Cardiff Lexington Corp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2026 AND 2025

Organization and Nature of Operations

Cardiff Lexington Corporation (“Cardiff”) was originally incorporated on September 3, 1986 in Colorado as Cardiff International Inc. On November 10, 2005, Cardiff merged with Legacy Card Company, LLC and changed its name to Cardiff Lexington Corporation. On August 27, 2014, Cardiff redomiciled and became a corporation under the laws of Florida. On April 13, 2021, Cardiff redomiciled and became a corporation under the laws of Nevada.

Cardiff is an acquisition holding company focused on locating undervalued and undercapitalized companies, primarily in the healthcare industry, and providing them capitalization and leadership to maximize the value and potential of their private enterprises while also providing diversification and risk mitigation for stockholders. All of Cardiff’s operations are predominantly conducted through, and its income derived from, its Nova Ortho and Spine, LLC (“Nova”) subsidiary. Its subsidiaries include:

Basis of Presentation and Principles of Consolidation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of Cardiff and its wholly owned subsidiaries, Nova and Edge View (collectively, the “Company”). All significant intercompany accounts and transactions are eliminated in consolidation.

Reverse Stock Split

On January 12, 2026, the Company implemented a 1-for-3 reverse split of our outstanding shares of common stock. All share and per share data throughout these consolidated financial statements have been retroactively adjusted to reflect the reverse stock split. The total number of authorized shares of common stock did not change. As a result of the reverse stock split, an amount equal to the decreased value of the common stock was reclassified from “common stock” to “additional paid-in capital.” In addition, the conversion prices of the outstanding convertible notes and certain series of preferred stock were adjusted to reflect a proportional decrease in the number of shares of common stock to be issued upon conversion. All fractional shares were rounded up.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Management uses its historical records and knowledge of its business in making estimates. Accordingly, actual results could differ from those estimates.

Accounts Receivable

In the normal course of business, the Company is in the lien based medical industry, providing orthopedic healthcare servicing an uninsured market insulated by a letter of protection which insulates the Company from, and insures payment in full of, insurance settlements. Accounts receivable consists of amounts due from attorneys and insurance providers for services provided to patients under the letter of protection. Accounts receivable are recorded at the expected settlement realization amount, which is less contractual adjustments and an allowance for credit losses. The Company recognizes an allowance for credit losses for its accounts receivable to present the net amount expected to be collected as of the balance sheet date. This allowance is determined based on the history of net settlements received, where the net settlement amount is not collected. No collection can happen if no settlement is reached with the defendant’s insurance company and the plaintiff (the patient) loses the case at trial, or the case is abandoned, then the Company will not be able to collect on its letter of protection and its receivable will not be collected. The Company monitors outstanding cases as they develop through ongoing discussions with attorneys, doctors and its third-party medical billing company and additionally monitors settlement realization rates over time. Additionally, the Company considers economic factors and events or trends expected to affect future collections experience. The no collection history of the Company’s customers is considered in future assessments of collectability as these patterns are established over a longer period. The Company uses the term collection and collection rate in its disclosures to describe the historical less than 1.0% occurrence of not collecting under a contract, which aligns with the Company’s credit loss accounting under ASC 326.

The Company does not have a significant exposure to credit losses as it has historically had a less than 1.0% loss rate where the Company received no settlement amount for its outstanding accounts receivable. Although possible, claims resulting in zero collection upon settlement are rare based on the Company’s historical experience and has historically been less than 1.0% of its outstanding accounts receivable, thereby resulting in a collection rate of 99%. The Company uses the loss rate method to record its allowance for credit losses. The Company applies the loss rate method by reviewing its zero collection history on a quarterly basis and updating its estimates of credit losses to adjust for changes in loss data. The Company typically collects on its accounts receivable between twelve and twenty-four months after recording. The Company does not record an allowance for credit losses based on an aging of its accounts receivable as the aging of the Company’s receivables do not influence the credit loss rate due to the nature of its business and the letter of protection. The Company does not adjust its receivables for the effects of a significant financing component at contract inception as the timing of variable consideration is determined by the settlement, which is outside of the Company’s control. As of September 30, 2026 and December 31, 2025, the Company’s allowance for credit losses was $480,000 and $400,000, respectively. As of September 30, 2025 and December 31, 2024, the Company’s allowance for credit losses was $249,799 and $255,215, respectively. The Company recognized $50,000 and $80,000 credit loss expense during the three and nine months ended September 30, 2026, respectively, and $0 and $112,727 of credit loss expense during the three and nine months ended September 30, 2025, respectively, which is included in selling, general and administrative expenses in the consolidated statement of operations. The balance of accounts receivable, net as of January 1, 2025 was $15,934,490. The balance of the allowance for credit losses was $255,215 as of January 1, 2025.

The following table shows the allowance for credit losses activity:

Property and Equipment

Property and equipment are carried at cost. Expenditures for renewals and betterments that extend the useful lives of property, equipment or leasehold improvements are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is calculated using the straight-line method for financial reporting purposes based on the following estimated useful lives:

Goodwill

Goodwill is not amortized but is evaluated for impairment annually or when indicators of a potential impairment are present. The Company reviews goodwill for impairment on a reporting unit basis annually and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. Goodwill is tested first for impairment based on qualitative factors on an annual basis or in between if an event occurs or circumstances change that indicate the fair value may be below its carrying amount, otherwise known as a ‘triggering event’. An assessment is made of these qualitative factors to determine whether it is more likely than not the fair value is less than the carrying amount, including goodwill. The annual evaluation is based on valuation models that incorporate assumptions and internal projections of expected future cash flows and operating plans. The Company believes such assumptions are also comparable to those that would be used by other marketplace participants. During the nine months ended September 30, 2026 and 2025, the Company didnot recognize any goodwill impairment and noted there were no such triggering events.

Valuation of Long-lived Assets

In accordance with the provisions of Accounting Standards Codification (“ASC”) Topic 360-10-35, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as plant and equipment and construction in progress held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of assets to estimated cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.

Revenue Recognition

The Company’s primary source of revenue is its healthcare subsidiary, which records revenues from providing licensed and/or certified orthopedic procedures. Revenue is recognized at a point in time in accordance with ASC 606 and at an estimated net settlement realization rate based on gross billed charges. The Company’s healthcare subsidiary does not have contract liabilities or deferred revenue as there are no amounts prepaid for services. The Company applies the following five-step ASC 606 model to determine revenue recognition:

At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses services promised within each contract and determines those that are a performance obligation and assesses whether each promised service is distinct.

The Company’s contracts contain a single performance obligation (providing orthopedic services), as the promise to transfer the individual services is not separately identifiable from other promises in the contracts and, therefore, not distinct, as a result, the entire transaction price is allocated to this single performance obligation.

Accordingly, the Company recognizes net revenue when the patient receives orthopedic care services. The Company’s patient service contracts generally have performance obligations which are satisfied at a point in time. The performance obligation is for onsite or off-site care provided. Patient service contracts are generally fixed-price, and the transaction price is in the contract.

In determining net revenue to record under ASC 606, the Company must estimate the transaction price, including estimates of variable consideration in the contract at inception. In order to estimate variable consideration, the Company uses established billings rates (also described as “gross charges”) for the procedures being performed, however, the billing rates are not the same as actual amounts recovered for the Company’s healthcare subsidiary. They generally do not reflect what the Company is ultimately paid by the customer, insurance carriers and other payors, and therefore are not reported in the consolidated financial statements at that rate. The Company is typically paid amounts based on established charges per procedure with guidance from the annually updated Current Procedural Terminology (“CPT”) guidelines that designates relative value units and a suggested range of charges for each procedure which is then assigned a CPT code. This gross charge is discounted to reflect the percentage paid to the Company using a modifier recognized by each insurance carrier for services, less deductible, co-pay, and contractual adjustments which are deducted from the calculated fee. These adjustments are considered variable consideration under ASC 606 and are deducted from the calculated fee to arrive at the net transaction price. The Company also estimates changes in the contract price as a result of price concessions, changes to deductibles, co-pays and other contractual adjustments to determine the eventual settlement amount the Company expects to receive. The Company uses the term settlement realization in its disclosures to describe the amount of cash the Company expects to receive based on its estimate of the transaction price under the expected value method of ASC 606.

Where appropriate, the Company utilizes the expected value method to determine the appropriate amount for estimates of variable consideration, which has been based on a historical lookback of its actual settlement realization rates. The estimates of reserves established for variable consideration reflect current contractual requirements, the Company’s historical experience, specific known market events and trends, industry data and forecasted patient data and settlement patterns. Settlement realization patterns are assessed based on actual settlements and based on expected settlement realization trends obtained from discussions with attorneys, doctors and the Company’s third-party medical billing company. Settlement amounts are negotiated, and prolonged settlement negotiations are not indicative of a greater likelihood of reduced settlement realization or zero settlement.

The Company may accept a lower settlement realization rate in order to receive faster payment. The Company obtains information about expected settlement realization trends from discussions with doctors and attorneys and its third-party medical billing company vendor, which handles settlement claims and negotiations. Settlement amounts are presented to the Company’s third-party medical billing company vendor.

Settlement rates of 49% or higher based on gross billed amounts are typically accepted without further negotiation. Proposed settlement rates below 49% are negotiated when possible and longer negotiations typically result in higher settlement rates. If the Company accepts a lower settlement realization rate in order to receive payments more quickly, the Company considers that a price concession and estimates these concessions at contract inception. The various forms of variable consideration described above included in the transaction price may be constrained and are included in net revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period.

Service Fees – Net (PIP)

The Company generates services fees from performing various procedures on the date the services are performed. These services primarily include slip and falls as well as smaller nominal Non-Personal Injury Protection (“PIP”) services. As described above, these revenues are based on established insurance billing rates, less allowances for contractual adjustments and uncollectible amounts. These contractual adjustments vary by insurance company and self-pay patients. The Company computes these contractual and other adjustments based on its historical settlement realization experience. Completing the paperwork for each case and preparing it for billing takes approximately ten business days after a procedure is performed. The majority of claims are then filed electronically except for those remaining insurance carriers requiring paper filing. An initial response is usually received within four weeks from electronic filing and up to six weeks from paper filing. Responses may be a payment, a denial, or a request for additional information. The Company’s healthcare revenues are generated from professional medical billings including facility and anesthesia services. With respect to facility and anesthesia services, the Company is the primary obligor as the facility and anesthesia services are considered part of one integrated performance obligation.

The Company satisfies performance obligations as services are performed and then billed to the patient. Payment in most cases is made by an attorney for such services to our patients which are due upon final settlement of patients’ claims. During the claims process, legal counsel warranties such claim through the letter of protection, which is sent to the Company, as a medical provider, on behalf of the client patient. This letter states that the attorney is responsible for paying the client’s medical bills when the case is fully developed and settles. The medical professional agrees to provide treatment to the injured person and refrain from attempting to collect payment as it is developing and until the case is resolved. Once the personal injury case is finalized with the insurance company, the attorney pays the outstanding medical bills from the settlement.

Settlement Rates

The Company periodically evaluates its estimated settlement realization rate at which revenue is recorded in accordance with ASC 606. This includes a monthly review of historical data and settlement realization rates, along with estimates of current and pending settlements through ongoing discussions with attorneys, doctors and the Company’s third-party medical billing company in order to determine the variable consideration under ASC 606 and the net transaction price. For each of the three and nine months ended September 30, 2026, the Company realized a 40% average settlement rate of its gross billed charges. For each of the three and nine months ended September 30, 2025, the Company realized a 42% average settlement rate of its gross billed charges.

Contract Fees (Non-PIP)

The Company has contract fees for amounts earned from its Non-PIP related procedures, typically car accidents, and are settled on a contingency basis. Prior to April 2023, these cases were sold to a factor who bears the risk of economic benefit or loss. Generally, the sale of these cases to a third-party factor resulted in an approximate 54% reduction from the accounts receivable amounts. After selling patient cases to the factor, any additional funds settled by the Company were remitted to the factor. The Company evaluated the factored adjustments considering the actual factored amounts per patient on a quarterly interval, and the reductions from accounts receivable that were factored were recorded in finance charges as other expenses on the consolidated statement of operations. As a result of the Company’s twelve to twenty-four month settlement realization timeframe, the Company has an accrued liability resulting from the settlement of receivables sold to the third-party factors which fluctuates as settlements are made and remitted to those third-party factors. These accounts receivable sold to these third-party factors are not included in the Company’s financial statements accounts receivable balance once sold and therefore are not part of the assessment of the net realizable value of accounts receivable. The Company ceased factoring of accounts receivable in the first quarter of 2023.

Advertising Costs

Advertising costs are expensed as incurred. Advertising costs are included as a component of cost of sales in the consolidated statements of operations. The Company recognized advertising and marketing expense of $64,204 and $104,663 for the three months ended September 30, 2026 and 2025, respectively. The Company recognized advertising and marketing expense of $186,910 and $308,001 for the nine months ended September 30, 2026 and 2025, respectively.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs), and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). See also Note 6.Fair Value Measurements. The three levels of the fair value hierarchy are described below:

Distinguishing Liabilities from Equity

The Company accounts for its series X senior convertible preferred stock subject to possible redemption in accordance with ASC 480, “Distinguishing Liabilities from Equity”. Conditionally redeemable preferred shares are classified as temporary equity within the Company’s consolidated balance sheet.

Share-Based Compensation

The Company accounts for its stock-based compensation in which the Company obtains employee/non-employee services in share-based payment transactions under the recognition and measurement principles of the fair value recognition provisions of section 718-10-30 of the FASB ASC. Pursuant to paragraph 718-10-30-6 of the FASB ASC, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

The measurement date used to determine the fair value of equity-classified awards is the grant-date, which is the date on which the Company and the grantee reach a mutual understanding of the award’s key terms and conditions. Generally, all forms of share-based payments, including stock option grants, warrants, restricted stock grants and stock appreciation rights are measured at their fair value on the awards’ grant-date, based on estimated number of awards that are ultimately expected to vest. The Company has elected to account for forfeitures as they occur and expense is recognized over the requisite service period.

The expense resulting from share-based payments is recorded in share-based compensation expense in the consolidated statements of operations.

Income Taxes

Income taxes are determined in accordance with ASC Topic 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company evaluates both positive and negative evidence in assessing the realizability of its net deferred tax assets and records a valuation allowance when it is more likely than not that some or all of the deferred tax assets will not be realized. The One Big Beautiful Bill Act (the “OBBBA”), which was enacted on July 4, 2025, makes numerous tax changes. The tax provisions of the OBBBA did not have a material impact on the Company’s effective tax rate and it also did not impact the Company’s net deferred tax assets, as the Company continues to maintain a full valuation allowance against that balance.

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

For the three and nine months ended September 30, 2026 and 2025, the Company didnot have any interest and penalties associated with tax positions and did not have any significant unrecognized uncertain tax positions.

Income (Loss) per Share

FASB ASC Subtopic 260,Earnings Per Share, provides for the calculation of “Basic” and “Diluted” earnings per share. Basic earnings per common share is computed by dividing income available to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing income available to common stockholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Income available to common stockholders consists of net (loss) income less any preferred stock dividends. Potentially dilutive securities include outstanding stock options, warrants, and debts convertible into common stock. The dilutive effect of stock options and warrants is reflected in diluted earnings per common share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s common stock can result in a greater dilutive effect from potentially dilutive securities. The diluted effect of debt convertibles is reflected utilizing the if converted method.

Going Concern

The accompanying condensed consolidated financial statements have been prepared using the going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The Company has sustained operating losses since its inception and has an accumulated deficit of $89,117,673 and $79,490,980 as of September 30, 2026 and December 31, 2025, respectively. The Company had negative cash flow from operations of $235,975 and $2,463,300 for the nine months ended September 30, 2026 and 2025, respectively. These factors raise a substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed consolidated financial statements do not reflect any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classifications of liabilities that might result if the Company is unable to continue as a going concern.

The ability of the Company to continue as a going concern and the appropriateness of using the going concern basis is dependent upon, among other things, additional cash infusions. Management has prospective investors and believes the raising of capital will allow the Company to fund its cash flow shortfalls and pursue new acquisitions. There can be no assurance that the Company will be able to obtain sufficient capital from debt or equity transactions or from operations in the necessary time frame or on terms acceptable to it. Should the Company be unable to raise sufficient funds, it may be required to curtail its operating plans. In addition, increases in expenses may require cost reductions. No assurance can be given that the Company will be able to operate profitably on a consistent basis, or at all, in the future. Should the Company not be able to raise sufficient funds, it may cause cessation of operations.

Recently Issued Accounting Standards

The FASB issued Accounting Standards Update (“ASU”) 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” in November 2024. The amendments are effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The amendments require disclosure in the notes to financial statements of specified information about certain costs and expenses related to selling expenses and in annual reporting periods, an entity’s definition of selling expenses, among other qualitative descriptions of relevant expense captions that are not separately disaggregated quantitatively. The Company is analyzing the impact that ASU 2024-03 will have on the Company’s required disclosures but does not expect any material impacts.

The FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow Scope Improvements” in December 2025. The amendments are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, for public business entities. The amendments can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The amendments in this update clarify interim disclosure requirements and the applicability of Topic 270 and result in a comprehensive list of interim disclosures that are required by GAAP. The amendments in this update also include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The Company will review the clarifications in the update around the Topic 270 disclosures but does not expect this update to have a material impact on our financial statements.

Property and equipment as of September 30, 2026 and December 31, 2025 is as follows:

For the three months ended September 30, 2026 and 2025, depreciation expense was $233 and $762, respectively. For the nine months ended September 30, 2026 and 2025, depreciation expense was $1,079 and $4,890, respectively. During the first quarter of 2025, the Company identified assets that were no longer functional in its medical facilities. As such, the Company has recorded a reduction in medical equipment and the related depreciation which resulted in a loss from the disposal of $12,593 in the condensed consolidated statement of operations for the nine months ended September 30, 2025.

As of September 30, 2026 and December 31, 2025, the Company had 27 acres of land with a carrying value of approximately $540,000. The land is currently vacant, and management does not currently have any plans to develop this property and expects to eventually sell the property.

On September 1, 2026, the Company issuedtwo shares of newly-designated Series A-1 Preferred Stock, each with a stated value of $250, to Alex Cunningham, the Company’s Chief Executive Officer, in partial settlement of accrued salaries. The issuance reduced accrued salaries by $500 and was recorded as an increase to preferred stock within stockholders’ equity. See Note 10.Capital Stock for details.

On June 30, 2026, the Company issued an unsecured promissory note in the principal amount of $233,333 to Daniel Thompson, the Company’s former Chairman of the Board and a significant stockholder, to resolve outstanding accrued compensation obligations. The note bears interest at 5% annually and matures June 30, 2028. See also Note 7.Notes and Loans Payable.

On March 6, 2026, the Company entered into a lock-up and compensation resolution agreement with Daniel Thompson to resolve outstanding accrued compensation obligations. Under the agreement, the Company issued an unsecured promissory note in the principal amount of $116,667 bearing interest at 10% annually, payable interest-only in year one and 50% principal in each of years two and three, with all amounts due within three years. The agreement also required Mr. Thompson to execute a lock-up agreement in connection with the Company’s planned public offering. See also Note 7.Notes and Loans Payable.

Also on March 6, 2026, the Company entered into a conversion agreement with Daniel Thompson, pursuant to which deferred compensation in the amount of $2,352,994 owed to Mr. Thompson was cancelled in exchange for 588,249 shares of common stock. The number of shares issued was determined based on the closing market price of the Company’s common stock of $4.00 on March 4, 2026. Because the underlying compensation was fully earned and the fair value of equity issued equals the amount accrued, the settlement was accounted for as an equity issuance with no impact on the Company’s consolidated statements of operations. The Company recorded a reduction to accrued compensation and a corresponding increase to stockholders’ equity upon issuance of the shares. See also Note 10.Capital Stock.

On January 29, 2026, the Company entered into a conversion agreement with Alex Cunningham, the Company’s Chief Executive Officer, pursuant to which deferred compensation in the amount of $2,365,242 owed to Mr. Cunningham was cancelled in exchange for 556,528 shares of common stock. The number of shares issued was determined based on the closing market price of the Company’s common stock of $4.25 on January 28, 2026. Because the underlying compensation was fully earned and the fair value of equity issued equals the amount accrued, the settlement was accounted for as an equity issuance with no impact on the Company’s consolidated statements of operations. The Company recorded a reduction to accrued compensation and a corresponding increase to stockholders’ equity upon issuance of the shares. See also Note 10.Capital Stock.

On December 21, 2025, in connection with bonuses earned by certain employees, the Company issued promissory notes in the aggregate principal amount of $1,085,703 (representing bonuses earned of $593,450 and $492,253 for the years ended December 31, 2025 and 2024, respectively), in lieu of cash payment, including a promissory note in the principal amount of $460,000 to Alex Cunningham, the Company’s Chairman and Chief Executive Officer, a promissory note in the principal amount of $122,550 to Matthew Shafer, the Company’s Chief Financial Officer, and a promissory note in the principal amount of $460,000 to Daniel Thompson. These notes bear interest of 5% per annum, matured on June 30, 2026 and are currently in default. The bonus expense was recognized in the period earned, and the issuance of the notes was accounted for as a non-cash financing activity. See also Note 7.Notes and Loans Payable.

In connection with the acquisition of Edge View on July 16, 2014, the Company assumed amounts due from previous owners who are current managers of Edge View. These amounts are due on demand and do not bear interest. The balance of these amounts is $4,979 due from the previous owners as of September 30, 2026 and December 31, 2025.

See also Note 13.Commitments and Contingencies and Note 17.Subsequent Events.

The Company measures certain liabilities at fair value on a recurring basis. These liabilities consist primarily of derivative liabilities associated with convertible notes (See Note 8.Convertible Notes Payable) as well as a Commitment Shares derivative liability (See Note 9.Derivative Liabilities and Note 10.Capital Stock). These instruments are valued using significant unobservable inputs and are classified within Level 3 of the fair value hierarchy. The fair value of these instruments was updated as of September 30, 2026, in accordance with ASC 820, reflecting all relevant market inputs and valuation considerations as of the reporting date.

Convertible Notes Derivative Liabilities

Valuation Methodology

The derivative liabilities relate to embedded features within the Company’s convertible notes, including variable conversion pricing, look-back provisions, contingent conversion price resets, default and delinquency adjustments, DTC trading restrictions, and change-of-control redemption alternatives. Because these features are not considered indexed to the Company’s own stock and may require net-cash settlement, they are accounted for as derivative liabilities under ASC 815.

The Company engaged an independent valuation specialist to estimate the fair value of the derivative liabilities using a Monte Carlo simulation model, which incorporates assumptions regarding expected volatility, risk-free interest rates, expected term, and probability-weighted assessments of contingent events.

Fair Value Hierarchy

Level 3 Roll-forward

Commitment Shares Derivative Liability

Valuation Methodology

The derivative liability related to the Commitment Shares feature of the Common Stock Purchase Agreement entered into on June 5, 2026 (see Note 10.Capital Stock) included a contingent settlement provision wherein the shares were issuable upon the date that the applicable Registration Statement has been declared effective by the Securities and Exchange Commission (the “SEC”). This affected when the shares could be issued and how many shares were issued. The number of shares to be issued was based on a future stock price determined on a future event outside the Company’s control. As such, the number of shares to be issued was variable, the denominator was a future stock price, and the share count was not fixed at inception. The Commitment Shares feature represented a variable-share obligation based on a future stock price which triggered derivative liability accounting requiring a fair value measurement at inception and at settlement. A Black-Scholes option-pricing model was used to fair-value the derivative liability as the payoff depended on a single future price, not a path-dependent minimum. Significant inputs included: current stock price, expected volatility, expected term and risk-free interest rate. Changes in any of these inputs could materially impact the fair value measurement.

During the three months ended September 30, 2026, the Company issued the Commitment Shares, and the derivative liability was remeasured to fair value and settled into equity. Upon settlement, the derivative liability was reclassified to additional paid-in capital, and no derivative liability related to this arrangement remained outstanding as of September 30, 2026. See also Note 10.Capital Stock.

Fair Value Hierarchy

Level 3 Roll-forward

Sensitivity Analysis

The fair value of the derivative liabilities is sensitive to changes in several unobservable inputs, most notably expected volatility, expected term, and probability-weighted assessments of default, delinquency, and other contingent events. In general, increases in expected volatility, decreases in stock price, or increases in the probability of default or delinquency would result in a higher fair value of the derivative liabilities. Conversely, decreases in volatility or increases in stock price would reduce the fair value. Because of the path-dependent nature of the conversion features in the Convertible Note derivative liabilities, the impact of changes in these inputs may not be linear. See also Note 9.Derivative Liabilities.

Notes payable and line of credit at September 30, 2026 and December 31, 2025 are summarized as follows:

Long-term debt matures as follows:

Promissory Note – Settlement Agreement

In June 2024, the Company issued a settlement promissory note in the amount of $535,000 in connection with the cancellation of certain preferred stock and convertible notes, as previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. The note did not bear interest and required fixed principal payments based on the timing and amount of capital raised in any offerings. During the nine months ended September 30, 2026, the Company paid $110,000 toward the outstanding principal balance. At September 30, 2026 and December 31, 2025, the remaining principal balance was $0 and $110,000, respectively.

Loans and Notes Payable

On March 12, 2009, the Company issued a debenture in the principal amount of $20,000. The debenture bore interest at 12% per year and matured on September 12, 2009. The balance of the debenture was $10,989 at September 30, 2026 and December 31, 2025. The accrued interest of the debenture was $11,174 and $10,188 at September 30, 2026 and December 31, 2025, respectively. The Company assigned all its receivables from consumer activations of the rewards program as collateral on this debenture.

Loans and Notes Payable – Related Parties

As of September 30, 2026 and December 31, 2025, the outstanding principal on the related party notes was $1,435,703 and $1,085,703, respectively. Accrued interest outstanding on the related party notes was $47,864 and $1,636 at September 30, 2026 and December 31, 2025, respectively. See also Note 5.Related Party Transactionsand Note 17.Subsequent Events.

Small Business Administration (“SBA”) Loans

On June 2, 2020, the Company obtained an SBA loan in the principal amount of $150,000 with an interest rate of 3.75% and a maturity date of June 2, 2050. The principal balance and accrued interest at September 30, 2026 was $140,988 and $0, respectively, and the principal balance and accrued interest at December 31, 2025 was $143,558 and $0, respectively.

Line of Credit

The Company maintains a revolving purchase and security agreement with DML HC Series, LLC (“DML”), which is accounted for as a secured borrowing. Under the facility, eligible accounts receivable are pledged as collateral, and advances of up to 70% of eligible receivables may be requested. Although the credit agreement currently provides for a maximum advance amount of $23,000,000, the lender has agreed to waive this maximum advance limit while the parties negotiate an amendment to the facility. The related accounts receivable remain recorded as assets on the Company’s balance sheet, and the amounts drawn are recorded as a liability under ‘Line of Credit’ until repaid. The Company is required to repurchase or replace certain ineligible or uncollected receivables. Collections on pledged receivables are remitted directly to the lender and applied against outstanding borrowings. The revolving purchase and security agreement includes discounts recorded as interest expense on each funding. The facility includes customary recourse, repurchase provisions, and covenants, and matures on September 28, 2028.

Under the terms of the facility, collections from these receivables are used to repay advances outstanding, which are recognized as secured borrowings totaling $23,439,491 and $17,209,908 as of September 30, 2026 and December 31, 2025, respectively. The unused line of credit balance as of September 30, 2026 and December 31, 2025 was $0 and $5,790,092, respectively. The accrued interest related to the line of credit was $730,107 and $673,267 as of September 30, 2026 and December 31, 2025, respectively.

As of September 30, 2026 and December 31, 2025, the Company had convertible debt outstanding, at carrying value, of $240,205 and $118,295, respectively. Debt discounts associated with the convertible debt at September 30, 2026 and December 31, 2025, were $873,327 and $131,705, respectively. Amortization of debt discounts recorded for the three months ended September 30, 2026 and 2025 were $22,516 and $0, respectively. Amortization of debt discounts recorded for the nine months ended September 30, 2026 and 2025 were $56,847 and $0, respectively.

During the nine months ended September 30, 2026, the Company received $918,800 in net proceeds from the issuance of convertible notes (as detailed below) and made required cash amortization principal payments of $35,357. No interest was repaid in cash, and the Company converted $341,388 in principal and accrued interest and $5,500 in conversion cost into an aggregate of 1,487,768 shares of common stock. During the nine months ended September 30, 2025, the Company did not receive any proceeds from convertible notes and no interest was repaid. See also Note 10.Capital Stock for interest settled in shares of common stock during the nine months ended September 30, 2026.

The carrying amount of the convertible notes as of September 30, 2026 and December 31, 2025 represents the principal amount less the unamortized debt discount allocated to the host debt, as shown below:

The following maturity table reflects the full expected principal amounts due as follows:

On January 24, 2017, the Company issued a convertible promissory note in the principal amount of $80,000 for services rendered, which matured on January 24, 2018. On August 26, 2025, the total outstanding principal and accrued interest of $154,049 of this tranche was converted into 64,165 shares of common stock. On February 10, 2023, the Company executed a second tranche under this note in the principal amount of $50,000. In May of 2024, $63,513 of outstanding principal and interest on this tranche was paid in full. On March 30, 2023, the Company executed a third tranche under this note in the principal amount of $25,000. On July 28, 2026, the total outstanding principal and accrued interest of $40,705 of this tranche was converted into 113,302 shares of common stock. On August 11, 2023, the Company executed a fourth tranche under this note in the principal amount of $25,000. As of September 30, 2026, the outstanding principal amount is $25,000 and accrued interest is $14,585. This note is currently in default and accrues interest at a default interest rate of 20% per annum. At the sole option of the holder, the holder may convert the outstanding principal amount, or any portion of the principal amount, and any accrued interest, in whole or in part, into shares of common stock. The conversion price is $0.25 per share or 50% of the lowest closing price on the primary trading market on which the Company’s common stock is quoted for the last ten trading days immediately prior to but not including the conversion date, whichever is lower.

In December 2025, the Company entered into loan agreements with two accredited investors, pursuant to which the Company issued to such investors (i) convertible promissory notes in the aggregate principal amount of $200,000, (ii) warrants for the purchase of an aggregate of 66,667 shares of common stock and (iii)6,667 shares of common stock for total gross and net proceeds of $200,000. The Company concluded that the notes, warrants and common shares represent freestanding financial instruments issued as a single financing unit and, accordingly, allocated the total transaction proceeds to each instrument based on their relative fair values. The fair value of the warrants was estimated using the Black-Scholes option pricing model, and the fair value of the common shares was based on the quoted market price on the issuance date. The aggregate amount allocated to the warrants and common shares was recorded as a debt discount and is being amortized to interest expense over the contractual term of the notes. These notes accrue interest at a rate of twelve percent (12%) per annum, payable in shares of common stock, cash or a combination thereof at the Company’s option quarterly commencing on April 1, 2026, with all principal and accrued interest being due and payable one (1) year after issuance. During the nine months ended September 30, 2026, the Company paid accrued interest on these notes in shares of its common stock, including $6,499 paid on April 1, 2026 in 2,516 shares and $6,067 paid on July 1, 2026 in 3,915 shares. The Company may prepay the principal and accrued interest at any time without penalty upon fifteen (15) days’ notice. These notes are unsecured and contain customary events of default for a loan of this type. These notes are convertible into shares of common stock at a conversion price of $3.00 (subject to standard adjustments in the event of any stock splits, stock combinations, dividends paid in common stock, stock reclassifications or similar transactions). As of September 30, 2026 and December 31, 2025, the outstanding principal balance of these notes was $200,000. Unamortized debt discount was $113,706 and $131,705 as of September 30, 2026 and December 31, 2025, respectively. Accrued interest was $6,133 and $499, as of September 30, 2026 and December 31, 2025, respectively. See also Note 10.*Capital Stock,*Note 11.Warrants and Note 17.Subsequent Events.

In December 2025 and January 2026, the Company also entered into loan agreements with two additional accredited investors, pursuant to which the Company issued to such investors (i) convertible promissory notes in the aggregate principal amount of $80,000, which also provide for a second tranche of up to an additional $80,000 upon the mutual agreement of the parties, all of which were issued in the first quarter of 2026, (ii) warrants for the purchase of an aggregate of 73,334 shares of common stock, of which 33,334 were issued in December 2025 and 40,000 were issued in January 2026, and (iii)36,667 shares of common stock, all of which were issued in January 2026, for total gross proceeds of $160,000 and net proceeds of approximately $139,000, all of which were received in the first quarter of 2026. As noted above, although one of the loan agreements and one warrant were executed in December 2025, no proceeds were received as of December 31, 2025, and the promissory note was not funded or outstanding at year-end. In accordance with ASC 815, the Company analyzed the notes for any embedded features that would need to be bifurcated from the host instrument and accounted for separately as a derivative. Several embedded features requiring bifurcation were noted and it was determined that the conversion option as a whole should be separated and accounted for as a single derivative liability. A Monte Carlo valuation was obtained from valuation specialists to fair value the derivative liability (See Note 6.Fair Value Measurements andNote 9.Derivative Liabilities). The derivative liabilities were recorded first, and the host debt instruments were recorded at the residual amounts after allocating proceeds to the derivative liabilities based on the relative fair values. Issuance costs were also allocated between the derivative liabilities and the host instruments based on relative values. The warrants were valued using a Black-Scholes model and the common shares were valued at the closing market price. In accordance with ASC 405 and ASC 470, the remaining proceeds were then used to allocate the relative fair values of the convertible promissory notes, the related warrants and the issuance of the common stock. The allocated values of the warrants and the common shares were recorded with their debt discounts which were amortized over the life of the notes. Upon initial recognition, the Company recorded a day-1 loss to other expense in the condensed consolidated income statements of $1,192,641, representing the excess of the fair value of the embedded derivative liabilities over the net proceeds allocated to the host debt instruments. These convertible promissory notes accrued interest at a rate of twelve percent (12%) per annum, payable in shares of common stock, cash or a combination thereof at the Company’s option quarterly commencing on April 1, 2026, with all principal and accrued interest being due and payable five (5) years after issuance. If a quarterly interest payment was paid in shares of common stock, then the interest rate used in connection with such issuance shall be fifteen percent (15%) per annum. During the nine months ended September 30, 2026, the Company paid accrued interest on these notes in shares of its common stock, including $4,283 paid on April 1, 2026 in 1,659 shares and $6,067 paid on July 1, 2026 in 3,916 shares.

The Company may prepay the principal and accrued interest at any time without penalty upon fifteen (15) days’ notice. In addition, if the Company completes a financing of at least $2.5 million, then, if requested by a holder, the Company must repay the remaining principal and interest from the proceeds of such financing. As the Company determined the likelihood of a financing occurring as noted above is high, the notes were classified as current on the condensed consolidated balance sheets. These convertible promissory notes were unsecured and contain customary events of default for a loan of this type. These convertible promissory notes were convertible into shares of common stock at a conversion price of $0.825 (subject to standard adjustments in the event of any stock splits, stock combinations, dividends paid in common stock, stock reclassifications or similar transactions). In addition, these convertible promissory notes provide that if the closing price of the Company’s common stock on the sixth (6th) month anniversary of the issuance date is less than the conversion price then in effect, then the conversion price shall be adjusted to such lower price, and also provide that if the Company issues any shares of common stock, or securities convertible into common stock, at a price that is less than the conversion price then in effect, then the conversion price shall be adjusted to such lower price, subject to certain exceptions. All of the warrants may be exercised for a period of three years at an exercise price of $9.00 (subject to standard adjustments in the event of any stock splits, stock combinations, dividends paid in common stock, stock reclassifications, mergers, consolidations, reorganizations or similar transactions) and may be exercised on a cashless basis if there is no effective registration statement covering the shares of common stock issuable upon the exercise of the warrants. All of the convertible promissory notes and warrants contain ownership limitations, which provide that the Company shall not effect any conversion or exercise, and a holder shall not have the right to convert or exercise any portion of a note or a warrant, to the extent that after giving effect to the issuance of common stock upon such conversion or exercise, such holder, together with its affiliates, would beneficially own in excess of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of common stock upon such conversion or exercise. This limitation may be waived, up to a maximum of 9.99%, by a holder upon not less than sixty-one (61) days’ prior notice to the Company. On September 18, 2026, the total outstanding principal and accrued interest in the aggregate of $269,766 and conversion cost of $3,000 was converted into an aggregate of 1,128,731 shares of common stock. See also Note 10.Capital Stock and Note 11.Warrants.

In March 2026, the Company entered into securities purchase agreements with two additional accredited investors, pursuant to which the Company issued to such investors convertible promissory notes in the principal amount of $230,000 each, or $460,000 in the aggregate, with an aggregate $46,000 original issuance discount, $14,000 in associated legal fees and $24,000 in brokers fees for total net cash proceeds of $376,000. These convertible promissory notes accrue interest at a rate of six percent (6%) and ten percent (10%) per annum and mature as of March 26, 2027 and March 30, 2027. Interest is payable in shares of the Company’s common stock. The notes may be converted at any time after the six-month anniversary at a variable conversion price equal to 70% of the lowest trading price of the Company’s common stock over the twelve trading days prior to the conversion date. The notes contain multiple contingent features that may further adjust the conversion price, including adjustments triggered by events of default, DTC trading restrictions, and other operational or credit-related events. The notes also include redemption premiums ranging from 110% to 140% of principal if prepaid within specified timeframes. The notes contain ownership limitations, which provide that the Company shall not effect any conversion, and a holder shall not have the right to convert, to the extent that after giving effect to the issuance of common stock upon such conversion or exercise, such holder, together with its affiliates, would beneficially own in excess of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of common stock upon such conversion. This limitation may be waived, up to a maximum of 9.99%, by a holder upon not less than sixty (60) days’ prior notice to the Company. In accordance with ASC 815, the embedded conversion options and related contingent features were bifurcated and accounted for as derivative liabilities. A Monte Carlo valuation was obtained from valuation specialists to fair value the derivative liabilities (See Note 6.Fair Value Measurementsand Note 9.Derivative Liabilities). The derivative liabilities were recorded first, and the host debt instruments were recorded at the residual amounts after allocating proceeds to the derivative liabilities based on the relative fair values. Issuance costs allocated to the host debt were recorded as debt discounts and are being amortized to interest expense over the life of the notes. The derivative liabilities will be remeasured at fair value each reporting period with changes in fair value recognized in other income (expense) in the consolidated statement of operations. On September 28, 2026, $30,917 of outstanding principal and accrued interest and conversion cost of $1,000 was converted into an aggregate of 245,735 shares of common stock. As of September 30, 2026, the outstanding principal balance of these notes is an aggregate of $430,000, they have accrued interest of $18,035, and unamortized debt discounts of $314,905. See also Note 10.Capital Stockand Note 17.Subsequent Events.

Also in March 2026, the Company entered into a securities purchase agreement with an additional accredited investor, pursuant to which the Company issued to such investor a convertible promissory note in the principal amount of $225,000 with a $20,500 original issuance discount, $3,500 in associated legal fees, $1,500 in due diligence costs and $11,900 in brokers fees for total net cash proceeds of $187,600. This convertible promissory note carries a one-time interest charge of $22,500 (rate of ten percent (10%)) which is guaranteed at issuance. The $22,500 guaranteed interest payment was recorded as a separate liability with the offset being recorded to the debt discount and is grouped with accrued interest on the Company’s condensed consolidated balance sheet. This note matures on March 31, 2027, and includes scheduled amortization payments beginning on September 30, 2026 with the remaining balance due at maturity. During the third quarter of 2026, the Company made cash amortization payments of $35,357 on this note. Each amortization payment is applied first to accrued interest, with the remainder reducing principal. Upon an event of default, the note becomes immediately due and payable at 150% of the outstanding principal plus accrued interest. The note may be converted at any time following the earlier of (i) the date that the Company fails to make an amortization payment, (ii) the date that is 180 days after the issuance date or (iii) the date that any of the shares of common stock issuable upon conversion of the note are registered for resale pursuant to a registration statement filed by the Company at a variable conversion price equal to 75% of the lowest closing bid price of the Company’s common stock over the ten trading days prior to the conversion date. The note contains multiple contingent features that may further adjust the conversion price, including full-ratchet anti-dilution adjustments and adjustments if the conversion price is less than the par value of the common stock. The notes contain ownership limitations, which provide that the Company shall not affect any conversion, and a holder shall not have the right to convert, to the extent that after giving effect to the issuance of common stock upon such conversion or exercise, such holder, together with its affiliates, would beneficially own in excess of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of common stock upon such conversion. This limitation may be waived, up to a maximum of 9.99%, by a holder upon not less than sixty-one (61) days’ prior notice to the Company. In accordance with ASC 815, the embedded conversion option and related contingent features were bifurcated and accounted for as a derivative liability. A Monte Carlo valuation was obtained from valuation specialists to fair value the derivative liability (See Note 6.Fair Value Measurementsand Note 9.Derivative Liabilities). The derivative liability was recorded first, and the host debt instrument was recorded at the residual amount after allocating proceeds to the derivative liability based on the relative fair values. The derivative liability will be remeasured at fair value each reporting period with changes in fair value recognized in other income (expense) in the consolidated statement of operations. As of September 30, 2026, the outstanding principal balance of this note is $189,643, with $0 in accrued interest, and the note has unamortized debt discounts of $191,563.

On April 8, 2026, the Company entered into a securities purchase agreement with an accredited investor, pursuant to which the Company issued to such investor a convertible promissory note in the principal amount of $268,889 with a $26,889 original issuance discount, $5,000 in associated legal fees and $7,000 for due diligence costs, for total proceeds of $230,000. This convertible promissory note carries a one-time interest charge of $32,267 (rate of twelve percent (12%)) which is guaranteed at issuance. This note matures on April 8, 2027, and includes scheduled amortization payments which began in October 2026 with the remaining balance due at maturity. Each amortization payment is applied first to accrued interest, with the remainder reducing principal. The note may be converted at any time after issuance at a variable conversion price equal to 60% of the lowest trading price of the Company’s common stock for the ten trading days prior to the conversion date. The note also contains an ownership limitation, which provides that the Company shall not affect any conversion, and a holder shall not have the right to convert, to the extent that after giving effect to the issuance of common stock upon such conversion, such holder, together with its affiliates, would beneficially own in excess of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of common stock upon such conversion. In accordance with ASC 815, the embedded conversion option and related contingent features were bifurcated and accounted for as a derivative liability. A Monte Carlo valuation was obtained from valuation specialists to fair value the derivative liability (See Note 6.Fair Value Measurements and Note 9.Derivative Liabilities). The derivative liability was recorded first, and the host debt instrument was recorded at the residual amount after allocating proceeds to the derivative liability at its fair value. Upon initial recognition, the Company recorded a day-1 loss to other expense in the condensed consolidated income statements of $76,230, representing the excess of the fair value of the embedded derivative liability over the net proceeds allocated to the host debt instrument. The derivative liability will be remeasured at fair value each reporting period with changes in fair value recognized in other income (expense) in the consolidated statement of operations. As of September 30, 2026, the outstanding principal balance of this note is $268,889. The note has unamortized debt discounts of $253,153.

Convertible Notes Derivative Liabilities

Several of the Company’s convertible notes contain embedded features that require bifurcation of the conversion option and derivative liability accounting under ASC 815 (see also Note 8.Convertible Notes Payable). These features include:

Because these features are not considered indexed to the Company’s own stock and could require net-cash settlement, the embedded conversion options do not qualify for equity classification under ASC 815-40 and were bifurcated from the host debt instruments and recorded as derivative liabilities at fair value on the issuance date. The derivative liability is remeasured at fair value each reporting period, with changes recognized in earnings. Issuance costs, including original issue discounts, legal fees, and broker commissions, were allocated between the derivative liabilities and the host debt based on relative fair values. The portion allocated to the derivative liabilities reduced their initial carrying amount.

Key valuation inputs included:

Commitment Shares Derivative Liability

In connection with entering into a Common Stock Purchase Agreement on June 5, 2026 (refer to Note 10.Capital Stock for details), the Company was required to issue Commitment Shares equal to $250,000 divided by the closing price of the Company’s common stock on the Effective Date of the registration statement covering the resale of shares under the Purchase Agreement. Because the number of Commitment Shares was based on a future stock price (the Effective Date closing price), the Commitment Shares represented a freestanding derivative liability under ASC 815-40. The Company measured the derivative liability at fair value on the commitment date using a Black-Scholes option-pricing model.

Key valuation inputs included:

The Company recorded an initial derivative liability of $12,621 at inception. During the three months ended September 30, 2026, subsequent to the registration statement becoming effective and all closing conditions being met, the Company issued the Commitment Shares. Upon issuance, the derivative liability was remeasured to fair value and settled into equity. Changes in fair value are recognized in other income (expense) in the condensed consolidated statements of operations. The derivative liability was derecognized and reclassified to additional paid-in capital. As a result, no derivative liability related to the Commitment Shares remained outstanding as of September 30, 2026. A roll-forward of the derivative liability is presented in Note 6.Fair Value Measurements. Additional information regarding valuation techniques and fair value hierarchy classification is included in Note 6.Fair Value Measurements.

The Company is authorized to issue 350,000,000 shares of capital stock, consisting of 300,000,000 shares of common stock, $0.001 par value, and 50,000,000 shares of preferred stock, $0.001 par value per share.

Preferred Stock

On August 31, 2026, the Board of Directors approved the creation of a new series of preferred stock designated as “Series A-1 Preferred Stock” par value $0.001 per share. The Certificate of Designation establishing the rights, preferences, and limitations of the Series A-1 Preferred Stock (as described below) was filed with the Nevada Secretary of State on August 31, 2026, at which time the series became legally effective. The Company issued two shares of Series A-1 Preferred Stock on September 1, 2026, following the effectiveness of the Certificate of Designation. The Series A-1 Preferred Stock was issued to an employee in partial settlement of accrued salaries. The issuance reduced accrued salaries by $500 and was recorded as an increase to preferred stock within stockholders’ equity. See also Note 5.Related Party Transactions.

The Company has designated multiple series of preferred stock, including 2 shares of series A-1 preferred stock, two shares of series A preferred stock,3,000,000 shares of series B preferred stock,500 shares of series C preferred stock,1,000,000 shares of series E preferred stock,50,000 shares of series F-1 preferred stock,15,000,000 shares of series I preferred stock,400,000 shares of series L preferred stock,3,000,000 shares of series N senior convertible preferred stock,5,000,000 shares of series X senior convertible preferred stock and 1,500,000 shares of series Y senior convertible preferred stock.

The Company’s Annual Report on Form 10-K for the year ended December 31, 2025 contains a description of the rights and preferences of each series of preferred stock.

Redeemable Preferred Stock

The Company recognizes the series X senior convertible preferred stock as mezzanine equity in accordance with ASC 480, “Distinguishing Liabilities from Equity”.

On January 29, 2026, the Company filed a certificate of amendment to the certificate of designation for its series N senior convertible preferred stock with the Nevada Secretary of State’s Office to amend the certificate of designation to remove the redemption provisions, which previously provided for an optional redemption by the Company and a mandatory redemption at the option of the holder in certain circumstances. As a result of this modification, the preferred stock no longer meets the criteria for classification outside of permanent equity. The $3,802,010 carrying value was reclassified from mezzanine equity to permanent equity on the Company’s condensed consolidated balance sheet as of March 31, 2026, prospectively.

Series X Senior Convertible Preferred Stock

As of September 30, 2026 and December 31, 2025, there were 471,751 and 438,388 shares of series X senior convertible preferred stock issued and outstanding, respectively. For the nine months ended September 30, 2026, cumulative dividends earned on the series X senior convertible preferred stock were $133,451. The cumulative accrued dividends for the nine months ended September 30, 2026 were paid by the Company via the issuance of 33,363 shares of series X senior convertible preferred stock.

Non-redeemable Preferred Stock

Series A-1 Preferred Stock

As of September 30, 2026, there were 2 shares of series A-1 preferred stock issued and outstanding.

*Ranking.*The series A-1 preferred stock ranks, with respect to the distribution of assets upon liquidation, (i) senior to all common stock and each other class or series that is not expressly made senior to or on parity with the series A-1 preferred stock; (ii) on parity with each class or series that is not expressly subordinated or made senior to the series A-1 preferred stock; and (iii) junior to the series F-1 preferred stock, series L preferred stock, series N senior convertible preferred stock, series X senior convertible preferred stock, series Y preferred stock and each other series of preferred stock and each class or series that is expressly made senior to the series A-1 preferred stock, as well as to all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company.

Dividend Rights. The series A-1 preferred stock is not entitled to participate in any distributions or payments to the holders of common stock or any other class of stock and shall have no economic interest in the Company.

Liquidation Rights. In the event of any liquidation, dissolution or winding up of the Company, either voluntarily or involuntarily, a merger or consolidation of our company wherein the Company is not the surviving entity, or a sale of all or substantially all of the assets of the Company, the holders of each share of series A-1 preferred stock shall be entitled to receive from any distribution of any of the assets or surplus funds of the Company, before and in preference of any holder of shares of common stock, an amount equal to the stated value of $250. Once the holders receive the foregoing from any such liquidation, dissolution or winding up, the holders shall not participate with the common stock or any other class of stock.

Voting Rights. Each share of series A-1 preferred stock shall have a number of votes at any time equal to (i) 25% of the number of votes then held or entitled to be made by all other equity securities of the Company, including, without limitation, the common stock, plus (ii) one (1). The series A-1 preferred stock shall vote on any matter submitted to the holders of the common stock, or any other class of voting securities, for a vote, and shall vote together with the common stock, or any class of voting securities, as applicable, on such matter for as long as the shares of series A-1 preferred stock are issued and outstanding. Notwithstanding the foregoing, the series A-1 preferred stock shall not have the right to vote on any matter as to which solely another series of preferred stock is entitled to vote pursuant to the Company’s amended and restated articles of incorporation or a certificate of designation of such other series of preferred stock.

Transfer. Upon transfer of any share of series A-1 preferred stock, except for a transfer by the holder to an affiliate, whether such transfer is voluntary or involuntary, such share of series A-1 preferred stock shall automatically, and without any action being required by the Company or the holder, be converted into one (1) share of common stock.

Other Rights. Holders of series A-1 preferred stock do not have any conversion (except as set forth above) or redemption rights.

Series A Preferred Stock

As of September 30, 2026 and December 31, 2025, there weretwo shares of series A preferred stock issued and outstanding.

Series B Preferred Stock

As of September 30, 2026 and December 31, 2025, there wereno shares of series B preferred stock issued and outstanding. During the year ended December 31, 2025, all outstanding shares of series B preferred stock were converted into common stock.

Series C Preferred Stock

As of September 30, 2026 and December 31, 2025, there wereno shares of series C preferred stock issued and outstanding. During the year ended December 31, 2025, all outstanding shares of series C preferred stock were converted into common stock.

Series E Preferred Stock

As of September 30, 2026 and December 31, 2025, there wereno shares of series E preferred stock issued and outstanding. During the year ended December 31, 2025, all outstanding shares of series E preferred stock were converted into common stock.

Series F-1 Preferred Stock

As of September 30, 2026 and December 31, 2025, there were 3,875 shares of series F-1 preferred stock issued and outstanding.

Series I Preferred Stock

As of September 30, 2026 and December 31, 2025, there wereno shares of series I preferred stock issued and outstanding. During the year ended December 31, 2025, all outstanding shares of series I preferred stock were converted into common stock.

Series L Preferred Stock

As of September 30, 2026 and December 31, 2025, there were 319,493 shares of series L preferred stock issued and outstanding.

Series N Senior Convertible Preferred Stock

As of September 30, 2026 and December 31, 2025, there were 1,133,227 and 1,037,311 shares of series N senior convertible preferred stock issued and outstanding, respectively. For the nine months ended September 30, 2026, cumulative dividends earned on the series N senior convertible preferred stock were $383,660. The cumulative accrued dividends for the nine months ended September 30, 2026 were paid by the Company via the issuance of 95,916 shares of series N senior convertible preferred stock.

Series Y Senior Convertible Preferred Stock

As of September 30, 2026 and December 31, 2025, there were 1,150,528 and 1,067,878 shares of series Y senior convertible preferred stock issued and outstanding, respectively. For the nine months ended September 30, 2026, cumulative dividends earned on the series Y senior convertible preferred stock were $332,051. Cumulative accrued dividends for the period December 2, 2025 through September 1, 2026 in the amount of $330,594 were paid by the Company via the issuance of 82,650 shares of series Y senior convertible preferred stock. At September 30, 2026, the total dividend payable was $36,565 (for the period September 2, 2026 through September 30, 2026).

Preferred Stock Transactions

During the nine months ended September 30, 2026, the Company executed the following transactions:

During the nine months ended September 30, 2025, the Company executed the following transactions:

Common Stock

Common Stock Purchase Agreement

On June 5, 2026, the Company entered into a Common Stock Purchase agreement (the “Purchase Agreement”) and a Registration Rights Agreement with an institutional investor (the “Investor”) pursuant to which the Investor has committed to purchase up to $25,000,000 of shares of the Company’s common stock; provided that such amount may be increased to $75,000,000 in the Company’s sole discretion (the “Total Purchase Commitment”). In consideration for the Investor’s commitment to purchase shares of common stock under the Purchase Agreement, the Company agreed to issue to the Investor a number of shares of common stock equal to $250,000 (or $750,000 if the Total Purchase Commitment is increased to $75,000,000) equal to the closing price of the Company’s common stock on the effective date of the Registration Statement (as defined below) (the “Commitment Shares”), upon written demand by the Investor. During the third quarter of 2026, the Company issued 166,667 shares of common stock for the Commitment Shares.

Under the terms and subject to the conditions of the Purchase Agreement, the Company has the right, but not the obligation, to sell to the Investor, and the Investor is obligated to purchase, shares of common stock in an amount of up to the Total Purchase Commitment. Sales under the Purchase Agreement did not commence until all of the conditions set forth in the Purchase Agreement were satisfied, including that a registration statement on Form S-1 (the “Registration Statement”) was declared effective by the SEC and a final prospectus in connection therewith was filed (such conditions were satisfied effective as of July 7, 2026). Thereafter, the Company may, subject to the satisfaction of certain additional conditions set forth in the Purchase Agreement, from time to time and at its sole discretion, for a period of thirty-six (36) months, on any trading day that it selects, provided that the Closing Sale Price (as defined below) of the common stock is equal to or greater than $0.20 (unless such requirement is waived by the Investor) and that all shares of common stock subject to all prior purchases have been properly delivered to the Investor in accordance with the Purchase Agreement, direct the Investor to purchase up to a number of shares of common stock equal to the lesser of (i) 40% of the lowest Daily Value Traded (as defined below) of the common stock on the five (5) trading days immediately preceding the purchase date, (ii) 250,000 shares of common stock, or (iii) $250,000. For purposes of the Purchase Agreement, “Closing Sale Price” means the greater of (i) the then current book value of the common stock and (ii) the last closing trade price for the common stock on its principal trading market, as reported by Bloomberg L.P., and “Daily Value Traded” means the product obtained by multiplying the daily trading volume of the common stock during regular trading hours as reported by Bloomberg L.P. by the dollar volume-weighted average price for the common stock, as reported by Bloomberg L.P. through its “AQR” function, for such trading day.

The Company will control the timing and amount of any sales of common stock to the Investor. The purchase price of the shares that may be sold to the Investor under the Purchase Agreement will be equal to 97% of the lowest daily volume weighted average price of the common stock for the five (5) trading days immediately preceding the applicable purchase date; provided, however, that if the Investor waives the requirement that the Closing Sale Price is equal to or greater than $0.20 and purchases are made at less than $0.20, then the discount shall be adjusted to 90%, and the Company must reimburse the Investor for any incremental increase in trading commissions and clearing costs incurred in connection therewith. Pursuant to the Purchase Agreement, if the lowest trade price of the Company’s common stock on the trading day on which the shares are delivered via DWAC is lower than the price at which the shares were initially issued, the Company is required to issue additional shares, not to exceed 10% of the original purchase amount, to ensure the Investor receives the intended economic value of the purchase. These additional shares represent a post-settlement operational true-up and are recorded in equity when issued. The purchase price per share will be equitably adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction occurring after the date of the Purchase Agreement.

During the nine months ended September 30, 2026, the Company issued 20,619 shares of common stock and received $30,000 in proceeds under the Purchase Agreement.

The purchases are indexed to the Company’s own stock and meet the equity classification requirements of ASC 815-40. Accordingly, no derivative liability is recorded for this feature.

Common Stock Transactions

During the nine months ended September 30, 2026, the Company issued common stock as part of the following transactions:

During the nine months ended September 30, 2025, in addition to the conversions of preferred stock noted above, the Company issued common stock as part of the following transactions:

Share-based compensation

On January 31, 2024, the Company’s board of directors and stockholders adopted the Cardiff Lexington Corporation 2024 Equity Incentive Plan (the “Plan”). Awards that may be granted include incentive stock options, non-qualified stock options, stock appreciation rights, restricted awards, performance share awards, and performance compensation awards. In accordance with the annual evergreen provision of the Plan, the number of shares available for issuance increased on January 1, 2026 to 1,606,718.

Share-based compensation expense is attributable to the issuance of the Company’s common stock, restricted common stock awards, stock option awards and preferred stock granted to non-employee independent directors, employees and service providers for services rendered. The Company recognizes expense using a straight-line amortization method as reflected in general and administrative expense in the consolidated statement of operations. Total share-based compensation expense in the consolidated statement of operations for the three months ended September 30, 2026, and 2025 was $369,981 and $41,188, respectively. Total share-based compensation expense for the three months ended September 30, 2026, includes $321,814 of employee related expense for the issuance of restricted stock grants and stock options that were recorded to stock compensation expense and $48,167 related to the issuance of the Company’s common stock to external service providers that were recorded to professional fees. Total share-based compensation expense for the three months ended September 30, 2025, included $41,188 of employee related expense for the issuance of restricted stock and restricted stock grants that were recorded to stock compensation expense.

Total share-based compensation expense in the consolidated statement of operations for the nine months ended September 30, 2026, and 2025 was $1,401,116 and $138,688, respectively. Total share-based compensation expense for the nine months ended September 30, 2026, includes $782,116 related to the issuance of restricted stock grants and stock options to employees that were recorded to stock compensation expense, as well as $619,000 related to the issuance of the Company’s common stock to external service providers that were recorded to professional fees. Total share-based compensation for the nine months ended September 30, 2025, includes $41,188 of employee related expense for the issuance of restricted stock and restricted stock grants that were recorded to stock compensation expense and $97,500 related to the issuance of the Company’s common stock to external service providers that were recorded to professional fees.

Generally, all forms of share-based payments, including stock option grants, warrants and restricted stock grants are measured at their fair value on the awards’ grant-date, based on the estimated number of awards that are ultimately expected to vest. The Company has elected to account for forfeitures as they occur and expense is recognized over the requisite service period. Grant-date fair value of restricted common stock and common stock awards is determined using the Company’s closing share price on the grant-date and the grant-date fair value of stock options awarded is determined using a Black-Scholes valuation model. Grant-date fair value of any preferred stock awards is determined utilizing a third-party valuation.

Non-Vested Common Stock

Share-based compensation expense related to non-vested common stock of $116,001 and $5,738 was recorded in the consolidated statement of operations for the three months ended September 30, 2026 and 2025, respectively. Share-based compensation expense related to non-vested common stock of $344,678 and $5,738 was recorded in the consolidated statement of operations for the nine months ended September 30, 2026 and 2025, respectively. Total unrecognized compensation cost related to unvested awards was $125,065 and $17,213 as of September 30, 2026 and 2025, respectively, which is expected to be recognized over a weighted-average period of 0.38 of a year.

On April 1, 2026, the Company issued an aggregate of 15,000 shares of the Company’s restricted common stock for the annual Director’s share grant award. The award will vest in equal parts over the course of four (4) quarters (i.e., January 1, April 1, July 1 and October 1) commencing on July 1, 2026. On April 17, 2026, in accordance with an extension of an agreement effective November 24, 2025, the Company issued 100,000 shares of common stock to a consulting service provider for services to be rendered. The award vests in equal parts over the course of April 2026 through July 2026. On January 13, 2026, the Company issued a restricted stock award for 62,500 shares of common stock.

Stock Options

On September 8, 2026, the Company granted to certain directors stock options to purchase 1,500,000 shares of its common stock in lieu of payment of cash compensation ($30,000 currently owed, and board fees coming due in 2026). The options have an exercise price equal to the fair market value of the Company’s common stock on the grant-date of $0.1162 per share, vest immediately, and expire five years from the grant-date.

The Company estimated the grant-date fair value of the options using the Black-Scholes option-pricing model. The weighted-average assumptions used in the valuation were as follows:

Expected volatility was estimated using a blended approach that incorporates both the Company’s historical volatility and the historical volatilities of a peer group of publicly traded healthcare companies with similar size, stage, and operating characteristics. The Company utilized the simplified method to estimate expected term due to limited historical exercise data.

The weighted-average grant-date fair value of options granted during the period was $0.08 per option, resulting in total grant-date fair value of $120,000, of which $30,000 of the total grant-date fair value of the award was recorded as a reduction of accrued liabilities and $90,000 was recognized as share-based compensation expense in the condensed consolidated statement of operations as of September 30, 2026. The full fair value of the award was recorded to additional paid-in capital. As the grant vested immediately, there isno unrecognized compensation cost at September 30, 2026. Intrinsic value is $0 at grant and will remain $0 until the stock trades above the exercise price.

On December 11, 2025, the Company granted stock options to purchase 90,002 shares of its common stock to certain employees and directors under the Plan. Share-based compensation expense is recognized on a straight-line basis over the requisite service period. During the three and nine months ended September 30, 2026, the Company recognized $205,813 and $437,439 in share-based compensation expense related to these options, respectively. Total unrecognized compensation cost at September 30, 2026 is $0 and there is no weighted-average remaining amortization period.

During the fourth quarter of 2025, the Company issued a three-year warrant to purchase 100,000 shares of common stock at $3.00 per share with an investor relations firm as part of a service agreement which provides that the warrant is subject to vesting 30 days prior to the date that the Company’s common stock is listed on a national securities exchange. As of September 30, 2026, the listing had not occurred and was not considered probable yet based on the status of the Company’s application and the remaining substantive listing requirements. Accordingly, no fair value has been calculated and no liability or equity instrument has been recognized related to the warrant as of September 30, 2026. If the listing occurs in a future period, the Company will recognize the warrant at its fair value on the date the listing becomes probable or is satisfied with the corresponding impact recorded in equity. See also Note 10.Capital Stock.

In December 2025, the Company entered into a financing arrangement pursuant to which it issued a twelve-month convertible promissory note with a principal amount of $50,000, together with a warrant to purchase 16,667 shares of common stock at $9.00 per share and 1,667 shares of common stock. The Company concluded that the note, warrant and common shares represent freestanding financial instruments issued as a single financing unit and, accordingly, allocated the total transaction proceeds to each instrument based on their relative fair values. The $1.72 per share fair value of the warrant was estimated using a Black-Scholes option pricing model, and the fair value of the common shares was based on the quoted market price on the issuance date. The aggregate amount allocated to the warrant and common shares was recorded as a debt discount and is being amortized to interest expense over the contractual term of the note. See also Note 8.Convertible Notes Payable and Note 10.Capital Stock.

In December 2025, the Company entered into a financing arrangement pursuant to which it issued a twelve-month convertible promissory note with a principal amount of $150,000, together with a warrant to purchase 50,000 shares of common stock at $9.00 per share and 5,000 shares of common stock. The Company concluded that the note, warrant and common shares represent freestanding financial instruments issued as a single financing unit and, accordingly, allocated the total transaction proceeds to each instrument based on their relative fair values. The $1.76 per share fair value of the warrant was estimated using a Black-Scholes option pricing model, and the fair value of the common shares was based on the quoted market price on the issuance date. The aggregate amount allocated to the warrant and common shares was recorded as a debt discount and is being amortized to interest expense over the contractual term of the note. See also Note 8.Convertible Notes Payable and Note 10.Capital Stock.

Also, during December 2025, the Company issued a three-year warrant to purchase 33,334 shares of common stock at $9.00 per share with an investor relations firm in connection with a financing transaction that also included the issuance of a convertible promissory note and restricted common shares. Upon funding of the convertible promissory note in January 2026, the note, warrant and common shares issued were accounted for as a single financing unit and, accordingly, the total transaction proceeds were allocated to each instrument based on their relative fair values. The $5.00 per share fair value of the warrant was estimated using a Black-Scholes option pricing model, and the fair value of the common shares was based on the quoted market price on the issuance date. The aggregate amount allocated to the warrant and common shares was recorded as a debt discount and is being amortized to interest expense over the contractual term of the note. See also Note 8.Convertible Notes Payable and Note 10.Capital Stock.

On January 14, 2026, the Company issued a three-year warrant to purchase 40,000 shares of common stock at $9.00 per share with an accredited investor in connection with a financing transaction that also included the issuance of a convertible promissory note and restricted common shares. Upon funding the convertible promissory note on January 20, 2026, the note, warrant and common shares issued were accounted for as a single financing unit and, accordingly, the total transaction proceeds were allocated to each instrument based on their relative fair values. The $3.91 per share fair value of the warrant was estimated using a Black-Scholes option pricing model, and the fair value of the common shares was based on the quoted market price on the issuance date. The aggregate amount allocated to the warrant and common shares was recorded as debt discount and is being amortized to interest expense over the contractual term of the note. See also Note 8.Convertible Notes Payable and Note 10.Capital Stock.

The table below sets forth warrant activity during the nine months ended September 30, 2026 and 2025:

The Company reviews goodwill for impairment on a reporting unit basis annually and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. During the nine months ended September 30, 2026 and 2025, the Company determined that no impairment triggers occurred and no impairment indicators were present.

Leases

ASC 842, “Leases”, requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. The Company adopted ASC 842, January 1, 2020, using the effective date method and elected certain practical expedients allowing the Company not to reassess:

The Company also made the accounting policy decision not to recognize lease assets and liabilities for leases with a term of 12 months or less.

The Company leases eleven medical facilities and one vehicle as operating leases as of September 30, 2026. The Company recorded operating lease expenses of $93,753 and $112,832 for the three months ended September 30, 2026 and 2025, respectively, and $280,861 and $347,350 for the nine months ended September 30, 2026 and 2025, respectively. Lease expense includes all rent payments for all leased facilities, including those subject to the Company’s short-term lease election under ASC 842. Under this election, leases with terms of 12 months or less are not recorded as right-of-use assets or lease liabilities, but the related rent expense is included in total lease expense.

Only leases that result in recognized right-of-use assets and lease liabilities are included in the future minimum lease payments table below. Short-term leases accounted for under the 12-month election are excluded from the future commitments disclosure.

The Company has operating lease liabilities with future commitments as follows:

The following table summarizes supplemental information about the Company’s leases:

Employees

In connection with separate employment agreements and related addendums with Alex Cunningham, the Company’s Chairman, President and Chief Executive Officer, and Daniel Thompson, the Company’s former Chairman, from time to time the Company accrued each of their respective compensation elements at their election rather than pay them in cash to Accrued expenses - related parties in the Company’s consolidated balance sheet. The total outstanding accrued compensation as of September 30, 2026 and December 31, 2025 for Alex Cunningham was $324,000 and $2,163,000, respectively, and for Daniel Thompson was $175,058 and $2,237,167, respectively, all of which is included in Accrued expenses – related parties in the consolidated balance sheets as of September 30, 2026 and December 31, 2025, respectively. The total interest accrued as of September 30, 2026 was $4,069 for Alex Cunningham and $0 for Daniel Thompson. See also Note 5.Related Party Transactionsand Note 7.Notes and Loans Payable.

From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company’s business.

On May 1, 2026, Daniel R. Thompson, the Company’s former Chairman of the Board and a significant stockholder, commenced a lawsuit against the Company by filing a complaint against it in the Eighth Judicial District Court, Clark County, Nevada. In the complaint, Mr. Thompson alleges that he entered into an employment agreement and addendum thereto with the Company, and that we failed to provide him with restricted preferred stock and separation compensation allegedly owed to him under those agreements, and he alleges that the Company has improperly continued to defer payment of accrued salary and other compensation he claims to be owed. The complaint asserts claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. Mr. Thompson alleges damages in an unspecified amount in excess of $15,000 under each of those claims. Mr. Thompson also seeks declaratory relief regarding compensation that he claims to be owed and regarding the validity of a conversion agreement between him and the Company. Pursuant to the conversion agreement, Mr. Thompson agreed to cancel $2,352,994 in deferred compensation owed to him in exchange for receiving 588,249 shares of common stock. Mr. Thompson contends in the complaint that he revoked the conversion agreement or that it is otherwise unenforceable and, in the alternative, seeks its reformation to provide that it was contingent on the successful uplisting of the Company’s stock to the Nasdaq Stock Market. The complaint also asserts a claim for accounting, seeking inspection of the Company’s books, records, and accounts. The complaint also seeks an award of attorneys’ fees and costs.

On May 21, 2026, the Company filed a motion to dismiss Mr. Thompson’s complaint, arguing, among other things, that the employment agreement contains a prelitigation mediation requirement that Mr. Thompson did not satisfy before filing suit. Mr. Thompson opposed the motion and filed a countermotion for partial summary judgment, contending that he is entitled to separation package compensation totaling $1,350,000 under the addendum to the employment agreement. On July 17, 2026, the court entered an order that granted the Company’s motion to dismiss without prejudice, dismissed the countermotion without prejudice, and dismissed the case without prejudice so that the parties may submit to mediation for 60 days before commencing any claims for breach of the employment agreement. In that order, the court found that the addendum to the employment agreement did not remove the prelitigation mediation requirement but, rather, expressly preserved it.

On September 8, 2026, Mr. Thompson commenced a lawsuit against the Company by filing a complaint against it in the Eighth Judicial District Court, Clark County, Nevada. That complaint is substantially the same as the complaint Mr. Thompson filed on May 1, 2026 discussed above. On September 23, 2026, Mr. Thompson filed a notice of voluntary dismissal without prejudice. Pursuant to that notice, he dismissed the lawsuit he commenced on September 8, 2026 without prejudice to his right to refile the lawsuit.

Should Mr. Thompson re-file a lawsuit asserting the same claims he asserted in the voluntarily dismissed lawsuit, the Company intends to vigorously defend against those claims. Although the Company believes that it would have meritorious defenses to such claims, the Company is unable to reasonably estimate the potential loss or range of loss, if any, that may result from the litigation of such claims because the outcome of litigation is inherently uncertain. It is possible that an adverse outcome in such litigation, if it were to be commenced, could have a material adverse effect on the Company’s business, financial condition, results of operations, cash flows, and prospects.

At December 31, 2025, the Company had federal and state net operating loss carry forwards of approximately $24.4 million that expire in various years through the year 2041. Due to current period losses and carryforwards of past net operating losses, there is no provision for current federal or state income taxes for the three and nine months ended September 30, 2026 and 2025.

The Company has not paid federal or state income taxes as a result of its net losses and the availability of its net operating loss carryforwards. The State of Nevada, the Company's state of incorporation, does not impose a corporate income tax. Florida, the state in which the Company's operating subsidiary conducts business, imposes a corporate income tax at a rate of 5.5%; however, the Company has not been required to pay Florida income taxes due to its net loss position and available net operating loss carryforwards. The Company does not conduct any business outside the United States and accordingly has no foreign income tax obligations.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for federal and state income tax purposes. The Company has a deferred tax asset that consists of net operating loss carry forwards calculated using federal and state effective tax rates. Because of the Company’s lack of past earnings history, the deferred tax asset has been fully offset by a valuation allowance. The OBBBA, which was enacted on July 4, 2025, makes numerous tax changes. The tax provisions of the OBBBA did not have a material impact on the Company’s effective tax rate and it also did not impact the Company’s net deferred tax assets, as the Company continues to maintain a full valuation allowance against that balance.

As of September 30, 2026, the Company hadtwo reportable operating segments as determined by management using the “management approach” as defined by the authoritative guidance onDisclosures about Segments of an Enterprise and Related Information.

These segments are a result of differences in the nature of the products and services sold. Their operating results are regularly reviewed by the Company’s chief operating decision maker group, which consists of the Chairman of the Board and Chief Executive Officer (a dual role held by the same individual) and the Chief Financial Officer. Corporate administration costs, which include, but are not limited to, general accounting, human resources, legal and credit and collections, are partially allocated to the two operating segments.

The healthcare segment provides a full range of diagnostic and surgical services for injuries and disorders of the skeletal system and associated bones, joints, tendons, muscles, ligaments, and nerves.

The real estate segment consists of Edge View, a real estate company that owns five (5) acres zoned medium density residential (MDR) with 12 lots already platted, six (6) acres zoned high-density residential (HDR) that can be platted in various configurations to meet current housing needs, and twelve (12) acres zoned in Lemhi County as Agriculture that is available for further annexation into the City of Salmon for development, as well as a common area for landowners to view wildlife, provide access to the Salmon River and fishing in a two (2) acre pond.

The accounting policies of the segments are the same as those described in Note 1.Summary of Significant Accounting Policies. Management uses revenues, cost of sales, operating expenses, (loss) income from subsidiaries and (loss) income before taxes to evaluate and measure its subsidiaries’ success. To help the segments achieve optimal operating performance, management retains the prior owners of the subsidiaries and allows them to do what they do best, which is run the business. Additionally, management monitors key metrics primarily revenues and income from operations in order to allocate resources accordingly.

The Company has evaluated its operations subsequent to September 30, 2026 to the date these consolidated financial statements were issued and determined the following subsequent events and transactions required disclosure in these consolidated financial statements.

Convertible Notes Payable

On October 5, 2026, October 8, 2026, October 14, 2026, October 21, 2026 and October 30, 2026, the holder of a convertible promissory note elected to convert an aggregate of $51,907 of outstanding principal, accrued interest and fees into an aggregate of 2,755,001 shares of common stock at a conversion price of $0.042 per share for the October 5, 2026 and October 8, 2026 conversions, $0.0329 per share for the October 14, 2026 conversion, $0.01274 per share for the October 21, 2026 conversion and $0.00672 per share for the October 30, 2026 conversion.

On October 20, 2026, October 22, 2026 and November 2, 2026, the holder of a convertible promissory note elected to convert an aggregate of $23,325 of outstanding principal, accrued interest and fees into an aggregate of 1,968,214 shares of common stock at a conversion price of $0.0329 per share for the October 20, 2026 conversion, $0.01274 per share for the October 22, 2026 conversion and $0.00672 per share for the November 2, 2026 conversion.

On October 6, 2026 and November 5, 2026, the Company made contractually required cash amortization payments on an outstanding convertible note in the total amount of $88,296. After these payments, the outstanding principal balance on the note is $180,593.

On October 30, 2026, the Company made a contractually required cash amortization payment on an outstanding convertible note in the amount of $35,357. After this payment, the outstanding principal balance on the note is $154,285.

Related Party Note Payable

On October 1, 2026, the Company issued an unsecured promissory note in the principal amount of $175,003 to Daniel Thompson, the Company’s former Chairman of the Board and a significant stockholder, to resolve outstanding accrued compensation obligations. The note bears interest at 5% annually and matures October 1, 2028.

Additional Stock Issuances

On October 1, 2026, the Company issued an aggregate of 44,607 shares of common stock to various holders of our convertible notes as payment of quarterly accrued interest. Also on October 1, 2026 the Company issued 21,819 shares of common stock to a consultant for services provided.

On November 2, 2026, the Company issued an aggregate of 230,770 shares of common stock to a consultant for services provided.