Envirotech Vehicles, Inc.

1. Organization and Operations

Envirotech Vehicles, Inc., including its consolidated subsidiaries ("we," "us," "our," or the "Company"), is a United States ("U.S.") distributor ofzero-emission commercial vehicles and heavy capacity drones engineered for logistics, infrastructure, and precision agriculture applications worldwide. The Company's systems enable a cleaner, safer, and more efficient future for critical industrial operations. During thefirst quarter of2025, the Company increased its business portfolio by addingtwo new business operations: (1) medical supplies and (2) drones. The medical supplies segment currently consists of manufacturing medical gowns for the government of the U.S.

On* August 8, 2025,the Company effected a1*-for-10 reverse stock split of our common stock withno change to authorized shares of common stock (the "Reverse Stock Split"). All share, options, warrants and per share information through this Annual Report on Form10-K has been retroactively adjusted to reflect the Reverse Stock Split. The shares of common stock retain a par value of $0.00001 per share. Accordingly, an amount equal to the par value of the decreased shares resulting from the Reverse Stock Split was reclassified from “Common Stock” to “Additional paid-capital.”

2. Summary of Significant Accounting Policies

******Basis of Presentation—The accounting and reporting policies of the Company conform with generally accepted accounting principles in the United States (“GAAP”).

******Principles of Consolidation—The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

******Use of Estimates—The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America ("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 revenue and expenses during the reporting period. Actual results could differ from those estimates.

Going Concern—The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company sustained significant losses and negative cash flows from operations and is dependent on the overall improvement of its operating activities as well as debt and equity financing to fund operations. The Company incurred a net loss of $39,126,986 and $8,848,975 for the years ended* December 31, 2025and2024,* respectively. Cash used in operating activities was $5,587,517 and $3,504,673 for the years ended* December 31, 2025and2024,* respectively. Accumulated deficit was $112,588,460 and $73,461,474 as of* December 31, 2025and2024,* respectively. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

The Company plans to grow and expand operations and seek sources of capital to pay its contractual obligations as they come due. Failure to successfully continue to grow operational revenues could harm the Company’s profitability and adversely affect the Company’s financial condition and results of operations. Management believes that its future operating strategy will provide the opportunity to continue as a going concern as long as the Company is able to obtain additional financing; however, there isno assurance this will occur. The accompanying financial statements donot include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Fair Value of Financial Instruments—The carrying values of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate their fair value due to the short-term nature of these financial instruments. Accounting Standards Codification (“ASC”)820, Fair Value Measurement ("ASC820") defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. It also establishes athree-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level1: Observable inputs such as quoted prices in active markets;

Level2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level3: Unobservable inputs that are supported by little orno market data and that require the reporting entity to develop its own assumptions.

The Company has an option liability that is measured at fair value on a recurring basis. See Note7 - Notes Payable for additional disclosures.

Revenue Recognition—The Company recognizes revenue from the sales ofzero-emission electric vehicles and vehicle maintenance and inspection services and delivery of medical supplies to the customers of its related party. The Company recognizes revenue in accordance with ASC606, Revenue from Contracts with Customers("ASC606"), which requires an entity to 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.

Net revenue recorded for the year ended* December 31, 2025was $323,500 and $5,589,945 for the electric vehicles segment and medical supplies segment, respectively. Two customers accounted for 100% of the net revenue for the delivery of electric vehicles in the electric vehicles segment for the year ended December**31,* 2025. One customer, a related party, accounted for 100% of the medical supplies segment net revenue for the year ended* December 31, 2025.*

Net revenue recorded for the year ended* December 31, 2024was $1,817,755 for the electric vehicles segment. Eight customers accounted for approximately all of the net revenue for the delivery of electric vehicles in the electric vehicles segment for the year ended December**31,* 2024.

In applying ASC606, the Company is required to:

Product revenue includes the sale of electric trucks and cargo vans. These sales represent a single performance obligation and revenue is recognized when the vehicle is delivered and the customer has accepted the vehicle and signed the appropriate documentation acknowledging receipt of the vehicle. At this time, revenue is recognized.

Other revenue for the electric vehicles segment for the years ended* December 31, 2025and December 31, 2024were $25,563 and $52,303 respectively, and primarily included safety inspection and document fees for compliance with U.S. Department of Transportation guidelines. These sales represent a single performance obligation with revenue recognition occurring at the time services are invoiced. The Company has thereforenot* provided any additional disaggregation information, as all other revenue relates to the sale of vehicles and medical supplies (gowns) as discussed above.

39

****Cash and Cash Equivalents—The Company considers all highly liquid investments purchased with an original maturity ofthree months or less to be cash equivalents. The recorded value of our cash and cash equivalents approximates their fair value.

Short-term Investments—The Company may,from time to time, invest in short-term, highly liquid, marketable securities, such as U.S. Treasury notes, U.S. Treasury bonds, and other government-backed securities. The Company mayalso, from time to time, invest in bank certificates of deposit. The Company classifies these short-term investments as held-to-maturity, as the intent isnot to liquidate them prior to the respective stated maturity date. The balances for these short-term investments at December 31, 2025and* December 31, 2024,*were $0 and $0, respectively.

Accounts Receivable and Allowance for Doubtful Accounts—The accounts receivable balance relates to the Company's electric vehicles segment. The Company establishes an allowance for bad debts through a review of several factors, including historical collection experience, current aging status of the customer accounts, and financial condition of its customers. The Company doesnot generally require collateral for its accounts receivable. The Company had trade accounts receivable of $0 as of* December 31, 2025as all accounts receivable were written off due to unfavorable market conditions. The Company had trade accounts receivable of $1,031,972 as of December 31, 2024and an allowance for doubtful accounts of $15,306, resulting in a net trade receivable balance of $1,016,666. A significant portion of the Company’s electric vehicle sales are made to customers who qualify for state-sponsored grant programs which can cover a significant portion, up to all of a vehicle’s purchase price. Grant monies are paid directly to vehicle dealers like the Company after the customer and the dealer meet state requirements related to the transaction; reimbursements to the Company maytaketwo* tonine months from the date of request before being received.

Receivable from Related Party and Allowance for Doubtful Accounts—The receivable from related party relates to the Company's medical supplies segment. The allowance for doubtful accounts is established by reviewing several factors, including historical collection experience, current aging of the customer account and financial condition of its customer. The Company had a receivable from related party of $1,202,335 and a recorded allowance of $6,082, resulting in a net receivable from related party of $1,196,253 as of December31, 2025. The Company had a receivable from related party of $1,000,000 and a recorded allowance of $6,700, resulting in a net receivable from related party of $993,300 as of December 31, 2024.

Inventory and Inventory Valuation Allowance—The Company records inventory at the lower of cost or net realizable value, uses a First In, First Out (“FIFO”) accounting valuation methodology and establishes an inventory valuation allowance for vehicles that it doesnot intend to sell in the future. The Company had finished goods inventory on hand of $6,040,410 as of* December 31, 2025* and recorded an inventory valuation allowance of $6,040,410 as a result of deteriorating market conditions, resulting in a net inventory balance of $0 at* December 31, 2025*. The Company had finished goods inventory on hand of $6,428,806 as of* December 31, 2024* and recorded an inventory valuation allowance of $12,429 resulting in a net inventory balance of $6,416,377 as of* December 31, 2024*.

Inventory Deposits—Certain of our vendors require the Company to pay upfront deposits before they will commence manufacturing our vehicles, and then progress payments are required through the production cycle and before the finished vehicles are shipped. These deposits are classified as inventory deposits in the Consolidated Balance Sheets. Upon completion of production, acceptance of the completed inventory by the Company, and passage of title to the Company, deposits are reclassified to inventory. The Company had inventory deposits of $0 and $6,036,809 as of* December 31, 2025* and* December 31, 2024*, respectively. The Company wrote-off $6,027,981 of its balance primarily due to deteriorating market conditions. Deposits paid to a related party vendor accounted for 99% of the deposits outstanding at* December 31, 2024.*

**EPA Fulfillment Asset—These are costs incurred to fulfill the U.S. Environmental Protection Agency ("EPA") school bus contract that are capitalized. These costs will be expensed to cost of goods sold once all the performance obligations stipulated in the EPA school bus contract are satisfied and revenue from the contract is recognized. The balance of EPA fulfillment asset at December 31, 2025and December 31, 2024is $1,503,477 and $0, respectively.

***Income Taxes—***The Company uses the liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes.

The Company previously recorded deferred tax benefits from net operating losses in current and prior periods. The Company, in light of the uncertainty of generating future taxable income against which those losses can be offset in order to realize such benefits, has determined that recording a valuation allowance to reduce the deferred income tax assets to the amount that is more likely thannot to be realized is appropriate. In making such determinations, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. A full valuation allowance is recorded at* December 31, 2025and December 31, 2024.*

Accounting for Uncertainty in Income Taxes—The Company evaluates its uncertain tax positions and will recognize a loss contingency when it is probable that a liability has been incurred as of the date of the financial statements and the amount of the loss can be reasonably estimated. The amount recognized is subject to estimate and management judgment with respect to the likely outcome of each uncertain tax position. The amount that is ultimately sustained for an individual uncertain tax position or for all uncertain tax positions in the aggregate could differ from the amount recognized. At December 31, 2025and2024, respectively, management didnot identify any uncertain tax positions.

Net Loss Per Share—Basic net loss per share is calculated by dividing the Company’s net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period.

Diluted net loss per share is calculated by dividing the Company’s net loss applicable to common stockholders by the diluted weighted average number of shares of common stock outstanding during the period. The diluted weighted average number of shares of common stock outstanding is the basic weighted number of shares of common stock adjusted for any potentially dilutive debt or equity securities. As of* December 31, 2025*,977,250 shares of the Company’s common stock were subject to issuance upon the exercise of stock options then outstanding and 147,039 shares of the Company’s common stock were subject to issuance upon the exercise of warrants then outstanding. As of* December 31, 2024*,564,126 shares of the Company’s common stock were subject to issuance upon the exercise of stock options then outstanding and 190,163 shares of the Company’s common stock were subject to issuance upon the exercise of warrants then outstanding. Stock options and warrants werenot included in the diluted weighted average number of shares outstanding for the years ended* December 31, 2025and2024*, as the effect would be anti-dilutive.

40

**Concentration of Credit Risk—The Company has credit risks related to cash and cash equivalents on deposit with a federally insured bank, as at times it exceeds the$250,000 maximum amount insured by the Federal Deposit Insurance Corporation (“FDIC”). Between FDIC and the Securities Investor Protection Corporation (“SIPC”) coverage, funds up to $750,000, which mayinclude cash up to $500,000, are insured.

Impairment of Long-Lived Assets—Long-lived assets, including property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset* may**not* be recoverable. The Company evaluates these assets to determine potential impairment by comparing the carrying amount to the undiscounted estimated future cash flows of the related assets. If the estimated undiscounted cash flows are less than the carrying value of the assets, the assets are written down to their fair value. There wasno impairment of long-lived assets, or property and equipment, as of* December 31, 2025* and* December 31, 2024*, respectively.

Goodwill—Goodwill represents the excess of acquisition cost over the fair value of the net tangible and intangible assets acquired. Goodwill isnot amortized and is subject to annual impairment testing on or between annual tests if an event or change in circumstance occurs that would more likely thannot reduce the fair value of a reporting unit below its carrying value. In testing for goodwill impairment, the Company has the option tofirst assess qualitative factors to determine whether the existence of events or circumstances lead to a determination that it is more likely thannot that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, the Company concludes that it isnot more likely thannot that the fair value of a reporting unit is less than its carrying amount, it can conclude the assessment. If the Company concludes otherwise, the Company is required to perform a quantitative analysis to determine the amount of impairment. A quantitative analysis is performed at the reporting unit level by comparing the estimated fair value of a reporting unit with its respective carrying value to determine the amount of impairment, if any. The Company has determined that it hasone reporting unit. In2025, the Company conducted its annual impairment test. Based on the impairment test, which predominantly utilized the Company's quoted market price and the number of outstanding shares at the end of the period as inputs, the Company recorded a non-cash goodwill impairment of $10,103,048 as of* December 31, 2025.The balance of the Company's goodwill at December 31, 2025iszero. See Note3* - Goodwill for additional disclosures.

Other Intangible Assets—The Company's other intangibles consist of customer relationships and tradenames and trademarks and are stated at cost, less accumulated amortization and impairment charge. The Company records amortization expense using the straight-line method over the estimated useful lives of these assets, which range fromthree toten years. The Company reviews these intangibles for impairment whenever events or circumstances indicate that the carrying amount of these intangibles maynot be recoverable. During thethird quarter of2025, the Company identified indicators of impairment related to its other intangibles. The Company performed a recoverability test by comparing the undiscounted future cash flows of the asset group to its carrying amount. The analysis indicated that the carrying amount wasnot recoverable. As a result, the Company measured the impairment loss as the excess of carrying amount over fair value, determined by using a discounted cash flow approach. Accordingly, the Company recorded a non-cash impairment charge of $3,300,801 in the Consolidated Statements of Operations for the year ended* December 31, 2025.See Note3* - Goodwill and Other Intangibles.

**EPA Contract Liability—These are costs related to the EPA school bus program that are expected to be reimbursed to the EPA as a result of the Company's decision to discontinue the school bus initiative. The balance of EPA contract liability at December 31, 2025and December 31, 2024is $5,169,691 and $0, respectively.

**Research and Development ("R&D")—Costs incurred in connection with the development of new products and manufacturing methods are charged to operating expenses as incurred. R&D expenses were $731,808 and $192,885 for the years ended December 31, 2025 and December 31, 2024, respectively.

Stock-Based Compensation—The Company accounts for employee stock-based compensation in accordance with the guidance of ASC718, Compensation-Stock Compensation ("ASC718"), which requires all share-based payments to employees, including grants of employee stock options and restricted shares and stock options to external consultants, to be recognized in the financial statements based on their grant date fair values using the Black-Scholes option pricing model for stock options and the closing market price on the date of the award for restricted shares and are recognized as compensation expense ratably over the requisite service period, which is generally the awards' vesting period. The Company recorded non-cash stock-based compensation expense of $639,815, and $1,889,353 for the years ended* December 31, 2025and December 31, 2024,*respectively.

******Property and Equipment—Property and equipment are stated at cost, less accumulated depreciation and amortization. The Company provides for depreciation using the straight-line method over the estimated useful lives of the assets, which range from three tofive years, except leasehold improvements, which are being amortized over the shorter of its useful life or the lease term. Major repairs and replacements, which extend the useful lives of equipment, are capitalized and depreciated over the estimated useful lives of the property. All other maintenance and repairs are expensed as incurred.

Leases—The Company accounts for leases in accordance with ASC842, Leases (“ASC842”). At the inception or modification of a contract, the Company determines whether a lease exists and classifies its leases as an operating or finance lease at commencement. Right-of-use ("ROU") assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent their obligation to make lease payments arising from the lease. See Note13 - Leases.

As most of the Company’s leases donot provide an implicit interest rate, the lease liability is calculated at lease commencement as the present value of unpaid lease payments using the Company’s estimated incremental borrowing rate. The incremental borrowing rate represents the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term and is determined using a portfolio approach based on information available at the commencement date of the lease.

The lease asset also reflects any prepaid rent, initial direct costs incurred and lease incentives received. The Company’s lease terms* may*include optional extension periods when it is reasonably certain that those options will be exercised.

Leases with an initial expected term of12 months or less arenot recorded in the Company's Consolidated Balance Sheet and the related lease expense is recognized on a straight-line basis over the lease term. For certain classes of underlying assets, the Company has elected tonot separate fixed lease components from the fixed non-lease components.

41

Recently Adopted Accounting Pronouncements

**ASUNo. 2023-09, **“Income Taxes (Topic740): Improvements to Income Tax Disclosures”

In* December 2023,the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")2023-09, Income Taxes (Topic740*): Improvements to Income Tax Disclosures ("ASU2023-09"), which requires public entities, on an annual basis, to provide disclosure of specific categories in the reconciliation of the effective tax rate, as well as disclosure of income taxes paid, disaggregated by jurisdiction. ASU2023-09 is effective for fiscal years beginning after* December 15, 2024,with early adoption permitted. The Company adopted ASU2023*-09 on a prospective basis. The adoption hadno material impact on the Company's consolidated financial statements.

Recently Issued Accounting PronouncementsNot Yet Adopted**

**ASUNo. 2024-03, **“Income Statement (Subtopic220-40): Disaggregation of Income Statement Expenses”

In* November 2024,the FASB issued ASU2024*-03, Income Statement (Subtopic220-40): Disaggregation of Income Statement Expenses ("ASU2024-03"), which requires additional information about certain expenses in the notes to the financial statements. ASU2024-03 is effective for fiscal years beginning after* December 15, 2026,with early adoption permitted. The Company is currently evaluating the impact of adopting ASU2024*-03 and will adopt the guidance when it becomes effective on a prospective basis.

42

3. Goodwill and Intangible Assets

The Company has determined that it hasthree reporting units, and based on both qualitative and quantitative analysis and management’s assessment during the period ended* December**31,* 2025, the Company recorded a non-cash impairment charge of $10,103,048 on the Company's Consolidated Statements of Operations.

The following table presents a reconciliation of the carrying amount of goodwill for the year ended* December 31, 2025.*

The following table presents the carrying amount of intangible assets for the years ended* December 31, 2025and December 31, 2024:*

Amortization expense for the years ended* December 31, 2025and2024* was $667,500 and $31,699, respectively. Due to unfavorable business conditions affecting its medical supplies segment, the Company conducted an impairment test of its intangibles. As a result of this test, the Company recorded an impairment of $3,300,801 for the year ended* December 31, 2025.The remaining balance of intangible assets at December 31, 2025*is $0.

4. Property and equipment, net

Components of property and equipment, net consist of the following as of* December 31, 2025and2024*:

Depreciation expense was $293,038 and $158,850 for the years ended* December 31, 2025and2024*, respectively.

43

5. Income Taxes

The cumulative estimated net operating loss (“NOL”) carry-forward is $73,591,129 and $50,713,781 at* December 31, 2025and2024,* respectively. Of this amount as of* December 31, 2025,$59,213,790 of this NOL maybe carried forward indefinitely while $14,377,339 is subject to expiration over a20*-year period. Due to the enactment of the Tax Cuts and Jobs Act of2017, the corporate tax rate for those tax years beginning with2018 has been reduced to21%. Therefore, the cumulative tax effect of the NOL carryforward at the expected rate of21% comprising the Company’s net deferred tax amount is as follows:

44

Due to the change in ownership provisions of the Tax Reform Act of1986, net operating loss carryover for federal income tax reporting purposes are subject to annual limitations. The net operating loss carry-forward includes the years2012 through2022 for the Envirotech Vehicles, Inc losses, and includes the years2014 through2020 for EVT, as the2021 EVT loss is included in the consolidated Envirotech Vehicles, Inc. loss. Because a change in ownership occurred as a result of the Company’s acquisition of EVT pursuant to a merger of a wholly owned subsidiary of the Company with and into EVT, with EVT surviving the merger as a wholly-owned subsidiary of the Company, net operating loss carryover will be limited as to use in future years. Federal tax returns for tax years since 2021 are still open for examination by the Internal Revenue Service.

The following table reconciles the Federal statutory rate to the Company's effective tax rate.

6. Debt

Notes Payable

On* July 15, 2022,the Company entered into an equipment financing agreement with Wells Fargo Bank, N.A. in connection with the purchase of facility grounds equipment. The $25,007 loan is payable over 36 months, beginning in August 2022,with monthly payments of $521. The balance of this note was $4,168 as of December**31,* 2025, of which $4,168 is classified as Notes Payable - current on the Company's Consolidated Balance Sheets as of* December 31, 2025.*

On* June 15, 2025,the Company entered into a premium financing agreement with AFCO Insurance Premium Finance to finance its directors' and officers' insurance coverages. The $140,400 loan is payable over nine months, beginning in July 2024,and bears interest at 8.24% with monthly payments of $14,576. The balance of this note was $57,315 as of December 31, 2025.*

On* August 20, 2025,the Company entered into a premium financing agreement with AFCO Insurance Premium Finance to finance certain insurance coverages other than its directors' and officers' insurance coverages. The $114,140 loan is payable over eleven months, beginning in September 2025,and bears interest at 8.24% with monthly payments of $7,809 and required an initial down payment of $39,515. The balance of this note, including accrued interest, was $114,762 as of December 31, 2025.*

Convertible Note

On* January 18, 2024,the Company entered into a convertible promissory note agreement ("Note") for $1,000,000 with an unrelatedthird*-party investor (the "Holder"). The origination fee of the Note was $99,000 and the maturity date of the Note was* September 30, 2024.The Holder was entitled to convert the Note into common stock at the greater of $1.50 per share or at 90% of the share price of the Company's common stock on the maturity date. The Holder also had a security interest in the assets of the Company in the event of non-payment of the Note. In addition, the Holder received options to purchase 80,000 shares of the Company's common stock at $1.50 per share. These options expiretwo years from the date of the Note. On May 6, 2024,the Note was cancelled and replaced with a short-term note. During thethird* quarter of2024, the short-term note was converted into 50,505 shares of common stock.

The Company elected to measure the Note and options at fair value. In estimating the fair value of the Note, a Monte Carlo simulation model is applied. The required inputs include the current stock price, the risk-free rate and volatility of the common stock. The Note's fair value is classified as Level3 under the fair value hierarchy as provided by ASC820. In estimating the fair value of the options, the Black-Scholes Merton Model is used. The required inputs include the current stock price, the exercise price, the term of the options, the risk-free rate and the volatility of the common stock. The options' fair value is classified as Level3 under the fair value hierarchy as provided by ASC820. The fair valuation of the Note and options uses inputs other than quoted prices that are observable either directly or indirectly.

The net proceeds of $901,000 received by the Company from the issuance of the Note were bifurcated between the Note and the options. The amount allocated to the options was $431,405 which was the fair value on the issuance date of the Note. The remaining proceeds received are allocated to the Note. Under the fair value election, both the Note and options are remeasured to their respective fair values at the reporting date and are presented as Options liability, at fair value on the Company's Consolidated Balance Sheets. Changes in fair values for the Note and options are recorded as an unrealized gain or loss on convertible note fair value in Other (Expense)/Income in the Company's consolidated statements of operations. As a result of this election, the Company recorded an unrealized loss $556,174 for the year ended* December**31,* 2024 for the Note. The Company recorded an unrealized gain of $132,412 and $298,993 for the year ended* December 31, 2025and December 31, 2024,*respectively for the options.

45

Amended and Restated Standby Equity Purchase Agreement (as Supplemented and Amended, the "A&R SEPA")

On* October 31, 2024,the Company entered into A&R SEPA with YA II PN, Ltd. (the "Investor"). The A&R SEPA amends and restates in its entirety the standby equity purchase agreement, dated September 23, 2024,*by and between the Company and the Investor (the “Original SEPA”).

Pursuant to the A&R SEPA, except for so long as there is a balance outstanding under the Promissory Notes (as defined below) and the Additional Promissory Notes (as defined below), the Company has the right, from time to time, until* November 1, 2027,to require the Investor to purchase up to $25 million of shares of common stock, subject to certain limitations and conditions set forth in the A&R SEPA, by delivering written notice to the Investor. Pursuant to the A&R SEPA, the Investor advanced to the Company the principal amount of $3 million (the “Pre-Paid Advance”) in exchange for the Company’s issuance to the Investor of convertible promissory notes (the “Promissory Notes”) intwo* tranches, resulting in net proceeds (net of discounts and fees) to the Company of $2,635,500. The Company received thefirst tranche of the Pre-Paid Advance in the principal amount of $2 million on* October 31, 2024in exchange for the Promissory Note dated October 31, 2024 (the “EVTV-1 Promissory Note”), and thesecond* tranche of the Pre-Paid Advance in the principal amount of $1 million on* December 17, 2024in exchange for the Promissory Note dated December 17, 2024 (the “EVTV-2 Promissory Note”). The Promissory Notes accrue interest on the outstanding principal balance at an annual rate equal to 0%, which will increase to an annual rate of 18% upon the occurrence of an Event of Default (as defined in the Promissory Notes) or a Registration Event (as defined in the Promissory Notes) for so long as such event of default remains uncured. Prior to the Company’s entry into the Supplemental Agreement (as defined below), the Promissory Notes were initially set to mature on November 13, 2025and were convertible at a conversion price equal to the lower of (i) $21.48 per share or (ii)93% of the lowest daily volume weighted average price of the Company’s common stock on Nasdaq Stock Market LLC (“Nasdaq”) as reported by Bloomberg L.P. (“VWAP”) during thefive consecutive trading days immediately preceding the conversion date (butno* lower than the “floor price” then in effect, which was $3.58 per share, subject to adjustment from time to time in accordance with the terms contained in the Promissory Notes). Pursuant to the terms of the Original SEPA, the Company issued 6,410 shares of common stock to the Investor as a commitment fee.

During2025, the obligation under the EVTV-1 Promissory Note was partially satisfied through the conversion of the EVTV-1 Promissory Note into shares of the Company's common stock. As a result of this conversion,1,416,116 shares of the Company's common stock were issued at a weighted average price of $1.06. The remaining principal balance of the EVTV-1 Promissory Note at* December31,* 2025, was $285,000. As a result of these conversions, a realized gain of $339,855 was recognized for the EVTV-1 Promissory Note for the year ended* December31,* 2025.

During thefirst quarter of2025, the obligation under the EVTV-2 Promissory Note in the principal amount of $1 million was fully satisfied through the conversion of the EVTV-2 Promissory Note into shares of the Company's common stock. As a result of this conversion,174,348 shares of the Company's common stock were issued at a weighted average price of $6.95 and a realized loss of $135,976 was recognized for the EVTV-2 Promissory Note for the year ended* December 31, 2025.The principal balance of the EVTV-2 Promissory Note waszero at December**31,* 2025.

The Company has elected to measure the Promissory Notes at fair value. In estimating the fair value of the Promissory Notes, a lattice model is applied. The required inputs include the current stock price, the term, the conversion price, the risk-free rate and volatility of the common stock. The Promissory Notes' fair values are classified as Level3 under the fair value hierarchy as provided by ASC820.

Supplemental Agreement to A&R SEPA

On* February 24, 2025,the Company entered into a supplemental agreement, dated February 24, 2025 (the “Supplemental Agreement”), with the Investor, which amends and supplements the A&R SEPA to: (i) provide for the advancement by the Investor to the Company, subject to the satisfaction of certain conditions as set forth in the Supplemental Agreement, of $5 million under the A&R SEPA (the “Additional Pre-Paid Advance”), to be evidenced by convertible promissory notes (the “Additional Promissory Notes”) intwo* tranches, (ii) amend the maturity date for the EVTV-1 Promissory Note to* March 9, 2026,*and (iii) amend the floor price for the EVTV-1 Promissory Note to $0.7130 per share.

The Additional Promissory Notes accrue interest on the outstanding principal balance at an annual rate equal to 5%, which will increase to an annual rate of 18% upon the occurrence of an Event of Default (as defined in the Additional Promissory Notes) or a Registration Event (as defined in the Additional Promissory Notes) for so long as such event remains uncured. The Additional Promissory Notes will mature on* March 9, 2026,which maybe extended at the option of the Investor. The Additional Promissory Notes are convertible at a conversion price equal to the lower of (i) $10.00 per share or (ii)93% of the lowest daily VWAP during thefive consecutive trading days immediately preceding the conversion date (butno* lower than the “floor price” then in effect, which is $0.7130 per share, subject to adjustment from time to time in accordance with the terms contained in the Additional Promissory Notes).

Thefirst tranche of the Additional Pre-Paid Advance was disbursed on* February 25, 2025in the principal amount of $3 million (with net proceeds to the Company of approximately $2.7 million after deducting discounts and fees) as evidenced by an Additional Promissory Note issued by the Company to the Investor on February 24, 2025 (the “EVTV-3 Additional Promissory Note”). During2025,* the obligation under the EVTV-3 Additional Promissory Note in the principal amount of $3 million was partially satisfied through the conversion of the EVTV-3 Additional Promissory Note into shares of the Company's common stock. As a result of this conversion,2,134,613 shares of the Company's common stock were issued at a weighted average price of $1.51. The remaining principal balance of the EVTV-3 Additional Promissory Note on* December31,* 2025, was $50,000. A realized loss of $7,284 was recognized as a result of this conversion during the year ended* December31,* 2025.

Thesecond tranche of the Additional Pre-Paid Advance in the principal amount of $2 million (with net proceeds of approximately $1.8 million after deducting discounts and fees) was disbursed to the Company on* May 7, 2025 (the "EVTV-4 Additional Promissory Note"). During2025,* the obligation under the EVTV-4 Additional Promissory Note in the principal amount of $2 million was fully satisfied through the conversion of the EVTV-4 Additional Promissory Note into shares of the Company's common stock. As a result of this conversion,1,163,731 shares of the Company's common stock were issued at a weighted average price of $1.96. A realized loss of $112,809 was recognized as a result of this conversion during the year ended* December 31, 2025.*

The Company has elected to measure the Additional Promissory Notes at fair value. In estimating the fair value of the Additional Promissory Notes, a lattice model is applied. The required inputs include the current stock price, the term, the conversion price, the risk-free rate and volatility of the Company's common stock. The Additional Promissory Notes' fair values are classified as Level3 under the fair value hierarchy as provided by ASC820.

The following table depicts the future annual minimum payments of the Company's outstanding debt as of* December 31, 2025:*

7. Stockholders' Equity

The Company has 5,000,000 authorized shares of its preferred stock, par value $0.00001 per share, on* December31,* 2025 and* December 31, 2024.There wasno outstanding shares of preferred stock on December31,* 2025 and* December 31, 2024.*

The Company has 350,000,000 authorized shares of its common stock, par value$0.00001 per share, of which 7,736,129 and 1,987,262 shares of the Company's common stock were outstanding on* December**31,* 2025 and* December 31, 2024,*respectively.

A&R SEPA

On* September 23, 2024,the Company entered into the Original SEPA, which was amended and restated pursuant to the A&R SEPA on October 31, 2024.Pursuant to the A&R SEPA, except for so long as there is a balance outstanding under the Promissory Notes and the Additional Promissory Notes and subject to certain limitations and conditions set forth therein, the Company has the right, butnot* the obligation, to sell to the Investor, and the Investor agreed to purchase from the Company, an aggregate amount of up to $25,000,000 of shares of the Company’s common stock at the Company's request (subject to certain beneficial ownership restrictions), from time to time, until* November 1, 2027.See Note6* – Debt.

46

8. Stock Warrants

The Company’s outstanding warrants as of* December 31, 2025* are summarized as follows, and all were exercisable at that date:

** December 2020** Warrants

The warrants issued pursuant to a securities purchase agreement, dated as of* December 24, 2020,that the Company entered into with certain institutional and accredited investors and pursuant to which, among other things, the Company sold and issued, and the investors purchased, shares of the Company’s common stock and related warrants to purchase additional shares of the Company’s common stock in a series oftwo* closings, contain a call provision whereby the Company, after the13-month anniversary of the issuance date, and if the volume weighted average price of the common stock for such date exceedsfour times the exercise price of the warrants for20 consecutive trading days,* maycall the warrants that havenot* previously been exercised, and the warrant holders haveten trading days within which to exercise before the warrants* maybe cancelled. From among these warrants, warrants for 1,283 shares of common stock expired in2023,* warrants for 43,125 shares of common stock expired on* December 29, 2025,and warrants for 95,834 shares of common stock will expire on May 7, 2026.*

** September 2024** Warrants

On* September 12, 2024,the Company entered into securities purchase agreements withfour* private investors with respect to the private placement of an aggregate of 51,205 shares of the Company’s common stock at a price of $16.60 per share and warrants to purchase up to an aggregate of 51,205 shares of the Company's common stock. The Company received aggregate gross cash proceeds from this private placement (exclusive of proceeds from any future exercise of the warrants) of $850,000. The warrants have a term oftwo years and are exercisable at any time after* September 16, 2024,at an exercise price of $16.60 per share. The warrants expire on September 11, 2026.*

As of* December 31,*2025 and2024, the outstanding warrants haveno intrinsic value.

47

9. Stock Options and Restricted Shares

Stock Options

The following is a summary of stock option activity under the Company’s2017 Equity Incentive Plan for the year ended* December 31, 2025*:

48

As of* December 31, 2025stock options for 761,776 shares of common stock were exercisable. Unrecognized compensation for unvested options was $107,000 as of December 31, 2025.*

On* March 10, 2025,the Compensation Committee (the "Compensation Committee") of the Company's Board of Directors (the "Board") granted the non-employee directors and certain executives and consultants options to purchase an aggregate of 415,000 shares of common stock at an exercise price of $2.50 per share, of which 385,000 of these options vested immediately upon grant and expire on thetenth anniversary of the grant date. The remaining 30,000 options vest on theone*-year anniversary of the grant date and expire on thetenth anniversary of the grant date.

On* May 21, 2025,*the Compensation Committee granted a consultant options to purchase 10,000 shares of common stock at an exercise price of $2.12 per share, all of which vested immediately upon grant and expire on thetenth anniversary of the grant date.

As of* December 31, 2025,*the outstanding stock options had intrinsic value of $0.

Performance Options

On* February 28, 2024,the Company issued options to an external party to purchase 200,000 shares of the Company's common stock at an exercise price of $27.50 per share, contingent upon achieving certain sales targets. On December31,* 2025, the sales targets werenot met and therefore,no compensation expense was recorded for the year ended* December31,* 2025. The Company doesnot believe that the criteria will be met. These options expire on* February 5, 2027.*

The options granted during2025 were valued using the Black-Scholes option pricing model, resulting in a weighted average fair market value of approximately $1.37 per option for the years ended* December 31,*2025. The weighted average assumptions used in the valuation of the options are summarized in the following table:

As of* December 31, 2025*, the outstanding options hadno intrinsic value.

Restricted Shares

In* November 2023,the Company awarded 65,660 restricted shares to a vendor that vested over asix-month period in exchange for marketing services to be provided over the same period. As a result, the Company recorded stock compensation expense of $58,671 during the year ended December 31, 2024.No compensation expense was recognized for these restricted shares during the year ended December 31, 2025.*

The Company recorded total stock compensation expense of $639,815 and $1,889,353 for the years ended* December 31, 2025and December 31, 2024,*respectively.

49

10. Related Party Transactions

The Company has entered into lease agreements with SRI Professional Services, Incorporated (“SRI”), pursuant to which the Company leases equipment used in connection with the operation of its business (the “SRI Equipment Leases”). Phillip W. Oldridge, the Company’s Chief Executive Officer and Chairman of the Board, serves as an executive officer and a member of the board of directors of SRI. Two of the SRI Equipment Leases provide for the leasing oftwo vehicles that commenced on* January 1, 2020and the combined rent under such leases is $3,880 per month, and athird* SRI Equipment Lease provides for a trailer lease that commenced on* December 1, 2019,under which the rent is $3,891 per month. The total monthly payment obligation of the Company under the SRI Equipment Leases is $7,771. As a result of the SRI Equipment Leases, the Company recorded rent expense of $93,247 for the year ended December**31,* 2025.

The Company has entered into a commercial lease agreement (the “ABCI Office Lease”) with Alpha Bravo Charlie, Inc. (“ABCI”) that commenced on* April 1, 2020,for the lease of office space in Porterville, California. The monthly rent for this facility is approximately $5,000. Phillip W. Oldridge, the Company’s Chief Executive Officer and Chairman of the Board, is a director of ABCI. The Company recorded rent expense of $60,000 for the year ended December**31,* 2025 in connection with the ABCI Office Lease.

The Company incurred $75,000 for the year ended* December**31,* 2025 of costs related to engineering consulting services from42Motorsports LTD, the owner of which is a sibling of Phillip W. Oldridge, the Company's Chief Executive Officer and Chairman of the Board.

The Company also incurred $352,000 for the year ended* December31,* 2025, respectively, for payment to Shell Castle LLC, an entity owned by Jason Maddox for services rendered as President and Interim Chief Financial Officer of the Company in lieu of wages. In addition, the Company also expensed $352,000 for the year ended* December31,* 2025 for payment to Met Consulting LLC, an entity owned by Elgin Tracy for services rendered as Chief Operating Officer of the Company in lieu of wages.

During thefirst quarter of2025, the Company engaged a consultant, Franklin Lim, to assist in its financial reporting and accounting process. At the end of thethird quarter of2025, the Company appointed the consultant as Vice President, Finance for the Company. The Company incurred $136,500 for the year ended* December**31,* 2025 for these services.

All revenue earned for the year ended* December**31,* 2025 by the Company's medical supplies segment was from Maddox Medical Corp. ("Maddox Medical"), a company owned by Jason Maddox, President and Interim Chief Financial Officer of the Company, through a contract that Maddox Medical holds with athird party (that supplies medical gowns, among other things, to the federal government) that is fulfilled by Maddox Industries, LLC ("Maddox Industries") a wholly-owned subsidiary of the Company.

The Company also maintains a procurement contract for electric vehicles and their components and accessories with Envirotech Electric Vehicles Inc., a related party wherebyone of its officers holds a significant number of shares in the Company and a significant amount of the Company's inventory deposits.

On* April 1, 2025,the Company entered into athree*-year sub-lease arrangement with Maddox Defense, Inc. ("Maddox Defense") (with renewal options), an entity of which Jason Maddox, the President and Interim Chief Financial Officer of the Company, is the sole stockholder, to lease a facility in Houston, Texas for its medical supplies operations. See Note13 - Leases for additional disclosures.

11. Commitments

Other Agreements

On* December 31, 2021,the Company entered into employment agreements with Phillip W. Oldridge (the “Oldridge Agreement”), its Chief Executive Officer, and with Susan M. Emry (the “Emry Agreement”), its then Executive Vice President. According to the Oldridge Agreement, effective as of March 1, 2021,Mr. Oldridge will receive an annual base salary of $300,000, payable in semi-monthly installments consistent with the Company’s payroll practices. Mr. Oldridge will also receive participation in medical insurance, dental insurance, and the Company’s other benefit plans. Under the Oldridge Agreement, Mr. Oldridge will also receive an amount equal to5%* of the net income of the Company on an annual basis and will be eligible for a bonus at the sole discretion of the Board. The Oldridge Agreement also provides for an automobile monthly allowance of $1,500. Mr. Oldridge’s employment shall continue until terminated in accordance with the Oldridge Agreement. If Mr. Oldridge is terminated without cause or if he terminates his employment for good reason, Mr. Oldridge will be entitled to receive (i)one-year of base salary, (ii) reimbursement of reimbursable expenses in accordance with the Oldridge Agreement, (iii) any bonus that would have been payable within thetwelve months following the date of termination, and (iv) the value of any accrued and unused paid time off as of the date of termination. There areno future minimum payments under the terms of the Oldridge Agreement as Mr. Oldridge has the right to terminate the Oldridge Agreement without any contractual payments other than what has been stated in the Oldridge Agreement. On* February 5, 2026,Mr. Oldridge's annual base salary was retroactively approved to $500,000 starting on July 1, 2025*and his automobile monthly allowance was changed to $2,000.

According to the Emry Agreement, effective on* January 1, 2022,Mrs. Emry would receive an annual base salary of $200,000 and was eligible for a bonus at the sole discretion of the Board. Mrs. Emry would also receive participation in medical insurance, dental insurance, and the Company’s other benefit plans. The Emry Agreement provided that Mrs. Emry’s employment would continue until terminated in accordance with the Emry Agreement. If Mrs. Emry was terminated without cause or if she terminated her employment for good reason, Mrs. Emry was entitled to receive (i)one-year of base salary, (ii) reimbursement of reimbursable expenses in accordance with the Emry Agreement, and (iii) the value of any accrued and unused paid time off as of the date of termination. Ms. Emry terminated her employment with the Company as Executive Vice President on October 15, 2024.*

On* March 28, 2023,the Company entered into a sublease with Berthaphil, Inc. ("Berthaphil") to sublease approximately 3,600 square yards of a warehouse building based in the Clark Freeport Zone in the Philippines (the "Berthaphil Sublease"). The term of the lease wastwo years andtwo* months with a turnover date of* July 1, 2023and a rental commencement of September 1, 2023.The Company had originally intended to use the leased space as a production facility as it seeks to expand its business presence in that region and the U.S. However, in December 2024,the Company decidednot* to use the leased space for its original purpose. See Note13 - Leases for further information.

50

12. Contingencies

Except as set forth below, we know ofno material, existing or pending, legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There areno proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder of more than5% of our common stock, or any associate of any of the foregoing persons, is an adverse party or has a material interest adverse to our interest.

GreenPower Litigation

From time to time, the Company* may*be involved in legal proceedings arising in the ordinary course of business. The Company evaluates such matters on a case-by-case basis and establishes reserves when a loss is considered probable and reasonably estimable.

The Company is named as a defendant in litigation commenced in the Supreme Court of British Columbia, Canada, originally filed on* December 17, 2019*by GreenPower Motor Company Inc. (“GreenPower”), along with certain related entities and individuals, including an executive officer of the Company. The claims generally allege, among other things, breach of fiduciary duty, misuse of confidential information, unfair competition, and related matters. The Company and the other named defendants have denied these allegations. In addition, certain of the defendants, including the Company, are named in a related counterclaim proceeding.

The litigation was previously scheduled for trial in2024; however, the trial was adjourned by consent of the parties. As of* December 31, 2025,*no new trial date has been set, limited discovery has been conducted, and there has beenno material activity in the proceedings during fiscal year2025. The matter remains in an early procedural stage.

Lawsuit against Efraim Diveroli and Kingbird Ventures LLC

On* February 5, 2026,the Company sued Efraim Diveroli and Kingbird Ventures LLC in the Houston Division of the Texas Business Court, alleging that the defendants, acting individually and in concert withone* another, caused agents and representatives of theirs, including Joel E. Tasca of Greenberg Traurig, to spread lies about the Company, its principals, and its business partners in an effort to scuttle the expected merger with Azio AI Corporation. The Company asserted claims for tortious interference with contract, tortious interference with prospective economic advantage, and defamation and business disparagement as well as seeking emergency and temporary injunctive relief. On* February 9, 2026,Kingbird Ventures removed the case to the United States District Court for the Southern District of Texas. An initial pretrial and scheduling conference is set on May 28, 2026.*No scheduling order has been entered, nor has a trial date been set. While the Company believes that its claims have merit, even if there is an unfavorable outcome, the Company willnot be subjected to a material loss.

Lawsuit against Efraim Diveroli, Kingbird Ventures LLC, VD Acquisitions, LLC, Bront Bird, and Karla Mae Capital, LLC

On* December 8, 2025,the Company and Maddox Defense sued Efraim Diveroli, Kingbird Ventures LLC, VD Acquisitions, LLC, Bront Bird, and Karla Mae Capital, LLC in the Southern District of California, alleging that defendants, acting individually and in concert withone* another, engaged in coercive and extortionate activities, including through abuse of the legal process, in an attempt to force the Company into unwanted transactions, including with Fenix Oro, a gold-mining enterprise. The Company asserted claims for civil extortion; RICO,18 U.S.C. §1962(c); fraudulent inducement; tortious interference with contract; tortious interference with prospective economic relations; abuse of process; declaratory relief; injunctive relief; civil conspiracy; and unfair competition, Bus. & Prof. Code §17200. On* January 7, 2026,Bront Bird and Karla Mae Capital were voluntarily dismissed with prejudice.No responsive pleadings have been filed.No scheduling order has been entered, nor has a trial date been set. While the Company believes that its claims have merit, even if there is an unfavorable outcome, the Company willnot* be subjected to a material loss.

Lawsuit from VD Acquisitions

On* January 14, 2026,VD Acquisitions LLC filed suit against Jason Maddox, Elgin Tracy; Maddox Defense; Maddox Industries; the Company; Phillip Oldridge; Karla Mae Capital, LLC; and Airboss Defense Group, LLC, alleging that Maddox Defense had failed to perform under a fuel agreement. Plaintiff asserted claims for breach of contract, fraud in the inducement; fraudulent transfer; civil conspiracy; intentional interference with contract; and declaration of alter ego. The plaintiff seeks monetary damages and injunctive relief restraining the assets of Jason Maddox, Maddox Defense, Maddox Industries, and the Company. On February 10, 2025,*the Court held a hearing on the plaintiff’s motion for a temporary restraining order and denied the requested relief. The Company disputes these allegations and intends to vigorously defend itself.No trial date has been set. A motion to dismiss filed by the defendants is pending.

Litigation with Former Independent Auditor

In* December 2025,the Company initiated legal proceedings against its former independent registered public accounting firm, MaloneBailey LLP (“MaloneBailey”), in the United States District Court for the Central District of California (CaseNo.* 5:25-cv-03457). The complaint alleges, among other things, breach of contract and related claims arising from MaloneBailey’s engagement to audit the Company’s financial statements for the fiscal year ended* December 31, 2022.Specifically, the Company asserts that MaloneBailey failed to complete required audit procedures and didnot* issue an audit report in connection with the Company’s Annual Report on Form10-K for the2022 fiscal year, despite having been engaged to do so.

MaloneBailey previously served as the Company’s independent auditor. During2023, the Company disclosed that MaloneBailey wouldnot provide an audit opinion on the Company’s financial statements for the fiscal year ended* December 31, 2022.*As a result, the Company engaged a successor independent registered public accounting firm to complete the audit and support its financial reporting obligations.

The Company’s claims are based on alleged contractual breaches and professional failures related to MaloneBailey’s audit engagement. The Company is seeking damages and other relief deemed appropriate by the court. As of* December 31, 2025,the litigation is in its early stages. The complaint was recently filed, andno* substantive rulings have been issued by the court. The Company cannot predict the timing or outcome of this matter. While the Company believes that its claims have merit, even if there is an unfavorable outcome, the Company willnot be subjected to a material loss. The Company hasnot accrued for loss contingencies in the accompanying financial statements related to this matter.

13. Leases

Operating leases

The Company has active operating lease arrangements for office space and warehouse facilities. The Company is typically required to make fixed minimum rent payments relating to its right to use the underlying leased assets. Although these leases have terms that are either month-to-month or terms that areone year or less (with renewal options), the Company concluded that the term renewal options are reasonably certain to be exercised, and the Company classified such leases as operating leases in accordance with the provisions of ASC842.

On* April 1, 2025,the Company entered into athree-year sub-lease arrangement with Maddox Defense (with renewal options), an entity of which Jason Maddox, the President and Interim Chief Financial Officer of the Company, is the sole stockholder, to lease a facility in Houston, Texas for its medical supplies operations. This lease is treated as an operating lease in accordance with the provisions of ASC842.* Therefore, the Company recognized operating lease liabilities with corresponding ROU assets based on the present value of the minimum rental payments of such leases.

On* March 28, 2023,the Company entered into the Berthaphil Sublease to sublease approximately 3,600 square yards of a warehouse building based in the Clark Freeport Zone in the Philippines. The term of the Berthaphil Sublease wastwo years andtwo* months with a turnover date of* July 1, 2023 (the "turnover date") and a rental commencement of September 1, 2023.However, the warehouse building wasnot* available for use to the Company until the early part of thefourth quarter of2023. Therefore, the commencement date was deferred until thefourth quarter of2023, which is when the Company was given access to use the warehouse building. There was a grace period oftwo months for rental payments starting from the turnover date. The monthly rent for thefirst year is $15,000, escalating to $15,750 for thesecond year and $16,530 for the remaining term. In addition to the monthly rent, the Company is required to pay an additional 5% of the monthly rent as common area maintenance costs. The Berthaphil Sublease* maybe renewed for an additional period that is mutually agreed upon subject to certain terms and conditions. The Company intended to use the leased space as a production facility as it sought to expand its business presence in the region. The Company accounted for this lease as an operating lease under ASC842* and recorded an operating lease liability and a corresponding ROU asset for this lease. However, the Company decidednot to use this facility for its original intended purpose and recorded a full impairment on its ROU asset in* December 2024.*The Company maintains the remaining obligation on the Berthaphil Sublease as a contingency should the lessor demand payment.

On* July 1, 2024,*the Company entered into a month-to-month lease contract to lease a residence in Osceola, Arkansas for the purpose of housing certain of the Company's employees. The monthly lease cost is $3,000. This lease is treated as a short-term lease.

On* August 26, 2024,the Company entered into aone*-year lease contract to lease a location in Manalapan, New Jersey with the purpose of servicing the Company's New Jersey customers. The monthly lease cost is $2,900 and at the end of theone-year lease term, the lease converted into a month-to-month arrangement. This lease is treated as a short-term lease.

The Company's lease agreements donot provide an implicit borrowing rate. Therefore, the Company used a benchmark approach to derive an appropriate incremental borrowing rate. The Company benchmarked itself against other companies of similar credit ratings and comparable credit quality and derived an incremental borrowing rate to discount each of its lease liabilities based on the remaining lease terms.

51

ROU assets at* December31,* 2025 and* December 31, 2024were $485,482 and $108,508, respectively. Short-term operating lease liabilities were $229,899 and $235,625 at December31,* 2025 and* December 31, 2024,respectively. Long-term operating lease liabilities were $306,904 and $0 at December**31,* 2025 and* December 31, 2024,*respectively.

Quantitative information regarding the Company’s leases is as follows:

As of* December 31, 2025,*future minimum lease payments required under operating leases are as follows:

14. Segment Reporting

15. Subsequent Events

The Company evaluates subsequent events through* March 31, 2026,which is the date the financial statements were issued or available to be issued. There aretwo* types of subsequent events: (1) recognized, or those that provide additional evidence with respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, and (2) non-recognized, or those that provide evidence with respect to conditions that didnot exist at the date of the balance sheet but arose subsequent to that date.

Debenture Financing

On* March 6, 2026,the Company entered into a securities purchase agreement (the “SPA”) with the Investor, pursuant to which the Company agreed to issue and sell to the Investor, and the Investor agreed to purchase, debentures (the “Debentures”) in the aggregate principal amount of $11,000,000 (the “Subscription Amount”) intwo* tranches with the purchase price of the Debentures in each tranche being equal to 96% of the Subscription Amount to be purchased. The closing of the initial tranche of Debentures occurred on* March 6, 2026 (the “First Closing”), in which the Company issued Debentures in the aggregate principal amount of $4,000,000 (the “First Closing Debentures”) to the Investor. Pursuant to the SPA, the Company and the Investor have agreed that the closing of thesecond* tranche of the remaining $7,000,000 in aggregate principal amount of the Debentures (the “Second Closing” and such Debentures, the “Second Closing Debentures”) will occur on or before thefirst business day after the Company’s filing of the registration statement with Securities and Exchange Commission registering the resale of the shares of the Company’s common stock issuable upon exercise of the Warrants (as defined below) andno less than 10,000,000 shares of the Company’s common stock issuable pursuant to the A&R SEPA(such registration statement, the “Resale Registration Statement”), has been declared effective and subject to the satisfaction or waiver of customary closing conditions set forth in the SPA. The sale of the Debentures to the Investor is expected to result in gross proceeds to us of approximately $10.5 million, after deducting aone-time due diligence and structuring fee to the Investor of $25,000 but before deducting any other fees and expenses.

In addition, in connection with the First Closing, as a commitment fee for the transactions contemplated by the SPA, the Company issued to the Investor warrants to purchase up to 1,291,778 shares of the Company’s common stock at an exercise price of $0.01 per share (the “Warrants”). The Warrants are immediately exercisable and will expire60 months from the date of issuance. The Warrants include customary adjustment provisions for stock splits, combinations and similar events.

The Debentures bear interest at a rate of 5.0% per annum, subject to a potential increase to 18.0% per annum upon the occurrence of certain events of default. The Debentures mature on* March 6, 2027 (the “Maturity Date”). The Company will repay the outstanding principal of the Debentures in monthly installments of (i) $363,636 for the First Closing Debentures and (ii) $636,364 for the Second Closing Debentures, in each case, plus accrued and unpaid interest, in cash, beginning on the earlier of the30th* calendar day following the effectiveness of the Resale Registration Statement or* June 6, 2026,*with all remaining outstanding principal plus accrued and unpaid interest due in full on the Maturity Date. Any outstanding principal amount of, and accrued and unpaid interest on, the Debentures as of the Maturity Date will be due and payable on the Maturity Date.

The Debentures provide the Company with an optional redemption right pursuant to which we, at any time,* may*redeem in cash, in whole or in part, all amounts outstanding under the Debentures prior to the Maturity Date. The redemption amount shall be equal to the outstanding principal balance of the Debentures being redeemed by the Company, plus all accrued and unpaid interest thereon as of such redemption date.

52