What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-19 compared with 2025-05-09 · 230 added, 147 removed, 253 unchanged (60% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following management’s discussion

and analysis of financial condition and results of operations provides information that management believes is relevant to an assessment

and understanding of our plans and financial condition .

The following management’s discussion and

analysis of financial condition and results of operations provides information that management believes is relevant to an assessment and

understanding of our plans and financial condition .

The following financial information is derived from our financial statements

and should be read in conjunction with such financial statements and notes thereto set forth elsewhere herein.

Except as otherwise indicated by the context and

for the purposes of this report only, references in this report to “we,” “us,” “our” and “our

company” are to Cardiff Lexington Corporation, a Nevada corporation, and its consolidated subsidiaries.

Except as otherwise indicated by the context and for

the purposes of this report only, references in this report to “we,” “us,” “our” and “our company”

are to Cardiff Lexington Corporation, a Nevada corporation, and its consolidated subsidiaries.

Special Note Regarding Forward-Looking Statements

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extraordinary or force majeure events affecting the business or operations of our businesses.

In some cases, you can identify forward-looking

statements by terms such as “may,” “could,” “will,” “should,” “would,” “expect,”

In some cases, you can identify forward-looking statements

by terms such as “may,” “could,” “will,” “should,” “would,” “expect,”

“plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,”

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information, future events, changed circumstances or any other reason.

We are an acquisition holding company focused

on locating undervalued and undercapitalized companies, primarily in the healthcare industry, and providing them capitalization and leadership

to maximize the value and potential of their private enterprises while also providing diversification and risk mitigation for our stockholders.

We are an acquisition holding company focused on locating

undervalued and undercapitalized companies, primarily in the healthcare industry, and providing them capitalization and leadership to

maximize the value and potential of their private enterprises while also providing diversification and risk mitigation for our stockholders.

Specifically, we have and will continue to look at a diverse variety of acquisitions in the healthcare sector in terms of growth stages

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enter into a joint venture agreement with a developer for this planned concept development.

All of our operations are conducted through, and

our income derived from, our two subsidiaries.

As of March 31, 2025, we had two reportable operating

All of our operations are conducted through, and our

income derived from, our two subsidiaries.

As of June 30, 2025, we had two reportable operating

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

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Real Estate (Edge View)

These segments are a result of differences in

the nature of the products and services sold.

Corporate administration costs, which include, but are not limited to, general accounting,

human resources, legal and credit and collections, are partially allocated to the two operating segments.

The healthcare segment provides a full range of

diagnostic and surgical services for injuries and disorders of the skeletal system and associated bones, joints, tendons, muscles, ligaments,

The real estate segment consists of Edge View,

a real estate company that owns five (5) acres zoned medium density residential (MDR) with 12 lots already platted, six (6) acres zoned

high-density residential (HDR) that can be platted in various configurations to meet current housing needs, and twelve (12) acres

zoned in Lemhi County as Agriculture that is available for further annexation into the City of Salmon for development, as well as a common

area for landowners to view wildlife, provide access to the Salmon River and fishing in a two (2) acre pond.

These segments are a result of differences in the

nature of the products and services sold.

Corporate administration costs, which include, but are not limited to, general accounting, human

resources, legal and credit and collections, are partially allocated to the two operating segments.

The healthcare segment provides a full range of diagnostic

and surgical services for injuries and disorders of the skeletal system and associated bones, joints, tendons, muscles, ligaments, and

The real estate segment consists of Edge View, a real

estate company that owns five (5) acres zoned medium density residential (MDR) with 12 lots already platted, six (6) acres zoned high-density

residential (HDR) that can be platted in various configurations to meet current housing needs, and twelve (12) acres zoned in Lemhi

County as Agriculture that is available for further annexation into the City of Salmon for development, as well as a common area for landowners

to view wildlife, provide access to the Salmon River and fishing in a two (2) acre pond.

Management uses revenues, cost of sales, operating

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Results of Operations

Comparison of Three Months Ended March 31,

2025 and 2024

The following table sets forth key components

of our results of operations during the three months ended March 31, 2025 and 2024, both in dollars and as a percentage of our revenue.

Three Months Ended March 31,

2024 (Restated)

Comparison of Three Months Ended June 30, 2025

The following table sets forth key components of our

results of operations during the three months ended June 30, 2025 and 2024, both in dollars and as a percentage of our revenue.

Three Months Ended June 30,

2024 (Restated – as reflected in Form 10-Q/A, filed October 17, 2024)

Total revenue

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Depreciation expense

Share based compensation

Selling, general and administrative

Total operating expenses

Income (loss) from operations

Other (expense) income

Gain on debt refinance and forgiveness

Penalties and fees

Interest expense

Amortization of debt discounts

Total other (expense) income

$ (1,226,395 )

For the three months ended

June 30, 2025 and 2024, all of our revenue was generated by our healthcare segment, which is through a full range of diagnostic and surgical

Our total revenue increased by $1,317,364, or 89.52%, to $2,789,007 for the three months ended June 30, 2025 from $1,471,643

for the three months ended June 30, 2024.

The increase in revenue is mainly attributable to the higher settlement realization rate on

gross billed charges of 43.18% as of June 30, 2025, versus the settlement realization rate of 41.80% as of June 30, 2024.

For the three

months ended June 30, 2024, we recorded a cumulative catch up reduction to net revenue of $859,321 which adjusted our accounts and receivable

and revenue to the 41.80% settlement realization rate.

Cost of sales .

Our cost of sales consists

of surgical center and laboratory fees, physician and professional fees, salaries and wages and medical supplies.

Our total cost of sales

increased by $300,738, or 37.92%, to $1,093,748 for the three months ended June 30, 2025 from $793,010 for the three months ended June

As a percentage of revenue, cost of sales decreased

from 53.89% for the three months ended June 30, 2024 to 39.22% for the three months ended June 30, 2025.

Excluding the cumulative catch

up reduction to revenue of $859,321 noted above, as a percentage of revenue, cost of sales increased from 34.02% to 39.22% for the three

months ended June 30, 2025.

The increase is attributable to increases in laboratory fees and personnel related fees.

Gross profit .

As a result of the foregoing,

our total gross profit increased by $1,016,626, or 149.80%, to $1,695,259 for the three months ended June 30, 2025 from $678,633 for the

three months ended June 30, 2024.

Our total gross margin (as a percentage of revenue) increased from 46.11% for the three months ended

June 30, 2024 to 60.78% for the three months ended June 30, 2025.

Depreciation expense .

Our depreciation

expense was $763, or 0.03% of revenue, for the three months ended June 30, 2025, as compared to $3,366, or 0.23% of revenue, for the three

months ended June 30, 2024.

Share based compensation expense .

based compensation expense was $97,500 and $0 for the three months ended June 30, 2025 and 2024, respectively.

Selling, general and administrative expenses .

Our selling, general and administrative expenses consist primarily of accounting, auditing, legal and public reporting expenses, personnel

related expenses, advertising expenses, professional advisor fees, rent expense, insurance and other expenses incurred in connection with

general operations.

Our selling, general and administrative expenses increased by $152,569, or 18.28%, to $987,319 for the three months

ended June 30, 2025 from $834,750 for the three months ended June 30, 2024.

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

expenses were 35.40% and 56.72% for the three months ended June 30, 2025 and 2024, respectively.

The increase in selling, general and

administrative expenses was primarily attributable to higher personnel related expenses.

Total other (expense) income .

$1,836,072 in total other expense, net, for the three months ended June 30, 2025, as compared to total other income, net, of $27,898 for

the three months ended June 30, 2024.

Total other expense, net, for the three months ended June 30, 2025 consisted entirely of interest

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.

The increase in interest expense is primarily attributable to the increase in initial and incremental fees charged on the number of existing

purchases and claims under the line of credit for the three months ended June 30, 2025 versus the three months ended June 30, 2024.

As a result of the cumulative

effect of the factors described above, our net loss was $1,226,395 for the three months ended June 30, 2025, as compared to $131.585 for

the three months ended June 30, 2024, an increase of $1,094,810, or 832.00%.

Comparison of Six Months Ended June 30, 2025

The following table sets forth key components of our

results of operations during the six months ended June 30, 2025 and 2024, both in dollars and as a percentage of our revenue.

Six Months Ended June 30,

2024 (Restated – as reflected in Form 10-Q/A, filed October 17, 2024)

Total revenue

Total cost of sales

Operating expenses

Depreciation expense

Loss on disposal of fixed assets

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Total operating expenses

Income from continuing operations

Other expense

Income from operations

Other (expense) income

Gain on debt refinance and forgiveness

Penalties and fees

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Total other expense

Net loss before discontinued operations

Loss from continuing operations

Loss from discontinued operations

For the three months ended

March 31, 2025, and 2024, 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 increased by $593,435, or 25.56%, to $2,915,567 for the three months ended March 31,

2025 from $2,322,132 for the three months ended March 31, 2024.

The increase in revenue is primarily attributable to an overall increase

in patient volume and more complex medical procedures.

$ (1,677,172 )

Our total revenue increased

by $1,910,799, or 50.37%, to $5,704,574 for the six months ended June 30, 2025 from $3,793,775 for the six months ended June 30, 2024.

The increase in revenue is mainly attributable to the higher settlement realization rate on gross billed charges of 43.18% as of June

30, 2025, versus the settlement realization rate of 41.80% as of June 30, 2024.

For the six months ended June 30, 2024, we recorded a

cumulative catch up reduction to net revenue of $1,199,155 which adjusted our accounts and receivable and revenue to the 41.80% settlement

realization rate.

Cost of sales .

Our cost of sales

consists of surgical center and laboratory fees, physician and professional fees, salaries and wages and medical supplies.

Our total cost

of sales increased by $126,880, or 13.38%, to $1,075,034 for the three months ended March 31, 2025 from $948,154 for the three months

ended March 31, 2024.

This increase is mainly attributable to increases in laboratory fees and salaries, wages and management fees.

Our total cost of sales

increased by $427,618, or 25.46%, to $2,168,782 for the six months ended June 30, 2025 from $1,741,164 for the six months ended June 30,

As a percentage of revenue, cost of sales decreased

from 40.83% for the three months ended March 31, 2024 to 36.87% for the three months ended March 31, 2025.

from 45.90% for the six months ended June 30, 2024 to 38.02% for the six months ended June 30, 2025.

Excluding the cumulative catch up

reduction to revenue of $1,199,155 noted above, as a percentage of revenue, cost of sales increased from 34.87% to 38.02% for the six

months ended June 30, 2025.

The increase is attributable to increases in laboratory fees and personnel related fees.

Gross profit .

As a result of the

foregoing, our total gross profit increased by $466,555, or 33.96%, to $1,840,533 for the three months ended March 31, 2025 from $1,373,978

for the three months ended March 31, 2024.

Our total gross margin (as a percent of revenue) increased from 59.17% for the three months

ended March 31, 2024 to 63.13% for the three months ended March 31, 2025.

As a result of the foregoing,

our total gross profit increased by $1,483,181, or 72.26%, to $3,535,792 for the six months ended June 30, 2025 from $2,052,611 for the

six months ended June 30, 2024.

Our total gross margin (as a percentage of revenue) increased from 54.10% for the six months ended June

30, 2024 to 61.98% for the six months ended June 30, 2025.

Depreciation expense .

Our depreciation

expense was $3,365, or 0.12% of revenue, for the three months ended March 31, 2025, as compared to $3,365, or 0.14% of revenue, for the

three months ended March 31, 2024.

Share based compensation expense .

Share based compensation expense was $0 and $300,225 for the three months ended March 31, 2025 and 2024, respectively.

expense was $4,128 or 0.07% of revenue, for the six months ended June 30, 2025, as compared to $6,731, or 0.18% of revenue, for the six

months ended June 30, 2024.

Loss on disposal of fixed assets .

Loss on disposal of fixed assets was $12,593 and $0 for the three months ended March 31, 2025 and 2024, respectively.

the six months ended June 30, 2025, we recorded a loss on disposal of fixed assets of $12,593 due to the disposal of medical equipment

that was no longer functional in our medical facilities.

Share based compensation expense .

based compensation expense was $97,500 and $300,225 for the six months ended June 30, 2025 and 2024, respectively.

Selling, general and administrative expenses .

Our selling, general and administrative expenses consist primarily of accounting, auditing, legal and public reporting expenses, personnel

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

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

Our selling, general and administrative

expenses increased by $429,245, or 50.42%, to $1,280,641 for the three months ended March 31, 2025 from $851,396 for the three months

ended March 31, 2024.

As a percentage of revenue, our selling, general and administrative expenses were 43.92% and 36.66% for the three

months ended March 31, 2025 and 2024, respectively.

Increases were primarily attributable to increases in salaries and wages expense of

$255,387, bad debt expense of $112,727, and billing costs $57,735.

Total other income (expense) .

had $994,711 in total other expense, net, for the three months ended March 31, 2025, as compared to total other expense, net, of $390,784

for the three months ended March 31, 2024.

Total other expense, net, for the three months ended March 31, 2025 consisted of interest expense

of $993,114 and other expense of 1,597.

Other expense, net, for the three months ended March 31, 2024 consisted of interest expense of

$376,269, amortization of debt discounts of $13,515 and financing penalties and fees of $1,000.

Our selling, general and administrative expenses increased by $581,814, or 34.51%, to $2,267,960 for the six months ended June 30, 2025

from $1,686,146 for the six months ended June 30, 2024.

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

39.76% and 44.45% for the six months ended June 30, 2025 and 2024, respectively.

The increase in selling, general and administrative expenses

was primarily attributable to higher personal related expenses of $432,746 and bad debt expense of $112,727.

Total other expense .

We had $2,830,783

in total other expense, net, for the six months ended June 30, 2025, as compared to total other expense, net, of $362,886 for the six

months ended June 30, 2024.

Total other expense, net, for the six months ended June 30, 2025 consisted of interest expense of $2,829,186

and other expense of $1,597.

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 a gain on debt refinance and forgiveness of $78,834 and other

income of $2,047.

The increase in interest expense is primarily attributable to the increase in initial and incremental fees charged on

the number of existing purchases and claims under the line of credit for the six months ended June 30, 2025 versus the six months ended

June 30, 2024.

Discontinued operations .

three months ended March 31, 2025 and 2024, we recorded a loss from discontinued operations of $0 and $111,312, respectively.

months ended June 30, 2025 and 2024, we recorded a loss from discontinued operations of $0 and $111,312, respectively.

As a result of the cumulative

effect of the factors described above, our net loss was $450,777 for the three months ended March 31, 2025, as compared to $283,104 for

the three months ended March 31, 2024, an increase of $167,673, or 59.23%.

effect of the factors described above, our net loss was $1,677,172 for the six months ended June 30, 2025, as compared to $414,689 for

the six months ended June 30, 2024, an increase of $1,262,483, or 304.44%.

Liquidity and Capital Resources

As of March 31, 2025, we had $996,758 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.

We believe, based on our operating plan, that

current working capital and current and expected additional financing should be sufficient to fund operations and satisfy our obligations

as they come due for at least one year from the financial statement issuance date.

However, additional funds from new financing and/or

future equity raises are required for continued operations and to execute our business plan and our strategy of acquiring additional businesses.

As of June 30, 2025, we had $559,715 in cash.

This Quarterly Report on Form 10-Q reflects a restatement limited to reclassifying noncash interest expense in the consolidated statements

of cash flows from financing to operating activities for the six months ended June 30, 2024.

This change in presentation did not affect

our cash balance for any period presented.

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 current

working capital and current and expected additional financing should be sufficient to fund operations and satisfy our obligations as they

come due for at least one year from the financial statement issuance date.

However, additional funds from new financing and/or future

equity raises are required for continued operations and to execute our business plan and our strategy of acquiring additional businesses.

The funds required to sustain operations range between $600,000 to $1 million and additional funds execute our business plan will depend

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The following table provides detailed information

about our net cash flow for the three months ended March 31, 2025 and 2024.

Three Months Ended March 31,

about our net cash flow for the six months ended June 30, 2025 and 2024.

Six Months Ended June 30,

Net cash used in operating activities from continuing operations

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$ (1,135,300 )

Net cash provided by financing activities from continuing operations

Net cash provided by financing activities

Net change in cash

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Cash at end of period

Our net cash used in operating activities from

continuing operations was $1,628,728 for the three months ended March 31, 2025, as compared to $1,187,816 for the three months ended March

The primary drivers of our net cash used in operating activities for the three months ended March 31, 2025 are our net loss

of $450,777 and an increase of $1,680,291 in accounts receivable, offset by increases of $230,608 in accounts payable and other accrued

expenses and $101,773 in accrued interest.

For the three months ended March 31, 2024, our net loss of $283,104 and an increase in accounts

receivable of $1,344,676, offset by an increase in share based compensation of $300,225 were the primary drivers of our net cash used

in operating activities.

Our net cash used in operating activities from continuing

operations was $1,889,003 for the six months ended June 30, 2025, as compared to $1,135,300 for the six months ended June 30, 2024.

primary drivers of our net cash used in operating activities for the six months ended June 30, 2025 are our net loss of $1,677,172 and

an increase of $3,371,656 in accounts receivable, offset by increases of $2,579,283 in interest expense in the line of credit balance,

$119,855 in accounts payable and other accrued expenses, $112,468 in accrued officers compensation, and $137,211 in accrued interest.

For the six months ended June 30, 2024, the primary

drivers of our net cash used in operating activities was our net loss of $414,689, decreases of $1,555,885 in accounts receivable and

$367,400 in accounts payable and other accrued expenses, offset by increases in interest expense in the line of credit balance of $845,427

and share based compensation of $300,225.

We monitor outstanding cases as they develop through

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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

Shortening our negotiation time frame will typically result in a lower settlement realization rate, but will accelerate the cash settlement

of the outstanding accounts receivable.

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As a result of the new efforts to accelerate cash settlement,

we realized a 42.9% 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 $339,834 for the three months ended

March 31, 2024.

We will continue to evaluate our estimate of our settlement realization rates in the future, which will include a monthly

review of our trailing 24-month historical settlement realization rate, along with estimates of current and pending settlements through

ongoing discussions with attorneys, doctors and our third-party medical billing company in order to determine our variable consideration

under ASC 606 and the net transaction price.

We will update our settlement realization rate estimate used in determining our accounts

receivable and revenue each quarter based on this review.

during the six months ended June 30, 2024 we realized a 42.3% 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.

As of June 30, 2025 the settlement realization

rate was 43.18%.

We will continue to evaluate our estimate of our settlement

realization rates in the future, which will include a monthly review of our trailing 24-month historical settlement realization rate,

along with estimates of current and pending settlements through ongoing discussions with attorneys, doctors and our third-party medical

billing company in order to determine our variable consideration under ASC 606 and the net transaction price.

We will update our settlement

realization rate estimate used in determining our accounts receivable and revenue each quarter based on this review.

We had no investing activities for the three months

ended March 31, 2025 and 2024.

Our net cash provided by financing activities

was $1,437,301 for the three months ended March 31, 2025, as compared to $1,463,113 for the three months ended March 31, 2024.

provided by financing activities for the three months ended March 31, 2025 consisted of proceeds from line of credit of $1,564,494, offset

by the payment of note payable of $75,000, payment of preferred stock dividends of $50,000 and repayments of the Small Business Administration

ended June 30, 2025 and 2024.

Our net cash provided by financing activities was

$1,260,533 for the six months ended June 30, 2025, as compared to $3,353,840 for the six months ended June 30, 2024.

Net cash provided

by financing activities for the six months ended June 30, 2025 consisted of proceeds from line of credit of $1,464,919, offset by the

payment of note payable of $150,000, payment of preferred stock dividends of $50,000 and repayments of the Small Business Administration

loan described below of $4,386.

Net cash provided by financing activities for the three months ended March 31, 2024 consisted of proceeds

from line of credit of $1,463,273, offset by repayments of the Small Business Administration loan described below of $160.

Net cash provided by financing activities for the six months ended June 30, 2024 consisted of proceeds

from line of credit of $3,677,268, 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 Small Business Administration loan described below.

Convertible Notes

As of March 31, 2025, we had convertible debt

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

As of June 30, 2025, we had convertible debt outstanding

net of amortized debt discount of $105,000.

On January 24, 2017, we issued a convertible promissory

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Promissory Note – Settlement Agreement

On June 11, 2024, we entered into a settlement

agreement and release of claims with the holder of 165 shares of series R convertible preferred stock and certain convertible promissory

Pursuant to the settlement agreement and release of claims, the holder agreed to cancel its shares of series R convertible preferred

stock and convertible promissory notes in exchange for a new fixed amount settlement promissory note in the principal amount of $535,000.

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

On June 11, 2024, we entered into a settlement agreement

and release of claims with the holder of 165 shares of series R convertible preferred stock and certain convertible promissory notes.

Pursuant to the settlement agreement and release of claims, the holder agreed to cancel its shares of series R convertible preferred stock

and convertible promissory notes in exchange for a new fixed amount settlement promissory note in the principal amount of $535,000.

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 year ended December 31, 2024, in accordance with FASB Topic 470 Borrower’s Accounting for Debt

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interest rate of ten percent per annum.

During the three months ended March 31, 2025, we paid a total of $75,000 against the outstanding

During the six months ended June 30, 2025, we paid a total of $150,000 against the outstanding

principal due.

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The principal balance and accrued

interest at March 31, 2025 was $146,045 and $0, respectively.

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

principal amount of $20,000.

interest at June 30, 2025 was $145,215 and $0, respectively.

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

amount of $20,000.

The debenture bore interest at 12% per year and matured on September 12, 2009.

The balance of the debenture

was $10,989 at March 31, 2025 and the accrued interest was $9,195.

We assigned all of our receivables from consumer activations of the

rewards program as collateral on this debenture.

The balance of the debenture was $10,989

at June 30, 2025 and the accrued interest was $9,523.

We assigned all of our receivables from consumer activations of the rewards program

as collateral on this debenture.

Line of Credit

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3 with DML which further increased the maximum advance amount to $15,000,000.

As of March 31, 2025, we had an outstanding balance

of $10,210,485 against the revolving receivable line of credit and accrued interest of $411,300.

As of June 30, 2025, we had an outstanding balance of

$12,690,193 against the revolving receivable line of credit and accrued interest of $441,174.

The revolving purchase and security agreement

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Related Party Loans

In connection with the acquisition of Edge View

on July 16, 2014, we assumed amounts due to previous owners who are current managers of Edge View.

These amounts are due on demand and

do not bear interest.

The balance of these amounts is $4,979 as of March 31, 2025.

In connection with the acquisition of Edge View on

July 16, 2014, we assumed amounts due to previous owners who are current managers of Edge View.

These amounts are due on demand and do

not bear interest.

The balance of these amounts is $4,979 as of June 30, 2025.

Contractual Obligations

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Actual results may differ from these estimates.

For a description of the accounting policies that,

in management’s opinion, involve the most significant application of judgment or involve complex estimation and which could, if

different judgment or estimates were made, materially affect our reported financial position, results of operations, or cash flows, see

“Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies”

in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the Securities and Exchange Commission, or the

SEC, on March 14, 2025.

For a description of the accounting policies

that, in management’s opinion, involve the most significant application of judgment or involve complex estimation and which could,

if different judgment or estimates were made, materially affect our reported financial position, results of operations, or cash flows,

see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies”

in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2024 filed with the Securities and Exchange Commission, or

the SEC, on August 19, 2025.

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements that

have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues

or expenses, results of operations, liquidity, capital expenditures or capital resources.

We have no off-balance sheet arrangements that have

or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses,

results of operations, liquidity, capital expenditures or capital resources.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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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