What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-11-12 compared with 2025-08-19 · 242 added, 220 removed, 263 unchanged (64% 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

26 unchanged sentences

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,”

4 unchanged sentences

Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Item

1A “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2024.

1A “Risk Factors” included in our Annual Report on Form 10-K/A for the year ended December 31, 2024.

If one or more of these

15 unchanged sentences

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

19 unchanged sentences

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 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

about Segments of an Enterprise and Related Information .

All of our operations are conducted through, and

our income derived from, our two subsidiaries.

Recent Developments

On October 1, 2025, we and Nova entered into amendment

4 to the revolving purchase and security agreement described below, which further increased the maximum advance amount to $23,000,000.

As of September 30, 2025, 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)

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, 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.

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.

Management uses revenues, cost of sales, operating

4 unchanged sentences

Results of Operations

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)

Comparison of Three Months Ended September

30, 2025 and 2024

The following table sets forth key components

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

Three Months Ended September 30,

Total revenue

7 unchanged sentences

Other (expense) income

Gain on debt refinance and forgiveness

Other expense

Penalties and fees

Interest expense

Amortization of debt discounts

Total other (expense) income

Total other expense

$ (1,144,299 )

$ (1,977,968 )

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.

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

surgical services.

Our total revenue increased by $1,703,099, or 125.63%, to $3,058,740 for the three months ended September 30, 2025

from $1,355,641 for the three months ended September 30, 2024.

Excluding the one-time change to revenue of $1,650,474 for a change in

accounting estimate recorded in the third quarter of 2024 (discussed below), revenue increased by $52,625, or 1.75%.

For the three months ended September 30, 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.

As a result, 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 .

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

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 $148,560, or 14.85%, to $1,149,161 for the three months ended September 30, 2025 from $1,000,601 for the three months

ended September 30, 2024.

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.

from 73.81% for the three months ended September 30, 2024 to 37.57% for the three months ended September 30, 2025.

Excluding the cumulative

catch up reduction to revenue of $1,650,474 noted above, as a percentage of revenue, cost of sales decreased from 39.17% for the three

months ended September 30, 2024 to 37.57% for the three months ended September 30, 2025.

The decrease is attributable to an increase in

revenue as noted above, partially offset by increased 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.

As a result of the

foregoing, our total gross profit increased by $1,554,539, or 437.85%, to $1,909,579 for the three months ended September 30, 2025 from

$355,040 for the three months ended September 30, 2024.

Our total gross margin (as a percentage of revenue) increased from 26.19% for

the three months ended September 30, 2024 to 62.43% for the three months ended September 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.

expense was $762, or 0.02% of revenue, for the three months ended September 30, 2025, as compared to $3,365, or 0.25% of revenue, for

the three months ended September 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.

Share based compensation expense was $41,188 and $0 for the three months ended September 30, 2025 and 2024, respectively.

Selling, general and administrative expenses .

3 unchanged sentences

Our selling, general and administrative expenses increased by $287,515, or 30.69%, to $1,224,350 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.

ended September 30, 2025 from $936,835 for the three months ended September 30, 2024.

As a percentage of revenue, our selling, general

and administrative expenses were 40.03% and 69.11% for the three months ended September 30, 2025 and 2024, respectively.

in selling, general and administrative expenses was primarily attributable to higher personnel and business development consulting related

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.

had $1,787,578 in total other expense, net, for the three months ended September 30, 2025, as compared to $1,392,808 in total other expense,

net, for the three months ended September 30, 2024.

Total other expense, net, for the three months ended September 30, 2025 consisted

of interest expense of $1,765,528, a conversion penalty of $1,500 and other expense of $20,550.

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.

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 described below.

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)

effect of the factors described above, our net loss was $1,144,299 for the three months ended September 30, 2025, as compared to $1,977,968

for the three months ended September 30, 2024, a decrease in loss of $833,669, or 42.15%.

Comparison of Nine Months Ended September 30, 2025 and 2024

The following table sets forth key components

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

Nine Months Ended September 30,

Total revenue

6 unchanged sentences

Total operating expenses

Income from operations

Other (expense) income

Income (loss) from operations

Other (expense) income

Other expense

Gain on debt refinance and forgiveness

6 unchanged sentences

$ (2,821,471 )

$ (2,392,657 )

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.

by $3,613,898, or 70.18%, to $8,763,314 for the nine months ended September 30, 2025 from $5,149,416 for the nine months ended September

Excluding the cumulative catch up reduction to revenue of $1,199,155 and the one-time change in accounting estimate of $1,650,474

(both discussed below), revenue increased by $764,269, or 9.55%.

The increase in revenue is mainly attributable to an increase in both

office visits and surgical procedures performed year over year.

For 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 cumulative catch up 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

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,

Our total cost of

sales increased by $576,178, or 21.01%, to $3,317,943 for the nine months ended September 30, 2025 from $2,741,765 for the nine months

ended September 30, 2024.

As a percentage of revenue, cost of sales decreased

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.

from 53.24% for the nine months ended September 30, 2024 to 37.86% for the nine months ended September 30, 2025.

Excluding the cumulative

catch up reduction to revenue of $1,199,155 noted above, as a percentage of revenue, cost of sales decreased from 40.32% for the nine

months ended September 30, 2024 to 37.86% for the nine months ended September 30, 2025.

The decrease is attributable to an increase in

revenue as noted above, partially offset by increased laboratory fees and personnel-related fees.

Gross profit .

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.

As a result of the

foregoing, our total gross profit increased by $3,037,720, or 126.17%, to $5,445,371 for the nine months ended September 30, 2025 from

$2,407,651 for the nine months ended September 30, 2024.

Our total gross margin (as a percentage of revenue) increased from 46.76% for

the nine months ended September 30, 2024 to 62.14% for the nine months ended September 30, 2025.

Depreciation expense .

Our depreciation

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.

expense was $4,890 or 0.06% of revenue, for the nine months ended September 30, 2025, as compared to $10,096, or 0.20% of revenue, for

the nine months ended September 30, 2024.

Loss on disposal of fixed assets .

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.

For the nine months ended September 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.

Share based compensation expense was $138,688 and $300,225 for the nine months ended September 30, 2025 and 2024, respectively.

Selling, general and administrative expenses .

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.

Our selling, general and administrative expenses increased by $869,329, or 33.14%, to $3,492,310 for the nine months ended September 30,

2025 from $2,622,981 for the nine months ended September 30, 2024.

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

expenses were 39.85% and 50.94% for the nine months ended September 30, 2025 and 2024, respectively.

The increase in selling, general

and administrative expenses was primarily attributable to higher personnel and business development consulting related expenses of $664,909

and bad debt expense of $112,727.

Total other expense .

We had $4,618,361

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.

in total other expense, net, for the nine months ended September 30, 2025, as compared to total other expense, net, of $1,755,694 for

the nine months ended September 30, 2024.

Total other expense, net, for the nine months ended September 30, 2025 consisted of interest

expense of $4,594,714, a conversion penalty of $1,500, and other expense of $22,147.

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

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 described

Discontinued operations .

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

nine months ended September 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 $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%.

effect of the factors described above, our net loss was $2,821,471 for the nine months ended September 30, 2025, as compared to $2,392,657

for the nine months ended September 30, 2024, an increase of $428,814, or 17.92%.

Liquidity and Capital Resources

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.

As of September 30, 2025, we had $232,033 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.

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

30 unchanged sentences

The following table provides detailed information

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

Six Months Ended June 30,

about our net cash flow for the nine months ended September 30, 2025 and 2024.

Nine Months Ended September 30,

Net cash used in operating activities from continuing operations

5 unchanged sentences

Cash at end of period

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.

Our net cash used in operating activities from

continuing operations was $2,463,300 for the nine months ended September 30, 2025, as compared to $2,043,238 for the nine months ended

September 30, 2024.

The primary drivers of our net cash used in operating activities for the nine months ended September 30, 2025 are

our net loss of $2,821,471 and an increase of $4,878,236 in accounts receivable, offset by an increase of $4,292,471 in interest expense

in the line of credit balance.

For the nine months ended September 30, 2024, the primary drivers of our net cash used in operating activities

was our net loss of $2,392,657, an increase of $3,143,440 in accounts receivable and a decrease of $691,072 in accounts payable and accrued

expense, offset by an increase of $1,953,667 in interest expense in the line of credit balance and a $1,650,474 one-time change in estimate

for the adjustment to the realization rate.

We monitor outstanding cases as they develop through

26 unchanged sentences

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

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.

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 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.

As of September 30, 2025 the settlement realization rate was 42%.

We will continue to evaluate our estimate of our

settlement realization rates in the future, which will include a monthly review of historical settlement realization rates, 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 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 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.

ended September 30, 2025 and 2024.

Our net cash provided by financing activities

was $1,507,148 for the nine months ended September 30, 2025, as compared to $3,014,583 for the nine months ended September 30, 2024.

cash provided by financing activities for the nine months ended September 30, 2025 consisted of proceeds from line of credit of $1,788,727,

offset by the payment of note payable of $225,000, payment of preferred stock dividends of $50,000 and repayments of the Small Business

Administration loan described below of $6,579.

Net cash provided by financing activities for the nine months ended September 30, 2024

consisted of proceeds from line of credit of $3,395,204, offset by the payment of $120,997 to a director, $105,079 paid on convertible

notes payable, $100,000 in dividend payments, $50,000 paid on a note payable, and $4,545 in payments on the Small Business Administration

loan described below.

Convertible Notes

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

note in the principal amount of $80,000 for services rendered, which matured on January 24, 2018.

This note is currently in default and

accrues interest at a default interest rate of 20% per annum.

On March 30, 2023, we executed an additional tranche under this note in

the principal amount of $25,000.

This note is currently in default and accrues interest at a default interest rate of 20% per annum.

August 11, 2023, we executed an additional tranche under this note in the principal amount of $25,000.

This note accrues interest at a

rate of 15% per annum.

note in the principal amount of $80,000 for services rendered, the remaining balance of which was converted into common stock on August

On March 30, 2023, we executed an additional tranche under this note in the principal amount of $25,000.

This note is currently

in default and accrues interest at a default interest rate of 20% per annum.

On August 11, 2023, we executed an additional tranche under

this note in the principal amount of $25,000.

This note accrues interest at a rate of 15% per annum.

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 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

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

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

25 unchanged sentences

interest rate of ten percent per annum.

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

During the nine months ended September 30, 2025, we paid a total of $225,000 against the outstanding

principal due.

3 unchanged sentences

The principal balance and accrued

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.

interest at September 30, 2025 was $144,404 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 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.

The balance of the debenture

was $10,989 at September 30, 2025 and the accrued interest was $9,856.

We assigned all our receivables from consumer activations of the

rewards program as collateral on this debenture.

Line of Credit

On September 29, 2023, our company and Nova entered

into a two-year revolving purchase and security agreement with DML HC Series, LLC, or DML, to sell, with recourse, Nova’s accounts

receivables for a revolving financing up to a maximum advance amount of $4.5 million.

A review is performed on a quarterly basis to assess

the adequacy of the maximum amount.

If mutually agreed upon by us and DML, the maximum amount may be increased.

On April 24, 2024, we

entered into amendment No.

1 with DML which increased the maximum advance amount to $8,000,000 and defined the discount fee equal to 2.25%

per purchase and claims balance forward on new purchases with a minimum fee to now be $10,000.

On June 11, 2024, we entered into amendment

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

On December 27, 2024, we and Nova entered into amendment

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

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

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

into a two-year revolving purchase and security agreement with DML HC Series, LLC, or DML, which was automatically renewed for a term

of one year on September 29, 2025, to sell, with recourse, Nova’s accounts receivables for a revolving financing up to a maximum

advance amount of $4.5 million.

A review is performed on a quarterly basis to assess the adequacy of the maximum amount.

If mutually agreed

upon by us and DML, the maximum amount may be increased.

On April 24, 2024, we entered into amendment No.

1 with DML which increased the

maximum advance amount to $8,000,000 and defined the discount fee equal to 2.25% per purchase and claims balance forward on new purchases

with a minimum fee to now be $10,000.

On June 11, 2024, we entered into amendment No.

2 with DML which further increased the maximum advance

amount to $11,000,000.

On December 27, 2024, we and Nova entered into amendment No.

3 with DML which further increased the maximum advance

amount to $15,000,000.

As of September 30, 2025, we had an outstanding balance of $14,727,190 against the revolving receivable line of

credit and accrued interest of $537,284.

The revolving purchase and security agreement includes discounts recorded as interest expense

on each funding and matures on September 29, 2026.

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 June 30, 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 September 30, 2025.

Contractual Obligations

9 unchanged sentences

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”

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

1 unchanged sentence

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.

1 unchanged sentence

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