.

From time to time, the Company issues shares of common stock in connection with the granting of RSAs and the exercise of stock options under its equity incentive plans. For a detailed summary of these issuances and related stock-based compensation, please refer to Note 7.

5. Commitments and Contingencies

Legal Proceedings

From time to time, the Company is party to various litigation matters incidental to the conduct of its business. The Company is not presently party to any legal proceedings the resolution of which it believes would have a material adverse effect on its business, prospects, financial condition, liquidity, results of operation, cash flows or capital levels.

Leases

The Company entered into a five-year lease for its corporate headquarters in Stuart, Florida, commencing in November of 2022. The Company’s real estate lease also includes executory costs such as common area maintenance (non-lease component) and real estate taxes (not considered a component of the Company’s lease). As a practical expedient permitted under ASC 842, the Company has elected to account for the lease and non-lease components as a single lease component. For the three and six months ended June 30, 2026 and 2025, the rent-related expenses for this lease were $20,812 and $41,624, respectively. The Company hadno short-term leases as of June 30, 2026, andone short-term lease as of December 31, 2025.

The Company’s office lease is classified as an operating lease. At the inception date of the office lease, the Company recorded a right-of-use asset of $330,554 in operating lease right-of-use asset, as well as an operating lease liability of $324,021. This lease liability represented the net present value of future lease payments for the lease utilizing a discount rate of 10%, which corresponded to the Company’s incremental borrowing rate.

During the three and six months ended June 30, 2026, the Company made cash payments of $21,417 and $42,834 for amounts included in the measurement of lease liabilities, respectively.

The following table reconciles the undiscounted lease liabilities to the total lease liabilities recognized on the Consolidated Balance Sheet as of June 30, 2026:

The remaining lease term was 1.3 years and 1.8 years as of June 30, 2026 and December 31, 2025, respectively.

The discount rate used to determine the operating lease liability was 10% both as of June 30, 2026 and December 31, 2025.

6. Income Taxes

(Loss) income before income taxes consists of the following:

During the three and six months ended June 30, 2026, the Company recognized an income tax benefit of $809,888 and $1,289,957, respectively. During the three and six months ended June 30, 2025, the Company recognized an income tax expense of $202,637 and $388,468, respectively.

The Company’s income tax provision consists of the following for the three and six months ended June 30, 2026 and 2025:

Beginning in its 2025 annual financial reporting, the Company adopted ASU 2023-09 on a prospective basis. The following table presents the reconciliation of income taxes computed at the U.S. federal statutory tax rate to income tax provision for the three and six months ended June 30, 2026 after the adoption of ASU 2023-09:

The following table presents the reconciliation of income taxes computed at the U.S. federal statutory tax rate to income tax provision for the three and six months ended June 30, 2025 prior to the adoption of ASU 2023-09:

6. Income Taxes (cont.)

The Company’s net deferred tax assets and liabilities consisted of the following as of June 30, 2026 and December 31, 2025:

As of June 30, 2026, the Company had federal net operating loss carryforwards of approximately $6.7 million, which may be carried forward indefinitely to offset future taxable income, but are subject to the 80% taxable income limitation upon utilization. Additionally, the Company had state net operating loss carryforwards of approximately $6.7 million as of June 30, 2026. Certain state net operating loss carryforwards may be carried forward indefinitely, while the remaining carryforwards begin to expire in 2033 through 2055, depending on the applicable state jurisdiction. State net operating loss carryforwards are also subject to various state-specific utilization limitations.

In general, under Section 382 of the U.S. Internal Revenue Code of 1986, as amended, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change net operating loss carryforwards (“NOLs”) to offset future taxable income. As of June 30, 2026, the Company has not performed such an analysis evaluation the potential limitation of the Company’s net operating loss carryforwards due to the “Change in ownership” as defined under Section 382 of the Internal Revenue Code.

The Company evaluates the realizability of its deferred tax assets and the need for a valuation allowance at the end of each fiscal quarter. Based on all available positive and negative evidence, including forecasts of future taxable income and statutory carryforward periods, management concluded that it is more likely than not that its deferred tax assets will be realized. Accordingly, no valuation allowance was required as of June 30, 2026.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, introducing significant changes to the U.S. federal tax system. Among other provisions, the OBBBA restored immediate expensing for certain domestic research and experimental (“R&E” ) expenditures, provided potential retroactive relief or accelerated deductions for previously capitalized R&E costs, reinstated EBITDA-based limitations for interest expense deductions, and made certain business tax incentives permanent. The OBBBA did not have a material impact on the Company¡¯s income tax benefit or expense, or related tax assets and liabilities, for the period ended June 30, 2026. The Company plans to expense qualifying domestic R&E costs beginning in 2025 and accelerate the amortization of previously capitalized and unamortized R&E costs. The Company does not intend to apply retroactive treatment to prior tax periods.

The amounts of cash income taxes paid by the Company were as follows:

7. Stock-Based Compensation

HIT Equity Awards

2022 Equity Incentive Plan

On December 21, 2022, the Company adopted and approved the Health in Tech Equity Incentive Plan (the “2022 Plan”), which provides for the issuance of 4,501,683 shares of Class A Common Stock for purposes of attracting, retaining, and motivating key employees, directors, and consultants. The 2022 Plan provides for the grant of incentive stock options, nonqualified stock options, RSAs and restricted stock units. Upon the consummation of the Company’s initial public offering on December 24, 2024, the 2024 Equity Incentive Plan (the “2024 Plan”) went into effect. The terms of the 2022 Plan continue to govern the RSAs and options outstanding thereunder as of June 30, 2026 and December 31, 2025. There areno shares reserved for future issuance under the 2022 Plan.

2024 Equity Incentive Plan

On December 24, 2024, the Company adopted and approved the 2024 Plan. The 2024 Plan is a comprehensive incentive compensation plan under which the Company can grant 7,677,849 shares of equity-based and other incentive awards to officers, employees, directors, consultants and advisers. On October 3, 2025, the Company’s stockholders approved an amendment to the 2024 Plan to (i) increase the total number of shares of Class A common stock authorized for issuance pursuant to awards granted thereunder from 7,677,849 shares to 10,677,849 shares and (ii) include the issuance of up to 2,000,000 shares of Class B Common Stock and options convertible into Class B Common Stock to executive officers of the Company. The purpose of the 2024 Plan is to help the Company attract, motivate and retain such persons with awards under the 2024 Plan and thereby enhance shareholder value. The 2024 Plan provides for the grant of stock options, stock appreciation rights, performance share awards, performance unit awards, distribution equivalent right awards, RSAs, restricted stock unit awards and unrestricted stock awards. Under the 2024 Plan,1,288,000 shares of unrestricted stock and 3,749,538 RSAs were granted as of June 30, 2026, and 1,288,000 shares of unrestricted stock and 1,363,744 RSAs were granted as of December 31, 2025.

Some RSAs granted under the 2024 Plan have service-based vesting conditions and vest over a period fromone totwo years. Some RSAs granted under the 2024 Plan are subject to both service and performance-based vesting conditions. These awards vest upon the achievement of specified metrics. Depending on the award, these metrics are either measured over a concurrent service period, or act as a prerequisite that must be met to initiate a subsequent 12-month service-based vesting schedule, with the awards vesting in equal monthly installments. The assessment for this prerequisite may occur within a fixed period or be indefinite. Compensation expense for awards with service and performance-based vesting conditions is recognized based on the grant-date fair value over the requisite service period on a straight-line basis to the extent achievement of the performance condition is probable. As of each reporting date, the Company estimates the probability that specified performance criteria will be met and does not recognize compensation expense until it is probable that the performance-based vesting condition will be achieved.

Restricted Stock Awards

Service-based RSAs

The table below identifies service-based RSA activity under the 2024 Plan and certain awards granted outside of the Company’s equity incentive plans for the relevant periods presented:

(1)On June 15, 2026, the Company granted 95,238 RSAs to a consulting firm outside of its equity incentive plans at a grant-date fair value of $1.05 per share, subject to vesting monthly over a 6-month period commencing on June 15, 2026.

As of June 30, 2026, there was $196,188 of unrecognized compensation cost, adjusted for estimated forfeitures based on historical data, related to non-vested service-based RSAs. The RSAs are expected to be recognized over a weighted-average remaining requisite service period of 0.4 years, using the straight-line method. The total fair value of the RSAs vested was $246,596 and $6,568 during the six months ended June 30, 2026 and 2025, respectively. The weighted-average grant-date fair value per share of RSAs granted was $1.15 and $0.64 during the six months ended June 30, 2026 and 2025, respectively.

Service and performance-based RSAs

The table below identifies service and performance-based RSA activity under the 2022 Plan and the 2024 Plan for the relevant periods presented:

As of June 30, 2026, there was $1,356,808 of unrecognized compensation cost, adjusted for estimated forfeitures based on historical data, related to non-vested service and performance-based RSAs that were considered probable of achievement. The RSAs are expected to be recognized over a weighted-average remaining requisite service period of 0.4 years, using the straight-line method. The total fair value of the RSAs vested was $401,649 and $439,465 during the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, there was $2,125,400 of unrecognized compensation expense related to non-vested service and performance-based RSAs that were considered not probable of achievement. The weighted-average grant-date fair value per share of RSAs granted was $1.55 and $0.66 during the six months ended June 30, 2026 and 2025, respectively.

During the six months ended June 30, 2026 and 2025, the Company cancelled and retired 206,785 and 0 shares of common stock, respectively, surrendered by three executive officers to satisfy tax withholding obligations in connection with the net settlement of service and performance-based RSAs.

Options

The table below identifies stock options activity under the 2022 Plan for the relevant periods presented:

The intrinsic value of a stock option is calculated as the difference between the per share exercise price of the underlying stock option award and the closing stock price on the last trading day in fiscal quarter. There wereno stock options granted or exercised during the six months ended June 30, 2026 and 2025. The total fair value of options vested during the six months ended June 30, 2026 and 2025 was $29,794 and $483,141, respectively.

As of June 30, 2026, there was $28,661 of unrecognized compensation cost, adjusted for estimated forfeitures based on historical data, related to non-vested service and performance-based stock options, which is expected to be recognized over a weighted-average remaining requisite service period of 0.4 years, using the straight-line method.

HITChain Equity Awards

2026 Equity Incentive Plan

On April 10, 2026, HITChain adopted and approved the 2026 Equity Incentive Plan (the “2026 Plan”), which provides for the issuance of 5,000,000 shares of Class A Common Stock and 2,000,000 shares of Class B Common Stock of HITChain, each with par value $0.001 per share, for purposes of attracting, retaining, and motivating key employees, directors, and consultants. The 2026 Plan provides for the grant of stock options, unrestricted stock awards, RSAs, stock appreciation rights, restricted stock units and performance stock units. Under the 2026 Plan,500,000 RSAs and 2,000,000 stock options were granted as of June 30, 2026.

Restricted Stock Awards

Service and performance-based RSAs

The table below identifies service and performance-based RSA activity for shares of Class A Common Stock under the 2026 Plan for the relevant periods presented:

As of June 30, 2026, there was no unrecognized compensation cost, adjusted for estimated forfeitures based on historical data, related to non-vested service and performance-based RSAs that were considered probable of achievement. As of June 30, 2026, there was $3,550 of unrecognized compensation expense related to non-vested service and performance-based RSAs that were considered not probable of achievement. The weighted-average grant-date fair value per share of RSAs granted was $0.01 during the six months ended June 30, 2026.

Options

The table below identifies the stock options activity for shares of Class B Common Stock granted to the Company’s Chief Executive Officer and Chief Financial Officer under the 2026 Plan for the relevant periods presented:

The intrinsic value of a stock option is calculated as the difference between the per share exercise price of the underlying stock option award and the estimated per share fair value of the HITChain’s common stock at the measurement date. There were no stock options exercised during the six months ended June 30, 2026. The weighted-average fair value of options granted during the six months ended June 30, 2026 was $0.004 per share. The total fair value of options vested during the six months ended June 30, 2026 was $8,000. As of June 30, 2026, there was no unrecognized compensation cost.

The estimated fair value of stock options was calculated using the binomial option-pricing model, based on the following range of assumptions:

Expected volatilities are based on historical volatilities of the similar public companies’ common shares over the respective expected term of the share-based awards. Risk-free interest rate is based on the yield of U.S. Treasury Strips with maturity terms similar to the expected term on the share-based awards. The exercise multiples are the share price multiples upon which the employees are likely to exercise share options. Fair market value per common share is the market value of HITChain’s stocks on the grant date. The shares of common stock to be issued upon the exercise of stock options are made available from authorized and unissued common stock.

8. Subsequent Events

Equity Awards and Share Cancellation

On July 8, 2026, the Company granted an aggregate of 56,601 RSAs to its three independent directors under the 2024 Plan, with 18,867 RSAs to each independent director. These awards were vested in full on the grant date, subject to the director’s requisite service in the second quarter of 2026.

On July 15, 2026, the Company cancelled and retired 80,026 shares of Class A common stock surrendered by three executive officers to satisfy tax withholding obligations in connection with the net settlement of equity awards.

Board Changes

On August 10, 2026, Sanjay Shrestha, a member of the Board of Directors of the Company (the “Board”) resigned from the Board, effective immediately. In connection with his resignation from the Board, Mr. Shrestha also resigned from all committees of the Board on which he served, including the Audit Committee, Nominating and Governance Committee and Compensation Committee of the Board. Mr. Shrestha’s resignation was in relation to other professional and personal commitments and not due to any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

Convertible Financing

On August 12, 2026 (the “Effective Date”), the Company entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, Ltd. (the “Investor”) pursuant to which the Company has the right, but not the obligation, to sell up to $20 million (the “Commitment Amount”) of shares of the Company’s Class A common stock (such shares issuable under the SEPA, “Common Shares”) to the Investor, subject to certain conditions and limitations set forth in the SEPA, including a resale registration statement covering the Common Shares (a “Registration Statement”) having been filed by the Company and declared effective by the SEC pursuant to the terms of a related registration rights agreement (the “Registration Rights Agreement”) to be entered into between the Company and the Investor in connection with the funding and closing of the first Pre-Paid Advance (as defined below) under the SEPA on or about August 18, 2026. Common Share issuances under the SEPA are subject to a 4.99% beneficial ownership limitation and an exchange cap of 13,100,378 shares (the “Exchange Cap”), representing approximately 19.99% of the Company’s outstanding Class A and Class B common stock, subject to adjustment in accordance with the SEPA and applicable Nasdaq requirements.

8. Subsequent Events(cont.)

Pursuant to the SEPA, the Investor has agreed to provide the Company with pre-paid advances (each, a “Pre-Paid Advance”) in an aggregate principal amount of up to $15 million, to be evidenced by convertible promissory notes (the “Promissory Notes”). The Pre-Paid Advances are expected to be funded in three tranches consisting of a first tranche of $7 million, a second tranche of $3 million and a third tranche of up to $5 million, subject to the satisfaction of specified conditions. The first tranche is expected to be advanced on the fourth trading day following the filing of this Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, and the second tranche is expected to be advanced on the later of October 21, 2026 and the second trading day following the initial Registration Statement first becoming effective. The third tranche, if requested by the Company, is subject to the Investor’s agreement in its sole and absolute discretion and may be funded in a principal amount of up to $5 million.

Each Pre-Paid Advance will be funded at a 5% purchase price discount to the principal amount of the applicable Promissory Note. The Promissory Notes will bear interest at 8.75% per annum (increasing to 18% upon certain events of default as specified therein) and will mature 18 months from the closing date of the first $7 million Pre-Paid Advance. The Promissory Notes are convertible into shares of the Company’s Class A common stock at a fixed conversion price of $1.5735 per share, subject to certain anti-dilution and price-adjustment provisions and a floor price of $0.204 per share. The Promissory Notes are subject to scheduled installment payments beginning 60 days after issuance, consisting of principal, a 4% payment premium, and accrued and unpaid interest. Installment payments may be satisfied in cash or through the application of net proceeds from sales of Common Shares under the SEPA, in which case the 4% payment premium does not apply.

Pursuant to the SEPA, the Company has agreed, among other things, (i) to enter into the Registration Rights Agreement, (ii) to, within 90 calendar days of the Effective Date, subject to applicable Nasdaq rules and regulations, seek approval by the Company’s shareholders of (A) the issuance of Common Shares in an amount up to the Commitment Amount (without regard to the Exchange Cap) and (B) the issuance of the maximum number of shares of Class A common stock issuable upon conversion of the Promissory Notes (without regard to the Exchange Cap), and (iii) until the Promissory Notes have been paid in full, not to (A) repay any loans to any of its executives or employees or make any payments in respect of related party debt, (B) other than with the Investor, enter into any Variable Rate Transaction (as defined in the SEPA), including the issuance or sale of Class A common stock or securities convertible into, exchangeable or exercisable therefor, at a conversion, exchange or exercise price that varies with the trading price of the Class A common stock or is subject to being reset at some date after such securities’ initial issuance, (C) enter into any at-the-market agreement unless a specified affiliate of the Investor is the sole executing broker on such facility, with said specified affiliate additionally granted a participation right of at least 33% of any such facility for a period ending 12 months from the date of the first Pre-Paid Advance closing, or (D) without the prior written consent of the Investor, enter into any Indebtedness or Liens, each as defined in the SEPA, other than as permitted therein.

Pursuant to the Registration Rights Agreement, and subject to certain exceptions contained therein, the Company will be required to file a Registration Statement with the SEC to register the Common Shares issuable under the SEPA for resale within twenty one (21) calendar days of the Effective Date, to use its commercially reasonable efforts to have such Registration Statement declared effective within the time period set forth therein, and to keep the Registration Statement effective until (i) the date that all registrable securities covered by the Registration Statement have been sold, thereunder or pursuant to Rule 144 promulgated under the Securities Act (“Rule 144”), or (ii) termination of the SEPA, which SEPA shall terminate automatically on the earlier of (x) 36 months from the Effective Date, provided all outstanding Promissory Notes have been repaid, and (y) the date on which the Investor shall have made an aggregate of Pre-Paid Advances to the Company for a number of Common Shares equal to the Commitment Amount.

The SEPA provides for a commitment fee, which is earned as of the Effective Date, equal to 1.0% of the Commitment Amount, or $200,000, of which one-half, due within three days of the Effective Date, is payable in cash or through issuance of a number of shares of Class A common stock calculated using such shares’ daily volume-weighted average price during the three trading days preceding the Effective Date, and the remaining one-half is payable by the six-month anniversary of the Effective Date, as well as a $25,000 structuring fee. In connection with the SEPA financing, on August 10, 2026, the Company entered into an engagement agreement with Independent Investment Bankers, Corp. (“IIB”), pursuant to which IIB is entitled to a success fee equal to 6.5% of the gross principal amount of each Pre-Paid Advance, payable at the respective closing thereof. Certain of the Company’s subsidiaries, including SMR, ICE and Hi Card, will guarantee the Company’s obligations under the SEPA, the Promissory Notes and the other related transaction documents pursuant to a Global Guaranty Agreement to be entered into concurrently with the closing of the first Pre-Paid Advance.

As of the date of this filing, the Company had not received any proceeds under or issued any Common Shares or Promissory Notes pursuant to the SEPA.