AZIO AI HOLDINGS, INC.
For the period ended Jun 30, 2026. Filed Aug 18, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 18, 2026
AZIO$0.51-23.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-19.
0001437749-26-017803
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-18.
0001437749-26-028254
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 97 previous paragraphs and 96 current paragraphs.
57 unchanged; 25 reworded; 13 added; 15 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 1 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
Merger with Azio AI Corporation ("Legacy Azio")
Current report
As disclosed in Note 1 - Organization and Operations to the consolidated financial statements included in this Quarterly Report, on July 2, 2026, the Company acquired Legacy Azio pursuant to the Amended and Restated Agreement and Plan of Merger, dated July 2, 2026 (the “Merger Agreement” and the transactions contemplated by the Merger Agreement, the “Azio Acquisition”), by and among the Company, Legacy Azio, EV-AZ Merger Sub, Inc., a wholly owned subsidiary of the Company (“First Merger Sub”), and Azio AI, LLC, a wholly owned subsidiary of the Company (“Second Merger Sub”). The Merger Agreement amended and restated in its entirety the prior merger agreement between the parties entered into and announced on May 19, 2026. Pursuant to the Merger Agreement, First Merger Sub merged with and into Legacy Azio, pursuant to which Legacy Azio was the surviving corporation and became a wholly owned subsidiary of the Company (the “First Merger”) and immediately following the effective time of the First Merger (the “First Effective Time”), Legacy Azio merged with and into Azio AI, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company (“Second Merger Sub” and, together with the First Merger, the “Mergers”), pursuant to which Second Merger Sub was the surviving entity and became a wholly owned subsidiary of the Company.
Current report
At the closing of the Azio Acquisition, the Company issued to former Legacy Azio stockholders (i) 2,460,351 shares of the Company's common stock, representing no more than 19.9% of the Company's outstanding common stock immediately prior to the closing, net of 194,807 shares issuable upon conversion of $150,000 aggregate principal amount of Legacy Azio convertible notes assumed by the Company, and (ii) 973,450 shares of the Company's Series A Non-Voting Convertible Preferred Stock (the “Series A Preferred Stock”). No fractional shares were issued. Any fractional interests were aggregated and any remaining fractional shares were rounded up to the nearest whole share. Each share of Series A Preferred Stock is convertible into 100 shares of common stock upon approval by the Company's stockholders of a proposal to permit such conversion under Nasdaq Listing Rule 5635.
Current report
The Azio Acquisition will allow the Company to enhance its AI infrastructure business segment to offer the following services:
Current report
The Company submitted the required compliance plan to Nasdaq before the June 13, 2026, and on June 18, 2026, the Company received notice from the Department that the Nasdaq staff had determined to grant the Company an extension to regain compliance with the Minimum Stockholders’ Equity Requirement until October 26, 2026 subject to the satisfaction of certain conditions set forth in the notice.
Current report
Subsequent to June 30, 2026, we expanded our operations into the artificial intelligence and data center infrastructure sector through the Azio Acquisition. A significant portion of the capital raised to date and expenditures incurred in connection with these operations has been deployed toward infrastructure, equipment, site development and other expenditures intended to establish the foundation for commissioning and operating revenue-producing AI data center capacity.
Current report
Management's plans to address the conditions giving rise to substantial doubt include: (i) commissioning and placing into service income-producing data center capacity; (ii) generating revenue from hosting, infrastructure and equipment sales arrangements; (iii) obtaining project-level financing to fund additional data center development and expansion; (iv) raising additional capital through debt or equity financings, as appropriate; and (v) managing operating expenditures as the Company's AI infrastructure operations scale.
Current report
Future financing proposals, indications of interest and other preliminary commitments may be subject to due diligence, definitive documentation, satisfaction of closing conditions and other contingencies and, unless and until definitive agreements are executed and applicable conditions are satisfied, there can be no assurance that such financing will be consummated on acceptable terms or at all. There can also be no assurance as to the timing of commissioning additional data center capacity, the amount or timing of revenues generated from such capacity, the realization of anticipated benefits from the Azio Acquisition, or the Company's ability to achieve positive operating cash flows.
Current report
Accordingly, while management believes that its strategic assets, commercial pipeline, financing alternatives and planned commencement and expansion of revenue-generating AI data center operations provide a basis for its plans to improve liquidity and operating results, these plans are not considered probable of being fully implemented within the applicable assessment period to the extent necessary to alleviate the substantial doubt regarding the Company's ability to continue as a going concern.
Current report
Sales for the six months ended June 30, 2026 and 2025 were $4,911,508 and $1,637,595, respectively. All sales for the six months ended June 30, 2026 consisted of margin and services associated with the delivery of medical supplies to a related party. Sales for the six months ended June 30, 2025 of our electric vehicle segment were $348,063 and consisted primarily of two logistics cargo vans and two cab and chassis trucks. Sales of our medical supplies segment consisted of margin and services associated with the delivery of medical supplies totaling $1,289,532 to a related party.
Current report
G&A expenses were $5,796,429 and $2,751,788 for the three months ended June 30, 2026 and 2025, respectively. The increase in G&A costs were primarily due to higher payroll and benefit costs due to additional employees and certain payroll increases, higher rent as we needed additional space for our operations, higher legal fees incurred due to increased compliance activities, higher stock compensation due to additional issuances of options that vested in the second quarter of 2026, higher commissions due to second debenture issued in May 2026, partially offset by lower bad debts as all receivables from our electric vehicles segment were written-off at December 31, 2025, lower contract labor, lower licenses, lower utilities as we reduced activity in our Arkansas location, lower insurance costs as we undertook certain cost cutting measures with respect to our policies, lower amortization expense as we wrote-off our intangibles during the second half of 2025 and overall lower costs due to certain cost cutting measures that were implemented.
Current report
G&A expenses were $9,368,866 and $6,354,896 for the six months ended June 30, 2026 and 2025, respectively. The increase in G&A costs were primarily due to higher payroll and benefit costs due to additional employees and certain payroll increases, higher rent as we needed additional space for our operations, higher legal fees incurred due to increased compliance activities, higher stock compensation due to higher number of awards, higher commissions due to debentures issued in 2026, partially offset by lower bad debts as all receivables from our electric vehicles segment were written-off at December 31, 2025, lower contract labor, lower licenses, lower utilities as we reduced activity in our Arkansas location, lower amortization expense as we wrote-off our intangibles during the second half of 2025 and overall lower costs due to certain cost cutting measures that were implemented.
Current report
R&D expenses were $12,000 and $590,121 for the three months ended June 30, 2026 and 2025, respectively. R&D expenses were $22,000 and $688,519 for the six months ended June 30, 2026 and 2025, respectively.
Removed paragraphs (15)
Previous report
Factors Affecting Our Performance
Previous report
We believe that the growth and future success of our business depend on various opportunities, challenges and other factors, including the following:
Previous report
***Availability of government subsidies, rebates and economic incentives.We believe that the availability of government subsidies, rebates, and economic ***incentives is currently a critical factor considered by our customers when purchasing our zero-emission systems or converting their existing vehicles to zero-emission-electric or hybrids, and that our growth depends in large part on the availability and amounts of these subsidies and economic incentives. As an alternative to being dependent on such funding, however, we are exploring the possibility of leasing our vehicles to our customers as well.
Previous report
***New customers.We are competing with other companies and technologies to help fleet managers and their districts/companies more efficiently and ***cost-effectively manage their fleet operations. Once these fleet managers have decided they want to buy from us, we still face challenges with helping them to obtain financing options to reduce the cost barriers to purchasing. We may also encounter customers with inadequate electrical services at their facilities that may delay their ability to purchase from us.
Previous report
***Dependence on external sources of financing of our operations.We have historically depended on external sources of capital to finance our ***operations. Accordingly, our future performance will depend in part upon our ability to achieve independence from external sources for the financing of our operations.
Previous report
***Investment in growth.We plan to continue to invest for long-term growth. We anticipate that our operating expenses will increase in the foreseeable ***future as we invest in research and development to enhance our zero-emission electric vehicles and systems; design, develop and manufacture our commercial fleet vehicles and their components; increase our sales and marketing to acquire new customers; and increase our general and administrative functions to support our growing operations. We believe that these investments will contribute to our long-term growth, although they will adversely affect our results of operations in the near term. In addition, the timing of these investments can result in fluctuations in our annual and quarterly operating results.
Previous report
***Zero-emission electric vehicle experience.Our dealer and service network is not currently completely established, although we do have certain ***agreements in place. One issue they may have, and we may encounter, is finding appropriately trained technicians with zero-emission electric fleet vehicle experience. Our performance will depend on having a robust dealer and service network, which will require appropriately trained technicians to be successful. Because vehicles that utilize our technology are based on a different technology platform than traditional internal combustion engines, individuals with sufficient training in zero-emission electric vehicles may not be available to hire, and we may need to expend significant time and expense training the employees we do hire. If we are not able to attract, assimilate, train or retain additional highly qualified personnel in the future, or do so cost-effectively, our performance would be significantly and adversely affected.
Previous report
***Market growth.We believe the market for all-electric solutions for alternative fuel technology, specifically all-electric vehicles, will continue to grow as ***more purchases of new zero-emission vehicles and as more conversions of existing fleet vehicles to zero-emission vehicles are made. However, unless the costs to produce such vehicles decrease dramatically, purchasers of our products will continue to depend in large part on financing subsidies from government agencies. We cannot be assured of the continued availability, the amounts of such assistance to our customers, or our ability to access such funds.
Previous report
Sales revenue growth from additional products**.***** We seek to add to our product offerings additional zero-emission vehicles of all sizes to be marketed, ***sold, warrantied and serviced through our developing distribution and service network, as well as add other ancillary products discussed elsewhere in this Quarterly Report.
Previous report
***Third-party contractors, suppliers and manufacturers.We rely upon third parties to supply us with raw materials, parts, components and services in ***adequate quantity in a timely manner and at reasonable prices, quality levels, and volumes acceptable to us. We also are solely reliant on one vendor which is a related party to provide all vehicles as there is currently no manufacturing in the United States.
Previous report
G&A expenses were $3,572,437 and $3,603,108 for the three months ended March 31, 2026 and 2025, respectively. G&A expenses decreased slightly by $30,671 primarily due to lower payroll and benefits of $39,590 as a result of restructuring activities in 2025, lower contract labor of $581,747 due to lower level of activities, lower taxes and licenses of $202,573, lower commissions paid of $200,000, lower stock-based compensation of $521,067 as no awards were granted in the first quarter of 2026, lower amortization expense of $222,500 as all amortizable intangibles were written-off in the third quarter of 2025, lower overall costs of $133,937 due to cost-cutting measures taken, partially offset by higher legal and accounting costs of $1,870,743 due to an SEC investigation and additional lawsuits filed against various parties as well outside accounting consultants employed to manage the accounting activities.
Previous report
R&D expenses were $10,000 and $98,398 for the three months ended March 31, 2026 and 2025, respectively, as the level of activity decreased.
Previous report
We expect cash used in operating activities to fluctuate significantly in future periods as a result of a number of factors, some of which are outside of our control, including, among others: the success we achieve in generating revenue; the success we have in helping our customers obtain financing and government incentives to subsidize their purchases of our products; our ability to efficiently develop our dealer and service network; the costs of batteries and other materials utilized to make our products; the extent to which we need to invest additional funds in research and development; the amount of expenses we incur to satisfy future warranty claims, and the ability to engage in providing medical supplies to the federal government on a long-term basis.
Previous report
In February 2022, we moved into an approximately 580,000 square foot facility in Osceola, Arkansas. We plan to close this facility in 2026.
Previous report
On February 12, 2025, we announced the relocation of our corporate headquarters and the establishment of a new 86,000 square foot facility in Houston, Texas. We opened our new corporate headquarters and manufacturing facility in 2025. As a result of this relocation, we incurred additional capital expenditure and one-time relocation costs.
Reworded paragraphs (25)
Previous wording
The following discussion of our financial condition and the results of operations should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in this Quarterly Report and the audited financial statements and notes thereto included in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the "SEC") on April 13, 2026. This discussion contains forward-looking statements that are subject to known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. These risks, uncertainties, and other factors include, among others, those identified under the “Special Note Regarding Forward-Looking Statements” above in this Quarterly Report.
Current wording
The following discussion of our financial condition and the results of operations should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in this Quarterly Report and the audited financial statements and notes thereto included in our 2025 Annual Report. This discussion contains forward-looking statements that are subject to known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. These risks, uncertainties, and other factors include, among others, those identified under the “Special Note Regarding Forward-Looking Statements” above in this Quarterly Report.
Previous wording
For the three months ended March 31, 2026 and 2025, we generated sales revenue of $2,248,621 and $590,567 respectively, and our net loss for the three months ended March 31, 2026 and 2025 was $3,986,923 and $14,036,381, respectively. Included in our net loss for the three months ended March 31, 2026 is a loss on conversion and changes in fair value of convertible notes of $108,800. Included in our net loss for the three months ended March 31, 2025 is a loss on conversion and changes in fair value of convertible notes of $283,793 and a non-cash impairment charge of $10,103,048 for goodwill.
Current wording
For the six months ended June 30, 2026 and 2025, we generated sales revenue of $4,911,508 and $1,637,595 respectively, and our net loss for the six months ended June 30, 2026 and 2025 was $10,624,339 and $19,183,118, respectively. Included in our net loss for the six months ended June 30, 2026 is a loss on conversion and changes in fair value of convertible notes of $1,007,627. Included in our net loss for the six months ended June 30, 2025 is a loss on conversion and changes in fair value of convertible notes of $650,701 and a non-cash impairment charge of $10,103,048 for goodwill.
Previous wording
On April 29, 2026, we received a notice (the “Notice”) from the Listing Qualifications Department of Nasdaq notifying us that, because our stockholders’ equity was below $2,500,000 as reported on the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, we no longer meet the minimum shareholders’ equity requirement of $2,500,000 for continued listing on Nasdaq under Nasdaq Listing Rule 5550(b)(1).
Current wording
On April 29, 2026, we received a notice (the “Notice”) from the Listing Qualifications Department of Nasdaq (the “Department”) notifying us that, because our stockholders’ equity was below $2,500,000 as reported on the 2025 Annual Report, we no longer meet the minimum shareholders’ equity requirement of $2,500,000 for continued listing on Nasdaq under Nasdaq Listing Rule 5550(b)(1) (the “Minimum Stockholders’ Equity Requirement”). Pursuant to Nasdaq Listing Rule 5810(c)(2)(C), the Company had 45 calendar days, or until June 13, 2026, to submit to Nasdaq a plan to regain compliance. If the Company’s plan was accepted, Nasdaq could grant an extension of up to 180 calendar days from the date of the Notice, or until October 26, 2026, to evidence compliance with the Minimum Stockholders’ Equity Requirement.
Previous wording
Our unaudited condensed consolidated 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. We sustained significant losses and negative cash flows from operations and are dependent on the overall improvement of our operating activities as well as debt and equity financing to fund operations. We incurred a net loss of $3,986,923 and $14,036,381 for the three months ended March 31, 2026 and 2025, respectively. Cash used in operating activities was $3,342,098 and $4,217,480 for the three months ended March 31, 2026 and 2025, respectively. Accumulated deficit was $116,575,383 and $112,588,460 as of March 31, 2026 and December 31, 2025, respectively.
Current wording
Our unaudited condensed consolidated 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. We sustained significant losses and negative cash flows from operations and are dependent on the overall improvement of our operating activities as well as debt and equity financing to fund operations. We incurred a net loss of $6,637,416 and $10,624,339 for the three and six months ended June 30, 2026, respectively. We incurred a net loss of $5,146,737 and $19,183,118 for the three and six months ended June 30, 2025, respectively. Cash used in operating activities was $8,731,663 and $5,385,357 for the six months ended June 30, 2026 and 2025, respectively. Accumulated deficit was $123,212,799 and $112,588,460 as of June 30, 2026 and December 31, 2025, respectively.
Previous wording
As more fully described above under "Debenture Financing," we closed the initial tranche of Debentures in the First Closing on March 6, 2026, resulting in net proceeds of approximately $3.8 million. We also closed the second tranche of Debentures in the second closing on May 7, 2026, resulting in net proceeds of approximately $5.8 million. We also plan to grow and expand our operations and seek additional sources of capital through either an additional debt or equity financial and to pursue acquisitions of cash flow generating assets or businesses. Although we have been successful in raising funds in the past, and expect to do so in the future, there are no guarantees that we will be able to raise funds as anticipated. In addition, there is no assurance that any such acquisition will be successful or that we will realize the anticipated benefits for such acquisition following the closing.
Current wording
As more fully described above under “Debenture Financing,” we closed the initial tranche of Debentures on March 6, 2026, resulting in net proceeds of $3,815,000, and closed the second tranche on May 7, 2026, resulting in net proceeds of $5,850,000.
Previous wording
Under the vehicles segment, sales are recognized from the sales of new, purpose-built zero-emission electric vehicles and from providing vehicle maintenance and safety inspection services. Under the medical supplies segment, revenue is recognized at the point in time when control transfers to the customer, which occurs when the medical gowns are delivered to the third party. Sales are recognized in accordance with ASC 606, as discussed in Note 2 to our unaudited consolidated financial statements included in this Quarterly Report.
Current wording
Sales are recognized in accordance with ASC 606, as discussed in Note 2 to our unaudited consolidated financial statements included in this Quarterly Report. Under the vehicles segment, sales are recognized from the sales of new, purpose-built zero-emission electric vehicles and from providing vehicle maintenance and safety inspection services. Under the medical supplies segment, revenue is initially recognized to the extent of incurred labor costs while the profit margin is recognized when the medical supplies are delivered to the third-party customer.
Previous wording
Cost of sales for our electric vehicles segment includes those costs related to the development, manufacture, and distribution of our electric vehicles. Specifically, we include in cost of sales for our electric vehicles segment each of the following: material costs (including commodity costs); freight costs; labor and other costs related to the development and manufacture of our electric vehicles; and other associated costs. Cost of sales also includes costs related to the valuation of inventory due to impairment, obsolescence, or shrinkage. Cost of sales included in our medical supplies activities include direct labor and accessories such as tape, glues, etc. The main materials of our medical supplies segment are supplied by the customer.
Current wording
Cost of sales for our electric vehicles segment includes those costs related to the development, manufacture, and distribution of our electric vehicles. Specifically, we include in cost of sales for our electric vehicles segment each of the following: material costs (including commodity costs); freight costs; labor and other costs related to the development and manufacture of our electric vehicles; and other associated costs. Cost of sales also includes costs related to the valuation of inventory due to impairment, obsolescence, or shrinkage. Cost of sales included in our medical supplies activities include direct labor. The main materials of our medical supplies segment are supplied by the customer and are not included as cost of sales.
Previous wording
The following discussion compares our results of operations for thethree months ended March 31, 2026 to the corresponding period ended March 31, 2025:
Current wording
The following discussion compares our results of operations for the three and six months ended June 30, 2026 to the corresponding periods ended June 30, 2025:
Previous wording
Sales for the three months ended March 31, 2026 and 2025 were $2,248,621 and $590,567, respectively. Sales for the three months ended March 31, 2026 of our electric vehicle segment was $0. Sales of our medical supplies segment consisted of delivery of medical supplies totaling $2,248,621 to a related party. Sales for the three months ended March 31, 2025 of our electric vehicle segment were $373,130 and consisted primarily of two class 4 trucks and one cargo van. Sales of our medical supplies segment consisted of delivery of medical gowns totaling $217,437 to a related party.
Current wording
Sales for the three months ended June 30, 2026 and 2025 were $2,662,887 and $1,047,029, respectively. Sales for the three months ended June 30, 2026 of our electric vehicle segment was $0. All sales for the three months ended June 30, 2026 consisted of margin and services associated with the delivery of medical supplies to a related party. Sales for the three months ended June 30, 2025 of our electric vehicle segment were ($25,237) as certain credit memos were issued for operational purposes. Sales of our medical supplies segment consisted of margin and services associated with the delivery of medical supplies totaling $1,072,266 to a related party.
Previous wording
Cost of sales for the three months ended March 31, 2026 and 2025 were $2,437,233 and $471,175, respectively. Cost of sales of our electric vehicles segment was $160,511 for the three months ended March 31, 2026 from the write-down of a portion of our U.S. Environmental Protection Agency ("EPA") fulfillment asset. Cost of sales of our medical supplies segment was $2,276,722 for the three months ended March 31, 2026. Cost of sales for our medical supplies segment was based on a cost-plus pricing structure to a related party. Cost of sales for the three months ended March 31, 2025 consisted of the costs related to the sale of the electric vehicles sold and the delivery of medical gowns as described above.
Current wording
Cost of sales for the three months ended June 30, 2026 and 2025 were $2,591,558 and $2,504,746, respectively. Cost of sales of our electric vehicles segment was $0 and $1,523,713 for the three months ended June 30, 2026 and 2025, respectively. Cost of sales of our medical supplies segment was $2,591,558 and $981,033 for the three months ended June 30, 2026 and 2025, respectively. Cost of sales for our electric vehicles segment was related to the sales of the trucks and a van and additional inventory write-downs while cost of sales for our medical supplies segment was based on a cost-plus pricing structure to a related party.
Previous wording
Consulting expenses were $0 and $46,511 for the three months ended March 31, 2026 and 2025, respectively.
Current wording
Consulting expenses were $0 and $0 for the three months ended June 30, 2026 and 2025, respectively. Consulting expenses were $0 and $46,511 for the six months ended June 30, 2026 and 2025, respectively.
Previous wording
Due to our declining stock price, we conducted an impairment test related to our goodwill in the first quarter of 2025. As a result of this test, we recorded an impairment charge of $10,103,048 related to our goodwill for the three months ended March 31, 2025.
Current wording
Due to our declining stock price, we conducted an impairment test related to our goodwill in the first quarter of 2025. As a result of this test, we recorded an impairment charge of $10,103,048 related to our goodwill during the first quarter of 2025.
Previous wording
We recorded a non-cash loss on conversion and changes in fair value of convertible notes of $106,997 for the three months ended March 31, 2026 and $283,793 for the three months ended March 31, 2025, on our financial instruments that we elected to measure at fair value.
Current wording
We recorded a non-cash loss on conversion and changes in fair value of convertible notes of $460,404 for the three months ended June 30, 2026 and $366,908 for the three months ended June 30, 2025, on our financial instruments that we elected to measure at fair value. We recorded a non-cash loss on conversion and changes in fair value of convertible notes of $567,401 for the six months ended June 30, 2026 and $650,701 for the six months ended June 30, 2025, on our financial instruments.
Previous wording
The following table summarizes our cash flows from operating, investing, and financing activities for the three months ended March 31, 2026 and 2025:
Current wording
The following table summarizes our cash flows from operating, investing, and financing activities for the six months ended June 30, 2026 and 2025:
Previous wording
Net cash used in operating activities for the three months ended March 31, 2026 was $3,342,098, primarily due to a net loss of $3,986,923, partially offset by changes in operating assets and liabilities, net of $448,283 and non-cash operating charges of $196,542. The changes in operating assets and liabilities, net were due to a decrease in EPA fulfillment asset of $160,511, an increase in accounts payable for $1,341,248 and an increase in accrued liabilities of $68,986, partially offset by an increase of $364,595 in other current assets, an increase in prepaid expenses of $112,654, and an increase in other non-current and right-of-use assets of $334,376, a decrease in EPA contract liability of $23,625, and a decrease in other liabilities of $42,330.
Current wording
Net cash used in operating activities for the six months ended June 30, 2026 was $8,731,663, primarily due to a net loss of $10,624,339 and changes in operating assets and liabilities, net of $988,577, partially offset by non-cash operating charges of $2,881,253. The changes in operating assets and liabilities, net was primarily due to an increase of $1,160,693 in receivable from related party, an increase in other non-current assets and right-of-use assets for $1,509,305, a decrease of $230,876 in accrued liabilities and a decrease in EPA contract liability for $23,625, partially offset by an increase in accounts payable of $459,390, an increase in other liabilities of $1,165,196, a decrease of $160,511 in EPA fulfillment assets, a decrease in prepaid expenses of $35,211 and a decrease of $115,614 in other current assets,
Previous wording
Net cash used in operating activities for the three months ended March 31, 2025 was $4,217,480, primarily due to a net loss of $14,036,381 and changes in operating assets and liabilities, net of $1,395,200, partially offset by non-cash operating charges of $11,214,101. The changes in operating assets and liabilities, net was due to an increase in receivable from related party of $202,663, and increase in miscellaneous receivable of $2,249,515 (related to certain fraudulent activities related to our banking operations and that was subsequently credited back to us), and increase in inventory deposits of $2,675,003 (primarily from deposits for our EPA grant program) and a decrease in other liabilities of $30,467, partially offset by a decrease in accounts receivable of $164,541, a decrease in inventory of $167,108, a decrease in prepaid expenses of $629,596, a decrease in other current and non-current assets of $55,751, an increase in accounts payable and accrued liabilities of $461,037 and an increase in deferred revenue of $2,284,415 (primarily related to our EPA grant program).
Current wording
Net cash used in operating activities for the six months ended June 30, 2025 was $5,385,357, primarily due to a net loss of $19,183,118, partially offset by changes in operating assets and liabilities, net of $1,897,702 and non-cash operating charges of $11,900,059. The changes in operating assets and liabilities, net was due a decrease in accounts receivable of $576,374, a decrease in inventory of $1,560,698, a decrease in prepaid expenses and other current assets of $779,123, an increase in accounts payable of $694,769, an increase in deferred revenue of $2,284,415 as a result of fundings from the EPA grants and an increase of $508,381 in other liabilities primarily from the capitalization of the Houston lease, partially offset by an increase in related party receivable of $1,161,947 from our medical supplies segment, an increase in inventory deposits of $2,743,291, an increase in non-current assets of $568,154 primarily from the capitalization of the Houston lease as a right-of-use asset and a decrease in accrued liabilities of $32,666.
Previous wording
Net cash used in investing activities during the three months ended March 31, 2026 was $1,525,900, primarily from the purchase of property and equipment used in our current operations.
Current wording
Net cash used in investing activities during the six months ended June 30, 2026 was $4,712,719, primarily from construction-in-progress for our AI data infrastructure segment.
Previous wording
Net cash used in investing activities during the three months ended March 31, 2025 was $176,828, primarily from the purchase of property and equipment used in our current operations.
Current wording
Net cash used in investing activities during the six months ended June 30, 2025 was $176,828, primarily from the purchase of property and equipment that is used in our current operations.
Previous wording
Net cash provided by financing activities during the three months ended March 31, 2026 was $6,522,849 primarily from proceeds from the issuance of issuance of common stock for $2,677,090, issuance of our Debentures (as defined below) for $3,815,000 and issuance of other debt for $109,061, partially offset by the repayment of other debt of $78,302.
Current wording
Net cash provided by financing activities during the six months ended June 30, 2026 was $13,227,371 primarily from the issuance of debentures totaling $10,535,000, issuance of common stock for $2,724,806 and exercise of 2,918 Warrants (as defined below), partially offset by net loan repayments of $35,353.
Previous wording
Net cash provided by financing activities during the three months ended March 31, 2025 was $2,664,411, primarily due to proceeds from the issuance of our convertible notes of $2,850,500, partially offset by the repayment of other debt of $186,089.
Current wording
Net cash provided by financing activities during the six months ended June 30, 2025 was $4,563,245 primarily from the issuance of the Additional Promissory Notes for $4,750,500 in net proceeds, partially offset by loan repayments of $187,255.
Previous wording
As of March 31, 2026, we had cash and cash equivalents of $2,013,817 and negative working capital of approximately $11,538,147. To date, we have financed our operations primarily through capital raises from issuing common stock. We believe that our existing cash and cash equivalents may not be sufficient to allow us to operate for the next 12 months due to our current and potential liabilities. We may need to raise additional capital through equity or debt issuances. If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations and reducing overhead expenses. We cannot provide any assurance that any new financing will be available on commercially acceptable terms, if at all, or will be completed on a timely basis. These conditions raise substantial doubt about our ability to continue as a going concern.
Current wording
As of June 30, 2026, we had cash and cash equivalents of $141,955 and negative working capital of approximately $22,804,321. To date, we have financed our operations primarily through capital raises from issuing common stock. We believe that our existing cash and cash equivalents may not be sufficient to allow us to operate for the next 12 months due to our current and potential liabilities. We may need to raise additional capital through equity or debt issuances. If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations and reducing overhead expenses. We cannot provide any assurance that any new financing will be available on commercially acceptable terms, if at all, or will be completed on a timely basis. These conditions raise substantial doubt about our ability to continue as a going concern.
Previous wording
We have 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 Level 3 under the fair value hierarchy as provided by ASC 820.
Current wording
We have 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 Level 3 under the fair value hierarchy as provided by ASC 820. All debt obligations under the Promissory Notes were fully satisfied at June 30, 2026.
Previous wording
The first tranche of the Additional Pre-Paid Advance was disbursed on February 25, 2025 in the principal amount of $3 million (with net proceeds to us of approximately $2.7 million after deducting discounts and fees) as evidenced by an Additional Promissory Note issued by us to the Investor on February 24, 2025 (the “EVTV-3 Additional Promissory Note”). During 2025, 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 our common stock. As a result of this conversion, 2,134,613 shares of our common stock were issued at a weighted average price of $1.51. The remaining principal balance of the EVTV-3 Additional Promissory Note on December 31, 2025, was $50,000. The remaining obligation was fully satisfied through the conversion of the EVTV-3 Additional Promissory Note into shares of our common stock during the first quarter of 2026. As a result of this conversion, 94,657 shares of the our common stock were issued at a weighted average price of $0.53.
Current wording
The first tranche of the Additional Pre-Paid Advance was disbursed on February 25, 2025 in the principal amount of $3 million (with net proceeds to us of approximately $2.7 million after deducting discounts and fees) as evidenced by an Additional Promissory Note issued by us to the Investor on February 24, 2025 (the “EVTV-3 Additional Promissory Note”). During 2025, 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 our common stock. As a result of this conversion, 2,134,613 shares of our common stock were issued at a weighted average price of $1.51. The remaining principal balance of the EVTV-3 Additional Promissory Note on December 31, 2025, was $50,000. The remaining obligation was fully satisfied through the conversion of the EVTV-3 Additional Promissory Note into shares of our common stock during the first quarter of 2026. As a result of this conversion, 94,657 shares of the common stock were issued at a weighted average price of $0.53.
Previous wording
We have 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 our common stock. The Additional Promissory Notes' fair values are classified as Level 3 under the fair value hierarchy as provided by ASC 820.
Current wording
We have 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 our common stock. The Additional Promissory Notes' fair values are classified as Level 3 under the fair value hierarchy as provided by ASC 820. All debt obligations under the Additional Promissory Notes were fully satisfied at June 30, 2026.
Previous wording
The Debentures provide us 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 us, plus all accrued and unpaid interest thereon as of such redemption date.
Current wording
The Debentures provide us 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 us, plus all accrued and unpaid interest thereon as of such redemption date. The outstanding principal balance at June 30, 2026 was $10,339,276.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
For the three months ended June 30, 2026 and 2025, we generated sales revenue of $2,662,887 and $1,047,029 respectively, and our net loss for the three months ended June 30, 2026 and 2025 was $6,637,416 and $5,146,737, respectively. Included in our net loss for the three months ended June 30, 2026 is a loss on conversion and changes in fair value of convertible notes of $893,630. Included in our net loss for the three months ended June 30, 2025 is a loss on conversion and changes in fair value of convertible notes of $366,908.