FOXO TECHNOLOGIES INC.

Previous wording

References to the “Company,” “FOXO,” “us,” “our” or “we” refer to FOXO Technologies Inc. and its consolidated subsidiaries. The following discussion and analysis summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity, capital resources and cash flows of our Company as of and for the periods presented below. You should read the following discussion of our financial condition and results of operations in conjunction with the unaudited condensed consolidated financial statements and the related notes included elsewhere in this Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC. In addition to our historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below. We undertake no obligation to update publicly any forward-looking statements for any reason, except as required by law, even as new information becomes available or events occur in the future.

Current wording

References to the “Company,” “FOXO,” “us,” “our” or “we” refer to FOXO Technologies Inc. and its consolidated subsidiaries. The following discussion and analysis summarize the significant factors affecting the consolidated operating results, financial condition, liquidity, capital resources and cash flows of our Company as of and for the periods presented below. You should read the following discussion of our financial condition and results of operations in conjunction with the unaudited condensed consolidated financial statements and the related notes included elsewhere in this Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC. In addition to our historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below. We undertake no obligation to update publicly any forward-looking statements for any reason, except as required by law, even as new information becomes available or events occur in the future.

Previous wording

We are a healthcare services and technology company operating in two reportable business segments: (i) Healthcare; and (ii) Labs and Life. These segments further operate in three synergistic divisions, a rural hospital division, a mental and behavioral health division, which together make up our Healthcare segment and an epigenetics diagnostics and interpretation division, which makes up our Labs segment. Our rural hospital division and our epigenetics diagnostics and interpretation division operate through wholly owned subsidiaries, and our behavioral health division operates through a majority-owned subsidiary.

Current wording

We are a healthcare services and technology company operating in two reportable business segments: (i) Healthcare; and (ii) Labs, formerly referred to as Labs and Life. These segments further operate in three synergistic divisions, a rural hospital division, a mental and behavioral health division, which together make up our Healthcare segment and an epigenetics diagnostics and interpretation division, which makes up our Labs segment. Our rural hospital division and our epigenetics diagnostics and interpretation division operate through wholly owned subsidiaries, and our behavioral health division operates through a majority-owned subsidiary.

Previous wording

Previously, Labs and Life were treated as separate segments; however, with the acquisition of Myrtle in June 2024, which is more fully discussed below, the Company’s operational focus shifted such that it was appropriate to combine our Labs and Life segments during the second quarter of 2024 and to operate Myrtle in the newly formed Healthcare segment. Our Healthcare segment also includes RCHI, and its wholly-owned subsidiary, SCCH which were acquired on September 10, 2024, as more fully discussed below.

Current wording

Our Healthcare segment includes Myrtle, which was acquired on June 14, 2024 and RCHI, and its wholly-owned subsidiary, SCCH which were acquired on September 10, 2024, as more fully discussed below.

Previous wording

Myrtle offers behavioral health services, primarily substance use disorder treatments and services that are provided on either an inpatient, residential basis or an outpatient basis. RCHI’s hospital, SCCH, doing business as BSF, has 25 inpatient beds, and a 24/7 emergency department and provides ancillary services, including laboratory, radiology, respiratory and pharmacy services. BSF is designated as a Critical Access Hospital (rural) hospital.

Current wording

RCHI’s hospital, SCCH, doing business as BSF, has 25 inpatient beds, and a 24/7 emergency department and provides ancillary services, including laboratory, radiology, respiratory and pharmacy services. BSF is designated as a Critical Access Hospital (rural) hospital

Previous wording

Our Labs and Life segment is commercializing epigenetic biomarker technology to support groundbreaking scientific research and disruptive next-generation business initiatives. It applies automated machine learning and artificial intelligence (“AI”) technologies to discover epigenetic biomarkers of human health, wellness and aging.

Current wording

Our Labs segment is commercializing epigenetic biomarker technology to support groundbreaking scientific research and disruptive next-generation business initiatives. It applies automated machine learning and artificial intelligence (“AI”) technologies to discover epigenetic biomarkers of human health, wellness and aging.

Previous wording

On April 17, 2025, the Company’s board of directors (pursuant to a previously-obtained shareholder approval) approved an amendment to its Second Amended and Restated Certificate of Incorporation, as amended (the “Charter Amendment”), to implement a 1-for-10 reverse stock split, such that every 10 shares of Common Stock will be combined into one issued and outstanding share of Common Stock, with no change in the $0.0001 par value per share (the “Reverse Stock Split”).

Current wording

On April 17, 2025, the Company’s board of directors (pursuant to a previously-obtained shareholder approval) approved the implementation of a 1-for-10 reverse stock split, such that every 10 shares of the Company’s Class A Common Stock will be combined into one issued and outstanding share of Common Stock, with no change in the $0.0001 par value per share (the “First Reverse Stock Split”). On July 17, 2025, the Company’s board of directors (pursuant to previously-obtained shareholder approval) approved the implementation of a 1-for-1.99 reverse stock split, such that every 1.99 shares of the Company’s Class A Common Stock will be combined into one issued and outstanding share of the Company’s Class A Common Stock, with no change in the $0.0001 par value per share (the “Second Reverse Stock Split”) and together with the First Reverse Stock Split, (the “Reverse Stock Splits”).

Previous wording

The Reverse Stock Split was effective at 4:01 p.m., Eastern Time, on April 28, 2025. Trading reopened on April 29, 2025, which is when our Class A Common Stock began trading on a post reverse stock split basis. All share information included in this report has been reflected as if the Reverse Stock Split occurred as of the earliest period presented.

Current wording

The First Reverse Stock Split was effective at 4:01 p.m., Eastern Time, on April 28, 2025. Trading reopened on April 29, 2025, which is when the Company’s Class A Common Stock began trading on a post reverse stock split basis. The Second Reverse Stock Split was effective at 4:01 p.m., Eastern Time, on July 27, 2025. Trading reopened on July 28, 2025, which is when the Company’s Class A Common Stock began trading on a post reverse stock split basis.

Previous wording

The first agreement, as supplemented (the “Myrtle Agreement”), provided for RHI to exchange all of its equity interest in Myrtle for $0.5 million, payable in a combination of shares of the Company’s Class A Common Stock and a note payable. The closing occurred effective on June 14, 2024. The Company recorded a non-interest bearing note payable due on demand to RHI in the amount of $0.3 million and it paid the remaining purchase price of $0.2 million by issuing 102,363 shares of its Class A Common Stock to RHI on July 17, 2024. In addition to the $0.3 million promissory note issued to RHI for a portion of the purchase price of Myrtle, Myrtle issued a promissory note payable to RHI dated June 13, 2024, in the original principal amount of $1.6 million, which represented the amount owed to RHI by Myrtle at the time of the sale of Myrtle to the Company.

Current wording

The first agreement, as supplemented (the “Myrtle Agreement”), provided for RHI to exchange all of its equity interest in Myrtle for $0.5 million, payable in a combination of shares of the Company’s Class A Common Stock and a note payable. The closing occurred effective on June 14, 2024. The Company recorded a non-interest bearing note payable due on demand to RHI in the amount of $0.3 million and it paid the remaining purchase price of $0.2 million by issuing 51,439 shares of its Class A Common Stock to RHI on July 17, 2024. In addition to the $0.3 million promissory note issued to RHI for a portion of the purchase price of Myrtle, Myrtle issued a promissory note payable to RHI dated June 13, 2024, in the original principal amount of $1.6 million, which represented the amount owed to RHI by Myrtle at the time of the sale of Myrtle to the Company.

Previous wording

The RCHI Note was guaranteed by the Company and SCCH, pursuant to the terms of a Guaranty Agreement (the “Guaranty”). The RCHI Note was also secured by the assets of RCHI and Scott County pursuant to a Security and Pledge Agreement (the “RCHI Pledge Agreement”) and by the “Collateral” owned by the Company as provided in the Security and Pledge Agreement with FOXO (the “FOXO Pledge Agreement”). The Amendment also provided that RHI may at any time request that the Company seek approval of its shareholders of the issuance of its Class A Common Stock upon conversion in full of the shares of the Company’s Series A Preferred Stock issuable upon exchange of the RCHI Note. At any time after receipt of such approval, RHI had the option to exchange, in whole or in part, the RCHI Note for shares of the Company’s Series A Preferred Stock. Upon any such exchange, RHI would receive the equivalent of $1.00 stated value of the Company’s Series A Preferred Stock for each $1.00 of the aggregate of principal and accrued and unpaid interest, liquidated damages and/or redemption proceeds (or any other amounts owing under the RCHI Note) being exchanged. On December 5, 2024, the Company and RCHI entered into an Exchange Agreement (the “Exchange Agreement”) with RHI. Pursuant to the Exchange Agreement, $21.0 million of the principal balance of the RCHI Note was exchanged for 21,000 shares of the Company’s Series A Preferred Stock with a stated value of $21.0 million. Upon the closing of the Exchange Agreement, RCHI executed a senior secured promissory note payable to RHI (the “New RCHI Note”) in the principal amount of $1.0 million, with similar terms to the RCHI Note.

Current wording

The RCHI Note was guaranteed by the Company and SCCH, pursuant to the terms of a Guaranty Agreement (the “Guaranty”). The RCHI Note was also secured by the assets of RCHI and Scott County pursuant to a Security and Pledge Agreement (the “RCHI Pledge Agreement”) and by the “Collateral” owned by the Company as provided in the Security and Pledge Agreement with FOXO (the “FOXO Pledge Agreement”). The Amendment also provided that RHI may at any time request that the Company seek approval of its shareholders of the issuance of its Class A Common Stock upon conversion in full of the shares of the Company’s Series A Preferred Stock issuable upon exchange of the RCHI Note. At any time after receipt of such approval, RHI had the option to exchange, in whole or in part, the RCHI Note for shares of the Company’s Series A Preferred Stock. Upon any such exchange, RHI would receive the equivalent of $1.00 stated value of the Company’s Series A Preferred Stock for each $1.00 of the aggregate of principal and accrued and unpaid interest, liquidated damages and/or redemption proceeds (or any other amounts owing under the RCHI Note) being exchanged. On December 5, 2024, the Company and RCHI entered into an Exchange Agreement (the “Exchange Agreement”) with RHI. Pursuant to the Exchange Agreement, $21.0 million of the principal balance of the RCHI Note was exchanged for 21,000 shares of the Company’s Series A Preferred Stock with a stated value of $21.0 million. Upon the closing of the Exchange Agreement, RCHI executed a senior secured promissory note payable to RHI (the “New RCHI Note”) in the principal amount of $1.0 million, with similar terms to the RCHI Note. At June 30, 2025, the New RCHI Note is in default and the Company is in discussions with RHI about extending the maturity date of the note.

Previous wording

Termination of Employment, Settlement and Mutual Release Agreement

Current wording

Amended Service Agreement and Termination of Employment, Settlement and Mutual Release Agreement

Previous wording

On October 29, 2023, we entered into a Letter Agreement with KR8 to develop a Direct-to-Consumer APP (iOS and Android) combining its AI Machine Learning technology to provide a commercial application of our epigenetic biomarker technology as a subscription consumer engagement platform. Effective January 12, 2024, the Letter Agreement was replaced by the KR8 Agreement. Our former Interim CEO and our current Interim CFO each are equity owners of the Licensor. Under the KR8 Agreement, the Licensor granted to us a limited, non-sub licensable, non-transferable perpetual license to use the Licensor’s products to develop, launch and maintain license applications based upon our epigenetic biomarker technology and software to develop an AI machine learning epigenetic APP to enhance health, wellness and longevity. The territory of the agreement is solely within the U.S., Canada and Mexico.

Current wording

On October 29, 2023, we entered into a Letter Agreement with KR8 to develop a Direct-to-Consumer APP (iOS and Android) combining its AI Machine Learning technology to provide a commercial application of our epigenetic biomarker technology as a subscription consumer engagement platform. Effective January 12, 2024, the Letter Agreement was replaced by the KR8 Agreement. Our current director and our former Interim CFO, who has passed away, are/were each equity owners of the Licensor. Under the KR8 Agreement, the Licensor granted to us a limited, non-sub licensable, non-transferable perpetual license to use the Licensor’s products to develop, launch and maintain license applications based upon our epigenetic biomarker technology and software to develop an AI machine learning epigenetic APP to enhance health, wellness and longevity. The territory of the agreement is solely within the U.S., Canada and Mexico.

Previous wording

Healthcare generates revenues from hospital and ancillary services as well as substance use disorder treatments, including inpatient and outpatient services. Labs currently recognizes revenue from residual life commissions, providing epigenetic testing services and collecting a royalty from Illumina, Inc. related to the sales of the Infinium Mouse Methylation Array.

Current wording

Healthcare generates revenues from hospital and ancillary services as well as substance use disorder treatments, including inpatient and outpatient services. Labs currently recognizes revenue from residual life insurance commissions and collecting a royalty from Illumina, Inc. related to the sales of the Infinium Mouse Methylation Array.

Previous wording

***Net revenues.***Net revenues were $3.2 million for the three months ended March 31, 2025, compared to $7,180 for the three months ended March 31, 2024. Myrtle, acquired on June 14, 2024 and RCHI, acquired on September 10, 2024, contributed $0.5 million and $2.7 million of the net revenues, respectively. Labs and Life’s net revenues were $8,489 and $7,180 for the three months ended March 31, 2025 and 2024, respectively.

Current wording

***Net revenues.***Net revenues were $5.2 million for the three months ended June 30, 2025, compared to $27,474 for the three months ended June 30, 2024. Myrtle, acquired on June 14, 2024, contributed $0.5 million of net revenues and RCHI, acquired on September 10, 2024, contributed $4.7 million of the net revenues for the three months June 30, 2025. Labs net revenues were $7,816 and $7,287 for the three months ended June 30, 2025 and 2024, respectively. Included in RCHI net revenues for the three months ended June 30, 2025, were net revenues of $2.5 million from the State of Tennessee’s Hospital Improvement Plan (“THIP”) for the plan’s fiscal year ended June 30, 2025. The THIP is designed to increase revenues for hospitals serving TennCare patients.

Previous wording

***Direct Costs of Revenues.***Direct costs of revenues were $1.9 million for the three months ended March 31, 2025. There were no direct costs of revenues for the three months ended March 31, 2024. The direct costs of revenue for the three months ended March 31, 2025 resulted from the direct costs of Myrtle and RCHI, which were acquired on June 14, 2024 and September 10, 2024, respectively.

Current wording

***Direct Costs of Revenues.***Direct costs of revenues were $2.0 million and $31,203 million for the three months ended June 30, 2025 and 2024, respectively. The direct costs of revenue for the three months ended June 30, 2025 resulted from $0.3 million of Myrtle’s direct costs and $1.7 million of RCHI’s direct costs. Myrtle was acquired on June 14, 2024 and RCHI was acquired on September 10, 2024. The direct costs for the three months ended June 30, 2024 were attributable to Myrtle.

Previous wording

***Research and Development.***Research and development expenses were $30,000 for the three months March 31, 2025, compared to $0.2 million for the three months ended March 31, 2024. The decrease was due to research and development projects that are no longer ongoing.

Current wording

***Research and Development.***Research and development expenses were $40,183 for the three months June 30, 2025, compared to $0.1 million for the three months ended June 30, 2024. The decrease was due to research and development projects that were paused or that are no longer ongoing.

Previous wording

***Management Contingent Share Plan.***Management Contingent Share Plan expense was $18,878 for the three months ended March 31, 2025 compared to an expense of $32,551 for the three months ended March 31, 2024. The expense for the three months ended March 31, 2025 resulted from the partial vesting of the 333 Management Contingent Share Plan shares that remain outstanding under the plan. These shares fully vest on September 15, 2027. During the three months ended March 31, 2024, 1,500 shares partially vested, offset by 67 shares that were forfeited under the plan.

Current wording

***Management Contingent Share Plan.***Management Contingent Share Plan expense was $18,878 for the three months ended June 30, 2025 compared to an expense of $8,509 for the three months ended June 30, 2024. The expense for the three months ended June 30, 2025 resulted from the partial vesting of the 168 Management Contingent Share Plan shares that remain outstanding under the plan. These shares fully vest on September 15, 2027. During the three months ended June 30, 2024, 670 shares partially vested, offset by 84 shares that were forfeited under the plan.

Previous wording

Selling, General and Administrative. Selling, general and administrative expenses were $2.8 million for the three months ended March 31, 2025, compared to $1.0 million for the three months ended March 31, 2024. The increase of $1.8 million, or 179.78%, was primarily due to $1.6 million of selling general and administrative expenses of Myrtle, acquired on June 14, 2024, and RCHI, acquired on September 10, 2024.

Current wording

Selling, General and Administrative. Selling, general and administrative expenses were $2.6 million for the three months ended June 30, 2025, compared to $1.5 million for the three months ended June 30, 2024. The increase of $1.1 million, or 70.05%, was due to $2.3 million of selling general and administrative expenses of Myrtle, acquired on June 14, 2024, and RCHI, acquired on September 10, 2024, partially offset by a reduction in Labs and Corporate selling, general and administrative expenses.

Previous wording

***Change in Fair Value of Warrant Liabilities.***The fair value of the warrant liabilities decreased by $31,594 for the three months ended March 31, 2025, compared to a decrease in fair value of $9,090 for the three months ended March 31, 2024. The change was attributable to a reduction in the quoted price of the Public Warrants at March 31 2025 versus March 31, 2024. The warrants are listed on the OTC Pink Marketplace.

Current wording

***Change in Fair Value of Warrant Liabilities.***The fair value of the warrant liabilities decreased by $7,596 for the three months ended June 30, 2025, compared to an increase in fair value of $999 for the three months ended June 30, 2024. The changes were attributable to fluctuations in the quoted price of the Public Warrants. The warrants are listed on the OTC Pink Marketplace.

Previous wording

***Interest Expense.***Interest expense was $0.9 million for the three months ended March 31, 2025 compared to $0.3 million for the three months ended March 31, 2024. The increase was attributable to the increase in notes payable during the three months ended March 31, 2025 compared to the 2024 period.

Current wording

***Interest Expense.***Interest expense was $1.0 million for the three months ended June 30, 2025 compared to $0.5 million for the three months ended June 30, 2024. The increase was attributable to the increase in notes payable during the three months ended June 30, 2025 compared to the 2024 period and includes default penalties and interest on two promissory notes during the three months ended June 30, 2025, partially offset by a reduction of interest expense on the Senior PIK Notes that were exchanged for the Company’s Series B Preferred Stock in January 2025.

Previous wording

***Other Non-Operating Expenses, Net.***Other non-operating expenses, net were $0.1 million for the three months ended March 31, 2025, compared to other non-operating expenses, net of $32,500 for the three months ended March 31, 2024. The other non-operating expenses, net in the three months ended March 31, 2025 resulted primarily from $0.2 million of penalties and interest for nonpayment of payroll taxes, partially offset by hospital cafeteria income of $0.1 million. The other non-operating expenses, net in the three months ended March 31, 2024 were for other taxes.

Current wording

***Other Non-Operating Expenses, Net.***Other non-operating expenses, net were $0.1 million for the three months ended June 30, 2025, compared to other non-operating expenses, net of $32,500 for the three months ended June 30, 2024. The other non-operating expenses, net in the three months ended June 30, 2025 resulted primarily from $0.1 million of penalties and interest for nonpayment of payroll taxes. The other non-operating expenses, net in the three months ended June 30, 2024 were for other taxes.

Previous wording

***Net Loss Attributable to FOXO.***Net loss attributable to FOXO was $0.6 million for the three months ended March 31, 2025 compared to a loss of $1.5 million for the three months ended March 31, 2024. The $0.9 million improvement was primarily due to the gain from extinguishment of Senior PIK Notes of $1.9 million, partially offset by an increase in loss from operations of $0.4 million and an increase in interest expense of $0.6 million in the three months ended March 31, 2025 compared to the three months ended March 31, 2024. Additionally, we recorded $0.5 million of undeclared and deemed dividends from the issuances of preferred stock and the triggers of the down round provisions of the Assumed Warrants in the three months ended March 31, 2025 compared to deemed dividends of $0.7 million related to the triggers of the down round provisions and extension of the Assumed Warrants during the three months ended March 31, 2024. The undeclared and deemed dividends resulted in net loss to common stockholders of $1.1 million and $2.2 million for the three months ended March 31, 2025 and 2024, respectively.

Current wording

***Net Loss Attributable to FOXO.***Net loss attributable to FOXO was $0.5 million for the three months ended June 30, 2025 compared to a loss of $2.2 million for the three months ended June 30, 2024. The $1.7 million improvement was primarily due to income from operations of $0.6 million in the three months ended June 30, 2025 compared to a loss from operations of $1.6 million in the three months ended June 30, 2024, which we attribute to the $2.5 million of THIP net revenues recorded in the three months ended June 30, 2025, partially offset by an increase in interest expense of $0.5 million in the three months ended June 30, 2025 compared to the three months ended June 30, 2024. Additionally, we recorded $0.3 million of deemed dividends from the anti-dilution provisions of and the issuances of preferred stock in the three months ended June 30, 2025 and deemed dividends of $0.3 million related to the triggers of the down round provisions and extension of the Assumed Warrants during the three months ended June 30, 2024. The deemed dividends resulted in a net loss to common stockholders of $0.8 million and $2.5 million for the three months ended June 30, 2025 and 2024, respectively.

Previous wording

***Gain from Extinguishment of Senior PIK Notes.***During the three months ended March 31, 2025, we exchanged $5.4 million of Senior PIK Notes, which included $1.9 million of accrued interest, for $3.5 million of stated value of our Series B Preferred Stock resulting in a gain of $1.9 million.

Current wording

***Gain from Extinguishment of Senior PIK Notes.***During the six months ended June 30, 2025, we exchanged $5.4 million of Senior PIK Notes, which included $1.9 million of accrued interest, for $3.5 million of stated value of our Series B Preferred Stock resulting in a gain of $1.9 million.

Previous wording

The following is an analysis of our results by reportable segment for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The primary earnings/loss measure used for assessing reportable segment performance is segment income/loss defined as earnings/loss before interest, income taxes, and depreciation and amortization not associated with a specific segment. Segment income/loss by reportable segment also excludes corporate and other costs, including management, IT, and overhead costs. For further information regarding our reportable business segments, please refer to the accompanying unaudited condensed consolidated financial statements and related notes.

Current wording

The following is an analysis of our results by reportable segment for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024. The primary earnings/loss measure used for assessing reportable segment performance is segment income/loss defined as earnings/loss before interest, income taxes, and depreciation and amortization not associated with a specific segment. Segment income/loss by reportable segment also excludes corporate and other costs, including management, IT, and overhead costs. For further information regarding our reportable business segments, please refer to the accompanying unaudited condensed consolidated financial statements and related notes.

Previous wording

***Net revenues.***Net revenues were $3.2 million for the three months ended March 31, 2025 and represent the net revenues of Myrtle of $0.5 million and the net revenues of RCHI of $2.7 million. Myrtle was acquired on June 14, 2024 and of RCHI was acquired on September 10, 2024. Our healthcare segment began with the acquisition of Myrtle.

Current wording

***Net revenues.***Net revenues were $5.2 million for the three months ended June 30, 2025 and represent Myrtle’s net revenues of $0.5 million and RCHI’s net revenues of $4.7 million. Net revenues for the three months ended June 30, 2024 of $20,187 represent the net revenues of Myrtle. Myrtle was acquired on June 14, 2024 and RCHI was acquired on September 10, 2024. Our healthcare segment began with the acquisition of Myrtle.

Previous wording

***Net revenues.***Net revenues were $8,489 for the three months ended March 31, 2025 compared to $7,180 for the three months ended March 31, 2024, an increase of $1,309 from royalty income.

Current wording

***Net revenues.***Net revenues were $7,816 for the three months ended June 30, 2025 compared to $7,287 for the three months ended June 30, 2024, an increase of $529 from royalty income.

Previous wording

Segment Loss. Segment loss decreased to $23,005 for the three months ended March 31, 2024 from $0.2 million for the three months ended March 31, 2024. The decrease was driven by research and development projects that are no longer ongoing.

Current wording

Segment Loss. Segment loss decreased to $33,443 for the three months ended June 30, 2025 from $0.7 million for the three months ended June 30, 2024. The decrease was driven by research and development projects that have been paused or that are no longer ongoing.

Previous wording

We had cash and cash equivalents of $16,907 and $68,268 as of March 31, 2025 and December 31, 2024, respectively. We have incurred net losses since our inception. For the three-months ended March 31, 2025 and 2024, we incurred net losses to common stockholders of $1.1 million and $2.2 million, respectively. As of March 31, 2025, we had a working capital deficit of $25.5 million. We expect to incur additional losses in future periods. Our current revenue and operating cash flow is not adequate to fund our operations in the next twelve months and requires us to fund our business through other sources until the time we achieve adequate scale. Securing additional capital is necessary to execute our business strategy.

Current wording

We had cash and cash equivalents of $321,789 and $68,268 as of June 30, 2025 and December 31, 2024, respectively. We have incurred net losses since our inception. For the six months ended June 30, 2025 and 2024, we incurred net losses to common stockholders of $1.6 million and $4.6 million, respectively. As of June 30, 2025, we had a working capital deficit of $27.3 million. We used $3.7 million of cash in operations for the six months ended June 30, 2025. We expect to incur additional losses in future periods. Our current revenue and operating cash flow is not adequate to fund our operations for the next twelve months and requires us to fund our business through other sources until the time we achieve adequate scale. Securing additional capital is necessary to execute our business strategy.

Previous wording

During the year ended December 31, 2024, we issued to third parties 17 promissory notes with principal balances totaling $5.0 million and one-time interest expense totaling $0.1 million and we received net cash proceeds from the issuances totaling $4.1 million. During the year ended December 31, 2024, we exchanged $2.2 million of the promissory notes issued in 2024 for 2,464 shares of our Series A Preferred Stock with a stated value of $1,000 per share. In addition, during the year ended December 31, 2024, $0.6 million of the principal balances of three of the promissory notes issued during 2024 and $61,745 of associated accrued interest were converted into 208,082 shares of our Class A Common Stock pursuant to the conversion terms of such notes. During the three months ended March 31, 2025, $0.7 million principal balance of the third-party notes issued in 2024, including accrued interest, were converted and exchanged into 332,431 shares of our Class A Common Stock.

Current wording

During the year ended December 31, 2024, we issued to third parties 17 promissory notes with principal balances totaling $5.0 million and one-time interest expense totaling $0.1 million and we received net cash proceeds from the issuances totaling $4.1 million. During the year ended December 31, 2024, we exchanged $2.2 million of the promissory notes issued in 2024 for 2,464 shares of our Series A Preferred Stock with a stated value of $1,000 per share. In addition, during the year ended December 31, 2024, $0.6 million of the principal balances of three of the promissory notes issued during 2024 and $61,745 of associated accrued interest were converted into 104,564 shares of our Class A Common Stock pursuant to the conversion terms of such notes.

Previous wording

During the three months ended March 31, 2025, we entered into nine third party promissory notes with principal balances totaling $1.1 million and one-time interest expense totaling $0.1 million and we received net cash of $1.0 million. In addition, in February 2025, the Western Note Payable (the “Western Note”), which we assumed when we acquired SCCH, was sold to a new holder and it was amended and restated. Per the terms of the amendment and restatement, the principal balance of the note, which included previously accrued interest expense, totaled $1.1 million, the maturity date is February 26, 2026 and the note is convertible into shares of the Company’s Class A Common Stock at a conversion price equal to 90% of the average VWAP for the five trading days prior to conversion. During the three months ended March 31, 2025, we issued 100,000 shares of our Class A Common Stock upon conversion of $0.1 million principal balance of the Western Note.

Current wording

During the six months ended June 30, 2025, we entered into ten third party promissory notes with principal balances totaling $1.3 million and one-time interest expense totaling $0.1 million and we received net cash of $1.1 million. In addition, in February 2025, the Western Note Payable (the “Western Note**”**), which we assumed when we acquired SCCH, was sold to a new holder and it was amended and restated. Per the terms of the amendment and restatement, the principal balance of the note, which included previously accrued interest expense, totaled $1.1 million, the maturity date is February 26, 2026 and the note is convertible into shares of the Company’s Class A Common Stock at a conversion price equal to 90% of the average VWAP for the five trading days prior to conversion. During the six months ended June 30, 2025, we issued 318,171 shares of our Class A Common Stock upon conversions of $0.5 million principal balance of the Western Note. In addition to the conversion of the Western Note discussed above, during the six months ended June 30, 2025, $1.4 million of principal balance of the third-party notes issued in 2025 and 2024, including accrued interest, were converted and/or exchanged into 673,209 shares of our Class A Common Stock.

Previous wording

At March 31, 2025, $2.8 million of the outstanding principal balance and $0.2 million of associated one-time accrued interest of 13 third-party promissory notes were convertible into 2.5 million shares of our Class A Common Stock per the conversion terms the notes. Three other promissory notes outstanding at March 31, 2025, were convertible but only in the event of an event of default as that term is defined in the applicable agreements and three other outstanding third party promissory notes are not convertible. As of March 31, 2025, the total principal balance of third-party promissory notes payable as presented on the accompanying unaudited condensed consolidated balance sheet was $2.6 million, which was net of $0.8 million of debt discounts. In addition, $0.3 million of accrued interest was owed on these notes. Each of these notes is more fully discussed in the footnotes to the accompanying unaudited condensed consolidated financial statements.

Current wording

At June 30, 2025, $2.4 million of the outstanding principal balance and $0.2 million of associated one-time accrued interest of 13 third-party promissory notes, including the Western Note, were convertible into 7.7 million shares of our Class A Common Stock per the conversion terms of the notes. Three other promissory notes outstanding at June 30, 2025, were convertible but only in the event of an event of default as that term is defined in the applicable agreements and one other outstanding third party promissory notes is not convertible. As of June 30, 2025, the total principal balance of third-party promissory notes payable as presented on the accompanying unaudited condensed consolidated balance sheet was $2.8 million, which was net of $0.4 million of debt discounts. In addition, $0.3 million of accrued interest was owed on these notes. Each of these notes is more fully discussed in the footnotes to the accompanying unaudited condensed consolidated financial statements.

Previous wording

On September 10, 2024, we issued a note payable that had a maturity date of September 10, 2026 to RHI in the principal amount of $22.0 million for the purchase of RCHI. During December, 2024, we exchanged $21.0 million of the promissory note owed to RHI for 21,000 shares of our Series A Preferred Stock with a stated value of $1,000 per share and we issued to RHI a new promissory note in the principal amount of $1.0 million due on June 5, 2025.

Current wording

On September 10, 2024, we issued a note payable that had a maturity date of September 10, 2026 to RHI in the principal amount of $22.0 million for the purchase of RCHI. During December, 2024, we exchanged $21.0 million of the promissory note owed to RHI for 21,000 shares of our Series A Preferred Stock with a stated value of $1,000 per share and we issued to RHI a new promissory note in the principal amount of $1.0 million due on June 5, 2025. At June 30, 2025, the note is in default and the Company is in discussions with RHI about extending the maturity date of the note.

Previous wording

In addition, we have outstanding a note payable to RHI in the amount of $0.3 million for the purchase of Myrtle, a note payable to RHI in the original amount of $1.6 million, which was the amount owed by Myrtle to RHI on the date that we acquired Myrtle, which balance has been reduced to $0.9 million as of March 31, 2025, and we have outstanding at March 31, 2025, three additional promissory notes payable to related parties totaling $0.8 million.

Current wording

In addition, we have outstanding at June 30, 2025: (i) a note payable to RHI in the amount of $264,565 for the purchase of Myrtle; (ii) a note payable to RHI in the original amount of $1.6 million, which was the amount owed by Myrtle to RHI on the date that we acquired Myrtle, which balance has been reduced to $652,403 as of June 30, 2025; (iii) we have a note payable to RHI in the amount of $1.0 million for the purchase of RCHI; (iv)we have a note payable to RHI in the amount of $5.8 million for additional consideration for the purchase of RCHI; and (iv) we have outstanding at June 30, 2025, three additional promissory notes payable to related parties totaling $0.8 million.

Previous wording

In addition to the issuances of shares of Series A Preferred Stock for the exchange of third party and RHI notes payable as discussed above, during the year ended December 31, 2024, we issued 120 shares of our Series C Preferred Stock with a stated value of $1,000 per share for net cash proceeds of $0.1 million and we issued 4,311.7 shares of our Series D Preferred Stock with a stated value of $1,000 per share for $4.2 million of accounts payable and accrued expenses. During December 2024, 924 shares of our Series A Preferred Stock were converted into 357,330 shares of our Class A Common Stock and during the three months ended March 31, 2025, 308 shares of our Series A Preferred Stock were converted into 146,015 shares of our Class A Common Stock.

Current wording

In addition to the issuances of shares of Series A Preferred Stock for the exchange of third party and RHI notes payable as discussed above, during the year ended December 31, 2024, we issued 120 shares of our Series C Preferred Stock with a stated value of $1,000 per share for net cash proceeds of $0.1 million and we issued 4,311.7 shares of our Series D Preferred Stock with a stated value of $1,000 per share for $4.2 million of accounts payable and accrued expenses. During December 2024, 924 shares of our Series A Preferred Stock were converted into 179,563 shares of our Class A Common Stock.

Previous wording

On February 28, 2025, an investor purchased 60 shares of Series C Preferred Stock for net cash proceeds of $44,825 and in doing so exchanged 50 shares of Series B Preferred Stock for 75 shares of Series C Preferred Stock.

Current wording

During the six months ended June 30, 2025, three investors purchased 135 shares of our Series C Preferred Stock for net cash proceeds of $0.1 million and in doing so exchanged 212.5 shares of Series B Preferred Stock for 318.75 shares of Series C Preferred Stock.

Previous wording

We have taken various actions to bolster our cash position, including raising funds through the private placements and the issuances of promissory notes, and conserving cash by issuing shares of our Preferred Stock and shares of our Class A Common Stock under exchange agreements, license agreements, legal settlements, consulting agreements, finder’s fees related to equity and debt financing and consulting agreements, among other transactions, as an alternative to paying in cash.

Current wording

We have taken various actions to bolster our cash position, including raising funds through the private placements and the issuances of promissory notes and other loans, and conserving cash by issuing shares of our preferred stock and shares of our Class A Common Stock under exchange agreements, license agreements, legal settlements, consulting agreements, finder’s fees related to equity and debt financing and consulting agreements, among other transactions, as an alternative to paying in cash.

Previous wording

Based on our current operating plan, our cash position as of March 31, 2025, and after taking into account the actions described above, we do not expect to be able to fund our operations through 2025 without the need for additional financing or other increases in our cash and cash equivalents balance to enable us to fund our future operations.

Current wording

Based on our current operating plan, our cash position as of June 30, 2025, and after taking into account the actions described above, we do not expect to be able to fund our operations through 2025 without the need for additional financing or other increases in our cash and cash equivalents balances to enable us to fund our future operations.

Previous wording

The following table summarizes our cash flow data for the three months ended March 31, 2025 and 2024:

Current wording

The following table summarizes our cash flow data for the six months ended June 30, 2025 and 2024:

Previous wording

The net cash used in operations in the three months ended March 31, 2025 was $1.3 million, or $0.9 million more than the $0.4 million of cash used in operations during the three months ended March 31, 2024. While the net loss, including noncontrolling interest, improved to $0.6 million in the three months ended March 31, 2025 compared to a net loss, including noncontrolling interest of $1.5 million for the three months ended March 31, 2024, $1.9 million of the improvement was due to the noncash gain from extinguishment of the Senior PIK Notes. Excluding the noncash gain from extinguishment of the Senior PIK Notes, the net loss, including noncontrolling interest, was $2.5 million or $1.0 million more than the comparable 2024 period resulting in more cash used in operations in the three months ended March 31, 2025.

Current wording

The net cash used in operations in the six months ended June 30, 2025 was $3.7 million, or $2.1 million more than the $1.6 million of cash used in operations during the six months ended June 30, 2024. While the net loss, including noncontrolling interest, improved to $1.0 million in the six months ended June 30, 2025 compared to a net loss, including noncontrolling interest of $3.7 million for the six months ended June 30, 2024, we did not collect all of the revenue generated in the six months ended June 30, 2025 as accounts receivable increased by $2.7 million in the period. In addition, $1.9 million of the improvement in the net loss for the six months ended June 30, 2025 was due to the noncash gain from extinguishment of the Senior PIK Notes.

Previous wording

We did not have cash flows from investing activities in the three months ended March 31, 2025 and March 31, 2024.

Current wording

Cash flows from investing activities in the six months ended June 30, 2025 and June 30, 2024 were $14,900 and $0.3 million, respectively. The cash used in the investing activities for the six months ended June 30, 2025 resulted from capital expenditures and for the six months ended June 30, 2024 resulted from the purchase of Myrtle.

Previous wording

Net cash provided by financing activities for three months ended March 31, 2025 was $1.3 million compared to $0.4 million for the three months ended March 31, 2024. Net cash provided by financing activities for the three months ended March 31, 2025, included $1.0 million and $0.3 million from the issuances of third party notes payable and borrowings under a related party note payable, respectively, $0.3 million from other loans and $44,825 from the issuance of shares of preferred stock, partially offset by $0.2 million of payments on other loans and $46,322 of payments of a note payable. Net cash provided by financing activities for the three months ended March 31, 2024, included $0.4 million from promissory notes.

Current wording

Net cash provided by financing activities for six months ended June 30, 2025 was $4.0 million compared to $1.8 million for the six months ended June 30, 2024. Net cash provided by financing activities for the six months ended June 30, 2025, included $3.1 million from the issuances of preferred stock, $1.1 million from the issuances of third party notes payable and $0.3 million from other loans, partially offset by $0.3 million of payments on other loans and $0.1 million of payments of third party notes payable. Net cash provided by financing activities for the six months ended June 30, 2024, of $1.8 million was from promissory notes payable.