What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-06 compared with 2024-08-14 · 235 added, 203 removed, 299 unchanged (59% of the section changed)

88 unchanged sentences

our income derived from, our two subsidiaries.

As of June 30, 2024, we had two reportable operating

segments as determined by management using the “management approach” as defined by the authoritative guidance on Disclosures

about Segments of an Enterprise and Related Information .

As of September 30, 2024, we had two reportable

operating segments as determined by management using the “management approach” as defined by the authoritative guidance on

Disclosures about Segments of an Enterprise and Related Information .

Healthcare (Nova)

26 unchanged sentences

Results of Operations

Comparison of Three Months Ended June 30,

Comparison of Three Months Ended September

30, 2024 and 2023

The following table sets forth key components

of our results of operations during the three months ended June 30, 2024 and 2023, both in dollars and as a percentage of our revenue.

Three Months Ended June 30,

of our results of operations during the three months ended September 30, 2024 and 2023, both in dollars and as a percentage of our revenue.

Three Months Ended September 30,

2023 (Restated)

Total revenue

5 unchanged sentences

(Loss) income from continuing operations

Other income (expense)

Gain on debt refinance and forgiveness

Other expense

Penalties and fees

1 unchanged sentence

Amortization of debt discounts

Total other income (expense)

Total other expense

Net (loss) income before discontinued operations

1 unchanged sentence

Net (loss) income

$ (1,977,968 )

For the three months ended

June 30, 2024, and 2023, all of our revenue was generated by our healthcare segment, which generates revenue through a full range of diagnostic

and surgical services.

Our total revenue decreased by $1,033,542, or 30.72%, to $2,330,964 for the three months ended June 30, 2024 from

$3,364,506 for the three months ended June 30, 2023.

The decrease in revenue is primarily attributable to the mix of services provided

during the quarter with less higher revenue surgical procedures performed and an increase in the lower revenue pain management treatments

being performed for approximately the same number of patient visits in the current three month period as compared to the same three month

period in the prior year.

September 30, 2024, and 2023, all of our revenue was generated by our healthcare segment, which generates revenue through a full range

of diagnostic and surgical services.

Our total revenue decreased by $2,050,218, or 60.20%, to $1,355,641 for the three months ended September

30, 2024 from $3,405,859 for the three months ended September 30, 2023.

The decrease in revenue is primarily attributable to the following

· The 2024 third quarter revenue was negatively impacted by the hurricanes that occurred in Florida during

this timeframe.

The harsh weather caused several of our facilities to shut down for periods of time due to storm damage as well as patients

not being able to attend their appointments.

All of our facilities have reopened.

· Prior to fiscal year 2024 we historically realized a 49% settlement rate from total gross billed charges.

Accordingly, we had historically recognized net healthcare service revenue as 49% of gross billed amounts.

Throughout the first half of

2024 as well as the third quarter of 2024, we underwent efforts to accelerate cash settlement of our accounts receivable to generate cash

flow for operations.

We did this by shortening our settlement negotiations timespan with attorneys and insurance companies and accepting

lower settlement amounts.

We expect this trend to continue in the short term as we work to settle our accounts receivables more quickly

to generate cash flow for operations.

· Additionally, during the third quarter of 2024, we completed a thorough review of our third-party billing

data, including reviewing historical reports and new reporting methods as a part of our updated analysis.

Based upon this review it was

determined that a 24-month lookback period should be used in the analysis of our historical settlement realization rates.

of the new efforts to accelerate cash settlement during the nine months ended September 30, 2024, we realized a 44% average settlement

rate of our gross billed charges during this time frame, which were historically recorded in accounts receivable and revenue at 49% of

gross billings.

With the reduction in our estimate of our settlement realization rate from 49% to 44%, a $1,650,474 change in accounting

estimate was taken during the third quarter of 2024 in our accounts receivable and revenue.

Cost of sales .

2 unchanged sentences

Our total cost

of sales decreased by $288,679, or 26.69%, to $793,010 for the three months ended June 30, 2024 from $1,081,689 for the three months ended

June 30, 2023.

This decrease is mainly attributable to decreases in salaries and wages, surgical contracted services and laboratory fees.

of sales increased by $449,178, or 81.46%, to $1,000,601 for the three months ended September 30, 2024 from $551,423 for the three months

ended September 30, 2023.

As a percentage of revenue, cost of sale increased from 16.19% for the three months ended September 30, 2023

to 73.81% for the three months ended September 30, 2024.

This increase is mainly attributable to increases in laboratory fees.

Gross profit .

As a result of the

foregoing, our total gross profit decreased by $744,863, or 32.63%, to $1,537,954 for the three months ended June 30, 2024 from $2,282,817

for the three months ended June 30, 2023.

foregoing, our total gross profit decreased by $2,499,396, or 87.56%, to $355,040 for the three months ended September 30, 2024 from $2,854,436

for the three months ended September 30, 2023.

Our total gross margin (as a percent of revenue) decreased from 83.81% for the three months

ended June 30, 2023 to 65.98% for the three months ended June 30, 2024.

ended September 30, 2023 to 26.19% for the three months ended September 30, 2024.

Depreciation expense .

Our depreciation

expense was $3,366, or 0.14% of revenue, for the three months ended June 30, 2024, as compared to $3,365, or 0.10% of revenue, for the

three months ended June 30, 2023.

expense was $3,365, or 0.25% of revenue, for the three months ended September 30, 2024, as compared to $3,365, or 0.10% of revenue, for

the three months ended September 30, 2023.

Selling, general and administrative expenses .

1 unchanged sentence

expenses, including employee salaries, bonuses plus related payroll taxes and stock compensation expense, advertising expenses, professional

advisor fees, bad debts, rent expense, insurance and other expenses incurred in connection with general operations.

Our selling, general

and administrative expenses increased by $1,206,920, or 227.72%, to $1,736,933 for the three months ended June 30, 2024 from $530,013

for the three months ended June 30, 2023.

As a percentage of revenue, our selling, general and administrative expenses were 74.52% and

15.75% for the three months ended June 30, 2024 and 2023, respectively.

Increases were primarily attributable to increases in salaries

and wages expense of $311,215, bad debt expense of $902,183, rent expense of $44,363, board fee expense of $30,919, general and administrative

expenses of $19,646 and professional fees of $28,605 offset by a decrease in management fees of $150,000.

As a result of our efforts to

accelerate cash collections throughout 2024, we have experienced lower than normal settlements of our accounts receivable resulting in

the increase in bad debt expense in the three months ended June 30, 2024.

This may continue as we continue to pay down the liability associated

with the third-party factoring of accounts receivable from previous years.

advisor fees, rent expense, insurance and other expenses incurred in connection with general operations.

Our selling, general and administrative

expenses increased by $359,158, or 62.17%, to $936,835 for the three months ended September 30, 2024 from $577,677 for the three months

ended September 30, 2023.

As a percentage of revenue, our selling, general and administrative expenses were 69.11% and 16.96% for the

three months ended September 30, 2024 and 2023, respectively.

Increases were primarily attributable to increases in salaries and wages

expense of $265,346, professional fees of $153,624, rent expense of $33,386, payroll taxes of $20,010, and board fee expense of $15,000,

offset by a decrease in management fees of $180,000.

Total other income (expense) .

had $27,898 in total other income, net, for the three months ended June 30, 2024, as compared to total other expense, net, of $889,551

for the three months ended June 30, 2023.

Other income, net, for the three months ended June 30, 2024 consisted of gain on debt refinance

and forgiveness of $78,834 and other income of $2,047, offset by interest expense of $41,347, amortization of debt discounts of $11,306

and penalties and fees of $330.

Other expense, net, for the three months ended June 30, 2023 consisted of interest expense of $843,918,

amortization of debt discounts of $30,633 and financing penalties and fees of $15,000.

The interest income for the three months ended

June 30, 2024 was mainly a result of the write-off of accrued interest as part of the settlement agreement described below.

had $1,392,808 in total other expense, net, for the three months ended September 30, 2024, as compared to total other expense, net, of

$288,168 for the three months ended September 30, 2023.

Other expense, net, for the three months ended September 30, 2024 consisted of

interest expense of $1,386,041 and other expense of $6,767.

Other expense, net, for the three months ended September 30, 2023 consisted

of interest expense of $226,119, amortization of debt discounts of $46,048, financing penalties and fees of $16,000 and other expense

Discontinued operations .

three months ended June 30, 2024 and 2023, we recorded a loss from discontinued operations of $0 and $43,810, respectively.

three months ended September 30, 2024 and 2023, we recorded a loss from discontinued operations of $0 and $3,705, respectively.

Net income (loss) .

As a result of

the cumulative effect of the factors described above, our net loss was $174,447 for the three months ended June 30, 2024, as compared

to net income of $816,078 for the three months ended June 30, 2023, a decrease of $990,525.

Comparison of Six Months Ended June 30,

the cumulative effect of the factors described above, our net loss was $1,977,968 for the three months ended September 30, 2024, as compared

to net income of $1,981,521 for the three months ended September 30, 2023, a decrease of $3,959,489.

Comparison of Nine Months Ended September

30, 2024 and 2023

The following table sets forth key components

of our results of operations during the six months ended June 30, 2024 and 2023, both in dollars and as a percentage of our revenue.

Six Months Ended June 30,

of our results of operations during the nine months ended September 30, 2024 and 2023, both in dollars and as a percentage of our revenue.

Nine Months Ended September 30,

2023 (Restated)

Total revenue

5 unchanged sentences

Total operating expenses

Income from continuing operations

(Loss) income from continuing operations

Other income (expense)

Other (expense) income

Gain on debt refinance and forgiveness

6 unchanged sentences

Net (loss) income

$ (2,392,657 )

Our total revenue decreased

by $1,077,975, or 17.76%, to $4,992,930 for the six months ended June 30, 2024 from $6,070,905 for the six months ended June 30, 2023.

The decrease in revenue is primarily attributable to the mix of services provided during the first half of the year with less higher revenue

surgical procedures performed and an increase in the lower revenue pain management treatments being performed for approximately the same

number of patient visits in the current six month period as compared to the same six month period in the prior year.

by $4,327,348, or 45.66%, to $5,149,416 for the nine months ended September 30, 2024 from $9,476,764 for the nine months ended September

The decrease in revenue is mainly attributable to the following factors:

· The 2024 third quarter revenue was negatively impacted by the hurricanes that occurred in Florida during

this timeframe.

The harsh weather caused several of our facilities to shut down for periods of time due to storm damage as well as patients

not being able to attend their appointments.

All of our facilities have reopened.

· Our mix of services provided during the first nine months of the year with lower settlement realization

rates from surgical procedures performed and an increase in the lower revenue pain management treatments being performed for approximately

the same number of patient visits in the current nine-month period as compared to the same nine-month period in the prior year, also contributed

to the decrease in revenue.

· Prior to fiscal year 2024, we historically realized a 49% settlement rate from total gross billed charges.

Accordingly, we had historically recognized net healthcare service revenue as 49% of gross billed amounts.

During the nine months ended

September 30, 2024, we underwent efforts to accelerate cash settlement of our accounts receivable throughout 2024 to generate cash flow

for operations.

We did this by shortening our settlement negotiations timespan with attorneys’ insurance companies and accepting

lower settlement amounts.

We expect this trend to continue in the short term as we work to settle our accounts receivables more quickly

to generate cash flow for operations.

· Additionally, during the third quarter of 2024, we completed a thorough review of our third-party billing

data, including reviewing historical reports and new reporting methods as a part of our updated analysis.

Based upon this review it was

determined that a 24-month lookback period should be used in the analysis of our historical settlement realization rates.

of the new efforts to accelerate cash settlement during the nine months ended September 30, 2024, we realized a 44% average settlement

rate of our gross billed charges during this time frame, which were historically recorded in accounts receivable and revenue at 49% of

gross billings.

Accordingly, we recorded a reduction to net revenue of $1,199,155 for the nine months ended September 30, 2024.

Additionally,

with the reduction in our estimate of our settlement realization rate from 49% to 44%, a $1,650,474 change in accounting estimate was

taken during the third quarter of 2024 in our accounts receivable and revenue.

Cost of sales .

Our total cost of

sales decreased by $296,820, or 14.56%, to $1,741,164 for the six months ended June 30, 2024 from $2,037,984 for the six months ended

June 30, 2023.

This decrease is mainly attributable to decreases in salaries and wages, surgical contracted services and laboratory fees.

sales increased by $152,358, or 5.88%, to $2,741,765 for the nine months ended September 30, 2024 from $2,589,407 for the nine months

ended September 30, 2023.

As a percentage of revenue, cost of sale increased from 27.32% for the nine months ended September 30, 2023

to 53.24% for the nine months ended September 30, 2024.

This increase is mainly attributable to an increase in laboratory fees.

Gross profit .

As a result of the

foregoing, our total gross profit decreased by $781,155, or 19.37%, to $3,251,766 for the six months ended June 30, 2024 from $4,032,921

for the six months ended June 30, 2023.

Our total gross margin (as a percent of revenue) decreased from 66.43% for the six months ended

June 30, 2023 to 65.13% for the six months ended June 30, 2024.

foregoing, our total gross profit decreased by $4,479,706, or 65.04%, to $2,407,651 for the nine months ended September 30, 2024 from

$6,887,357 for the nine months ended September 30, 2023.

Our total gross margin (as a percent of revenue) decreased from 72.68% for the

nine months ended September 30, 2023 to 46.76% for the nine months ended September 30, 2024.

Depreciation expense .

Our depreciation

expense was $6,731, or 0.13% of revenue, for the six months ended June 30, 2024, as compared to $8,000, or 0.13% of revenue, for the six

months ended June 30, 2023.

expense was $10,096 or 0.20% of revenue, for the nine months ended September 30, 2024, as compared to $11,365, or 0.12% of revenue, for

the nine months ended September 30, 2023.

Share based compensation expense .

Our share-based compensation expense $300,225, or 6.01% of revenue, for the six months ended June 30, 2024, as compared to $0 for the

six months ended June 30, 2023.

The increase is due to stock issuances for investor relation services, stock issued to board members and

stock issued as compensation for new employment bonuses to management.

Our share-based compensation expense $300,225, or 5.83% of revenue, for the nine months ended September 30, 2024, as compared to $0 for

the nine months ended September 30, 2023.

The increase is due to stock issuances for investor relation services, stock issued to board

members and stock issued as compensation for new employment bonuses to management.

Selling, general and administrative expenses .

Our selling, general and administrative expenses increased by $1,410,230, or 92.90%, to $2,928,163 for the six months ended June 30, 2024

from $1,517,933 for the six months ended June 30, 2023.

As a percentage of revenue, our selling, general and administrative expenses were

58.65% and 25.00% for the six months ended June 30, 2024 and 2023, respectively.

Increases were primarily attributable to increases in

bad debt expense of $1,242,017, salaries and wages expense of $504,350 and stock compensation expense of $93,600, offset by decreases

in professional fees of $21,826 and management fees of $45,000.

As a result of our efforts to accelerate cash collections throughout 2024,

we have experienced lower than normal settlements of our accounts receivable resulting in the increase in bad debt expense in the three

months ended June 30, 2024.

This may continue as we continue to pay down the liability associated with the third-party factoring of accounts

receivable from previous years.

Our selling, general and administrative expenses increased by $527,370, or 25.17%, to $2,622,981 for the nine months ended September 30,

2024 from $2,095,611 for the nine months ended September 30, 2023.

As a percentage of revenue, our selling, general and administrative

expenses were 50.94% and 22.11% for the nine months ended September 30, 2024 and 2023, respectively.

Increases were primarily attributable

to increases in salaries and wages expense of $769,696, stock compensation expense of $93,600, professional fees of $60,367, investor

relations and public company fees of $71,431, insurance expense of $71,635 and rent expense of $100,000, offset by decreases in management

fees of $225,000, bad debt expense of $270,000, and penalties of $44,670.

Total other expense .

We had $1,755,694

in total other expense, net, for the six months ended June 30, 2024, as compared to total other expense, net, of $1,617,601 for the six

months ended June 30, 2023.

Other expense, net, for the six months ended June 30, 2024 consisted of interest expense of $417,616, amortization

of debt discounts of $24,821 and penalties and fees of $1,330, offset by other income of $78,834 for the gain on debt refinance and forgiveness

and other income of $2,047.

Other expense, net, for the six months ended June 30, 2023 consisted of interest expense of $1,537,579, amortization

of debt discounts of $48,616 and financing penalties and fees of $32,000, offset by a gain on debt refinance and forgiveness of $390 and

other income of $204.

The decrease is primarily attributable to the decrease in interest expense due to the settlement agreement described

in total other expense, net, for the nine months ended September 30, 2024, as compared to total other expense, net, of $1,905,768 for

the nine months ended September 30, 2023.

Other expense, net, for the nine months ended September 30, 2024 consisted of interest expense

of $1,803,657, amortization of debt discounts of $24,821, penalties and fees of $1,330, and other expenses of $4,720, offset by other

income of $78,834 for the gain on debt refinance.

Other expense, net, for the nine months ended September 30, 2023 consisted of interest

expense of $1,763,698, amortization of debt discounts of $94,664 and financing penalties and fees of $48,000, offset by a gain on debt

refinance and forgiveness of $390 and other income of $204.

Discontinued operations .

six months ended June 30, 2024 and 2023, we recorded a loss from discontinued operations of $111,312 and $89,300, respectively.

nine months ended September 30, 2024 and 2023, we recorded a loss from discontinued operations of $111,312 and $93,005, respectively.

Net income (loss) .

As a result of

the cumulative effect of the factors described above, our net loss for the six months ended June 30, 2024 was $457,551, as compared to

net income of $800,087 for the six months ended June 30, 2023, a decrease of $1,257,638.

the cumulative effect of the factors described above, our net loss for the nine months ended September 30, 2024 was $2,392,657, as compared

to net income of $2,781,608 for the nine months ended September 30, 2023, a decrease of $5,174,265.

Liquidity and Capital Resources

As of June 30, 2024, we had $3,196,795 in cash.

To date, we have financed our operations primarily through revenue generated from operations, sales of securities, advances from stockholders

and third-party and related party debt.

As of September 30, 2024, we had $1,949,000 in

To date, we have financed our operations primarily through revenue generated from operations, sales of securities, advances from

stockholders and third-party and related party debt.

We believe, based on our operating plan, that

24 unchanged sentences

The following table provides detailed information

about our net cash flow for the six months ended June 30, 2024 and 2023.

Six Months Ended June 30,

about our net cash flow for the nine months ended September 30, 2024 and 2023.

Nine Months Ended September 30,

Net cash used in operating activities from continuing operations

5 unchanged sentences

Our net cash used in operating activities from

continuing operations was $1,980,727 for the six months ended June 30, 2024, as compared to $260,466 for the six months ended June 30,

The primary drivers of our net cash used in operating activities for the six months ended June 30, 2024 are our net loss of $457,551,

decreases of $2,755,040 in accounts receivable, $367,400 in accounts payable and other accrued expenses and $380,001 in accrued officer’s

compensation, offset by $1,242,017 in bad debt expense and share based compensation of $788,600.

For the six months ended June 30, 2023,

our net income of $800,087, an increase in accounts payable and accrued expenses of $738,353, an increase in accrued officer’s compensation

continuing operations was $3,996,905 for the nine months ended September 30, 2024, as compared to $557,542 for the nine months ended September

The primary drivers of our net cash used in operating activities for the nine months ended September 30, 2024 are our net loss

of $2,392,657, decreases of $1,492,966 in accounts receivable, $691,072 in accounts payable and other accrued expenses and $380,001 in

accrued officer’s compensation, offset by share based compensation of $788,600.

For the nine months ended September 30, 2023, our

net income of $2,781,608, an increase in accounts payable and accrued expenses of $733,125, an increase in accrued officer’s compensation

of $514,000, bad debt expense of $270,000 and an increase in accrued interest of $380,020, offset by a decrease in accounts receivable

of $5,510,098, were the primary drivers for the cash used in operations.

We monitor outstanding cases as they develop through

ongoing discussions with attorneys, doctors and our third-party medical billing company and additionally monitor our settlement realization

rates over time.

We have two primary methods of accelerating our cash settlement of our revenue and related accounts receivable.

is through factoring our receivables, which was done in 2023, but ended prior to April 2023.

The second method is through accepting lower

settlement amounts during the final negotiations of the settlement, which is coordinated through our third-party medical billing company.

When our third-party medical billing company is provided with a settlement amount of 49% of gross charges or greater they will accept.

When presented with a lower amount we will discuss the reasons for the reduced rate and negotiate a higher rate.

Shortening our negotiation

timeframe will typically result in a lower settlement realization rate, but will accelerate the cash settlement of the outstanding accounts

We began employing this second method in 2024, which reduced our settlement realization rate as described below.

We have employed

both methods from time to time to accelerate our cash settlement and may employ one or both in the future.

Prior to April 2023, we factored (sold) the vast

majority of our accounts receivable to third party(s) to generate working capital to fund ongoing business operations and growth, which

led to a significant increase in accounts receivable.

We have a 99% collection rate based on net settlements recorded to our accounts

receivable and revenue.

Our accounts receivable balance each reporting period does not include accounts receivables that were factored

Further, accounts receivable and revenue are recorded at what we anticipate will ultimately be collected, which historically is

99% of the net recognized upon billing to our patients of gross amounts for services.

In the past, for those receivables that were factored,

and we were advanced 46% of the accounts receivable balance and recorded 54% to finance charge.

We last factored our accounts receivable

in the first quarter of fiscal 2023.

Collection rates are estimated considering our 48-month historical collections with primary emphasis

to the most current prior 12-month trailing payment and collection percentage rates.

As a result of our efforts to accelerate cash collections

throughout 2024, in order to paydown the liability associated with the third-party factoring from previous years, we have experienced

lower than normal collection rates on our accounts receivable.

We acquired Nova in May 2021.

Nova was founded in January 2019.

As of December

31, 2023, we based our 48-month historical collections analysis on a look back period from December 31, 2023 to 48 months, part of which

was a period of time we did not yet own Nova.

We use the loss rate method to measure expected credit losses, and in addition we qualitatively

evaluate on an ongoing basis various factors, which include market conditions in which we operate, and the status of claims being settled.

We have established billing rates, which are not the same as actual amounts recovered.

These rates generally do not reflect what is ultimately

paid by the customer, insurance carriers, law firms and other payors, which is typically received eighteen to twenty-four months later,

and are not reported in the consolidated financial statements at those established billing rates.

Our customers, the patients, typically

pay amounts based on established charges per procedure with guidance from the annually updated Current Procedural Terminology, or CPT,

guidelines (a code set maintained by the American Medical Association through the CPT Editorial Panel), that designates relative value

units and a suggested range of charges for each procedure which is then assigned a CPT code.

This fee is discounted to reflect the percentage

paid to us “using a modifier” recognized by each insurance carrier for services, less deductible, co-pay, and contractual

adjustments which are deducted from the calculated fee.

The net revenue is recorded at the time the services are rendered.

of that revenue typically occurs eighteen to twenty-four months later and after the patient claim develops and settles.

Historical collection

rates are estimated using the most current prior 12-month historical payment and collection percentages.

We may incur instances whereby

patient claims are not settled.

However, these instances are very rare.

For example, if a patient dies during the claim’s development

period and there is no estate to bequeath, the claim may not be settled.

Settlements that are less than what was billed to the patient

are covered in our 99% collectability rate.

See also Note 1 to our consolidated financial statements.

For the six months ended June 30, 2023, we factored

a total of $544,196 of our accounts receivable in exchange for cash of $253,750.

We ceased factoring of accounts receivable in the first

quarter of 2023.

The most recent average collection time for accounts receivable was approximately 470 days from the initial date of service.

Typically, a patient will have a series of dates of service over an average of 12 to 16 months.

We had no investing activities for the six months

ended June 30, 2024 and 2023.

majority of our accounts receivable to third party(s) to generate working capital to fund ongoing business operations and growth.

the nine months ended September 30, 2023, we factored a total of $544,196 of our accounts receivable in exchange for cash of $253,750.

We ceased factoring of accounts receivable in the first quarter of 2023.

The most recent average realization time for accounts receivable

was approximately eighteen to twenty-four months from the initial date of service.

Typically, a patient will have a series of dates of

service over an average of 12 to 16 months.

Prior to fiscal year 2024, we historically realized

a 49% settlement rate from total gross billed charges.

Accordingly, we had historically recognized net healthcare service revenue as 49%

of gross billed amounts.

During the nine months ended September 30, 2024, we underwent efforts to accelerate cash settlement of our accounts

receivable throughout 2024 to generate cash flow for operations.

We did this by shortening our settlement negotiations with insurance

companies and accepting lower settlement amounts.

We expect this trend to continue in the short term as we work to settle our accounts

receivables more quickly to generate cash flow for operations.

Additionally, during the third quarter of 2024, we completed a thorough

review of our third-party billing data, including reviewing historical reports and new reporting methods as a part of our updated analysis.

Based upon this review it was determined that a 24-month lookback period should be used in the analysis of our historical settlement realization

As a result of the new efforts to accelerate cash settlement during the nine months ended September 30, 2024, we realized a 44%

average settlement rate of our gross billed charges during this time frame, which were historically recorded in accounts receivable and

revenue at 49% of gross billings.

Accordingly, we recorded reductions to net revenue of $1,199,155 for the nine months ended September

Additionally, with the reduction in our estimate of our settlement realization rate from 49% to 44%, a $1,650,474 change in

accounting estimate was taken during the third quarter of 2024 in our accounts receivable and revenue.

We had no investing activities for the

nine months ended September 30, 2024 and 2023.

Our net cash provided by financing activities

was $4,199,267 for the six months ended June 30, 2024, as compared to $360,470 for the six months ended June 30, 2023.

Net cash provided

by financing activities for the six months ended June 30, 2024 consisted of the proceeds of $4,522,695 from line of credit, offset by

the payment of $120,997 to a director, $100,079 paid on convertible notes payable, $100,000 in dividend payments and $2,352 in payments

on the SBA loan described below.

Net cash provided by financing activities for the six months ended June 30, 2023 consisted of proceeds

from convertible notes payable of $355,500 and proceeds from line of credit of $35,131, offset by repayments of line of credit of $30,161.

was $4,968,250 for the nine months ended September 30, 2024, as compared to $426,671 for the nine months ended September 30, 2023.

cash provided by financing activities for the nine months ended September 30, 2024 consisted of the proceeds of $5,348,871 from line of

credit, offset by the payment of $120,997 to a director, $105,080 paid on convertible notes payable, $100,000 in dividend payments, $50,000

paid on a note payable, and $4,545 in payments on the SBA loan described below.

Net cash provided by financing activities for the nine

months ended September 30, 2023 consisted of proceeds from convertible notes payable of $421,376 and proceeds from line of credit of $35,632,

offset by repayments of line of credit of $28,784.

Convertible Notes

As of June 30, 2024, we had convertible debt outstanding

net of amortized debt discount of $110,000.

During the six months ended June 30, 2024, we made $100,080 in principal payments and paid

the total outstanding accrued interest on these notes in the amount of $22,279.

We also paid $100,000 of accrued interest to a convertible

As of September 30, 2024, we had convertible debt

outstanding net of amortized debt discount of $105,000.

During the nine months ended September 30, 2024, we made $105,080 in principal

payments and paid the total outstanding accrued interest on these notes in the amount of $22,780.

We also paid $100,000 of accrued interest

to a convertible noteholder.

On June 11, 2024, we entered into a settlement

2 unchanged sentences

agreed to cancel such notes in exchange for the fixed amount settlement promissory note in the principal amount of $535,000 described

Additionally, during the six months ended June 30, 2024, we exchanged certain notes for the issuance of 938,908 shares of series

Y senior convertible preferred stock to the noteholder.

Additionally, during the nine months ended September 30, 2024, we exchanged certain notes for the issuance of 938,908 shares of

series Y senior convertible preferred stock to the noteholder.

On January 24, 2017, we issued a convertible

8 unchanged sentences

at a rate of 15% per annum.

On August 25, 2023, we issued a twelve-month convertible

promissory note in the principal amount of $5,000 to our chief executive officer for our operating expenses.

The rate of interest is 10%

Promissory Note – Settlement Agreement

4 unchanged sentences

This transaction was accounted for as a debt extinguishment and a gain on settlement of $78,834 was recorded to the unaudited consolidated

statement of operations for the quarter ended June 30, 2024, in accordance with FASB Topic 470 Borrower’s Accounting for Debt

Modifications.

statement of operations for the nine months ended September 30, 2024, in accordance with FASB Topic 470 Borrower’s Accounting

for Debt Modifications.

The note does not bear interest and requires fixed

7 unchanged sentences

then we must repay the entire principal amount on the closing date of the Offering.

If the Offering is not completed by August 15, 2024,

then we are required to pay $25,000 on such date and to continue making payments of $25,000 on each monthly anniversary thereof until

the entire principal amount is repaid in full.

If the Offering is completed after August 15, 2024, then we are required to make payments

as described in the schedule above.

Notwithstanding the foregoing, if we abandon the Offering and conduct a new public offering thereafter,

then we are required to make a payment of $100,000 on the closing date of such other public offering, a second payment of $100,000 on

the 90 th day following the closing of such offering and $35,000 each month thereafter until the entire principal amount

is repaid in full.

If any portion of the principal amount remains unpaid on the second (2 nd ) anniversary of the date of the

note, it shall become immediately due and payable on such date.

As the Offering was not completed by August 15, 2024,

we are required to pay $25,000 on such date and to continue making payments of $25,000 on each monthly anniversary thereof until the entire

principal amount is repaid in full.

If the Offering is completed after August 15, 2024, then we are required to make payments as described

in the schedule above.

Notwithstanding the foregoing, if we abandon the Offering and conduct a new public offering thereafter, then we

are required to make a payment of $100,000 on the closing date of such other public offering, a second payment of $100,000 on the 90 th day

following the closing of such offering and $35,000 each month thereafter until the entire principal amount is repaid in full.

If any portion

of the principal amount remains unpaid on the second (2 nd ) anniversary of the date of the note, it shall become immediately

due and payable on such date.

We may prepay the entire principal amount at any time without penalty.

The note is unsecured and contains customary events of default for a loan of this type.

Upon an event of default, interest would automatically

begin to accrue at a simple interest rate of ten percent per annum.

The note is unsecured and contains

customary events of default for a loan of this type.

Upon an event of default, interest would automatically begin to accrue at a simple

interest rate of ten percent per annum.

During the three and nine months ended September 30, 2024, we paid a total of $50,000 against

the outstanding principal due.

Small Business Administration Loans

2 unchanged sentences

The principal balance and accrued

interest at June 30, 2024 was $147,301 and $0, respectively.

interest at September 30, 2024 was $145,109 and $0, respectively.

On March 12, 2009, we issued a debenture in the

2 unchanged sentences

The balance of the debenture

was $10,989 at June 30, 2024 and the accrued interest was $8,205.

We assigned all of our receivables from consumer activations of the

rewards program as collateral on this debenture.

was $10,989 at September 30, 2024 and the accrued interest was $8,537.

We assigned all of our receivables from consumer activations of

the rewards program as collateral on this debenture.

Line of Credit

11 unchanged sentences

2 with DML which further increased the maximum advance amount to $11,000,000.

As of June 30, 2024, we had an outstanding balance of

$6,675,746 against the revolving receivable line of credit.

The revolving purchase and security agreement includes discounts recorded

as interest expense on each funding and matures on September 29, 2025.

As of September 30, 2024, we had an outstanding balance

of $7,468,971 against the revolving receivable line of credit and accrued interest of $252,628.

The revolving purchase and security agreement

includes discounts recorded as interest expense on each funding and matures on September 29, 2025.

Related Party Loans

3 unchanged sentences

do not bear interest.

The balance of these amounts is $4,979 as of June 30, 2024.

The balance of these amounts is $4,979 as of September 30, 2024.

Contractual Obligations

22 unchanged sentences

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-Q

Item 2. Management’s Discussion and Analysis