What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-04-13 compared with 2025-04-15 · 358 added, 338 removed, 491 unchanged (59% of the section changed)

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Opinion on the Financial Statements

We have audited the accompanying balance sheets of Envirotech Vehicles, Inc.

We have audited the accompanying consolidated balance sheets of Envirotech Vehicles, Inc.

and its Subsidiaries (the Company) as of December 31, 2025 and 2024, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the period ended, in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the period ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 2 to the consolidated financial statements, the Company has sustained significant losses and negative cash flows from operations and has an accumulated deficit that raises substantial doubt about its ability to continue as a going concern.

Management’s plans in that regard to these matters are also described in Note 2.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

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federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and auditing standards generally accepted in the United States.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Maddox Acquisition

The Company’s acquisition of Maddox Industries, LLC on December 18, 2024, involved significant judgment in the valuation of net assets and intangible assets.

The Company engaged a third-party valuation firm to assist with the purchase price allocation.

Auditing this matter involved evaluating the competence of the valuation specialists, reviewing the purchase agreements, assessing the purchase price allocation, and testing the reasonableness of the estimated useful lives of identified intangible assets.

Revenue Recognition

The Company’s medical supplies segment revenue is generated exclusively by sales to a related party and these transactions were material to the financial statements and involved especially challenging auditor judgement, as a result revenue recognized from sales to related parties was identified as a critical audit matter.

The Company’s revenue recognized is more fully described in the Notes to the consolidated financial statements.

Auditing revenue from related-party transactions required significant judgement due to the increased risk of material misstatement associated with the determination of whether the transactions were conducted at arm’s length and whether revenue was recognized in accordance with ASC 606.

In particular, evaluating whether control of the goods transferred to the related party, assessing the appropriateness of transaction prices, and determining whether collectability was probable involved complex judgements.

Our audit procedures related to revenue recognized from related-party transactions included;

Evaluating management’s identification of related parties and testing the completeness and accuracy of related-party disclosures.

Obtained an understanding of the contractual terms of related-party revenue arrangements and assessing the arms-length nature of the terms.

Evaluating management’s conclusions regarding the satisfaction of performance obligations and the timing of revenue recognition.

Testing a sample of related-party revenue transactions by inspecting contracts, invoices, shipping documents, and cash receipts.

Going Concern

As described in Note 2 to the financial statements, the Company has sustained significant losses and negative cash flows from operations and are dependent on debt and equity financing to fund operations.

If the Company is unable to improve operational performance or is unable to raise sufficient funding, it may not be able to meet its current and future obligations.

Accordingly, the company has determined that these factors raise substantial doubt as to the Company’s ability to continue as a going concern for a period of one year from the date these financial statements are issued.

Management’s plans to identify adequate sources of funding to provide operating capital for continued growth.

Auditing the Company’s assessment and related disclosures regarding its ability to continue as a going concern required significant auditor judgment due to the high level of uncertainty surrounding the projections and assumptions related to the timing and likelihood of future cash flows, including external funding which cannot be assumed.

Assessing whether the Company’s disclosures adequately reflect the uncertainty and risks associated with its going concern status also demanded considerable auditor judgement and effort.

We have served as the Company’s auditor since 2023.

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Accounts receivable, net of allowance of $ 0 and $ 15,306 , respectively,

Receivable from related party, net of allowance of $ 6,082 and $ 6,700 , respectively

1,196,253 993,300

Receivable from related party, net of allowance of $ 6,700

Inventory, net

6,416,377 6,830,593

Inventory deposits

6,036,809 3,300,388

EPA fulfillment asset

Prepaid expenses

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485,482 108,508

10,103,048 9,583,836

Intangible assets, net

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Deferred revenue

1,544,000 4,240,666

EPA contract liability

Accrued liabilities

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13,595,921 11,748,839

Commitment and contingencies (Notes 11 and 12)

Stockholders’ equity:

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Year Ended December 31,

$ 1,870,060 $ 2,862,853

Cost of sales

1,381,257 1,857,273

488,803 1,005,580

Operating expenses:

General and administrative

8,146,275 8,171,344

70,000 213,930

Research and development

192,885 236,181

Goodwill impairment charge

Goodwill impairment

Impairment of intangible assets

Total operating expenses, net

8,409,160 13,720,239

Loss from operations

( 7,920,357 ) ( 12,714,659 )

Other income (expense):

Interest income

Unrealized loss on financial instruments at fair value

( 633,981 ) —

Loss on conversions and changes in fair value of convertible notes

Other expense

( 302,306 ) ( 4,155 )

Total other income

( 928,618 ) 30,680

Loss before income taxes

( 8,848,975 ) ( 12,683,979 )

Income tax expense

$ ( 8,848,975 ) $ ( 12,683,979 )

Net loss per share to common stockholders:

Basic and diluted

$ ( 0.55 ) $ ( 0.84 )

Weighted shares used in the computation of net loss per share:

Basic and diluted

16,209,111 15,061,945

See accompanying notes to consolidated financial statements.

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Balance, December 31, 2023

15,021,088 $ 150 $ 83,923,350 $ ( 51,928,520 ) $ 31,994,980

Common stock issued for cash

150,660 2 99,998 — 100,000

Common stock issued for litigation settlements accrued in 2021

— — ( 100,000 ) — ( 100,000 )

Stock based compensation

— — 1,322,577 — 1,322,577

— — — ( 12,683,979 ) ( 12,683,979 )

Balance, December 31, 2023

15,171,748 $ 152 $ 85,245,925 $ ( 64,612,499 ) $ 20,633,578

Common stock issued for cash

1,031,710 12 1,799,236 — 1,799,248

Conversion of short-term note to common stock

505,051 5 1,046,254 — 1,046,259

Common stock issued - commitment fee (equity line of credit)

64,103 1 124,999 — 125,000

Common stock issued as consideration for acquisition (Note 3)

3,100,000 31 4,277,969 — 4,278,000

Fractional shares - reverse stock split

Stock based compensation

— — 1,889,353 — 1,889,353

— — — ( 8,848,975 ) ( 8,848,975 )

Balance, December 31, 2024

Common stock issued for cash

Common stock issued from convertible notes conversion

Fractional shares - reverse stock split

Stock based compensation

Balance, December 31, 2025

( 112,588,460

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Cash flows from operating activities:

$ ( 8,848,975 ) $ ( 12,683,979 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

190,549 128,801

Provision for bad debt

10,085 20,929

Stock based compensation expense

1,889,353 1,322,577

Goodwill impairment charge

Unrealized loss on financial instruments

Goodwill impairment

Impairment of intangible assets

Loss on conversions and changes in fair value of convertible notes

Inventory write-down

Write-off of inventory deposits

Changes in assets and liabilities:

Accounts receivable

( 327,949 ) 1,360,660

414,217 ( 1,159,267 )

Receivable from related party

Inventory deposits

( 2,736,421 ) 1,529,545

Prepaid expenses

( 515,789 ) ( 168,276 )

Other current assets

101,575 ( 21,806 )

Other non-current assets

404,609 ( 72,230 )

Accounts payable

709,300 111,838

Accrued liabilities and deferred revenue

4,757,823 ( 189,654 )

Other non-current liabilities

( 215,139 ) —

Net cash used in operating activities

( 3,504,673 ) ( 4,712,174 )

Cash flows from investing activities:

Purchase of property and equipment, net

( 430,333 ) ( 35,810 )

Acquisition of Maddox Industries, net of cash

( 4,276,041 ) —

Proceeds from sales and maturities of marketable securities

Net cash (used in) provided by investing activities

( 4,706,374 ) 2,306,833

Net cash used in investing activities

Cash flows from financing activities:

1 unchanged sentence

Common stock issued - Maddox acquisition

Contingent consideration payment - Maddox Industries acquisition

Proceeds from convertible notes

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Repayment of related party loan

( 300,000 ) —

Proceeds from the issuance of convertible

Proceeds from the issuance of Conrod convertible note

Proceeds from debt

648,937 467,074

Principal repayments on debt

( 567,176 ) ( 430,481 )

Net cash provided by financing activities

9,695,509 36,593

Net change in cash, restricted cash and cash equivalents

1,484,462 ( 2,368,748 )

Cash, restricted cash and cash equivalents at the beginning of the period

456,719 2,825,467

Cash, restricted cash and cash equivalents at the end of the period

$ 1,941,181 $ 456,719

Supplemental cash flow disclosures:

Cash paid for interest expense

$ 26,169 $ 14,997

Non-cash investing and financing activities:

Common stock issued for services rendered

Non-cash transfer of inventory deposits to EPA fulfillment asset

Non-cash transfer of deferred revenue to EPA contract liability

Conversion of short-term notes to common stock

See accompanying notes to consolidated financial statements.

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Organization and Operations

Envirotech Vehicles, Inc.

(“we,” “us,” “our” or the “Company”) is a provider of purpose-built zero -emission electric vehicles focused on reducing the total cost of vehicle ownership and helping fleet operators unlock the benefits of green technology.

The Company serves commercial and last-mile fleets, school districts, public and private transportation service companies and colleges and universities to meet the increasing demand for light to heavy-duty electric vehicles.

The Company’s vehicles address the challenges of traditional fuel price cost instability and local, state and federal regulatory compliance.

Envirotech Vehicles, Inc., including its consolidated subsidiaries ("we," "us," "our," or the "Company"), is a United States ("U.S.") distributor of zero -emission commercial vehicles and heavy capacity drones engineered for logistics, infrastructure, and precision agriculture applications worldwide.

The Company's systems enable a cleaner, safer, and more efficient future for critical industrial operations.

During the first quarter of 2025, the Company increased its business portfolio by adding two new business operations:

( 1 ) medical supplies and ( 2 ) drones.

The medical supplies segment currently consists of manufacturing medical gowns for the government of the U.S.

On August 8, 2025, the Company effected a 1 -for- 10 reverse stock split of our common stock with no change to authorized shares of common stock (the "Reverse Stock Split").

All share, options, warrants and per share information through this Annual Report on Form 10 -K has been retroactively adjusted to reflect the Reverse Stock Split.

The shares of common stock retain a par value of $ 0.00001 per share.

Accordingly, an amount equal to the par value of the decreased shares resulting from the Reverse Stock Split was reclassified from “Common Stock” to “Additional paid-capital.”

Summary of Significant Accounting Policies

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Actual results could differ from those estimates.

Going Concern —The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.

The Company sustained significant losses and negative cash flows from operations and is dependent on the overall improvement of its operating activities as well as debt and equity financing to fund operations.

The Company incurred a net loss of $ 39,126,986 and $ 8,848,975 for the years ended December 31, 2025 and 2024, respectively.

Cash used in operating activities was $ 5,587,517 and $ 3,504,673 for the years ended December 31, 2025 and 2024, respectively.

Accumulated deficit was $ 112,588,460 and $ 73,461,474 as of December 31, 2025 and 2024, respectively.

These conditions raise substantial doubt about the Company's ability to continue as a going concern.

The Company plans to grow and expand operations and seek sources of capital to pay its contractual obligations as they come due.

Failure to successfully continue to grow operational revenues could harm the Company’s profitability and adversely affect the Company’s financial condition and results of operations.

Management believes that its future operating strategy will provide the opportunity to continue as a going concern as long as the Company is able to obtain additional financing;

however, there is no assurance this will occur.

The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Fair Value of Financial Instruments —The carrying values of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate their fair value due to the short-term nature of these financial instruments.

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See Note 7 - Notes Payable for additional disclosures.

Revenue Recognition —The Company recognizes revenue from the sales of zero -emission electric vehicles and vehicle maintenance and inspection services.

Revenue Recognition —The Company recognizes revenue from the sales of zero -emission electric vehicles and vehicle maintenance and inspection services and delivery of medical supplies to the customers of its related party.

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers ("ASC 606" ), which requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

For the year ended December 31, 2024, eight customers accounted for approximately all of the annual revenue recorded.

At December 31, 2023, three customers accounted for approximately 70 % of the annual revenue recorded.

The Company had accounts receivable, net of $ 1,009,966 and $ 692,102 on December 31, 2024 and December 31, 2023, respectively.

Net revenue recorded for the year ended December 31, 2025 was $ 323,500 and $ 5,589,945 for the electric vehicles segment and medical supplies segment, respectively.

Two customers accounted for 100 % of the net revenue for the delivery of electric vehicles in the electric vehicles segment for the year ended December 31, 2025.

One customer, a related party, accounted for 100 % of the medical supplies segment net revenue for the year ended December 31, 2025.

Net revenue recorded for the year ended December 31, 2024 was $ 1,817,755 for the electric vehicles segment.

Eight customers accounted for approximately all of the net revenue for the delivery of electric vehicles in the electric vehicles segment for the year ended December 31, 2024.

In applying ASC 606, the Company is required to:

identify any contracts with customers;

identify contracts with customers;

determine if multiple performance obligations exist;

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These sales represent a single performance obligation and revenue is recognized when the vehicle is delivered and the customer has accepted the vehicle and signed the appropriate documentation acknowledging receipt of the vehicle.

At this time, the title of the vehicle is transferred to the customer.

During the fourth quarter of 2024, the Company recorded $ 4,240,666 of payments received through a grant from the Environmental Protection Agency ("EPA") to produce electric school buses as deferred revenue.

No revenue was recognized in 2024 as the performance obligation has not been met.

The balance of deferred revenue at December 31, 2024 and December 31, 2023 is $ 4,240,666 and $ 0 , respectively.

Other revenue for the years ended December 31, 2024 and December 31, 2023 were $ 52,303 and $ 29,605 respectively, and primarily included safety inspection and document fees for compliance with United States Department of Transportation guidelines.

At this time, revenue is recognized.

Other revenue for the electric vehicles segment for the years ended December 31, 2025 and December 31, 2024 were $ 25,563 and $ 52,303 respectively, and primarily included safety inspection and document fees for compliance with U.S.

Department of Transportation guidelines.

These sales represent a single performance obligation with revenue recognition occurring at the time services are invoiced.

The Company has therefore not provided any additional disaggregation information, as all other revenue relates to the sale of vehicles as discussed above.

The Company has therefore not provided any additional disaggregation information, as all other revenue relates to the sale of vehicles and medical supplies (gowns) as discussed above.

Cash and Cash Equivalents —The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

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The balances for these short-term investments at December 31, 2025 and December 31, 2024, were $ 0 and $ 0 , respectively.

Accounts Receivable and Allowance for Doubtful Accounts —The Company establishes an allowance for doubtful accounts through a review of several factors including historical collection experience, current aging status of the customer accounts, and financial condition of its customers.

Accounts Receivable and Allowance for Doubtful Accounts —The accounts receivable balance relates to the Company's electric vehicles segment.

The Company establishes an allowance for bad debts through a review of several factors, including historical collection experience, current aging status of the customer accounts, and financial condition of its customers.

The Company does not generally require collateral for its accounts receivable.

A significant portion of the Company’s sales are made to customers who qualify for state-sponsored grant programs which can cover a significant portion, up to most of, a vehicle’s purchase price.

The Company had trade accounts receivable of $ 0 as of December 31, 2025 as all accounts receivable were written off due to unfavorable market conditions.

The Company had trade accounts receivable of $ 1,031,972 as of December 31, 2024 and an allowance for doubtful accounts of $ 15,306 , resulting in a net trade receivable balance of $ 1,016,666 .

A significant portion of the Company’s electric vehicle sales are made to customers who qualify for state-sponsored grant programs which can cover a significant portion, up to all of a vehicle’s purchase price.

Grant monies are paid directly to vehicle dealers like the Company after the customer and the dealer meet state requirements related to the transaction;

reimbursements to the dealer may take two to nine months from the date of request before being received.

The Company estimates its allowance for doubtful accounts using an aging schedule, including a review of customers who may have a likelihood of default.

A percentage is applied to the respective portfolio of customers which are grouped by how long their balance has been outstanding.

This percentage represents an estimate of credit losses for the remaining estimated life of the accounts receivable balances and is estimated using historical experience, current conditions and reasonable and supportable forecasts that generally applies to accounts receivables, which are measured at amortized costs.

The Company had trade accounts receivable of $ 1,031,972 and an allowance for doubtful accounts of $ 15,306 at December 31, 2024 .

The Company had trade accounts receivable of $ 713,031 and an allowance for doubtful accounts of $ 20,929 as of December 31, 2023 .

The Company did have a concentration of customers:

five customers’ balances account for approximately 96 % of the outstanding accounts receivable for the year ended December 31, 2024 .

If the Company is unable to collect from these customers, the Company's write-offs will significantly increase and the write-offs may have a material adverse impact on the Company's financial condition.

However, the Company does not believe the receivables balance from these customers represents a significant risk based on past collection experience.

At December 31, 2023 , three customers’ balances account for approximately 37 % of the outstanding accounts receivable;

for the year ended December 31, 2023

reimbursements to the Company may take two to nine months from the date of request before being received.

Receivable from Related Party and Allowance for Doubtful Accounts —The receivable from related party relates to the Company's medical supplies segment.

The allowance for doubtful accounts is established by reviewing several factors, including historical collection experience, current aging of the customer account and financial condition of its customer.

The Company had a receivable from related party of $ 1,202,335 and a recorded allowance of $ 6,082 , resulting in a net receivable from related party of $ 1,196,253 as of December 31, 2025.

The Company had a receivable from related party of $ 1,000,000 and a recorded allowance of $ 6,700 , resulting in a net receivable from related party of $ 993,300 as of December 31, 2024.

Inventory and Inventory Valuation Allowance —The Company records inventory at the lower of cost or net realizable value, uses a First In, First Out (“FIFO”) accounting valuation methodology and establishes an inventory valuation allowance for vehicles that it does not intend to sell in the future.

The Company had finished goods inventory on hand of $ 6,428,806 as of December 31, 2024 and recorded an inventory valuation allowance of $ 12,429 related to three vehicles that the Company does not intend to support in the future, resulting in a net inventory balance of $ 6,416,377 at December 31, 2024 .

The Company had finished goods inventory on hand of $ 6,040,410 as of December 31, 2025 and recorded an inventory valuation allowance of $ 6,040,410 as a result of deteriorating market conditions, resulting in a net inventory balance of $ 0 at December 31, 2025 .

The Company had finished goods inventory on hand of $ 6,428,806 as of December 31, 2024 and recorded an inventory valuation allowance of $ 12,429 resulting in a net inventory balance of $ 6,416,377 as of December 31, 2024 .

Inventory Deposits —Certain of our vendors require the Company to pay upfront deposits before they will commence manufacturing our vehicles, and then require progress deposits through the production cycle and before the finished vehicles are shipped.

Inventory Deposits —Certain of our vendors require the Company to pay upfront deposits before they will commence manufacturing our vehicles, and then progress payments are required through the production cycle and before the finished vehicles are shipped.

These deposits are classified as inventory deposits in the Consolidated Balance Sheets.

Upon completion of production, acceptance by the Company, and passage of title to the Company, deposits are reclassified to inventory.

Upon completion of production, acceptance of the completed inventory by the Company, and passage of title to the Company, deposits are reclassified to inventory.

The Company had inventory deposits of $ 0 and $ 6,036,809 as of December 31, 2025 and December 31, 2024 , respectively.

Deposits paid to one vendor accounted for 99 % of the deposits outstanding at December 31, 2024 .

Deposits paid to one vendor accounted for 99 % of the deposits outstanding at December 31, 2023.

The Company wrote-off $ 6,027,981 of its balance primarily due to deteriorating market conditions.

Deposits paid to a related party vendor accounted for 99 % of the deposits outstanding at December 31, 2024.

EPA Fulfillment Asset —These are costs incurred to fulfill the U.S.

Environmental Protection Agency ("EPA") school bus contract that are capitalized.

These costs will be expensed to cost of goods sold once all the performance obligations stipulated in the EPA school bus contract are satisfied and revenue from the contract is recognized.

The balance of EPA fulfillment asset at December 31, 2025 and December 31, 2024 is $ 1,503,477 and $ 0 , respectively.

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

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In 2025, the Company conducted its annual impairment test.

Based on the impairment test, which predominantly utilized the Company's quoted market price and the number of outstanding shares at the end of the period as inputs, the Company recorded no non-cash goodwill impairment charge as of December 31, 2024 and a non-cash goodwill impairment charge of $ 5,098,784 as of December 31, 2023.

Based on the impairment test, which predominantly utilized the Company's quoted market price and the number of outstanding shares at the end of the period as inputs, the Company recorded a non-cash goodwill impairment of $ 10,103,048 as of December 31, 2025.

The balance of the Company's goodwill at December 31, 2025 is zero .

See Note 3 - Goodwill for additional disclosures.

Other Intangible Assets—Other Intangible assets (excluding indefinite-lived intangible assets) consist of customer lists and relationships.

These other intangible assets were acquired at fair value as a result of the Maddox Acquisition disclosed in Note 1 - Organization and Business Operations and are amortized on a straight-line basis over their estimated lives.

The Company assesses useful lives based on the period over which the asset is expected to contribute to cash flows.

Other Intangible Assets —The Company's other intangibles consist of customer relationships and tradenames and trademarks and are stated at cost, less accumulated amortization and impairment charge.

The Company records amortization expense using the straight-line method over the estimated useful lives of these assets, which range from three to ten years.

The Company reviews these intangibles for impairment whenever events or circumstances indicate that the carrying amount of these intangibles may not be recoverable.

During the third quarter of 2025, the Company identified indicators of impairment related to its other intangibles.

The Company performed a recoverability test by comparing the undiscounted future cash flows of the asset group to its carrying amount.

The analysis indicated that the carrying amount was not recoverable.

As a result, the Company measured the impairment loss as the excess of carrying amount over fair value, determined by using a discounted cash flow approach.

Accordingly, the Company recorded a non-cash impairment charge of $ 3,300,801 in the Consolidated Statements of Operations for the year ended December 31, 2025.

See Note 3 - Goodwill and Other Intangibles.

EPA Contract Liability —These are costs related to the EPA school bus program that are expected to be reimbursed to the EPA as a result of the Company's decision to discontinue the school bus initiative.

The balance of EPA contract liability at December 31, 2025 and December 31, 2024 is $ 5,169,691 and $ 0 , respectively.

Research and Development ("R&D") —Costs incurred in connection with the development of new products and manufacturing methods are charged to operating expenses as incurred.

R&D expenses were $ 731,808 and $ 192,885 for the years ended December 31, 2025 and December 31, 2024 , respectively.

Stock-Based Compensation —The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC 718, Compensation-Stock Compensation ("ASC 718" ), which requires all share-based payments to employees, including grants of employee stock options and restricted shares and stock options to external consultants, to be recognized in the financial statements based on their grant date fair values using the Black-Scholes option pricing model for stock options and the closing market price on the date of the award for restricted shares and are recognized as compensation expense ratably over the requisite service period, which is generally the awards' vesting period.

Stock-Based Compensation —The Company accounts for employee stock-based compensation in accordance with the guidance of ASC 718, Compensation-Stock Compensation ("ASC 718" ), which requires all share-based payments to employees, including grants of employee stock options and restricted shares and stock options to external consultants, to be recognized in the financial statements based on their grant date fair values using the Black-Scholes option pricing model for stock options and the closing market price on the date of the award for restricted shares and are recognized as compensation expense ratably over the requisite service period, which is generally the awards' vesting period.

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

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The Company’s lease terms may include optional extension periods when it is reasonably certain that those options will be exercised.

Leases with an initial expected term of 12 months or less are not recorded in the Balance Sheet and the related lease expense is recognized on a straight-line basis over the lease term.

Leases with an initial expected term of 12 months or less are not recorded in the Company's Consolidated Balance Sheet and the related lease expense is recognized on a straight-line basis over the lease term.

For certain classes of underlying assets, the Company has elected to not separate fixed lease components from the fixed non-lease components.

Recent Accounting Pronouncements—Currently Adopted

2023 - 07, “ Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosure ”

On November 27, 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023 - 07, Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosures (“ASU 2023 - 07” ), which requires public entities to disclose information about their reportable segments' significant expenses and other segment items on an interim and annual basis.

Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023 - 07, as well as existing segment disclosures and reconciliation required under Accounting Standard Codification (“ASC”) 280 on an interim and annual basis.

ASU 2023 - 07 is effective for fiscal years beginning after December 15, 2023, and for the interim periods beginning after December 15, 2024, with early adoption permitted.

The Company has adopted this guidance within the Company’s Annual Report on Form 10 -K for the year ending December 31, 2024.

There anticipates no material impact on the Company's consolidated financial statements.

Recently issued accounting pronouncements not yet adopted

Recently Adopted Accounting Pronouncements

2023 - 09, “ Income Taxes (Topic 740 ):

Improvements to Income Tax Disclosures ”

In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ):

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023 - 09, Income Taxes (Topic 740 ):

Improvements to Income Tax Disclosures ("ASU 2023 - 09" ), which requires public entities, on an annual basis, to provide disclosure of specific categories in the reconciliation of the effective tax rate, as well as disclosure of income taxes paid, disaggregated by jurisdiction.

ASU 2023 - 09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2023 - 09 and will adopt the guidance when it becomes effective on a prospective basis.

2024 - 03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220 - 40 ):

The Company adopted ASU 2023 - 09 on a prospective basis.

The adoption had no material impact on the Company's consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

2024 - 03, “ Income Statement (Subtopic 220 - 40 ):

Disaggregation of Income Statement Expenses ”

On November 4, 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024 - 03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220 - 40 ):

Disaggregation of Income Statement Expenses (“ASU 2024 - 03” ) , that improves financial reporting by requiring public companies to disclose additional information about certain expenses in the notes to the financial statements.

The amendments in the ASU 2024 - 03 are effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently evaluating the impact of adopting ASU 2023 - 07 and intends to adopt and report on this topic as required by this ASU.

On October 30, 2024, the Company entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Maddox Industries, LLC, a Puerto Rico limited liability company (“Maddox Industries”), and Jason Maddox, the sole member of Maddox Industries (the “Seller”), pursuant to which, subject to the terms and conditions of the Purchase Agreement, the Company purchased from the Seller all of the issued and outstanding membership interests (the “Purchased Interests”) in Maddox Industries (the “Maddox Acquisition”).

As consideration for the Purchased Interests, at the closing of the Maddox Acquisition on December 18, 2024 ( the “Closing”), the Company issued 3,100,000 shares of common stock to the Seller (the “Stock Consideration”).

In addition, during the six -month period following the Closing (the “Earnout Period”), the Seller was eligible to receive up to six monthly cash payments in an aggregate amount of up to $ 1 million (each such monthly payment, an “Earnout Payment”), which the Earnout Payment for each calendar month being equal to the aggregate amount of gross revenue received by Maddox Industries in respect of any closing receivable, as specified in the Purchase Agreement, during such calendar month, subject to an aggregate limit of $ 1 million with respect to all Earnout Payments payable under the Purchase Agreement.

The Maddox Acquisition was consummated on December 18, 2024.

The final purchase price of $ 4,276,041 , net of cash acquired of $ 1,959 , has been allocated to the fair values of assets and liabilities acquired as of December 18, 2024.

The following table summarizes the consideration paid, the fair values of the assets acquired, and the liabilities assumed as of the date of Maddox Acquisition:

Fair Values at December 18, 2024

Receivable from related party

Customer relationships

Trade names and trademarks

Fair value of assets acquired

Less fair value of liabilities acquired

( 1,243,171 )

Purchase price, net of cash acquired

Goodwill represents value the Company expects to be created by combining the operations of the acquired business with the Company's operations, including the expansion of customer relationships, access to new customers, and potential cost savings and synergies.

Goodwill related to the acquisition is not expected to be deductible for tax purposes.

Unaudited Supplemental Pro Forma Information

The following unaudited pro forma financial information presents the combined results of operations for the Company and gives effect to the Maddox Acquisition discussed above as if it had occurred on January 1, 2023.

The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the results of operations for the year ended December 31, 2024 and December 31, 2023, respectively, that would have been realized if the Maddox Acquisition had occurred on January 1, 2023, nor does it purport to project the results of the combined entity in future periods.

The pro forma financial information does not give effect to any anticipated integration costs related to the combined entities.

For the years ended December 31,

$ 4,867,581 $ 3,300,183

$ ( 6,294,107 ) $ ( 13,212,266 )

In November 2024, the FASB issued ASU 2024 - 03, Income Statement (Subtopic 220 - 40 ):

Disaggregation of Income Statement Expenses ("ASU 2024 - 03" ), which requires additional information about certain expenses in the notes to the financial statements.

ASU 2024 - 03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2024 - 03 and will adopt the guidance when it becomes effective on a prospective basis.

Goodwill and Intangible Assets

The Company conducted an impairment test in 2024 at year-end during its annual impairment test in accordance with ASC 350 - 20, Goodwill.

The Company also conducted its annual impairment test in 2023 as a result of a triggering event that occurred during the first quarter of 2023.

As a result of these tests, the Company recorded no goodwill impairment charge in December 31, 2024 and a goodwill impairment charge of $ 5,098,784 for the year ended December 31, 2023.

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

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

Goodwill as of December 31, 2023

Impairment charge

( 5,098,784 )

Goodwill as of December 31, 2023

Increase due to acquisitions

Goodwill as of December 31, 2024

The following table presents the carrying amount of intangible assets for the year ended December 31, 2024:

( 10,103,048 )

Goodwill as of December 31, 2025

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

As of December 31, 2025

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Accumulated amortization

Impairment charge

Intangible assets:

5 unchanged sentences

$ 4,000,000 $ ( 699,199 ) $ ( 3,300,801 ) $ -

Amortization for the year ended December 31, 2024 was $ 31,699 .

The estimated amortization expense for the next five years and thereafter is as follows:

Amortization expense

2029 and beyond

As of December 31, 2024

Weighted average amortization period (in years)

Gross carrying amount

Accumulated amortization

Intangible assets:

Customer relationships

$ 2,100,000 $ ( 24,932 ) $ 2,075,068 2.96

Trade names and trademarks

1,900,000 ( 6,767 ) $ 1,893,233 9.96

Intangible assets, net

$ 4,000,000 $ ( 31,699 ) $ 3,968,301

Amortization expense for the years ended December 31, 2025 and 2024 was $ 667,500 and $ 31,699 , respectively.

Due to unfavorable business conditions affecting its medical supplies segment, the Company conducted an impairment test of its intangibles.

As a result of this test, the Company recorded an impairment of $ 3,300,801 for the year ended December 31, 2025.

The remaining balance of intangible assets at December 31, 2025 is $ 0 .

Property and equipment, net

39 unchanged sentences

Federal tax returns for tax years since 2021 are still open for examination by the Internal Revenue Service.

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

Federal statutory rate

$ 8,216,667 21 % $ 1,858,285 21 %

Valuation allowance

( 8,216,667 ) ( 21 )% ( 1,858,285 ) ( 21 )%

$ - 0 % $ - 0 %

Notes Payable

2 unchanged sentences

The $ 25,007 loan is payable over 36 months, beginning in August 2022, with monthly payments of $ 521 .

The balance of this note is $ 10,420 of which $ 6,252 is classified as Notes Payable - current and $ 4,168 is classified as Notes Payable - long term on the Company's consolidated balance sheets as of December 31, 2024.

Effective August 20, 2023, the Company entered into a premium financing agreement with First Insurance Funding to finance insurance coverages other than its directors' and officers' insurance coverages.

The $ 467,074 loan is payable over nine months, beginning in September 2023, and bears interest at 8.2 % with monthly payments of $ 53,675 .

There was no balance under this note as of December 31, 2024.

Effective June 15, 2024, the Company entered into a premium financing agreement with First Insurance Funding to finance its directors' and officers' insurance coverages.

The balance of this note was $ 4,168 as of December 31, 2025, of which $ 4,168 is classified as Notes Payable - current on the Company's Consolidated Balance Sheets as of December 31, 2025.

On June 15, 2025, the Company entered into a premium financing agreement with AFCO Insurance Premium Finance to finance its directors' and officers' insurance coverages.

The $ 140,400 loan is payable over nine months, beginning in July 2024, and bears interest at 8.24 % with monthly payments of $ 14,576 .

The balance of this note, including accrued interest, is $ 94,739 as of December 31, 2024.

Effective August 20, 2024, the Company entered into a premium financing agreement with AFCO Insurance Premium Finance to finance insurance coverages other than its directors' and officers' insurance coverages.

The $ 417,050 loan is payable over eleven months, beginning in September 2024, and bears interest at 8.24 % with monthly payments of $ 39,493 .

The balance of this note, including accrued interest, is $ 269,015 as of December 31, 2024.

The balance of this note was $ 57,315 as of December 31, 2025.

On August 20, 2025, the Company entered into a premium financing agreement with AFCO Insurance Premium Finance to finance certain insurance coverages other than its directors' and officers' insurance coverages.

The $ 114,140 loan is payable over eleven months, beginning in September 2025, and bears interest at 8.24 % with monthly payments of $ 7,809 and required an initial down payment of $ 39,515 .

The balance of this note, including accrued interest, was $ 114,762 as of December 31, 2025.

Convertible Note

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The Holder also had a security interest in the assets of the Company in the event of non-payment of the Note.

In addition, the Holder received options to purchase 800,000 share of the Company's common stock at $ 1.50 per share.

In addition, the Holder received options to purchase 80,000 shares of the Company's common stock at $ 1.50 per share.

These options expire two years from the date of the Note.

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During the third quarter of 2024, the short-term note was converted into 50,505 shares of common stock.

The Company has elected to measure the Note and options at fair value.

The Company elected to measure the Note and options at fair value.

In estimating the fair value of the Note, a Monte Carlo simulation model is applied.

3 unchanged sentences

The required inputs include the current stock price, the exercise price, the term of the options, the risk-free rate and the volatility of the common stock.

The options' fair value is classified a Level 2 under the air value hierarchy as provided by ASC 820.

The options' fair value is classified as Level 3 under the fair value hierarchy as provided by ASC 820.

The fair valuation of the Note and options uses inputs other than quoted prices that are observable either directly or indirectly.

The net proceeds of $ 901,000 received by the Company from the issuance of the Note are bifurcated between the Note and the options.

The amount allocated to the options is $ 431,405 which is the fair value on the date of the Note.

The net proceeds of $ 901,000 received by the Company from the issuance of the Note were bifurcated between the Note and the options.

The amount allocated to the options was $ 431,405 which was the fair value on the issuance date of the Note.

The remaining proceeds received are allocated to the Note.

Under the fair valuation election, both the Note and options are remeasured to their respective fair values at the reporting date.

Changes in fair values for the Note and options are recorded as an unrealized gain or loss on convertible note fair value in Other (Expense)/Income in the Company's consolidated statements of operations for the year ended December 31, 2024.

As a result of this election, the Company recorded an unrealized loss $ 556,174 for the year ended December 31, 2024 for the Note and an unrealized gain of $ 298,993 for the year ended December 31, 2024 for the options, respectively.

Related Party Loan

On August 13, 2024, the Company entered into a long-term loan arrangement (the "Oldridge Loan") with Phillip W.

Oldridge ("Mr.

Oldridge") whereby Mr.

Oldridge loaned $ 300,000 to the Company.

The Oldridge Loan carried an interest rate of 8 % and matures on January 1, 2026.

The Oldridge Loan was paid off in full on December 31, 2024.

The amount paid to satisfy the Oldridge Loan was $ 309,000 of which $ 9,000 represented accrued interest on the loan.

Amended and Restated Standby Equity Purchase Agreement ("A&R SEPA")

Under the fair value election, both the Note and options are remeasured to their respective fair values at the reporting date and are presented as Options liability, at fair value on the Company's Consolidated Balance Sheets.

As a result of this election, the Company recorded an unrealized loss $ 556,174 for the year ended December 31, 2024 for the Note.

The Company recorded an unrealized gain of $ 132,412 and $ 298,993 for the year ended December 31, 2025 and December 31, 2024, respectively for the options.

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

On October 31, 2024, the Company entered into A&R SEPA with YA II PN, Ltd.

(the "Investor").

The A&R SEPA amends and restates in its entirety the Original SEPA.

Pursuant to the A&R SEPA, except for so long as there is a balance outstanding under the Promissory Notes, the Company has the right, from time to time, until November 1, 2027, to require the Investor to purchase up to $ 25 million of shares of common stock, subject to certain limitations and conditions set forth in the A&R SEPA, by delivering written notice to the Investor.

Pursuant to the A&R SEPA, the Investor advanced to the Company the Pre-Paid Advance of $ 3 million in exchange for the Company’s issuance to the Investor of the Promissory Notes in two tranches, resulting in net proceeds (net of discounts and fees) to the Company of $ 2,635,500 .

The Company received the first tranche of the Pre-Paid Advance in the principal amount of $ 2 million on October 31, 2024 in exchange for the Promissory Note dated October 31, 2024, and the second tranche of the Pre-Paid Advance in the principal amount of $ 1 million on December 17, 2024 in exchange for the Promissory Note dated December 17, 2024.

The Promissory Notes accrue interest on the outstanding principal balance at an annual rate equal to 0 %, which will increase to an annual rate of 18 % upon the occurrence of an Event of Default (as defined in the Promissory Notes) or a Registration Event (as defined in the Promissory Notes) for so long as such event remains uncured.

The Promissory Notes mature on November 13, 2025, which may be extended at the option of the Investor.

The Promissory Notes are convertible at a conversion price equal to the lower of (i) $ 2.1480 per share or (ii) 93 % of the lowest daily volume weighted average price of the Common Stock on Nasdaq as reported by Bloomberg L.P.

during the five consecutive trading days immediately preceding the conversion date (but no lower than the “floor price” then in effect, which is $ 0.3580 per share, subject to adjustment from time to time in accordance with the terms contained in the Promissory Notes).

The A&R SEPA amends and restates in its entirety the standby equity purchase agreement, dated September 23, 2024, by and between the Company and the Investor (the “Original SEPA”).

Pursuant to the A&R SEPA, except for so long as there is a balance outstanding under the Promissory Notes (as defined below) and the Additional Promissory Notes (as defined below), the Company has the right, from time to time, until November 1, 2027, to require the Investor to purchase up to $ 25 million of shares of common stock, subject to certain limitations and conditions set forth in the A&R SEPA, by delivering written notice to the Investor.

Pursuant to the A&R SEPA, the Investor advanced to the Company the principal amount of $ 3 million (the “Pre-Paid Advance”) in exchange for the Company’s issuance to the Investor of convertible promissory notes (the “Promissory Notes”) in two tranches, resulting in net proceeds (net of discounts and fees) to the Company of $ 2,635,500 .

The Company received the first tranche of the Pre-Paid Advance in the principal amount of $ 2 million on October 31, 2024 in exchange for the Promissory Note dated October 31, 2024 ( the “EVTV- 1 Promissory Note”), and the second tranche of the Pre-Paid Advance in the principal amount of $ 1 million on December 17, 2024 in exchange for the Promissory Note dated December 17, 2024 ( the “EVTV- 2 Promissory Note”).

Prior to the Company’s entry into the Supplemental Agreement (as defined below), the Promissory Notes were initially set to mature on November 13, 2025 and were convertible at a conversion price equal to the lower of (i) $ 21.48 per share or (ii) 93 % of the lowest daily volume weighted average price of the Company’s common stock on Nasdaq Stock Market LLC (“Nasdaq”) as reported by Bloomberg L.P.

(“VWAP”) during the five consecutive trading days immediately preceding the conversion date (but no lower than the “floor price” then in effect, which was $ 3.58 per share, subject to adjustment from time to time in accordance with the terms contained in the Promissory Notes).

Pursuant to the terms of the Original SEPA, the Company issued 6,410 shares of common stock to the Investor as a commitment fee.

During 2025, the obligation under the EVTV- 1 Promissory Note was partially satisfied through the conversion of the EVTV- 1 Promissory Note into shares of the Company's common stock.

As a result of this conversion, 1,416,116 shares of the Company's common stock were issued at a weighted average price of $ 1.06 .

The remaining principal balance of the EVTV- 1 Promissory Note at December 31, 2025, was $ 285,000 .

As a result of these conversions, a realized gain of $ 339,855 was recognized for the EVTV- 1 Promissory Note for the year ended December 31, 2025.

During the first quarter of 2025, the obligation under the EVTV- 2 Promissory Note in the principal amount of $ 1 million was fully satisfied through the conversion of the EVTV- 2 Promissory Note into shares of the Company's common stock.

As a result of this conversion, 174,348 shares of the Company's common stock were issued at a weighted average price of $ 6.95 and a realized loss of $ 135,976 was recognized for the EVTV- 2 Promissory Note for the year ended December 31, 2025.

The principal balance of the EVTV- 2 Promissory Note was zero at December 31, 2025.

The Company has elected to measure the Promissory Notes at fair value.

In estimating the fair value of the Note, a lattice model is applied.

In estimating the fair value of the Promissory Notes, a lattice model is applied.

The required inputs include the current stock price, the term, the conversion price, the risk-free rate and volatility of the common stock.

The Promissory Notes' fair values are classified as Level 3 under the fair value hierarchy as provided by ASC 820.

As a result of this election, the Company recorded an unrealized loss of $ 251,200 for the $ 2,000,000 Promissory Note and $ 125,600 for the $ 1,000,000 Promissory Note.

Supplemental Agreement to A&R SEPA

On February 24, 2025, the Company entered into a supplemental agreement, dated February 24, 2025 ( the “Supplemental Agreement”), with the Investor, which amends and supplements the A&R SEPA to:

(i) provide for the advancement by the Investor to the Company, subject to the satisfaction of certain conditions as set forth in the Supplemental Agreement, of $ 5 million under the A&R SEPA (the “Additional Pre-Paid Advance”), to be evidenced by convertible promissory notes (the “Additional Promissory Notes”) in two tranches, (ii) amend the maturity date for the EVTV- 1 Promissory Note to March 9, 2026, and (iii) amend the floor price for the EVTV- 1 Promissory Note to $ 0.7130 per share.

The Additional Promissory Notes accrue interest on the outstanding principal balance at an annual rate equal to 5 %, which will increase to an annual rate of 18 % upon the occurrence of an Event of Default (as defined in the Additional Promissory Notes) or a Registration Event (as defined in the Additional Promissory Notes) for so long as such event remains uncured.

The Additional Promissory Notes will mature on March 9, 2026, which may be extended at the option of the Investor.

The Additional Promissory Notes are convertible at a conversion price equal to the lower of (i) $ 10.00 per share or (ii) 93 % of the lowest daily VWAP during the five consecutive trading days immediately preceding the conversion date (but no lower than the “floor price” then in effect, which is $ 0.7130 per share, subject to adjustment from time to time in accordance with the terms contained in the Additional Promissory Notes).

The first tranche of the Additional Pre-Paid Advance was disbursed on February 25, 2025 in the principal amount of $ 3 million (with net proceeds to the Company of approximately $ 2.7 million after deducting discounts and fees) as evidenced by an Additional Promissory Note issued by the Company to the Investor on February 24, 2025 ( the “EVTV- 3 Additional Promissory Note”).

During 2025, the obligation under the EVTV- 3 Additional Promissory Note in the principal amount of $ 3 million was partially satisfied through the conversion of the EVTV- 3 Additional Promissory Note into shares of the Company's common stock.

As a result of this conversion, 2,134,613 shares of the Company's common stock were issued at a weighted average price of $ 1.51 .

The remaining principal balance of the EVTV- 3 Additional Promissory Note on December 31, 2025, was $ 50,000 .

A realized loss of $ 7,284 was recognized as a result of this conversion during the year ended December 31, 2025.

The second tranche of the Additional Pre-Paid Advance in the principal amount of $ 2 million (with net proceeds of approximately $ 1.8 million after deducting discounts and fees) was disbursed to the Company on May 7, 2025 ( the "EVTV- 4 Additional Promissory Note").

During 2025, the obligation under the EVTV- 4 Additional Promissory Note in the principal amount of $ 2 million was fully satisfied through the conversion of the EVTV- 4 Additional Promissory Note into shares of the Company's common stock.

As a result of this conversion, 1,163,731 shares of the Company's common stock were issued at a weighted average price of $ 1.96 .

A realized loss of $ 112,809 was recognized as a result of this conversion during the year ended December 31, 2025.

The Company has elected to measure the Additional Promissory Notes at fair value.

In estimating the fair value of the Additional Promissory Notes, a lattice model is applied.

The required inputs include the current stock price, the term, the conversion price, the risk-free rate and volatility of the Company's common stock.

The Additional Promissory Notes' fair values are classified as Level 3 under the fair value hierarchy as provided by ASC 820.

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

1 unchanged sentence

Stockholders' Equity

The Company has 5,000,000 authorized preferred stock with $ 0.00001 par value per share on December 31, 2024 and December 31, 2023.

There was no outstanding preferred stock on December 31, 2024 and December 31, 2023.

The Company has 350,000,000 authorized common stock of which 19,872,612 and 15,171,748 shares of the Company's common stock were outstanding on December 31, 2024 and December 31, 2023, respectively.

The par value of the Company's common stock is $0.00001.

During the first quarter of 2024, the Company entered into securities purchase agreements with five private investors with respect to the private placement of an aggregate of 348,889 shares of the Company’s common stock at a price of $ 1.68 per share.

The Company received aggregate gross cash proceeds from this private placement of $ 585,499 .

On May 3, 2024, the Company entered into securities purchase agreements with a private investor with respect to the private placement of an aggregate of 170,774 shares of the Company’s common stock at a price of $ 2.13 per share.

The Company received aggregate gross cash proceeds from this private placement of $ 363,749 .

On September 12, 2024, the Company entered into securities purchase agreements with four private investors with respect to the private placement of an aggregate of 512,047 shares of the Company’s common stock at a price of $ 1.66 per share and warrants to purchase up to an aggregate of 512,047 shares of Common Stock.

The Company received aggregate gross cash proceeds from this private placement (exclusive of proceeds from any future exercise of the warrants) of $ 850,000 .

The warrants have a term of two years and are exercisable at any time after September 16, 2024, at an exercise price of $ 1.66 per share.

The warrants expire on September 11, 2026.

See Note 9 - Stock Warrants.

As disclosed in Note 7 - Debt, the Company entered into the Note with the Holder.

During the third quarter of 2024, the Note was converted into 505,051 shares of common stock.

See further disclosures under the heading, "Convertible Note," in Note 7 - Debt.

As disclosed in Note 3 - Acquisition, the Company acquired Maddox Industries, a provider of government contracting solutions based in Puerto Rico.

As consideration for the Purchased Interests, at the Closing, the Company issued the Stock Consideration to the Seller.

In addition, during the Earnout Period, the Seller was eligible to receive up to six Earnout Payments, with the Earnout Payment for each calendar month being equal to the aggregate amount of gross revenue received by Maddox Industries in respect of any closing receivable, as specified in the Purchase Agreement, during such calendar month, subject to an aggregate limit of $ 1 million with respect to all Earnout Payments payable under the Purchase Agreement.

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

There was no outstanding shares of preferred stock on December 31, 2025 and December 31, 2024.

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

On September 23, 2024, the Company entered into the Original SEPA, which was amended and restated pursuant to the A&R SEPA on October 31, 2024.

Pursuant to the A&R SEPA, except for so long as there is a balance outstanding under the Promissory Notes and the Additional Promissory Notes and subject to certain limitations and conditions set forth therein, the Company has the right, but not the obligation, to sell to the Investor, and the Investor agreed to purchase from the Company, an aggregate amount of up to $ 25,000,000 of shares of the Company’s common stock at the Company's request (subject to certain beneficial ownership restrictions), from time to time, until November 1, 2027.

See Note 6 – Debt.

Stock Warrants

3 unchanged sentences

Weighted Average Remaining Contractual Life (years)

Outstanding warrants expiring January 28, 2025

431,250 $ 10.00 0.08

Outstanding warrants expiring May 7, 2026

3 unchanged sentences

Outstanding warrants on December 31, 2025

1,901,631 $ 12.79 1.16

December 2020 Warrants

The warrants issued pursuant to that certain Securities Purchase Agreement, dated as of December 24, 2020, that the Company entered into with certain institutional and accredited investors and pursuant to which, among other things, the Company sold and issued, and the investors purchased, shares of the Company’s common stock and related warrants to purchase additional shares of the Company’s common stock in a series of two closings, contain a call provision whereby the Company, after the 13 -month anniversary of the issuance date, and if the volume weighted average price of the common stock for such date exceeds four times the exercise price of the warrants for 20 consecutive trading days, may call the warrants that have not previously been exercised, and the warrant holders have ten trading days within which to exercise before the warrants may be cancelled.

From among these warrants, warrants for 12,833 shares of common stock expired in 2023, warrants for 431,250 shares of common stock will expire on January 28, 2025, and warrants for 958,334 shares of common stock will expire on May 7, 2026.

The warrants issued pursuant to a securities purchase agreement, dated as of December 24, 2020, that the Company entered into with certain institutional and accredited investors and pursuant to which, among other things, the Company sold and issued, and the investors purchased, shares of the Company’s common stock and related warrants to purchase additional shares of the Company’s common stock in a series of two closings, contain a call provision whereby the Company, after the 13 -month anniversary of the issuance date, and if the volume weighted average price of the common stock for such date exceeds four times the exercise price of the warrants for 20 consecutive trading days, may call the warrants that have not previously been exercised, and the warrant holders have ten trading days within which to exercise before the warrants may be cancelled.

From among these warrants, warrants for 1,283 shares of common stock expired in 2023, warrants for 43,125 shares of common stock expired on December 29, 2025, and warrants for 95,834 shares of common stock will expire on May 7, 2026.

September 2024 Warrants

See Note 8 - Stockholders' Equity for disclosures related to the warrants issued in conjunction with the private placements on September 12, 2024.

On September 12, 2024, the Company entered into securities purchase agreements with four private investors with respect to the private placement of an aggregate of 51,205 shares of the Company’s common stock at a price of $ 16.60 per share and warrants to purchase up to an aggregate of 51,205 shares of the Company's common stock.

The Company received aggregate gross cash proceeds from this private placement (exclusive of proceeds from any future exercise of the warrants) of $ 850,000 .

The warrants have a term of two years and are exercisable at any time after September 16, 2024, at an exercise price of $ 16.60 per share.

The warrants expire on September 11, 2026.

As of December 31, 2025 and 2024 , the outstanding warrants have no intrinsic value.

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Outstanding at December 31, 2024

608,266 $ 5.30 8.52

Options Granted during 2023:

Options Granted at $2.50 Exercise Price

415,000 $ 2.50

Options Granted at $2.10 Exercise Price

588,495 $ 2.10

Options Expired at $26.50 Exercise Price

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( 1,377 ) $ 21.10

Outstanding at December 31, 2023

Outstanding Options at $2.00 Exercise Price

250,000 $ 2.00 8.02

Outstanding Options at $2.40 Exercise Price

90,893 $ 2.40 9.05

Outstanding Options at $9.00 Exercise Price

256,750 $ 9.00 7.96

Outstanding Options at $26.20 Exercise Price

6,750 $ 26.20 5.3

Outstanding Options at $2.65 Exercise Price

15,000 $ 2.65 9.29

Outstanding Options at $2.10 Exercise Price

588,495 $ 2.10 9.53

Outstanding at December 31, 2023

1,207,888 $ 3.71 8.53

Options Granted during 2024:

Options expired during 2024

( 2,778 ) $ 2.65

Options Granted at $2.11 Exercise Price

1,378,364 $ 2.11

Options Granted at $2.66 Exercise Price

25,000 $ 2.66

Options Granted at $2.44 Exercise Price

100,000 $ 2.44

Options Granted at $1.50 Exercise Price

800,000 $ 1.50

Options Granted at $2.75 Exercise Price

Options Expired at $24.40 Exercise Price

( 10,000 ) $ 24.40

3 unchanged sentences

10,000 $ 2.12

Options Granted at $1.49 Exercise Price

20,000 $ 1.49

Options Granted at $2.20 Exercise Price

20,000 $ 2.20

Outstanding at December 31, 2025

17 unchanged sentences

200,000 $ 27.50 1.10

Outstanding Options at $1.50 Exercise Price

Outstanding Option at $17.60 Exercise Price

10,000 $ 17.60 8.47

1 unchanged sentence

2,000 $ 14.90 8.43

Outstanding Option at $1.76 Exercise Price

Outstanding Options at $22.00 Exercise Price

2,000 $ 22.00 8.30

4 unchanged sentences

Outstanding at December 31, 2025

5,641,252 $ 2.59 5.33

On December 31, 2024, stock options for 3,505,418 shares of common stock were exercisable.

On January 18, 2024, in conjunction with the Note disclosed in Note 7 - Debt, the Company issued 800,000 options to purchase 800,000 shares of the Company's common stock with an exercise price of $ 1.50 to the Holder.

See Note 4 - Debt, for additional disclosures related to this issuance.

On February 14, 2024, the Compensation Committee (the "Compensation Committee") of the Company's Board of Directors (the "Board") granted an employee options to purchase 25,000 shares of the Company's common stock at an exercise price of $ 2.66 per share.

The options vest ratably over 36 months and expire on the tenth anniversary of the grant date.

On February 23, 2024, the Compensation Committee granted to Franklin Lim, the Company’s Chief Financial Officer, options to purchase 100,000 shares of the Company's common stock at an exercise price of $ 2.44 per share.

The options vested immediately upon grant and expire on the tenth anniversary of the grant date.

On March 19, 2024, the Compensation Committee granted the non-employee directors and certain executives and consultants options to purchase 1,378,364 shares of common stock at an exercise price of $ 2.11 per share.

The options vested immediately and expire on the tenth anniversary of the grant date.

On April 17, 2024, the Compensation Committee granted to an employee option to purchase 20,000 shares of the Company's common stock at an exercise price of $ 2.20 per share.

The options vest ratably over 36 months and expire on the tenth anniversary of the grant date.

On June 3, 2024, the Compensation Committee granted to an employee option to purchase 20,000 shares of the Company's common stock at an exercise price of $ 1.49 per share.

The options vest ratably over 36 months and expire on the tenth anniversary of the grant date.

On June 17, 2024, the Compensation Committee granted to an employee option to purchase 100,000 shares of the Company's common stock at an exercise price of $ 1.76 per share.

The options vest ratably over 36 months and expire on the tenth anniversary of the grant date.

As of December 31, 2025 stock options for 761,776 shares of common stock were exercisable.

Unrecognized compensation for unvested options was $ 107,000 as of December 31, 2025.

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

The remaining 30,000 options vest on the one -year anniversary of the grant date and expire on the tenth anniversary of the grant date.

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

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

Performance Options

On February 28, 2024, the Company issued options to an external party to purchase 200,000 shares of the Company's common stock at an exercise price of $ 27.50 per share, contingent upon achieving certain sales targets.

On September 30, 2024, the sales targets were not met and therefore, no compensation expense was recorded.

On December 31, 2025, the sales targets were not met and therefore, no compensation expense was recorded for the year ended December 31, 2025.

The Company does not believe that the criteria will be met.

These options expire on February 5, 2027.

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As a result, the Company recorded stock compensation expense of $ 58,671 during the year ended December 31, 2024.

No compensation expense was recognized for these restricted shares during the year ended December 31, 2025.

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

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Oldridge, the Company’s Chief Executive Officer and Chairman of the Board, serves as an executive officer and a member of the board of directors of SRI.

The SRI Equipment Leases provide for the leasing of two vehicles that commenced on January 1, 2020 and the combined rent under such leases is $ 3,880 per month, and a separate SRI Equipment Lease provides for a trailer lease that commenced on December 1, 2019, under which the rent is $ 3,891 per month.

Two of the SRI Equipment Leases provide for the leasing of two vehicles that commenced on January 1, 2020 and the combined rent under such leases is $ 3,880 per month, and a third SRI Equipment Lease provides for a trailer lease that commenced on December 1, 2019, under which the rent is $ 3,891 per month.

The total monthly payment obligation of the Company under the SRI Equipment Leases is $ 7,771 .

As a result of the SRI Equipment Leases, the Company recorded rent expense of $ 93,248 for the year ended December 31, 2024, respectively.

As a result of the SRI Equipment Leases, the Company recorded rent expense of $ 93,247 for the year ended December 31, 2025.

The Company has entered into a commercial lease agreement (the “ABCI Office Lease”) with Alpha Bravo Charlie, Inc.

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Oldridge, the Company’s Chief Executive Officer and Chairman of the Board, is a director of ABCI.

The Company recorded rent expense of $ 60,000 for the year ended December 31, 2024, respectively, in connection with the ABCI Office Lease.

As disclosed in Note 3 - Acquisition, the Company recorded a $ 1,000,000 receivable that was due from Maddox Defense, an entity of which Jason Maddox, the President of the Company, is the sole stockholder.

During 2023 , the Company reimbursed Phillip W.

Oldridge, the Company’s Chief Executive Officer and Chairman of the Board, and a member of its board of directors, $ 81,269 for use of the CEO's personal airplane for certain business-related activities.

The Company incurred $ 150,000 of costs related to engineering consulting services from 42Motorsports LTD, the owner of which is a sibling of the Company's Chief Executive Officer and Chairman of the Board for the year ended December 31, 2024, respectively.

See Note 7 - Debt for disclosures related to the Oldridge Loan, a related party loan that was transacted during the third quarter of 2024 and paid off in the fourth quarter of 2024.

The Company recorded rent expense of $ 60,000 for the year ended December 31, 2025 in connection with the ABCI Office Lease.

The Company incurred $ 75,000 for the year ended December 31, 2025 of costs related to engineering consulting services from 42Motorsports LTD, the owner of which is a sibling of Phillip W.

Oldridge, the Company's Chief Executive Officer and Chairman of the Board.

The Company also incurred $ 352,000 for the year ended December 31, 2025, respectively, for payment to Shell Castle LLC, an entity owned by Jason Maddox for services rendered as President and Interim Chief Financial Officer of the Company in lieu of wages.

In addition, the Company also expensed $ 352,000 for the year ended December 31, 2025 for payment to Met Consulting LLC, an entity owned by Elgin Tracy for services rendered as Chief Operating Officer of the Company in lieu of wages.

During the first quarter of 2025, the Company engaged a consultant, Franklin Lim, to assist in its financial reporting and accounting process.

At the end of the third quarter of 2025, the Company appointed the consultant as Vice President, Finance for the Company.

The Company incurred $ 136,500 for the year ended December 31, 2025 for these services.

All revenue earned for the year ended December 31, 2025 by the Company's medical supplies segment was from Maddox Medical Corp.

("Maddox Medical"), a company owned by Jason Maddox, President and Interim Chief Financial Officer of the Company, through a contract that Maddox Medical holds with a third party (that supplies medical gowns, among other things, to the federal government) that is fulfilled by Maddox Industries, LLC ("Maddox Industries") a wholly-owned subsidiary of the Company.

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

On April 1, 2025, the Company entered into a three -year sub-lease arrangement with Maddox Defense, Inc.

("Maddox Defense") (with renewal options), an entity of which Jason Maddox, the President and Interim Chief Financial Officer of the Company, is the sole stockholder, to lease a facility in Houston, Texas for its medical supplies operations.

See Note 13 - Leases for additional disclosures.

Other Agreements

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Oldridge has the right to terminate the Oldridge Agreement without any contractual payments other than what has been stated in the Oldridge Agreement.

On February 5, 2026, Mr.

Oldridge's annual base salary was retroactively approved to $ 500,000 starting on July 1, 2025 and his automobile monthly allowance was changed to $ 2,000 .

According to the Emry Agreement, effective on January 1, 2022, Mrs.

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Emry was entitled to receive (i) one -year of base salary, (ii) reimbursement of reimbursable expenses in accordance with the Emry Agreement, and (iii) the value of any accrued and unused paid time off as of the date of termination.

Emry terminated her employment with the Company on October 15, 2024.

On March 28, 2023, the Company entered into an agreement with Berthaphil, Inc.

Emry terminated her employment with the Company as Executive Vice President on October 15, 2024.

On March 28, 2023, the Company entered into a sublease with Berthaphil, Inc.

("Berthaphil") to sublease approximately 3,600 square yards of a warehouse building based in the Clark Freeport Zone in the Philippines (the "Berthaphil Sublease").

The term of the lease is two years and two months with a turnover date of July 1, 2023 and a rental commencement of September 1, 2023.

The Company had originally intended to use the leased space as a production facility as it seeks to expand its business presence in that region and the United States.

The term of the lease was two years and two months with a turnover date of July 1, 2023 and a rental commencement of September 1, 2023.

The Company had originally intended to use the leased space as a production facility as it seeks to expand its business presence in that region and the U.S.

However, in December 2024, the Company decided not to use the leased space for its original purpose.

See Note 13 - Leases for further information.

On March 18, 2024, the Company entered into a Sale and Purchase Agreement (the "PlugD Agreement") with PlugD Commercial Electric Leasing and Rentals Inc.

("PlugD"), a Texas-based commercial electric vehicles leasing company.

Under the terms of the PlugD Agreement, the Company will deliver 200 electric high roof vans and trucks to PlugD for a total of approximately $ 16.2 million.

The sale is expected to take place over the next 13 months.

Contingencies

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GreenPower Litigation

On December 17, 2019, GreenPower Motor Company Inc., a public company incorporated under the laws of British Columbia (“GreenPower”), of which Phillip W.

Oldridge, the Company’s Chief Executive Officer and Chairman of the Board, previously served as a senior officer and a member of its board of directors, filed a notice of civil claim, captioned GreenPower Motor Company Inc.

Phillip Oldridge et al., Action No.

S- 1914285, in the Supreme Court of British Columbia, against Phillip Oldridge, his trust, Envirotech Drive Systems, Inc.

and certain other companies affiliated therewith.

On February 2, 2020, the Company and the other companies affiliated therewith named in the notice of civil claim filed a response to the civil claim in which they denied certain of the allegations.

Fact discovery, through document disclosure and examinations for discoveries, in this matter remains ongoing.

The Company believes it has meritorious defenses against GreenPower's claims and intends to vigorously defend itself against those claims.

On or about July 18, 2021, GreenPower and GP GreenPower Industries Inc.

(collectively “the GreenPower entities”), filed a counterclaim against David Oldridge, Phillip Oldridge, the Company and other companies in Supreme Court of British Columbia Action No.

The pleadings in this lawsuit have not closed and the Company intends to vigorously defend itself against the counterclaim.

On February 8, 2022, GreenPower Motor Company, Inc., a Delaware corporation, and GreenPower Motor Company Inc., a Canadian corporation, filed a complaint captioned GreenPower Motor Company, Inc.

Phillip Oldridge, et al., Case No.

5:22 -cv- 00252 in the United States District Court for the Central District of California.

The complaint’s allegations are centered around the same assertions in the pending Canadian litigation.

On May 10, 2022, the Company, together with other defendants, filed a Motion to Dismiss and/or Stay the lawsuit in the United States District Court for the Central District of California pending the outcome of the Canadian litigation.

The Court issued stay of this case pending resolution of parallel litigation in Canada between similar parties.

GreenPower and defendants have agreed that the U.S.

GreenPower case will not proceed while Canadian litigation is pending.

The Company believes that it has meritorious defenses against the Greenpower entities' claims and intends to vigorously defend itself against such claims.

From time to time, the Company may be involved in legal proceedings arising in the ordinary course of business.

The Company evaluates such matters on a case-by-case basis and establishes reserves when a loss is considered probable and reasonably estimable.

The Company is named as a defendant in litigation commenced in the Supreme Court of British Columbia, Canada, originally filed on December 17, 2019 by GreenPower Motor Company Inc.

(“GreenPower”), along with certain related entities and individuals, including an executive officer of the Company.

The claims generally allege, among other things, breach of fiduciary duty, misuse of confidential information, unfair competition, and related matters.

The Company and the other named defendants have denied these allegations.

In addition, certain of the defendants, including the Company, are named in a related counterclaim proceeding.

The litigation was previously scheduled for trial in 2024;

however, the trial was adjourned by consent of the parties.

As of December 31, 2025, no new trial date has been set, limited discovery has been conducted, and there has been no material activity in the proceedings during fiscal year 2025.

The matter remains in an early procedural stage.

Lawsuit against Efraim Diveroli and Kingbird Ventures LLC

On February 5, 2026, the Company sued Efraim Diveroli and Kingbird Ventures LLC in the Houston Division of the Texas Business Court, alleging that the defendants, acting individually and in concert with one another, caused agents and representatives of theirs, including Joel E.

Tasca of Greenberg Traurig, to spread lies about the Company, its principals, and its business partners in an effort to scuttle the expected merger with Azio AI Corporation.

The Company asserted claims for tortious interference with contract, tortious interference with prospective economic advantage, and defamation and business disparagement as well as seeking emergency and temporary injunctive relief.

On February 9, 2026, Kingbird Ventures removed the case to the United States District Court for the Southern District of Texas.

An initial pretrial and scheduling conference is set on May 28, 2026.

No scheduling order has been entered, nor has a trial date been set.

While the Company believes that its claims have merit, even if there is an unfavorable outcome, the Company will not be subjected to a material loss.

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

On December 8, 2025, the Company and Maddox Defense sued Efraim Diveroli, Kingbird Ventures LLC, VD Acquisitions, LLC, Bront Bird, and Karla Mae Capital, LLC in the Southern District of California, alleging that defendants, acting individually and in concert with one another, engaged in coercive and extortionate activities, including through abuse of the legal process, in an attempt to force the Company into unwanted transactions, including with Fenix Oro, a gold-mining enterprise.

The Company asserted claims for civil extortion;

RICO, 18 U.S.C.

fraudulent inducement;

tortious interference with contract;

tortious interference with prospective economic relations;

abuse of process;

declaratory relief;

injunctive relief;

civil conspiracy;

and unfair competition, Bus.

Code § 17200.

On January 7, 2026, Bront Bird and Karla Mae Capital were voluntarily dismissed with prejudice.

No responsive pleadings have been filed.

No scheduling order has been entered, nor has a trial date been set.

While the Company believes that its claims have merit, even if there is an unfavorable outcome, the Company will not be subjected to a material loss.

Lawsuit from VD Acquisitions

On January 14, 2026, VD Acquisitions LLC filed suit against Jason Maddox, Elgin Tracy;

Maddox Defense;

Maddox Industries;

Phillip Oldridge;

Karla Mae Capital, LLC;

and Airboss Defense Group, LLC, alleging that Maddox Defense had failed to perform under a fuel agreement.

Plaintiff asserted claims for breach of contract, fraud in the inducement;

fraudulent transfer;

civil conspiracy;

intentional interference with contract;

and declaration of alter ego.

The plaintiff seeks monetary damages and injunctive relief restraining the assets of Jason Maddox, Maddox Defense, Maddox Industries, and the Company.

On February 10, 2025, the Court held a hearing on the plaintiff’s motion for a temporary restraining order and denied the requested relief.

The Company disputes these allegations and intends to vigorously defend itself.

No trial date has been set.

A motion to dismiss filed by the defendants is pending.

Litigation with Former Independent Auditor

In December 2025, the Company initiated legal proceedings against its former independent registered public accounting firm, MaloneBailey LLP (“MaloneBailey”), in the United States District Court for the Central District of California (Case No.

5:25 -cv- 03457 ).

The complaint alleges, among other things, breach of contract and related claims arising from MaloneBailey’s engagement to audit the Company’s financial statements for the fiscal year ended December 31, 2022.

Specifically, the Company asserts that MaloneBailey failed to complete required audit procedures and did not issue an audit report in connection with the Company’s Annual Report on Form 10 -K for the 2022 fiscal year, despite having been engaged to do so.

MaloneBailey previously served as the Company’s independent auditor.

During 2023, the Company disclosed that MaloneBailey would not provide an audit opinion on the Company’s financial statements for the fiscal year ended December 31, 2022.

As a result, the Company engaged a successor independent registered public accounting firm to complete the audit and support its financial reporting obligations.

The Company’s claims are based on alleged contractual breaches and professional failures related to MaloneBailey’s audit engagement.

The Company is seeking damages and other relief deemed appropriate by the court.

As of December 31, 2025, the litigation is in its early stages.

The complaint was recently filed, and no substantive rulings have been issued by the court.

The Company cannot predict the timing or outcome of this matter.

While the Company believes that its claims have merit, even if there is an unfavorable outcome, the Company will not be subjected to a material loss.

The Company has not accrued for loss contingencies in the accompanying financial statements related to this matter.

Operating leases

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The Company is typically required to make fixed minimum rent payments relating to its right to use the underlying leased assets.

Although these leases have terms that are either month-to-month or terms that are one year or less (with renewal options), the Company concluded in the fourth quarter of 2023 that the term renewal options are reasonably certain to be exercised.

As a result of changes in certain circumstances related to some of the Company's short-term leases, the Company was required to classify such leases as operating leases in accordance with the provisions of ASC 842.

Therefore, the Company recognized operating lease liabilities with corresponding Right-of-Use ("ROU") assets based on the present value of the minimum rental payments of such leases.

On March 28, 2023, the Company entered into the Berthaphil Sublease with Berthaphil to sublease approximately 3,600 square yards of a warehouse building based in the Clark Freeport Zone in the Philippines.

The term of the Berthaphil Sublease is two years and two months with a turnover date of July 1, 2023 ( the "turnover date") and a rental commencement of September 1, 2023.

Although these leases have terms that are either month-to-month or terms that are one year or less (with renewal options), the Company concluded that the term renewal options are reasonably certain to be exercised, and the Company classified such leases as operating leases in accordance with the provisions of ASC 842.

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

This lease is treated as an operating lease in accordance with the provisions of ASC 842.

Therefore, the Company recognized operating lease liabilities with corresponding ROU assets based on the present value of the minimum rental payments of such leases.

On March 28, 2023, the Company entered into the Berthaphil Sublease to sublease approximately 3,600 square yards of a warehouse building based in the Clark Freeport Zone in the Philippines.

The term of the Berthaphil Sublease was two years and two months with a turnover date of July 1, 2023 ( the "turnover date") and a rental commencement of September 1, 2023.

However, the warehouse building was not available for use to the Company until the early part of the fourth quarter of 2023.

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The Berthaphil Sublease may be renewed for an additional period that is mutually agreed upon subject to certain terms and conditions.

The Company intended to use the leased space as a production facility as it seeked to expand its business presence in the region and the United States.

The Company intended to use the leased space as a production facility as it sought to expand its business presence in the region.

The Company accounted for this lease as an operating lease under ASC 842 and recorded an operating lease liability and a corresponding ROU asset for this lease.

As disclosed in Note 12 - Commitments, the Company decided to not use this facility for its original intended purpose.

As a result, the Company recorded an impairment of $ 129,062 with respect the corresponding ROU asset.

On July 1, 2024, the Company entered into a month-to-month lease contract with Southern Management Corporation to lease a residence in Osceola, Arkansas for the purpose of housing certain of the Company's employees.

However, the Company decided not to use this facility for its original intended purpose and recorded a full impairment on its ROU asset in December 2024.

The Company maintains the remaining obligation on the Berthaphil Sublease as a contingency should the lessor demand payment.

On July 1, 2024, the Company entered into a month-to-month lease contract to lease a residence in Osceola, Arkansas for the purpose of housing certain of the Company's employees.

The monthly lease cost is $ 3,000 .

This lease is treated as a short-term lease expense.

On August 26, 2024, the Company entered into a one -year lease contract with 120 Park SD, LLC to lease a location in Manalapan, New Jersey with the purpose of servicing the Company's New Jersey customers.

The monthly lease cost is $ 2,900 and at the end of the one -year lease term, the lease converts into a month-to-month arrangement.

This lease is treated as a short-term lease expense.

This lease is treated as a short-term lease.

On August 26, 2024, the Company entered into a one -year lease contract to lease a location in Manalapan, New Jersey with the purpose of servicing the Company's New Jersey customers.

The monthly lease cost is $ 2,900 and at the end of the one -year lease term, the lease converted into a month-to-month arrangement.

This lease is treated as a short-term lease.

The Company's lease agreements do not provide an implicit borrowing rate.

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Total payments

Segment Reporting

Year ended December 31, 2025

Electric vehicles

Medical Supplies

$ 349,063 $ 5,589,945 $ - $ - $ 5,939,008

Operating (Loss) Income

$ ( 33,116,441 ) $ ( 3,905,584 ) $ ( 694,754 ) $ ( 964,400 ) $ ( 38,681,179 )

Interest income (expense), net

Loss on conversions and changes in fair value of convertible notes

Other expense

Income tax expense

$ ( 39,126,986 )

Subsequent Events

The Company evaluates subsequent events through April 15, 2025, which is the date the financial statements were issued or available to be issued.

The Company evaluates subsequent events through March 31, 2026, which is the date the financial statements were issued or available to be issued.

There are two types of subsequent events:

( 1 ) recognized, or those that provide additional evidence with respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, and ( 2 ) non-recognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date.

On February 12, 2025, the Company announced the relocation of its corporate headquarters and the establishment of a new 86,000 square foot facility in Houston, Texas.

This strategic move reinforces the Company's commitment to expanding U.S.

manufacturing, strengthening fleet services, and supporting the growing demand for commercial electric vehicles.

The Company plans to open its new corporate headquarters and manufacturing facility in 2025.

As a result of this relocation, the Company may incur additional capital expenditure and one -time relocation costs, which at the time of filing, are being estimated.

Debenture Financing

On March 6, 2026, the Company entered into a securities purchase agreement (the “SPA”) with the Investor, pursuant to which the Company agreed to issue and sell to the Investor, and the Investor agreed to purchase, debentures (the “Debentures”) in the aggregate principal amount of $ 11,000,000 (the “Subscription Amount”) in two tranches with the purchase price of the Debentures in each tranche being equal to 96 % of the Subscription Amount to be purchased.

The closing of the initial tranche of Debentures occurred on March 6, 2026 ( the “First Closing”), in which the Company issued Debentures in the aggregate principal amount of $ 4,000,000 (the “First Closing Debentures”) to the Investor.

Pursuant to the SPA, the Company and the Investor have agreed that the closing of the second tranche of the remaining $ 7,000,000 in aggregate principal amount of the Debentures (the “Second Closing” and such Debentures, the “Second Closing Debentures”) will occur on or before the first business day after the Company’s filing of the registration statement with Securities and Exchange Commission registering the resale of the shares of the Company’s common stock issuable upon exercise of the Warrants (as defined below) and no less than 10,000,000 shares of the Company’s common stock issuable pursuant to the A&R SEPA(such registration statement, the “Resale Registration Statement”), has been declared effective and subject to the satisfaction or waiver of customary closing conditions set forth in the SPA.

The sale of the Debentures to the Investor is expected to result in gross proceeds to us of approximately $ 10.5 million, after deducting a one -time due diligence and structuring fee to the Investor of $ 25,000 but before deducting any other fees and expenses.

In addition, in connection with the First Closing, as a commitment fee for the transactions contemplated by the SPA, the Company issued to the Investor warrants to purchase up to 1,291,778 shares of the Company’s common stock at an exercise price of $ 0.01 per share (the “Warrants”).

The Warrants are immediately exercisable and will expire 60 months from the date of issuance.

The Warrants include customary adjustment provisions for stock splits, combinations and similar events.

The Debentures bear interest at a rate of 5.0 % per annum, subject to a potential increase to 18.0 % per annum upon the occurrence of certain events of default.

The Debentures mature on March 6, 2027 ( the “Maturity Date”).

The Company will repay the outstanding principal of the Debentures in monthly installments of (i) $ 363,636 for the First Closing Debentures and (ii) $ 636,364 for the Second Closing Debentures, in each case, plus accrued and unpaid interest, in cash, beginning on the earlier of the 30th calendar day following the effectiveness of the Resale Registration Statement or June 6, 2026, with all remaining outstanding principal plus accrued and unpaid interest due in full on the Maturity Date.

Any outstanding principal amount of, and accrued and unpaid interest on, the Debentures as of the Maturity Date will be due and payable on the Maturity Date.

The Debentures provide the Company with an optional redemption right pursuant to which we, at any time, may redeem in cash, in whole or in part, all amounts outstanding under the Debentures prior to the Maturity Date.

The redemption amount shall be equal to the outstanding principal balance of the Debentures being redeemed by the Company, plus all accrued and unpaid interest thereon as of such redemption date.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data