What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-05-13 compared with 2025-11-12 · 966 added, 1625 removed, 564 unchanged (82% of the section changed)

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets as of September 30, 2025 (Unaudited) and December 31, 2024

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 (Unaudited) and 2024 (Unaudited)

Condensed Consolidated Statements of Stockholders’ (Deficit)/Equity for the Three and Nine Months Ended September 30, 2025 (Unaudited) and 2024 (Unaudited and Restated)

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 (Unaudited) and 2024 (Unaudited and Restated)

Notes to Condensed Consolidated Financial Statements (Unaudited and Restated)

Condensed Consolidated Balance Sheets as of March 31, 2026 (Unaudited) and December 31, 2025

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2026 (Unaudited) and 2025 (Unaudited)

Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2026 (Unaudited) and 2025 (Unaudited)

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 (Unaudited) and 2025 (Unaudited and Restated)

Notes to Condensed Consolidated Financial Statements (Unaudited)

CARDIFF LEXINGTON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2025 (UNAUDITED) AND DECEMBER

September 30, 2025

AS OF MARCH 31, 2026 (UNAUDITED) AND DECEMBER

March 31, 2026

December 31, 2025

11 unchanged sentences

Accrued interest

Right of use – lease liabilities

Right of use – operating lease liabilities

Notes payable – current portion

Notes payable related parties – current portion

Line of credit

Convertible notes payable

Net liabilities of discontinued operations

Convertible notes payable, net of debt discounts of $ 815,228 and $ 131,705 , respectively – current portion

Derivative liabilities – current portion

Total current liabilities

Notes payable

Other liabilities

Operating lease liability – long term

Notes payable

Notes payable – related parties

Total liabilities

Mezzanine equity

Redeemable Series N Senior Convertible Preferred Stock - 3,000,000 shares authorized, $0.001 par value, stated value $ 4.00 , 1,006,857 and 921,636 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively

Redeemable Series X Senior Convertible Preferred Stock - 5,000,000 shares authorized, $0.001 par value, stated value of $ 4.00 par value;

427,690 and 397,464 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively

Redeemable Series N Senior Convertible Preferred Stock - 3,000,000 shares authorized, $0.001 par value, stated value $ 4.00 , 0 and 1,037,311 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively

Redeemable Series X Senior Convertible Preferred Stock - 5,000,000 shares authorized, $0.001 par value, stated value of $ 4.00 ;

449,117 and 438,388 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively

Total Mezzanine Equity

Stockholders' (deficit)/equity

Series B Preferred Stock - 3,000,000 shares authorized, $0.001 par value, stated value of $ 4.00 , 0 and 1,279,867 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively

Series C Preferred Stock - 500 shares authorized, $0.001 par value, stated value of $ 4.00 , 0 and 74 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively

Series E Preferred Stock - 1,000,000 shares authorized, $0.001 par value, stated value $ 4.00 , 0 and 175,375 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively

Series F-1 Preferred Stock - 50,000 shares authorized, $0.001 par value, stated value $ 4.00 , 3,875 shares issued and outstanding at September 30, 2025 and December 31, 2024

Series I Preferred Stock - 15,000,000 shares authorized, $0.001 par value, stated value $ 4.00 , 10,075,092 and 10,469,092 issued and outstanding at September 30, 2025 and December 31, 2024, respectively

Series L Preferred Stock - 400,000 shares authorized, $0.001 par value, stated value $ 4.00 , 319,493 shares issued and outstanding at September 30, 2025 and December 31, 2024

Series Y Senior Convertible Preferred Stock - 1,500,000 shares authorized, $0.001 par value, stated value of $ 4.00 , 1,041,764 and 979,125 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively

Stockholders' equity/(deficit)

Series F-1 Preferred Stock - 50,000 shares authorized, $0.001 par value, stated value $ 4.00 , 3,875 shares issued and outstanding at March 31, 2026 and December 31, 2025

Series L Preferred Stock - 400,000 shares authorized, $0.001 par value, stated value $ 4.00 , 319,493 shares issued and outstanding at March 31, 2026 and December 31, 2025

Series N Senior Convertible Preferred Stock - 3,000,000 shares authorized, $0.001 par value, stated value $ 4.00 , 1,068,004 and 0 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively

Series Y Senior Convertible Preferred Stock - 1,500,000 shares authorized, $0.001 par value, stated value of $ 4.00 , 1,094,354 and 1,067,878 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively

Common Stock:

300,000,000 shares authorized, $ 0.001 par value;

19,904,708 and 15,300,475 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively

15,167,350 and 13,701,698 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively

Additional paid-in capital

Unearned stock-based compensation

Accumulated deficit

1 unchanged sentence

( 79,490,980 )

Total stockholders’ (deficit)/equity

Total liabilities, mezzanine equity and stockholders’ (deficit)/equity

Total stockholders’ equity/(deficit)

( 2,469,661 )

Total liabilities, mezzanine equity and stockholders’ equity/(deficit)

The accompanying notes are an integral part of

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER

30, 2025 AND 2024

Three Months Ended September 30,

Nine Months Ended September 30,

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND

Three Months Ended March 31,

COST OF SALES

5 unchanged sentences

Total operating expenses

INCOME (LOSS) FROM OPERATIONS

(LOSS) / INCOME FROM OPERATIONS

OTHER (EXPENSE) INCOME

Other expense

Gain on debt refinance and forgiveness

Penalties and fees

Other income (expense)

Derivative liability loss on issuance and changes in fair value

Interest expense

( 1,910,737 )

Amortization of debt discounts

Total other expense

LOSS FROM CONTINUING OPERATIONS

LOSS FROM DISCONTINUED OPERATIONS

NET LOSS FOR THE PERIOD

( 2,580,915 )

$ ( 3,092,074 )

$ ( 450,777 )

PREFERRED STOCK DIVIDENDS

$ ( 272,459 )

$ ( 245,445 )

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$ ( 3,364,533 )

$ ( 696,222 )

BASIC AND DILUTED LOSS PER SHARE

CONTINUING OPERATIONS

DISCONTINUED OPERATIONS

WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC AND DILUTED *

Shares outstanding for the three months ended March 31, 2025 have

been restated for the 1-for-3 reverse stock split effective January 12, 2026.

Summary of Significant Accounting Policies .

The accompanying notes are an integral part of

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

(DEFICIT)/EQUITY

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025

Three and Nine Months Ended September 30, 2025:

EQUITY/(DEFICIT) *

THREE MONTHS ENDED MARCH 31, 2026 AND 2025

Three Months Ended March 31, 2026:

Preferred Stock Series

B, E, F-1, and L

Preferred Stock Series C

Additional Paid-In

Stockholders’ (Deficit)

Unearned Stock-based

Stockholders’ Equity

Balance, December 31, 2025

$ ( 579,215 )

Conversion of series B preferred stock

Conversion of series I preferred stock

Issuance of series Y preferred stock

Preferred stock dividends

Balance, March 31, 2025

$ ( 79,490,980 )

Conversion of series B preferred stock

$ ( 2,469,661 )

( 6,269,868 )

Conversion of series C preferred stock

Conversion of series E preferred stock

Issuance of series Y preferred stock

Issuance of B, C and E preferred stock in exchange for series I preferred stock

( 1,566,000 )

Issuance of common stock related to bridge loans

Common stock issued for services

Common stock cancelled for legal settlement

Preferred stock dividends

( 1,226,395 )

Balance, June 30, 2025

$ ( 75,125,710 )

Conversion of convertible notes payable

Cancellation of common stock for award forfeiture

Conversion of deferred compensation to common stock

Reclassification of series N preferred stock from mezzanine equity to permanent equity

Issuance of series N preferred stock

Issuance of series Y preferred stock

Common stock issued for services

Stock compensation expense

Preferred stock dividends

1 unchanged sentence

( 3,092,074 )

Balance, September 30, 2025

Balance, March 31, 2026

$ ( 331,938 )

$ ( 82,855,513 )

Three and Nine Months Ended September 30, 2024:

Three Months Ended March 31, 2025:

Preferred Stock Series

B, E, F-1, J and L

B, E, F-1 and L

Preferred Stock

1 unchanged sentence

Stockholders’ (Deficit)

Balance, December 31, 2023 (Restated)

$ ( 7,581,212 )

$ ( 68,684,115 )

Conversion of convertible notes payable

Conversion of series B preferred stock

( 3,115,196 )

Conversion of series C preferred stock

Conversion of series I preferred stock

( 2,928,500 )

( 11,714,000 )

Conversion of series J preferred stock

( 1,542,225 )

( 6,168,900 )

Issuance of series I preferred stock to officers

Cancellation of series C preferred stock

Common stock issued for services

Common stock issued to board members

Common stock issued in Red Rock settlement

Preferred stock dividends

Balance, March 31, 2024 (Restated)

$ ( 69,118,853 )

Conversion of series B preferred stock

( 1,522,000 )

Conversion of series C preferred stock

Conversion of series E preferred stock

Conversion of series F-1 preferred stock

Conversion of series I preferred stock

( 1,794,000 )

Conversion of series J preferred stock

Issuance of series Y preferred stock

Preferred stock dividends

Balance, June 30, 2024 (Restated)

Balance, December 31, 2024

$ ( 72,949,085 )

Conversion of series B preferred stock

Conversion of series C preferred stock

Conversion of series F-1 preferred stock

Conversion of series I preferred stock

Issuance of series Y preferred stock

Common stock issued in legal settlement

Preferred stock dividends

( 1,977,968 )

Balance, September 30, 2024

Balance, March 31, 2025

$ ( 73,645,307 )

*Shares outstanding have been restated for the 1-for-3 reverse stock

split effective January 12, 2026.

Summary of Significant Accounting Policies .

The accompanying notes are an integral part of

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025

Nine Months Ended September 30,

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND

Three Months Ended March 31,

2025 (Restated)

CASH FLOWS FROM OPERATING ACTIVITIES

$ ( 3,092,074 )

$ ( 450,777 )

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

Amortization of debt discount

Provision for credit losses

Change in estimate for settlement realization rate

Conversion and note issuance cost

Credit losses

Loss on disposal of assets

Loss on issuance / change in fair value of derivative liability

Interest included in line of credit

Gain on settlement of forgiveness of debt

Share issuance for compensation to directors and officers

Share issuance for service rendered

Share issuance and compensation expense

(Increase) decrease in:

Accounts receivable

( 1,680,291 )

Right of use – assets

2 unchanged sentences

Accounts payable and accrued expense

Accrued officers’ compensation

Accrued related parties compensation

Accrued interest

1 unchanged sentence

Net cash used in operating activities

Net cash provided by discontinued operations – operating

FINANCING ACTIVITIES

Payments to director

Repayment of SBA loans

Net proceeds from line of credit

Payment on convertible notes

Payment on note payable

Net (payments) proceeds on line of credit

Proceeds from convertible notes payable

Payments of debt issuance costs

Payments on note payable

Payment of dividends on preferred stock

Net cash provided by financing activities

NET (DECREASE) INCREASE IN CASH

NET INCREASE (DECREASE) IN CASH

CASH, BEGINNING OF PERIOD

3 unchanged sentences

NON-CASH INVESTING AND FINANCING ACTIVITIES*:

Common stock issued upon conversion of notes payable

Common stock issued upon conversion of preferred stock

Series Y preferred stock issued in exchange of convertible notes payable

Promissory note payable issued in settlement agreement

Dividends on preferred stock, including accrued dividends on preferred stock

*For the nine months ended September 30, 2025 and 2024, lease modifications

recorded increased right of use assets and right of use liabilities by $83,669 and $139,232, respectively.

For the nine months ended September

30, 2024, two new leases recorded during the period increased right of use assets and right of use liabilities by a total of $224,179.

Common stock issued upon conversion of accrued salaries

Promissory notes payable issued in settlement of accrued salaries

Discount on convertible notes payable

Recognition of derivative liability upon issuance of convertible note

Change in fair value of derivative liability

$ ( 523,819 )

*For the three months ended March 31, 2025, a lease modification recorded

increased right of use assets and right of use liabilities by $83,669.

The accompanying notes are an integral part of

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER

30, 2025 AND 2024

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

15 unchanged sentences

(“Edge View”), which was acquired on July 16, 2014.

Basis of Presentation

The accompanying unaudited condensed consolidated

financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) for interim financial information.

Accordingly, they do not include all of the information and footnotes required by U.S.

GAAP for complete annual financial statements.

These interim financial statements should be read in conjunction with the Company’s

audited financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2024.

opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature.

Principles of Consolidation

The consolidated financial statements include

Basis of Presentation and Principles of Consolidation

The consolidated financial statements have been

prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) and include

the accounts of Cardiff and its wholly owned subsidiaries, Nova and Edge View (collectively, the “Company”).

1 unchanged sentence

intercompany accounts and transactions are eliminated in consolidation.

The loss from discontinued operations presented in the condensed

consolidated statement of operations for the nine months ended September 30, 2024 is a part of the execution of a settlement that was

previously reached in July 2022 with six previous owners of Red Rock Travel Group, LLC (“Red Rock”), an entity that was discontinued

by the Company in May 2019.

Net liabilities from discontinued operations on the condensed consolidated balance sheets as of September

30, 2025 and December 31, 2024 include the residual liabilities related to the sale of Platinum Tax Defenders (“Platinum Tax”),

a business previously owned by the Company, which was sold in November 2023.

Please refer to Note 11.

Discontinued Operations for

further detail.

Reverse Stock Split

On January 9, 2024, the Company effected a 1-for-75,000

reverse split of its outstanding common stock.

All outstanding shares of common stock and warrant to purchase common stock were adjusted

to reflect the 1-for-75,000 reverse split, with respective exercise prices of the warrants proportionately increased.

The conversion prices

of the outstanding convertible notes and certain series of preferred stock were adjusted to reflect a proportional decrease in the number

of shares of common stock to be issued upon conversion.

All share and per share data throughout these

consolidated financial statements have been retroactively adjusted to reflect the reverse stock split.

The total number of authorized

shares of common stock did not change.

As a result of the reverse stock split, an amount equal to the decreased value of the common stock

was reclassified from “common stock” to “additional paid-in capital.”

On January 12, 2026, we implemented a 1-for-3 reverse

split of our outstanding shares of common stock.

All share and per share data throughout these consolidated financial statements have

been retroactively adjusted to reflect the reverse stock split.

The total number of authorized shares of common stock did not change.

As a result of the reverse stock split, an amount equal to the decreased value of the common stock was reclassified from “common

stock” to “additional paid-in capital.” In addition, the conversion prices of the outstanding convertible notes and

certain series of preferred stock were adjusted to reflect a proportional decrease in the number of shares of common stock to be issued

upon conversion.

All fractional shares were rounded up.

Use of Estimates

6 unchanged sentences

is in the lien based medical industry, providing orthopedic healthcare servicing an uninsured market insulated by a letter of protection

which insulates the Company and insures payment in full from insurance settlements.

Accounts receivable consists of amounts due from attorneys

and insurance providers for services provided to patients under the letter of protection.

Accounts receivable are recorded at the expected

settlement realization amount, which is less contractual adjustments and an allowance for credit losses.

The Company recognizes an allowance

for credit losses for its accounts receivable to present the net amount expected to be collected as of the balance sheet date.

This allowance

is determined based on the history of net settlements received, where the net settlement amount is not collected.

No collection can happen

if no settlement is reached with the defendant’s insurance company and the plaintiff (the patient) loses the case at trial, or the

case is abandoned, then the Company will not be able to collect on its letter of protection and its receivable will not be collected.

The Company monitors outstanding cases as they develop through ongoing discussions with attorneys, doctors and third-party medical billing

company and additionally monitors settlement realization rates over time.

Additionally, the Company considers economic factors and events

or trends expected to affect future collections experience.

The no collection history of the Company’s customers is considered in

future assessments of collectability as these patterns are established over a longer period.

The Company uses the term collection and

collection rate in its disclosures to describe the historical less than 1.0% occurrence of not collecting under a contract, which aligns

with the Company’s credit loss accounting under ASC 326.

which insulates the Company from, and insures payment in full of, insurance settlements.

Accounts receivable consists of amounts due from

attorneys and insurance providers for services provided to patients under the letter of protection.

Accounts receivable are recorded at

the expected settlement realization amount, which is less contractual adjustments and an allowance for credit losses.

The Company recognizes

an allowance for credit losses for its accounts receivable to present the net amount expected to be collected as of the balance sheet

This allowance is determined based on the history of net settlements received, where the net settlement amount is not collected.

No collection can happen if no settlement is reached with the defendant’s insurance company and the plaintiff (the patient) loses

the case at trial, or the case is abandoned, then the Company will not be able to collect on its letter of protection and its receivable

will not be collected.

The Company monitors outstanding cases as they develop through ongoing discussions with attorneys, doctors and

third-party medical billing company and additionally monitors settlement realization rates over time.

Additionally, the Company considers

economic factors and events or trends expected to affect future collections experience.

The no collection history of the Company’s

customers is considered in future assessments of collectability as these patterns are established over a longer period.

The Company uses

the term collection and collection rate in its disclosures to describe the historical less than 1.0% occurrence of not collecting under

a contract, which aligns with the Company’s credit loss accounting under ASC 326.

The Company does not have a significant exposure

6 unchanged sentences

its zero collection history on a quarterly basis and updating its estimates of credit losses to adjust for changes in loss data.

typically collects on its accounts receivable between eighteen and twenty-four months after recording.

The Company does not record an

allowance for credit losses based on an aging of its accounts receivable as the aging of the Company’s receivables do not influence

the credit loss rate due to the nature of its business and the letter of protection.

The Company does not adjust its receivables for the

effects of a significant financing component at contract inception as the timing of variable consideration is determined by the settlement,

which is outside of the Company’s control.

As of September 30, 2025 and December 31, 2024, the Company’s allowance for credit

losses was $ 249,799 and $ 255,215 , respectively.

As of September 30, 2024 and December 31, 2023, the Company’s allowance for credit

losses was $ 122,190 for each period, respectively.

The Company recognized $ 0 and $ 112,727 of credit loss expense during the three and

nine months ended September 30, 2025, respectively, and $ 0 during the three and nine months ended September 30, 2024, which is included

in selling, general and administrative expenses in the condensed consolidated statement of operations.

The balance of accounts receivable,

net as of January 1, 2024 was $ 13,305,254 .

typically collects on its accounts receivable between twelve and twenty-four months after recording.

The Company does not record an allowance

for credit losses based on an aging of its accounts receivable as the aging of the Company’s receivables do not influence the credit

loss rate due to the nature of its business and the letter of protection.

The Company does not adjust its receivables for the effects

of a significant financing component at contract inception as the timing of variable consideration is determined by the settlement, which

is outside of the Company’s control.

As of March 31, 2026 and December 31, 2025, the Company’s allowance for credit losses

was $ 400,000 .

The Company recognized $ 0 and $ 112,727 of credit loss expense during the three months ended March 31, 2026 and 2025, respectively,

which is included in selling, general and administrative expenses in the consolidated statement of operations.

The balance of accounts

receivable, net as of January 1, 2025 was $ 15,934,490 .

The balance of the allowance for credit losses was $ 255,215 as of January 1, 2025.

The following table shows the allowance for credit

7 unchanged sentences

Write off charged against the allowance

Balance at September 30

Balance at March 31

$ ( 400,000 )

19 unchanged sentences

An assessment is made

of these qualitative factors as such to determine whether it is more likely than not the fair value is less than the carry amount, including

The annual evaluation is based on valuation models that incorporate assumptions and internal projections of expected future

cash flows and operating plans.

The Company believes such assumptions are also comparable to those that would be used by other marketplace

participants.

During the nine months ended September 30, 2025 and 2024, the Company did no t recognize any goodwill impairment and noted

there were no such triggering events.

of these qualitative factors to determine whether it is more likely than not the fair value is less than the carry amount, including goodwill.

The annual evaluation is based on valuation models that incorporate assumptions and internal projections of expected future cash flows

and operating plans.

The Company believes such assumptions are also comparable to those that would be used by other marketplace participants.

During the three months ended March 31, 2026 and 2025, the Company did no t recognize any goodwill impairment and noted there were no such

triggering events.

Valuation of Long-lived Assets

In accordance with the provisions of Accounting

Standards Codification (“ASC”) Topic 360-10-5, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets

such as plant and equipment and construction in progress held and used by the Company are reviewed for impairment whenever events or changes

in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of assets to be held and used is

evaluated by a comparison of the carrying amount of assets to estimated cash flows expected to be generated by the assets.

If such assets

are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed

the fair value of the assets.

Standards Codification (“ASC”) Topic 360-10-35, “Impairment or Disposal of Long-Lived Assets”, all long-lived

assets such as plant and equipment and construction in progress held and used by the Company are reviewed for impairment whenever events

or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of assets to be held

and used is evaluated by a comparison of the carrying amount of assets to estimated cash flows expected to be generated by the assets.

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts

of the assets exceed the fair value of the assets.

Revenue Recognition

7 unchanged sentences

Identification of a contract with a customer

Identification of the performance obligations in the contact

Identification of the performance obligations in the contract

Determination of the transaction price

91 unchanged sentences

Settlement Rates

Prior to fiscal year 2024, the Company historically

realized a 49% settlement rate from total gross billed charges.

Accordingly, the Company had historically recognized net healthcare service

revenue as 49% of gross billed amounts.

During the nine months ended September 30, 2024, the Company underwent efforts to accelerate cash

settlement of its accounts receivable to generate cash flow for operations.

The Company did this by shortening its settlement negotiations

with insurance companies and accepting lower settlement amounts.

Additionally, during 2024, the Company completed a thorough review of

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

upon this review, it was determined that a 24-month lookback period should be used in the analysis of the Company’s historical settlement

realization rates.

As a result of the efforts to accelerate cash settlement during the nine months ended September 30, 2024, the Company

realized a 44% average settlement rate of its gross billed charges during this time frame, which were historically recorded in accounts

receivable and revenue at 49% of gross billings.

This resulted in a $ 1,650,474 million reduction in its accounts receivable and revenue

during the third quarter of 2024 related to the change in estimate.

Additionally, as a result of this reduced settlement realization experience,

the Company recorded reductions to net revenue of $ 0 and $ 1,199,155 for the three and nine months ended September 30, 2024, respectively.

The Company will continue to evaluate its estimate of its settlement realization rates in the future, which will include a monthly review

of the Company’s historical settlement realization rates, along with estimates of current and pending settlements through ongoing

discussions with attorneys, doctors and the Company’s third-party medical billing company in order to determine its variable consideration

under ASC 606 and the net transaction price.

The Company will update its settlement realization rate estimate used in determining its

accounts receivable and revenue each quarter based on this review.

As of September 30, 2025, the settlement realization rate at which

the Company’s accounts receivable and revenue is recorded is 42%.

The Company periodically evaluates its estimated

settlement realization rate at which revenue is recorded in accordance with ASC 606.

This includes a monthly review of historical data

and settlement realization rates, along with estimates of current and pending settlements through ongoing discussions with attorneys,

doctors and third-party medical billing company in order to determine the variable consideration under ASC 606 and the net transaction

For the three months ended March 31, 2026 and 2025, the Company realized a 41% and 44% average settlement rate of its gross billed

charges, respectively.

Contract Fees (Non-PIP)

10 unchanged sentences

other expenses on the consolidated statement of operations.

As a result of the Company’s eighteen to twenty-four month settlement

realization time frame, the Company has an accrued liability resulting from the settlement of receivables sold to the third-party factors

As a result of the Company’s twelve to twenty-four month settlement

realization timeframe, the Company has an accrued liability resulting from the settlement of receivables sold to the third-party factors

which fluctuates as settlements are made and remitted to those third-party factors.

6 unchanged sentences

Advertising costs are expensed as incurred.

costs are included as a component of cost of sales in the consolidated statements of operations and changes in stockholders’ equity.

The Company recognized advertising and marketing expense of $ 104,663 and $ 84,914 for the three months ended September 30, 2025 and 2024,

respectively.

The Company recognized advertising and marketing expense of $ 308,001 and $ 263,864 for the nine months ended September 30,

2025 and 2024, respectively.

costs are included as a component of cost of sales in the consolidated statements of operations.

The Company recognized advertising and

marketing expense of $ 62,530 and $ 90,169 for the three months ended March 31, 2026 and 2025, respectively.

Fair Value Measurements

8 unchanged sentences

assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

The three levels of the fair value hierarchy

are described below:

See also Note 11.

Capital Stock .

On January 29, 2026, the Company entered into

a conversion agreement with Alex Cunningham, the Company’s Chief Executive Officer, pursuant to which deferred compensation in the

amount of $ 2,365,242 owed to Mr.

Cunningham was cancelled in exchange for 556,528 shares of common stock.

The number of shares issued

was determined based on the closing market price of the Company’s common stock of $ 4.25 on January 28, 2026.

Because the underlying

compensation was fully earned and the fair value of equity issued equals the amount accrued, the settlement was accounted for as an equity

issuance with no impact on the Company’s consolidated statements of operations.

The Company recorded a reduction to accrued compensation

and a corresponding increase to stockholders’ equity upon issuance of the shares.

See also Note 11.

Capital Stock .

On December 21, 2025, in connection with bonuses

earned by certain employees, the Company issued promissory notes in the aggregate principal amount of $ 1,085,703 (representing bonuses

earned of $ 593,450 and $ 492,253 for the years ended December 31, 2025 and 2024, respectively), in lieu of cash payment, including a promissory

note in the principal amount of $ 460,000 to Alex Cunningham, the Company’s Chairman and Chief Executive Officer, a promissory note

in the principal amount of $ 122,550 to Matthew Shafer, the Company’s Chief Financial Officer, and a promissory note in the principal

amount of $ 460,000 to Daniel Thompson.

These notes bear interest of 5 % per annum and mature on June 30, 2026 .

The bonus expense was recognized

in the period earned, and the issuance of the notes was accounted for as a non-cash financing activity.

See also Note 6.

Related Party Transactions .

Small Business Administration (“SBA”)

2 unchanged sentences

The principal balance and accrued

interest at September 30, 2025 was $ 144,404 and $ 0 , respectively, and principal balance and accrued interest at December 31, 2024 was

interest at March 31, 2026 was $ 142,690 and $ 0 , respectively, and the principal balance and accrued interest at December 31, 2025 was

$ 143,558 and $ 0 , respectively.

Line of Credit

On September 29, 2023, the Company and Nova entered

into a two-year revolving purchase and security agreement with DML HC Series, LLC (“DML”) which was automatically renewed

for a term of one year on September 29, 2025.

This revolving and purchase security agreement is structured as a secured borrowing, under

which accounts receivable are pledged as collateral to secure advances under our line of credit.

The related accounts receivable remain

recorded as assets on our balance sheet, and the amounts drawn are recorded as a liability under ‘Line of Credit’ until repaid.

Under the terms of the facility, the Company may request advances up to 70% of eligible receivables, with the remaining balance held as

The Company is required to repurchase or replace certain ineligible or uncollected receivables.

All collections on pledged

receivables are remitted directly to the lender and applied to the outstanding borrowing.

The lender has recourse to the Company for uncollected

balances and maintains the right to enforce its security interest upon default.

Initially, accounts receivables pledged for this revolving

and purchase security agreement for 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 the Company and DML, the maximum amount may be increased.

2024, the Company and Nova 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 .

11, 2024, the Company and Nova entered into amendment No.

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

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

3 with DML which further increased the maximum advance amount to

$ 15,000,000 .

See also Note 9.

Capital Stock .

During the nine months ended September 30,

2025, the Company converted $ 154,049

in principal and accrued interest on Note 10 and $ 1,500

in conversion cost into 192,495

shares of common stock.

The Company recognized $ 145,679

of additional paid-in capital to adjust the fair value for the debt settlement during the nine months ended September 30, 2025.

During the nine months ended September 30, 2024, the Company converted $ 680

in accrued interest and $ 1,000

in conversion cost into 1,222

shares of common stock.

The Company recognized $ 1,679

of additional paid-in capital to adjust the fair value for the debt settlement during the nine months ended September 30,

There are no unamortized debt discounts associated

with the convertible debt at September 30, 2025 and December 31, 2024.

For the three months ended September 30, 2025 and 2024, the Company

recorded amortization of debt discounts of $ 0 .

For the nine months ended September 30, 2025 and 2024, the Company recorded amortization

of debt discounts of $ 0 and $ 24,821 , respectively.

Convertible notes as of September 30, 2025 and

December 31, 2024 are summarized as follows:

As of March 31, 2026 and December 31, 2025, the

Company had convertible debt outstanding, at carrying value, of $ 279,772 and $ 118,295 , respectively.

Debt discounts associated with the

convertible debt at March 31, 2026 and December 31, 2025, were $ 815,228 and $ 131,705 , respectively.

Amortization of debt discounts recorded

for the three months ending March 31, 2026 and 2025 were $ 11,438 and $ 0 , respectively.

During the three months ended March 31, 2026,

the Company received $ 702,600 in net proceeds from the issuance of convertible notes (as detailed below) and no interest was repaid.

the three months ended March 31, 2025, the Company did not receive any proceeds from convertible notes and no interest was repaid.

The carrying amount of the convertible notes as

of March 31, 2026 and December 31, 2025 represents the principal amount less the unamortized debt discount allocated to the host debt,

as shown below:

Schedule of convertible notes

September 30, 2025

March 31, 2026

December 31, 2025

4 unchanged sentences

Long-term portion

The following is a schedule of convertible notes

payable as of and for nine months ended September 30, 2025.

Schedule of convertible notes payable

Principal Balance 12/31/24

Settlements and/or Principal Conversions

New Loans or (Cash Paydown)

Shares Issued Upon Conversion or Exchange

Principal Balance 9/30/25

Accrued Interest on Convertible Debt at 12/31/24

Interest On Convertible Debt For the Period Ended 9/30/25

Accrued Interest on Convertible Debt at 9/30/25

On September 12, 2016, the Company issued a convertible

promissory note in the principal of $80,000 for services rendered, which matured on September 12, 2017.

In May of 2024, the $ 58,846 total

outstanding principal and interest was paid in full.

Note 10, 10-1, 10-2 and 10-3

The following maturity table reflects the full

expected principal amounts due as follows:

Schedule of expected principal amounts

2026 (remainder of year)

On January 24, 2017, the Company issued a convertible

1 unchanged sentence

On August 26, 2025, the total

outstanding principal and accrued interest of $154,049 was converted into 192,495 shares of the Company’s common stock.

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

On February 10, 2023, the Company executed a second tranche under this note

in the principal amount of $50,000 (Note 10-1).

On March 30, 2023, the Company executed a third tranche under this note in the principal

amount of $25,000 (Note 10-2).

On August 11, 2023, the Company executed a fourth tranche under this note in the principal amount of $25,000

In May of 2024, the $ 63,513 total outstanding principal and interest on Note 10-1 was paid in full.

Notes 10-2 and 10-3 are currently in default and

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

At the sole option of the holder, Notes 10-2 and 10-3 may convert the outstanding

principal amount, or any portion of the principal amount, and any accrued interest, in whole or in part, into shares of the Company’s

common stock.

The conversion price is $ 0.25 per share or 50% of the lowest closing price on the primary trading market on which the Company’s

common stock is quoted for the last ten trading days immediately prior to but not including the conversion date, whichever is lower.

Notes 29-2, 37-1, 37-2 and 37-3

On May 10, 2019, the Company issued a convertible

promissory note in the principal amount of $150,000.

On November 8, 2019, this note (Note 29) was purchased by and assigned to an unrelated

The amount assigned was the existing principal amount of $150,000 and accrued interest of $5,918, which was issued as Note 29-1,

plus a new convertible promissory note in the principal amount of $62,367, which was issued as Note 29-2.

On September 3, 2020, the Company issued a convertible

promissory note in the principal amount of $200,000, with an original issue discount of $50,000, which could be drawn in several tranches.

On September 3, 2020, the Company executed the first tranche in the principal amount of $67,000, less an original issue discount of $17,000,

which matured on June 30, 2021 (Note 37-1).

On November 2, 2020, the Company executed the second tranche in the principal amount of $66,500,

less an original issue discount of $16,500, which matured on August 31, 2021 (Note 37-2).

On December 29, 2020, the Company executed the

third tranche in the principal amount of $66,500, less an original issue discount of $16,500, which matured on September 30, 2021 (Note

On June 11, 2024, the Company entered into a settlement

agreement and release of claims with the holder of Notes 29-2, 37-1, 37-2 and 37-3.

Pursuant to the settlement agreement and release of

claims, the holder agreed to cancel these notes, along with the cancellation of their holding in the series R preferred stock, in exchange

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

Notes and Loans Payable for

further details.

Notes 40-1, 40-2, 40-3, 40-4, 40-5, 40-6, 40-7, 40-8, 40-9 and 40-10

On September 22, 2022, the Company issued a convertible

promissory note in the principal amount of $2,600,000 in exchange for a total of $4,791,099 of defaulted promissory notes balances (Note

On November 4, 2022, the Company executed a second tranche under this note in the principal amount of $68,667, less an original

issue discount and fee of $18,667 (Note 40-2).

On November 28, 2022, the Company executed the third tranche under this note in the principal

amount of $68,667, less an original issue discount and fee of $18,667 (Note 40-3).

On December 21, 2022, the Company executed a fourth

tranche under this note in the principal amount of $68,667, less an original issue discount and fee of $18,667 (Note 40-4).

24, 2023, the Company executed a fifth tranche under this note in the principal amount of $90,166, less an original issue discount and

fee of $25,166 (Note 40-5).

On March 21, 2023, the Company executed a sixth tranche under this note in the principal amount of $136,666,

less an original issue discount and fee of $39,166 (Note 40-6).

On June 5, 2023, the Company executed a seventh tranche under this note

in the principal amount of $136,667, less original issue discount and fee of $39,167 (Note 40-7).

On June 13, 2023, the Company executed

an eighth tranche under this note in the principal amount of $21,167, less original issue discount and fee of $5,167 (Note 40-8).

19, 2023, the Company executed a ninth tranche under this note in the principal amount of $35,500, less an original issue discount and

fee of $8,875 (Note 40-9).

On July 24, 2023, the Company executed a tenth tranche under this note in the principal amount of $14,000,

less an original issue discount and fee of $3,500 (Note 40-10).

On December 1, 2023, the Company executed an amendment on Notes series

40 consolidated senior secured convertible promissory note to extend the expired tranche note 40-1 through 40-5 due date to September

All of the Note 40 tranches matured in one year from the note issuance date and accrued interest at a rate of 10% per annum.

On April 11, 2024, the Company issued 938,908

shares of series Y senior convertible preferred stock in exchange for the settlement of the principal and interest in full on Notes 40-1,

40-2, 40-3, 40-4, 40-5, 4-6, 40-7, 40-8, 40-9 and 40-10.

outstanding principal and accrued interest of $154,049 of this tranche was converted into 64,165 shares of the Company’s common

On February 10, 2023, the Company executed a second tranche under this note in the principal amount of $50,000.

In May of 2024,

$ 63,513 of outstanding principal and interest on this tranche was paid in full.

On March 30, 2023, the Company executed a third tranche

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

On August 11, 2023, the Company executed a fourth tranche under this note in the principal

amount of $25,000.

As of March 31, 2026, the outstanding principal amount is $ 50,000 and accrued interest is $ 25,835 .

This note is currently

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

At the sole option of the holder, the holder may convert

the outstanding principal amount, or any portion of the principal amount, and any accrued interest, in whole or in part, into shares of

the Company’s common stock.

The conversion price is $ 0.25 per share or 50% of the lowest closing price on the primary trading market

on which the Company’s common stock is quoted for the last ten trading days immediately prior to but not including the conversion

date, whichever is lower.

In December 2025, the Company entered into loan

agreements with two accredited investors, pursuant to which the Company issued to such investors (i) convertible promissory notes in the

aggregate principal amount of $ 200,000 , (ii) warrants for the purchase of an aggregate of 66,667 shares of common stock and (iii) 6,667

shares of common stock for total gross and net proceeds of $ 200,000 .

The Company concluded that the notes, warrants and common shares

represent freestanding financial instruments issued as a single financing unit and, accordingly, allocated the total transaction proceeds

to each instrument based on their relative fair values.

The fair value of the warrants was estimated using the Black-Scholes option pricing

model, and the fair value of the common shares was based on the quoted market price on the issuance date.

The aggregate amount allocated

to the warrants and common shares was recorded as a debt discount and is being amortized to interest expense over the contractual term

of the notes.

These notes accrue interest at a rate of twelve percent ( 12 %) per annum, payable in shares of common stock, cash or a combination

thereof at the Company’s option quarterly commencing on April 1, 2026, with all principal and accrued interest being due and payable

one (1) year after issuance.

The Company may prepay the principal and accrued interest at any time without penalty upon fifteen (15) days’

These notes are unsecured and contain customary events of default for a loan of this type.

These notes are convertible into shares

of common stock at a conversion price of $ 3.00 (subject to standard adjustments in the event of any stock splits, stock combinations,

dividends paid in common stock, stock reclassifications or similar transactions).

As of March 31, 2026 and December 31, 2025, the outstanding

principal balance of these notes was $ 200,000 .

Unamortized debt discount was $ 125,706 and $ 131,705 as of March 31, 2026 and December 31,

2025, respectively.

Accrued interest was $ 6,499 and $ 499 , as of March 31, 2026 and December 31, 2025, respectively.

See also Note 11.

Capital Stock .

On August 25, 2023, the Company issued a twelve-month

convertible promissory note in the principal amount of $ 5,000 to the Company’s CEO for the Company’s operating expenses.

rate of interest is 10 % per annum.

In August of 2024, the remaining outstanding principal and interest of $ 5,501 was paid in full.

Capital Stock and Note 12.

In December 2025 and January 2026, the Company

also entered into loan agreements with two additional accredited investors, pursuant to which the Company issued to such investors (i)

convertible promissory notes in the aggregate principal amount of $ 80,000 , which also provide for a second tranche of up to an additional

$80,000 upon the mutual agreement of the parties, all of which were issued in the first quarter of 2026, (ii) warrants for the purchase

of an aggregate of 73,334 shares of common stock, of which 33,334 were issued in December 2025 and 40,000 were issued in January 2026,

and (iii) 36,667 shares of common stock, all of which were issued in January 2026, for total gross proceeds of $ 160,000 and net proceeds

of approximately $ 139,000 , all of which were received in the first quarter of 2026.

As noted above, although one of the loan agreements

and one warrant were executed in December 2025, no proceeds were received as of December 31, 2025, and the promissory note was not funded

or outstanding at year-end.

In accordance with ASC 815, the Company analyzed the notes for any embedded features that would need to be

bifurcated from the host instrument and accounted for separately as a derivative.

Several embedded features requiring bifurcation were

noted and it was determined that the conversion option as a whole should be separated and accounted for as a single derivative liability

(See Note 10.

Derivative Liabilities ).

A Monte Carlo valuation was obtained from valuation specialists to fair value the derivative

liability (See Note 7.

Fair Value Measurement ).

The derivative liabilities were recorded first, and the host debt instruments were

recorded at the residual amounts after allocating proceeds to the derivative liabilities based on the relative fair values.

Issuance costs

were also allocated between the derivative liabilities and the host instruments based on relative values.

The warrants were valued using

a Black-Scholes model and the common shares were valued at the closing market price.

In accordance with ASC 405 and ASC 470, the remaining

proceeds were then used to allocate the relative fair values of the convertible promissory notes, the related warrants and the issuance

of the common stock.

The allocated values of the warrants and the common shares were recorded with their debt discounts which will be

amortized over the life of the notes.

These convertible promissory notes accrue interest at a rate of twelve percent ( 12 %) per annum,

payable in shares of common stock, cash or a combination thereof at the Company’s option quarterly commencing on April 1, 2026,

with all principal and accrued interest being due and payable five (5) years after issuance.

If a quarterly interest payment is paid in

shares of common stock, then the interest rate used in connection with such issuance shall be fifteen percent (15%) per annum.

may prepay the principal and accrued interest at any time without penalty upon fifteen (15) days’ notice.

In addition, if the Company

completes a financing of at least $2.5 million, then, if requested by a holder, the Company must repay the remaining principal and interest

from the proceeds of such financing.

As the Company determined the likelihood of a financing occurring as noted above is high, the notes

have been classified as current on the condensed consolidated balance sheets.

These convertible promissory notes are unsecured and contain

customary events of default for a loan of this type.

These convertible promissory notes are convertible into shares of common stock at

a conversion price of $ 0.825 (subject to standard adjustments in the event of any stock splits, stock combinations, dividends paid in

common stock, stock reclassifications or similar transactions).

In addition, these convertible promissory notes provide that if the closing

price of the Company’s common stock on the sixth (6th) month anniversary of the issuance date is less than the conversion price

then in effect, then the conversion price shall be adjusted to such lower price, and also provide that if the Company issues any shares

of common stock, or securities convertible into common stock, at a price that is less than the conversion price then in effect, then the

conversion price shall be adjusted to such lower price, subject to certain exceptions.

All of the warrants may be exercised for a period

of three years at an exercise price of $9.00 (subject to standard adjustments in the event of any stock splits, stock combinations, dividends

paid in common stock, stock reclassifications, mergers, consolidations, reorganizations or similar transactions) and may be exercised

on a cashless basis if there is no effective registration statement covering the shares of common stock issuable upon the exercise of

the warrants.

All of the convertible promissory notes and warrants contain ownership limitations, which provide that the Company shall

not effect any conversion or exercise, and a holder shall not have the right to convert or exercise any portion of a note or a warrant,

to the extent that after giving effect to the issuance of common stock upon such conversion or exercise, such holder, together with its

affiliates, would beneficially own in excess of 4.99% of the number of shares of common stock outstanding immediately after giving effect

to the issuance of common stock upon such conversion or exercise.

This limitation may be waived, up to a maximum of 9.99%, by a holder

upon not less than sixty-one (61) days’ prior notice to the Company.

As of March 31, 2026 and December 31, 2025, the outstanding

principal balance of these notes is $ 160,000 and $ 0 , respectively, they have accrued interest of $ 4,283 and $ 0 , respectively, and they

have unamortized debt discounts of $ 154,562 .

See also Note 11.

Capital Stock and Note 12.

In March 2026, the Company entered into securities

purchase agreements with two additional accredited investors, pursuant to which the Company issued to such investors convertible promissory

notes in the principal amount of $ 230,000 each, or $ 460,000 in the aggregate, with an aggregate $ 46,000 original issuance discount, $ 14,000

in associated legal fees and $ 24,000 in brokers fees for total net cash proceeds of $ 376,000 .

These convertible promissory notes accrue

interest at a rate of six percent (6%) and ten percent (10%) per annum and mature as of March 26, 2027 and March 30, 2027.

payable in shares of the Company’s common stock.

The notes may be converted at any time after the six-month anniversary at a variable

conversion price equal to 70% of the lowest trading price of the Company’s common stock over the twelve trading days prior to the

conversion date.

The notes contain multiple contingent features that may further adjust the conversion price, including adjustments triggered

by events of default, DTC trading restrictions, and other operational or credit-related events.

The notes also include redemption premiums

ranging from 110% to 140% of principal if prepaid within specified timeframes.

The notes contain ownership limitations, which provide

that the Company shall not effect any conversion, and a holder shall not have the right to convert, to the extent that after giving effect

to the issuance of common stock upon such conversion or exercise, such holder, together with its affiliates, would beneficially own in

excess of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of common stock upon

such conversion.

This limitation may be waived, up to a maximum of 9.99%, by a holder upon not less than sixty (60) days’ prior

notice to the Company.

In accordance with ASC 815, the embedded conversion options and related contingent features were bifurcated and

accounted for as derivative liabilities (See Note 10.

Derivative Liabilities ).

A Monte Carlo valuation was obtained from valuation

specialists to fair value the derivative liabilities (See Note 7.

Fair Value Measurement ).

The derivative liabilities were recorded

first, and the host debt instruments were recorded at the residual amounts after allocating proceeds to the derivative liabilities based

on the relative fair values.

Issuance costs allocated to the host debt were recorded as debt discounts and are being amortized to interest

expense over the life of the notes.

The derivative liabilities will be remeasured at fair value each reporting period with changes in

fair value recognized in other income (expense) in the consolidated statement of operations.

As of March 31, 2026, the outstanding principal

balance of these notes is $ 460,000 , they have accrued interest of $ 256 and unamortized debt discounts of $ 341,774 .

Also in March 2026, the Company entered into a

securities purchase agreement with an additional accredited investor, pursuant to which the Company issued to such investor a convertible

promissory note in the principal amount of $ 225,000 with a $ 20,500 original issuance discount, $ 3,500 in associated legal fees, $ 1,500

in due diligence costs and $ 11,900 in brokers fees for total net cash proceeds of $ 187,600 .

This convertible promissory note carries a

one-time interest charge of $22,500 (rate of ten percent (10%)) which is guaranteed at issuance.

The $22,500 guaranteed interest payment

was recorded as a separate liability with the offset being recorded to the debt discount and is grouped with accrued interest on the Company’s

condensed consolidated balance sheet.

This note matures on March 31, 2027, and includes scheduled amortization payments beginning on September

30, 2026 with the remaining balance due at maturity.

Each amortization payment is applied first to accrued interest, with the remainder

reducing principal.

Upon an event of default, the note becomes immediately due and payable at 150% of the outstanding principal plus accrued

The note may be converted at any time following the earlier of (i) the date that the Company fails to make an amortization payment,

(ii) the date that is 180 days after the issuance date or (iii) the date that any of the shares of common stock issuable upon conversion

of the note are registered for resale pursuant to a registration statement filed by the Company at a variable conversion price equal to

75% of the lowest closing bid price of the Company’s common stock over the ten trading days prior to the conversion date.

contains multiple contingent features that may further adjust the conversion price, including full-ratchet anti-dilution adjustments and

adjustments if the conversion price is less than the par value of the common stock.

The notes contain ownership limitations, which provide

that the Company shall not effect any conversion, and a holder shall not have the right to convert, to the extent that after giving effect

to the issuance of common stock upon such conversion or exercise, such holder, together with its affiliates, would beneficially own in

excess of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of common stock upon

such conversion.

This limitation may be waived, up to a maximum of 9.99%, by a holder upon not less than sixty-one (61) days’ prior

notice to the Company.

In accordance with ASC 815, the embedded conversion option and related contingent features were bifurcated and

accounted for as a derivative liability (See Note 10.

Derivative Liabilities ).

A Monte Carlo valuation was obtained from valuation

specialists to fair value the derivative liability (See Note 7.

Fair Value Measurement ).

The derivative liability was recorded

first, and the host debt instrument was recorded at the residual amount after allocating proceeds to the derivative liability based on

the relative fair values.

The derivative liability will be remeasured at fair value each reporting period with changes in fair value recognized

in other income (expense) in the consolidated statement of operations.

As of March 31, 2026, the outstanding principal balance of this

note is $ 225,000 and the note has unamortized debt discounts of $ 193,187 .

DERIVATIVE LIABILITIES

Several of the Company’s convertible notes

contain embedded features that require bifurcation of the conversion option and derivative liability accounting under ASC 815 (see also

Convertible Notes Payable ).

These features include:

Variable price conversion features :

Variable conversion pricing based on a discount to the lowest trading price over a look-back period.

Six-month conversion price reset wherein the conversion price automatically resets to the lower of the fixed price or the Company’s common stock closing bid price on each reset date.

DTC chill reset where the conversion discount increases and default reset where the conversion discount increases further.

Interest payable in shares at a floating conversion price.

Down-round protection wherein the conversion price adjusts downward to match any future issuance below the current conversion price.

Variable settlement features :

Make-whole conversion feature where a make-whole amount equal to interest that would have accrued through maturity is added to the conversion amount which increases the number of shares issued upon conversion.

Variable interest-in-shares feature in which interest is payable in shares at a deemed rate and the number of shares varies based on the conversion price in effect at that time.

Interest payable in shares at a floating conversion price.

Variable conversion pricing based on a discount to the lowest trading price over a look-back period.

Contingent conversion features :

Change-in-control conversion feature where the conversion price becomes the lower of the then-current conversion price or a 25% discount to the acquisition price.

Delinquency reset where the conversion price is reduced during the delinquency period.

Default conversion feature where upon default, the holder may immediately convert the entire outstanding balance with the conversion price still subject to all the variable-price mechanics.

Change-of-control (Sale Event) redemption or conversion alternatives.

Successor-security conversion rights.

Holder early-exercise rights.

Because these features are not considered indexed

to the Company’s own stock and could require net-cash settlement, the embedded conversion options do not qualify for equity classification

under ASC 815-40 and were bifurcated from the host debt instruments and recorded as derivative liabilities at fair value on the issuance

The derivative liability is remeasured at fair value each reporting period, with changes recognized in earnings.

Issuance costs,

including original issue discounts, legal fees, and broker commissions, were allocated between the derivative liabilities and the host

debt based on relative fair values.

The portion allocated to the derivative liabilities reduced their initial carrying amount.

information regarding valuation techniques and fair value hierarchy classification is included in Note 7.

Fair Value Measurements .

CAPITAL STOCK

6 unchanged sentences

preferred stock, 1,000,000 shares of series E preferred stock, 50,000 shares of series F-1 preferred stock, 15,000,000 shares of series

I preferred stock, 2,000,000 shares of series J preferred stock, 400,000 shares of series L preferred stock, 3,000,000 shares of series

N senior convertible preferred stock, 5,000 shares of series R convertible preferred stock, 5,000,000 shares of series X senior convertible

preferred stock and 1,500,000 shares of series Y senior convertible preferred stock.

The following is a description of the rights and

preferences of each series of preferred stock.

I preferred stock, 400,000 shares of series L preferred stock, 3,000,000 shares of series N senior convertible preferred stock, 5,000,000

shares of series X senior convertible preferred stock and 1,500,000 shares of series Y senior convertible preferred stock.

The Company’s Annual Report on Form 10-K

for the year ended December 31, 2025 contains a description of the rights and preferences of each series of preferred stock.

Redeemable Preferred Stock

The Company recognizes the series N senior convertible

preferred stock and series X senior convertible preferred stock as mezzanine equity in accordance with ASC 480, “Distinguishing

Liabilities from Equity”.

Series N Senior Convertible Preferred Stock

As of September 30, 2025 and December 31, 2024,

there were 1,006,857 and 921,636 shares of series N senior convertible preferred stock issued and outstanding, respectively.

The series N senior convertible

preferred stock ranks, with respect to the payment of dividends and the distribution of assets upon liquidation, (i) senior to all common

stock and each other class or series that is not expressly made senior to or on parity with the series N senior convertible preferred

(ii) on parity with each class or series that is not expressly subordinated or made senior to the series N senior convertible preferred

and (iii) junior to all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company

and each class or series that is expressly made senior to the series N senior convertible preferred stock.

Dividend Rights .

Holders of series N senior

convertible preferred stock are entitled to dividends at a rate per annum of 12.0% of the stated value ($4.00 per share);

provided that

upon an event of default (as defined in the certificate of designation for the series N senior convertible preferred stock), such rate

would increase by 8% per annum.

Dividends accrued from day to day, whether or not declared, and are cumulative.

Dividends are payable

quarterly in arrears on each dividend payment date in cash or common stock at the Company’s discretion.

Dividends payable in common

stock are to be calculated based on a price equal to eighty percent (80%) of the volume weighted average price for the common stock on

the Company’s principal trading market (the “VWAP”) during the five (5) trading days immediately prior to the applicable

dividend payment date.

For the nine months ended September 30, 2025, cumulative dividends earned on the series N senior convertible preferred

stock were $ 340,877 .

The cumulative accrued dividends for the nine months ended September 30, 2025 were paid by the Company via the issuance

of 85,221 shares of series N senior convertible preferred stock.

Liquidation Rights.

Subject to the rights

of creditors and the holders of any senior securities or parity securities (in each case, as defined in the certificate of designation),

upon any liquidation of the Company or its subsidiaries, before any payment or distribution of the assets of the Company (whether capital

or surplus) are to be made to or set apart for the holders of junior securities (as defined in the certificate of designation), including

the common stock, each holder of outstanding series N senior convertible preferred stock is entitled to receive an amount of cash equal

to 115% of the stated value of $4.00 per share, plus an amount of cash equal to all accumulated accrued and unpaid dividends thereon (whether

or not declared) to, but not including the date of final distribution to such holders.

Voting Rights .

Holders of series N senior

convertible preferred stock do not have any voting rights;

provided that, so long as any shares of series N senior convertible preferred

stock are outstanding, the affirmative vote of holders of a majority of the series N senior convertible preferred stock, which majority

must include SILAC Insurance Company so long as it holds any shares of series N senior convertible preferred stock, voting as a separate

class, is necessary for approving, effecting or validating any amendment, alteration or repeal of any of the provisions of the certificate

of designation or prior to the Company’s (or Nova’s) creation or issuance of any parity securities or new indebtedness (as

defined in the certificate of designation);

provided that the foregoing does not apply to any financing transaction the use of proceeds

of which would be used to redeem the series N senior convertible preferred stock and the warrants issued in connection therewith.

the affirmative vote of holders of 66% of the series N senior convertible preferred stock, voting as a separate class, is required prior

to the Company’s (or Nova’s) creation or issuance of any senior securities.

Conversion Rights .

Each share of series

N senior convertible preferred stock, plus all accrued and unpaid dividends thereon, are convertible, at the option of the holder thereof,

at any time and from time to time, into such number of fully paid and nonassessable shares of common stock determined by dividing the

stated value ($4.00 per share), plus the value of the accrued, but unpaid, dividends thereon, by a conversion price of $900 per share

(subject to standard adjustments in the event of any stock splits, stock combinations, stock reclassifications, dividends paid in common

stock, sales of substantially all assets, mergers, consolidations or similar transactions);

provided that in no event shall the holder

of any series N senior convertible preferred stock be entitled to convert any number of shares that upon conversion the sum of (i) the

number of shares of common stock beneficially owned by the holder and its affiliates and (ii) the number of shares of common stock issuable

upon the conversion of the series N senior convertible preferred stock with respect to which the determination of this proviso is being

made, would result in beneficial ownership by the holder and its affiliates of more than 4.99% of the then outstanding common stock.

limitation can be waived (up to a maximum of 9.99%) by the holder and in its sole discretion, upon not less than sixty-one (61) days’

prior notice to the Company.

Redemption Rights .

The Company may redeem

the series N senior convertible preferred stock at any time by paying in cash therefore a sum equal to 115% of the stated value of $4.00

per share, plus the amount of accrued and unpaid dividends and any other amounts due pursuant to the terms of the certificate of designation.

In addition, any holder may require the Company to redeem some or all of its shares of series N senior convertible preferred stock on

the same terms after a period of twelve months from the date of issuance;

provided, however, that such redemption right shall only be

exercisable if the Company raises at least $5,000,000 or the common stock is trading on the Nasdaq Stock Market or the New York Stock

Series R Convertible Preferred Stock

As of September 30, 2025 and December 31, 2024,

there were no shares of series R convertible preferred issued and outstanding.

The series R convertible preferred stock was cancelled

as part of the June 2024 promissory note and settlement agreement.

See also Note 7.

Notes and Loans Payable and Note 8.

Notes Payable .

The series R convertible preferred

stock ranked, with respect to the distribution of assets upon liquidation, (i) senior to all common stock, series A preferred stock, series

B preferred stock, series C preferred stock, series E preferred stock, series F-1 preferred stock, series I preferred stock, series J

preferred stock, series L preferred stock and to each other class or series that is not expressly made senior to or on parity with the

series R convertible preferred stock;

(ii) on parity with each class or series that is not expressly subordinated or made senior to the

series R convertible preferred stock;

and (iii) junior to the series N senior convertible preferred stock, series X senior convertible

preferred stock and to each other series of preferred stock and each class or series that is expressly made senior to the series R convertible

preferred stock, as well as to all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company.

Dividend Rights .

The holders of series

R convertible preferred stock were entitled to receive cumulative dividends in the amount of twelve percent (12%) per annum, payable quarterly.

In addition, holders of series R convertible preferred stock were entitled to receive dividends equal (on an as converted to common stock

basis) to and in the same form as dividends actually paid on shares of common stock when, as and if such dividends are paid on shares

of common stock.

Any dividends that were not paid when due were to continue to accrue and entailed a late fee, which must be paid in cash,

at the rate of 18% per annum or the lesser rate permitted by applicable law which was to accrue and compound daily from the missed payment

date through and including the date of actual payment in full.

There were no cumulative dividends at December 31, 2024.

Liquidation Rights .

Upon any liquidation,

dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of series R convertible preferred stock were entitled

to receive out of the assets, whether capital or surplus, of the Company an amount equal to the stated value ($1,200), plus any accrued

and unpaid dividends thereon and any other fees or liquidated damages then due and owing, for each share of series R convertible preferred

stock before any distribution or payment shall be made to the holders of any junior securities.

Voting Rights .

The holders of series R

convertible preferred stock voted together with the common stock on an as-converted basis.

However, as long as any shares of series R

convertible preferred stock were outstanding, the Company shall not, without the affirmative vote of the holders of a majority of the

then outstanding shares of the series R convertible preferred stock, directly and/or indirectly (i) alter or change adversely the powers,

preferences or rights given to the series R convertible preferred stock or alter or amend the certificate of designation, (ii) authorize

or create any class of stock ranking as to redemption or distribution of assets upon a liquidation senior to, or otherwise pari passu

with, the series R convertible preferred stock, or authorize or create any class of stock ranking as to dividends senior to, or otherwise

pari passu with, the series R convertible preferred stock, (iii) amend its articles of incorporation or other charter documents

in any manner that adversely affects any rights of the holders of the series R convertible preferred stock, (iv) increase the number of

authorized shares of series R convertible preferred stock, or (v) enter into any agreement with respect to any of the foregoing.

Conversion Rights .

Each share of series

R convertible preferred stock was convertible, at the option of the holder thereof, at any time and from time to time, into such number

of fully paid and nonassessable shares of common stock determined by dividing the stated value ($1,200 per share) by a conversion price

equal to the lower of (i) $75.0 and (ii) the lowest daily VWAP during the twenty (20) trading days immediately prior to the applicable

conversion date.

Notwithstanding the foregoing, the Company shall not effect any conversion of the series R convertible preferred stock,

and a holder shall not have the right to convert any portion of the series R convertible preferred stock, to the extent that, after giving

effect to the conversion, such holder (together with such holder’s affiliates, and any persons acting as a group together with such

holder or any of such holder’s affiliates) would beneficially own in excess of 4.99% of the then outstanding common stock.

The conversion

price was subject to adjustment for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately

decreases or increases the common stock, as well as for mergers, business combinations and certain other fundamental transactions.

addition, subject to certain exceptions, upon any issuance by the Company or any of its subsidiaries of common stock or common stock equivalents

for cash consideration, indebtedness or a combination of units thereof (a “Subsequent Financing”), the holder could have elected,

in its sole discretion, to exchange (in lieu of conversion), if applicable, all or some of the shares of series R convertible preferred

stock then held for any securities or units issued in a Subsequent Financing on a $1.00 for $1.00 basis.

Participation Rights .

Subject to certain

exceptions, upon a Subsequent Financing, a holder of at least 100 shares of series R convertible preferred stock were to have the right

to participate in up to an amount of the Subsequent Financing equal to 100% of the Subsequent Financing on the same terms, conditions

and price provided for in the Subsequent Financing.

Company Redemption Rights .

had the right to redeem all (but not less than all), shares of the series R convertible preferred stock issued and outstanding at any

time upon three (3) business days’ notice, at a redemption price per share equal to the product of (i) the Premium Rate multiplied

by (ii) the sum of (x) the stated value ($1,200), (y) all accrued but unpaid dividends, and (z) all other amounts due to the holder.

Rate” means (a) 1.1 if all of the series R convertible preferred stock is redeemed within ninety (90) calendar days from the issuance

date thereof;

(b) 1.2 if all of the series R convertible preferred stock is redeemed after ninety (90) calendar days and within one hundred

twenty (120) calendar days from the issuance date thereof;

one hundred twenty (120) calendar days and within one hundred eighty (180) calendar days from the issuance date thereof;

if all of the series R convertible preferred stock is redeemed after one hundred eighty (180) calendar days.

Redemption Upon Triggering Events .

the occurrence of a Triggering Event (as defined below), each holder of series R convertible preferred stock had (in addition to all other

rights it may have) the right, exercisable at the sole option of such holder, to require the Company to (A) redeem all of the series R

convertible preferred stock then held by such holder for a redemption price, in cash, equal to the Triggering Redemption Amount (as defined

below), or (B) at the option of each holder either (i) redeem all of the series R convertible preferred stock then held by such holder

though the issuance to such holder of such number of shares of common stock equal to the quotient of (x) the Triggering Redemption Amount,

divided by (y) the lowest of (1) the conversion price, and (2) 75% of the average of the 10 VWAPs immediately prior to the date of election,

or (ii) increase the dividend rate on all of the outstanding series R convertible preferred stock held by such holder retroactively to

the initial issuance date to 18% per annum thereafter.

“Triggering Redemption Amount” means, for each share of series R convertible

preferred stock, the sum of (a) the greater of (i) 130% of the stated value and (ii) the product of (y) the VWAP on the trading day immediately

preceding the date of the Triggering Event, multiplied by (z) the stated value divided by the then applicable conversion price, (b) all

accrued but unpaid dividends thereon and (c) all liquidated damages, late fees and other costs, expenses or amounts due in respect of

the series R convertible preferred stock including, but not limited to legal fees and expenses of legal counsel to the holder in connection

with, related to and/or arising out of a Triggering Event.

A “Triggering Event” means any of the following events (whatever

the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any

judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

the Company shall fail to deliver the shares of common stock issuable upon a conversion prior to the fifth (5 th ) trading day after such shares are required to be delivered, or the Company shall provide written notice to any holder, including by way of public announcement, at any time, of its intention not to comply with requests for conversion of any shares of series R convertible preferred stock in accordance with the terms of the certificate of designation;

the Company shall fail for any reason to pay in full the amount of cash due pursuant to a Buy-In (as defined in the certificate of designation) within five (5) trading days after notice therefore is delivered;

the Company shall fail to have available a sufficient number of authorized and unreserved shares of common stock to issue to such holder upon a conversion;

unless specifically addressed elsewhere in the certificate of designation as a Triggering Event, the Company shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach of the Transaction Documents (as defined in the certificate of designation), and such failure or breach shall not, if subject to the possibility of a cure by the Company, have been cured within five (5) calendar days after the date on which written notice of such failure or breach shall have been delivered;

the Company shall redeem junior securities or pari passu securities;

the Company shall be party to a Change of Control Transaction (as defined in the certificate of designation);

there shall have occurred a Bankruptcy Event (as defined in the certificate of designation);

any monetary judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any of their respective property or other assets for more than $50,000 (provided that amounts covered by the Company’s insurance policies are not counted toward this $50,000 threshold), and such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a period of thirty (30) trading days;

the electronic transfer by the Company of shares of common stock through the Depository Trust Company or another established clearing corporation once established subsequent to the date of the certificate of designation is no longer available or is subject to a ‘freeze” and/or “chill;” or

any “Event of Default,” as defined in the Purchase Agreement (as defined in the certificate of designation).

The Company recognizes the series X senior convertible

preferred stock as mezzanine equity in accordance with ASC 480, “Distinguishing Liabilities from Equity”.

On January 29, 2026, the Company filed a certificate

of amendment to the certificate of designation for its series N senior convertible preferred stock with the Nevada Secretary of State’s

Office to amend the certificate of designation to remove the redemption provisions, which previously provided for an optional redemption

by the Company and a mandatory redemption at the option of the holder in certain circumstances.

As a result of this modification, the

preferred stock no longer meets the criteria for classification outside of permanent equity.

The $ 3,802,010 carrying value was reclassified

from mezzanine equity to permanent equity on the Company’s condensed consolidated balance sheet as of March 31, 2026, prospectively.

Series X Senior Convertible Preferred Stock

As of September 30, 2025 and December 31, 2024,

there were 427,690 and 397,464 shares of series X senior convertible preferred stock issued and outstanding, respectively.

The series X senior convertible

preferred stock ranks, with respect to the payment of dividends and the distribution of assets upon liquidation, (i) senior to all common

stock and each other class or series that is not expressly made senior to or on parity with the series X senior convertible preferred

(ii) on parity with each class or series that is not expressly subordinated or made senior to the series X senior convertible preferred

and (iii) junior to the series N senior convertible preferred stock, all indebtedness and other liabilities with respect to assets

available to satisfy claims against the Company and each class or series that is expressly made senior to the series X senior convertible

As of March 31, 2026 and December 31, 2025, there

were 449,117 and 438,388 shares of series X senior convertible preferred stock issued and outstanding, respectively.

For the three months

ended March 31, 2026, cumulative dividends earned on the series X senior convertible preferred stock were $ 42,916 .

The cumulative accrued

dividends for the three months ended March 31, 2026 were paid by the Company via the issuance of 10,729 shares of series X senior convertible

preferred stock.

Dividend Rights .

Holders of series X senior

convertible preferred stock are entitled to dividends at a rate per annum of 10.0% of the stated value ($4.00 per share);

provided that

upon an event of default (as defined in the certificate of designation for the series X senior convertible preferred stock), such rate

was to increase by 5% per annum.

Dividends accrue from day to day, whether or not declared, and are cumulative.

Dividends are payable

quarterly in arrears on each dividend payment date.

For the nine months ended September 30, 2025, cumulative dividends earned on the series

X senior convertible preferred stock were $120,900.

The cumulative accrued dividends for the nine months ended September 30, 2025 were

paid by the Company via the issuance of 30,226 shares of series X senior convertible preferred stock.

Liquidation Rights.

Subject to the rights

of creditors and the holders of any senior securities, including the series N senior convertible preferred stock, or parity securities

(in each case, as defined in the certificate of designation), upon any liquidation of the Company or its subsidiaries, before any payment

or distribution of the assets of the Company (whether capital or surplus) are to be made to or set apart for the holders of junior securities

(as defined in the certificate of designation), including the common stock, each holder of outstanding series N senior convertible preferred

stock is entitled to receive an amount of cash equal to 100% of the stated value of $4.00 per share, plus an amount of cash equal to all

accumulated accrued and unpaid dividends thereon (whether or not declared) to, but not including the date of final distribution to such

Voting Rights .

Holders of series X senior

convertible preferred stock do not have any voting rights;

provided that, so long as any shares of series X senior convertible preferred

stock are outstanding, the affirmative vote of holders of a majority of the series X senior convertible preferred stock, which majority

must include Leonite Capital LLC so long as it holds any shares of series X senior convertible preferred stock, voting as a separate class,

is necessary for approving, effecting or validating any amendment, alteration or repeal of any of the provisions of the certificate of

designation or prior to the creation or issuance of any parity securities or new indebtedness (as defined in the certificate of designation);

provided that the foregoing does not apply to any financing transaction the use of proceeds of which were to be used to redeem the series

X senior convertible preferred stock and the warrants issued in connection therewith.

In addition, the affirmative vote of holders of

66% of the series X senior convertible preferred stock, voting as a separate class, is required prior to the creation or issuance of any

senior securities.

Conversion Rights .

Each share of series

X senior convertible preferred stock, plus all accrued and unpaid dividends thereon, are convertible, at the option of the holder thereof,

at any time and from time to time, into such number of fully paid and nonassessable shares of common stock determined by dividing the

stated value ($4.00 per share), plus the value of the accrued, but unpaid, dividends thereon, by a conversion price equal to the lower

of (i) the lowest VWAP during the five (5) trading days immediately prior to the applicable conversion date and (ii) the price per share

paid in any subsequent financing (the “Fixed Price”).

The Fixed Price is subject to standard adjustments in the event of any

stock splits, stock combinations, stock reclassifications, dividends paid in common stock, sales of substantially all assets, mergers,

consolidations or similar transactions, as well as a price based antidilution adjustment, pursuant to which, subject to certain exceptions,

if the Company issues common stock at a price lower than the Fixed Price, the Fixed Price shall decrease to such lower price.

Notwithstanding

the foregoing, in no event shall the holder of any series X senior convertible preferred stock be entitled to convert any number of shares

that upon conversion the sum of (i) the number of shares of common stock beneficially owned by the holder and its affiliates and (ii)

the number of shares of common stock issuable upon the conversion of the series X senior convertible preferred stock with respect to which

the determination of this proviso is being made, would result in beneficial ownership by the holder and its affiliates of more than 4.99%

of the then outstanding common stock.

This limitation may be waived (up to a maximum of 9.99%) by the holder and in its sole discretion,

upon not less than sixty-one (61) days’ prior notice to the Company.

Redemption Rights Commencing on September

22, 2023, any holder may require the Company to redeem its shares by the payment in cash therefore of a sum equal to 100% of the stated

value of $4.00 per share, plus the amount of accrued and unpaid dividends and any other amounts due pursuant to the terms of the certificate

of designation;

provided however, that in the event that the Company completes a public offering prior to the redemption date, then any

holder may only cause the Company to redeem any outstanding series X senior convertible preferred stock by paying such redemption price

in twelve (12) equal monthly installments with the first such payment due on the date that is six (6) months following the date that the

Company completes such public offering.

Non-redeemable Preferred Stock

Series A Preferred Stock

As of September 30, 2025 and December 31, 2024,

there were 2 shares of series A preferred stock issued and outstanding.

The series A preferred stock ranks,

with respect to the distribution of assets upon liquidation, (i) senior to all common stock and each other class or series that is not

expressly made senior to or on parity with the series A preferred stock;

(ii) on parity with each class or series that is not expressly

subordinated or made senior to the series A preferred stock;

and (iii) junior to the series B preferred stock, series C preferred stock,

series E preferred stock, series F-1 preferred stock, series I preferred stock, series J preferred stock, series L preferred stock, series

N senior convertible preferred stock, series R convertible preferred stock, series X senior convertible preferred stock and each other

series of preferred stock and each class or series that is expressly made senior to the series A preferred stock, as well as to all indebtedness

and other liabilities with respect to assets available to satisfy claims against the Company.

Dividend Rights.

The series A preferred

stock is not entitled to participate in any distributions or payments to the holders of common stock or any other class of stock and shall

have no economic interest in the Company.

Liquidation Rights .

In the event of any

liquidation, dissolution or winding up of the Company, either voluntarily or involuntarily, a merger or consolidation of the Company wherein

the Company is not the surviving entity, or a sale of all or substantially all of the assets of the Company, the holders of each share

of series A preferred stock shall be entitled to receive from any distribution of any of the assets or surplus funds of the Company, before

and in preference of any holder of shares of common stock, an amount equal to the stated value of $250.

Once the holders receive the foregoing

from any such liquidation, dissolution or winding up, the holders shall not participate with the common stock or any other class of stock.

Voting Rights .

Each share of series A preferred

stock shall have a number of votes at any time equal to (i) 25% of the number of votes then held or entitled to be made by all other equity

securities of the Company, including, without limitation, the common stock, plus (ii) one (1).

The series A preferred stock shall vote

on any matter submitted to the holders of the common stock, or any other class of voting securities, for a vote, and shall vote together

with the common stock, or any class of voting securities, as applicable, on such matter for as long as the shares of series A preferred

stock are issued and outstanding.

Notwithstanding the foregoing, the series A preferred stock shall not have the right to vote on any

matter as to which solely another series of preferred stock is entitled to vote pursuant to the Company’s amended and restated articles

of incorporation or a certificate of designation of such other series of preferred stock.

Upon transfer of any share of

series A preferred stock, except for a transfer by the holder to an affiliate, whether such transfer is voluntary or involuntary, such

share of series A preferred stock shall automatically, and without any action being required by the Company or the holder, be converted

into one (1) share of common stock.

Other Rights .

Holders of series A preferred

stock do not have any conversion (except as set forth above) or redemption rights.

As of March 31, 2026 and December 31, 2025, there

were 2 shares of series A preferred stock issued and outstanding.

Series B Preferred Stock

As of September 30, 2025 and December 31, 2024,

there were 0 and 1,279,867 shares of series B preferred stock issued and outstanding, respectively.

During the nine months ended September

30, 2025, all outstanding shares of series B preferred stock were converted into common stock.

The series B preferred stock ranks,

with respect to the distribution of assets upon liquidation, (i) senior to all common stock, series A preferred stock and to each other

class or series that is not expressly made senior to or on parity with the series B preferred stock;

(ii) on parity with the series C

preferred stock, series E preferred stock, series F-1 preferred stock, series J preferred stock, series L preferred stock and each other

class or series that is not expressly subordinated or made senior to the series B preferred stock;

and (iii) junior to the series I preferred

stock, series N senior convertible preferred stock, series R convertible preferred stock, series X senior convertible preferred stock

and to each other series of preferred stock and each class or series that is expressly made senior to the series B preferred stock, as

well as to all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company.

Dividend Rights.

The holders of series

B preferred stock are entitled to receive dividends equal (on an as converted to common stock basis) to and in the same form as dividends

actually paid on shares of common stock when, as and if such dividends are paid on shares of common stock.

No other dividends shall be

paid on shares of series B preferred stock.

Liquidation Rights .

Upon any liquidation,

dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of series B preferred stock shall be entitled

to receive out of the assets of the Company the same amount that a holder of common stock would receive if the shares of series B preferred

stock were fully converted to common stock immediately prior to such liquidation, which amount shall be paid to the holders of series

B preferred stock pari passu with all holders of parity securities and in preference to the holders of junior securities.

Voting Rights .

On any matter presented

to stockholders for their action or consideration, each holder of series B preferred stock shall be entitled to cast one (1) vote per

share of series B preferred stock held.

Except as provided by law, the holders of series B preferred stock shall vote together with the

holders of shares of common stock as a single class.

However, as long as any shares of series B preferred stock are outstanding, the Company

shall not, without the affirmative vote of the holders of a majority of outstanding series B preferred stock, (a) alter or change adversely

the powers, preferences or rights given to the series B preferred stock or alter or amend the certificate of designation for the series

B preferred stock, or (b) amend the Company’s amended and restated articles of incorporation or other charter documents in any manner

that adversely affects any rights of the holders of series B preferred stock.

Conversion Rights .

Each share of series

B preferred stock is convertible, at any time and from time to time at the option of the holder thereof, into such number of shares of

common stock as is determined as follows:

(i) if the closing market price of the common stock on the principal trading market on which

the common stock is then traded or quoted is less than $4.00 per share, then each share of series B preferred stock shall be convertible

into a number of shares of common stock equal to two (2) times the stated value ($4.00 per share), divided by such closing market price

on the date of conversion;

or (ii) if such closing market price is equal to or greater than $4.00 per share, then each share of series

B preferred stock shall be convertible into two (2) shares of common stock.

In addition, upon the earlier to occur of:

(a) the closing

of the sale of shares of common stock to the public at a price of at least $3.00 per share in a public offering pursuant to an effective

registration statement or offering statement under the Securities Act resulting in at least $3,000,000 of gross proceeds to the Company,

(b) the date on which the shares of common stock of the Company are listed on a national stock exchange, including without limitation

the New York Stock Exchange, NYSE American or the Nasdaq Stock Market (any tier), or (c) the date and time, or the occurrence of an event,

specified by vote or written consent of the holders of at least 67% of the then outstanding shares of series B preferred stock, voting

together as a single class, each share of series B preferred stock shall be automatically converted into such number of shares of common

stock as is determined in accordance with the provisions above.

Such conversion price is subject to standard adjustments in the event

of any stock splits, stock combinations, stock dividends, stock reclassifications and similar events.

Redemption Rights .

Holders of series B

preferred stock do not have any redemption rights.

As of March 31, 2026 and December 31, 2025, there

were no shares of series B preferred stock issued and outstanding.

During the year ended December 31, 2025, all outstanding shares of

series B preferred stock were converted into common stock.

Series C Preferred Stock

As of December 30, 2025 and December 31, 2024,

there were 0 and 74 shares of series C preferred stock issued and outstanding, respectively.

During the nine months ended September 30,

2025, all outstanding shares of series C preferred stock were converted into common stock.

The series C preferred stock ranks,

with respect to the distribution of assets upon liquidation, (i) senior to all common stock, series A preferred stock and to each other

class or series that is not expressly made senior to or on parity with the series C preferred stock;

(ii) on parity with the series B

preferred stock, series E preferred stock, series F-1 preferred stock, series J preferred stock, series L preferred stock and each other

class or series that is not expressly subordinated or made senior to the series C preferred stock;

and (iii) junior to the series I preferred

stock, series N senior convertible preferred stock, series R convertible preferred stock, series X senior convertible preferred stock

and to each other series of preferred stock and each class or series that is expressly made senior to the series C preferred stock, as

well as to all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company.

Dividend Rights.

The holders of series

C preferred stock are entitled to receive dividends equal (on an as converted to common stock basis) to and in the same form as dividends

actually paid on shares of common stock when, as and if such dividends are paid on shares of common stock.

No other dividends shall be

paid on shares of series C preferred stock.

Liquidation Rights .

Upon any liquidation,

dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of series C preferred stock shall be entitled

to receive out of the assets of the Company the same amount that a holder of common stock would receive if the shares of series C preferred

stock were fully converted to common stock immediately prior to such liquidation, which amount shall be paid to the holders of series

C preferred stock pari passu with all holders of parity securities and in preference to the holders of junior securities.

Voting Rights .

On any matter presented

to stockholders for their action or consideration, each holder of series C preferred stock shall be entitled to cast one (1) vote per

share of series C preferred stock held.

Except as provided by law, the holders of series C preferred stock shall vote together with the

holders of shares of common stock as a single class.

However, as long as any shares of series C preferred stock are outstanding, the Company

shall not, without the affirmative vote of the holders of a majority of outstanding series C preferred stock, (a) alter or change adversely

the powers, preferences or rights given to the series C preferred stock or alter or amend the certificate of designation for the series

C preferred stock, or (b) amend the Company’s amended and restated articles of incorporation or other charter documents in any manner

that adversely affects any rights of the holders of series C preferred stock.

Conversion Rights .

Each share of series

C preferred stock is convertible, at any time and from time to time at the option of the holder thereof, into such number of shares of

common stock as is determined by dividing the stated value ($4.00 per share) by a conversion price of $0.00004.

In addition, on the date

on which the shares of common stock are listed on a national stock exchange, including without limitation the New York Stock Exchange,

NYSE American or the Nasdaq Stock Market (any tier) (a “Listing Event”), all outstanding shares of series C preferred stock

shall be automatically converted into such number of shares of common stock as is determined by dividing $50,000 by the highest traded

or closing price on such date, which such shares of common stock shall be issued pro rata among the holders of the outstanding series

C preferred stock.

Finally, upon the earlier to occur of:

(a) the closing of the sale of shares of common stock to the public at a price

of at least $3.00 per share (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar

recapitalization with respect to the common stock) in a public offering pursuant to an effective registration statement or offering statement

under the Securities Act resulting in at least $3,000,000 of gross proceeds to the Company or (b) the date and time, or the occurrence

of an event, specified by vote or written consent of the holders of at least 67% of the then outstanding shares of series C preferred

stock, voting together as a single class, each share of series C preferred stock shall be automatically converted into such number of

shares of common stock as is determined by dividing the stated value ($4.00 per share) by a conversion price of $0.00004.

Such conversion

price is subject to standard adjustments in the event of any stock splits, stock combinations, stock dividends, stock reclassifications

and similar events.

Redemption Rights .

If there is a Listing

Event, the Company shall have the right (but not the obligation) to redeem shares of series C preferred stock at a price per share of

As of March 31, 2026 and December 31, 2025, there

were no shares of series C preferred stock issued and outstanding.

During the year ended December 31, 2025, all outstanding shares of

series C preferred stock were converted into common stock.

Series E Preferred Stock

As of September 30, 2025 and December 31, 2024,

there were 0 and 175,375 shares of series E preferred stock issued and outstanding, respectively.

During the nine months ended September

30, 2025, all outstanding shares of series E preferred stock were converted into common stock.

The series E preferred stock ranks,

with respect to the distribution of assets upon liquidation, (i) senior to all common stock, series A preferred stock and to each other

class or series that is not expressly made senior to or on parity with the series E preferred stock;

(ii) on parity with the series B

preferred stock, series C preferred stock, series F-1 preferred stock, series J preferred stock, series L preferred stock and each other

class or series that is not expressly subordinated or made senior to the series E preferred stock;

and (iii) junior to the series I preferred

stock, series N senior convertible preferred stock, series R convertible preferred stock, series X senior convertible preferred stock

and to each other series of preferred stock and each class or series that is expressly made senior to the series E preferred stock, as

well as to all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company.

Dividend Rights.

The holders of series

E preferred stock are entitled to receive dividends equal (on an as converted to common stock basis) to and in the same form as dividends

actually paid on shares of common stock when, as and if such dividends are paid on shares of common stock.

No other dividends shall be

paid on shares of series E preferred stock.

Liquidation Rights .

Upon any liquidation,

dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of series E preferred stock shall be entitled

to receive out of the assets of the Company the same amount that a holder of common stock would receive if the shares of series E preferred

stock were fully converted to common stock immediately prior to such liquidation, which amount shall be paid to the holders of series

E preferred stock pari passu with all holders of parity securities and in preference to the holders of junior securities.

Voting Rights .

On any matter presented

to stockholders for their action or consideration, each holder of series E preferred stock shall be entitled to cast one (1) vote per

share of series E preferred stock held.

Except as provided by law, the holders of series E preferred stock shall vote together with the

holders of shares of common stock as a single class.

However, as long as any shares of series E preferred stock are outstanding, the Company

shall not, without the affirmative vote of the holders of a majority of outstanding series E preferred stock, (a) alter or change adversely

the powers, preferences or rights given to the series E preferred stock or alter or amend the certificate of designation for the series

E preferred stock, or (b) amend the Company’s amended and restated articles of incorporation or other charter documents in any manner

that adversely affects any rights of the holders of series E preferred stock.

Conversion Rights .

Each share of series

E preferred stock is convertible, at any time and from time to time at the option of the holder thereof, into such number of shares of

common stock as is determined as follows:

(i) if the closing market price of the common stock on the principal trading market on which

the common stock is then traded or quoted is less than $4.00 per share, then each share of series E preferred stock shall be convertible

into a number of shares of common stock equal to two (2) times the stated value ($4.00 per share), divided by such closing market price

on the date of conversion;

or (ii) if such closing market price is equal to or greater than $4.00 per share, then each share of series

E preferred stock shall be convertible into two (2) shares of common stock.

In addition, upon the earlier to occur of:

(a) the closing

of the sale of shares of common stock to the public at a price of at least $3.00 per share in a public offering pursuant to an effective

registration statement or offering statement under the Securities Act resulting in at least $3,000,000 of gross proceeds to the Company,

(b) the date on which the shares of common stock of the Company are listed on a national stock exchange, including without limitation

the New York Stock Exchange, NYSE American or the Nasdaq Stock Market (any tier), or (c) the date and time, or the occurrence of an event,

specified by vote or written consent of the holders of at least 67% of the then outstanding shares of series E preferred stock, voting

together as a single class, each share of series E preferred stock shall be automatically converted into such number of shares of common

stock as is determined in accordance with the provisions above.

Such conversion price is subject to standard adjustments in the event

of any stock splits, stock combinations, stock dividends, stock reclassifications and similar events.

As of March 31, 2026 and December 31, 2025, there

were no shares of series E preferred stock issued and outstanding, respectively.

During the year ended December 31, 2025, all outstanding

shares of series E preferred stock were converted into common stock.

Series F-1 Preferred Stock

As of September 30, 2025 and December 31, 2024,

there were 3,875 shares of series F-1 preferred stock issued and outstanding.

The series F-1 preferred stock

ranks, with respect to the distribution of assets upon liquidation, (i) senior to all common stock, series A preferred stock and to each

other class or series that is not expressly made senior to or on parity with the series F-1 preferred stock;

(ii) on parity with the series

B preferred stock, series C preferred stock, series E preferred stock, series J preferred stock, series L preferred stock and each other

class or series that is not expressly subordinated or made senior to the series F-1 preferred stock;

and (iii) junior to the series I

preferred stock, series N senior convertible preferred stock, series R convertible preferred stock, series X senior convertible preferred

stock and to each other series of preferred stock and each class or series that is expressly made senior to the series F-1 preferred stock,

as well as to all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company.

Dividend Rights.

The holders of series

F-1 preferred stock are entitled to receive dividends equal (on an as converted to common stock basis) to and in the same form as dividends

actually paid on shares of common stock when, as and if such dividends are paid on shares of common stock.

No other dividends shall be

paid on shares of series F-1 preferred stock.

Liquidation Rights .

Upon any liquidation,

dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of series F-1 preferred stock shall be entitled

to receive out of the assets of the Company the same amount that a holder of common stock would receive if the shares of series F-1 preferred

stock were fully converted to common stock immediately prior to such liquidation, which amount shall be paid to the holders of series

F-1 preferred stock pari passu with all holders of parity securities and in preference to the holders of junior securities.

Voting Rights .

Except as provided by law,

the holders of series F-1 preferred stock shall have no voting rights.

However, as long as any shares of series F-1 preferred stock are

outstanding, the Company shall not, without the affirmative vote of the holders of a majority of outstanding series F-1 preferred stock,

(a) alter or change adversely the powers, preferences or rights given to the series F-1 preferred stock or alter or amend the certificate

of designation for the series F-1 preferred stock, or (b) amend the Company’s amended and restated articles of incorporation or

other charter documents in any manner that adversely affects any rights of the holders of series F-1 preferred stock.

Conversion Rights .

Each share of series

F-1 preferred stock is convertible, at any time and from time to time at the option of the holder thereof, into such number of shares

of common stock as is determined as follows:

(i) if the closing market price of the common stock on the principal trading market on which

the common stock is then traded or quoted is less than $4.00 per share, then each share of series F-1 preferred stock shall be convertible

into a number of shares of common stock equal to two (2) times the stated value ($4.00 per share), divided by such closing market price

on the date of conversion;

or (ii) if such closing market price is equal to or greater than $4.00 per share, then each share of series

F-1 preferred stock shall be convertible into two (2) shares of common stock.

In addition, upon the earlier to occur of:

(a) the closing

of the sale of shares of common stock to the public at a price of at least $3.00 per share in a public offering pursuant to an effective

registration statement or offering statement under the Securities Act resulting in at least $3,000,000 of gross proceeds to the Company,

(b) the date on which the shares of common stock of the Company are listed on a national stock exchange, including without limitation

the New York Stock Exchange, NYSE American or the Nasdaq Stock Market (any tier), or (c) the date and time, or the occurrence of an event,

specified by vote or written consent of the holders of at least 67% of the then outstanding shares of series F-1 preferred stock, voting

together as a single class, each share of series F-1 preferred stock shall be automatically converted into such number of shares of common

stock as is determined in accordance with the provisions above.

Such conversion price is subject to standard adjustments in the event

of any stock dividends, stock reclassifications and similar events (but not for reverse stock splits).

Redemption Rights .

Holders of series F-1

preferred stock do not have any redemption rights.

As of March 31, 2026 and December 31, 2025, there

were 3,875 shares of series F-1 preferred stock issued and outstanding.

Series I Preferred Stock

As of September 30, 2025 and December 31, 2024,

there were 10,075,092 and 10,469,092 shares of series I preferred stock issued and outstanding, respectively.

The series I preferred stock ranks,

with respect to the distribution of assets upon liquidation, (i) senior to all common stock, series A preferred stock, series B preferred

stock, series C preferred stock, series E preferred stock, series F-1 preferred stock, series J preferred stock, series L preferred stock

and to each other class or series that is not expressly made senior to or on parity with the series I preferred stock;

(ii) on parity

with each class or series that is not expressly subordinated or made senior to the series I preferred stock;

and (iii) junior to the series

N senior convertible preferred stock, series R convertible preferred stock, series X senior convertible preferred stock and to each other

series of preferred stock and each class or series that is expressly made senior to the series I preferred stock, as well as to all indebtedness

and other liabilities with respect to assets available to satisfy claims against the Company.

Dividend Rights.

The holders of series

I preferred stock are entitled to receive dividends equal (on an as converted to common stock basis) to and in the same form as dividends

actually paid on shares of common stock when, as and if such dividends are paid on shares of common stock.

No other dividends shall be

paid on shares of series I preferred stock.

Liquidation Rights .

Upon any liquidation,

dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of series I preferred stock shall be entitled

to receive out of the assets of the Company the same amount that a holder of common stock would receive if the shares of series I preferred

stock were fully converted to common stock immediately prior to such liquidation, which amount shall be paid to the holders of series

I preferred stock pari passu with all holders of parity securities and in preference to the holders of junior securities.

Voting Rights .

On any matter presented

to stockholders for their action or consideration, each holder of series I preferred stock shall be entitled to cast five (5) votes per

share of series I preferred stock held.

Except as provided by law, the holders of series I preferred stock shall vote together with the

holders of shares of common stock as a single class.

However, as long as any shares of series I preferred stock are outstanding, the Company

shall not, without the affirmative vote of the holders of a majority of outstanding series I preferred stock, (a) alter or change adversely

the powers, preferences or rights given to the series I preferred stock or alter or amend the certificate of designation for the series

I preferred stock, or (b) amend the Company’s amended and restated articles of incorporation or other charter documents in any manner

that adversely affects any rights of the holders of series I preferred stock.

Conversion Rights .

Each share of series

I preferred stock is convertible, at any time and from time to time at the option of the holder thereof, into such number of shares of

common stock as is determined as follows:

(i) if the closing market price of the common stock on the principal trading market on which

the common stock is then traded or quoted is less than $4.00 per share, then each share of series I preferred stock shall be convertible

into a number of shares of common stock equal to two (2) times the stated value ($4.00 per share), divided by such closing market price

on the date of conversion;

or (ii) if such closing market price is equal to or greater than $4.00 per share, then each share of series

I preferred stock shall be convertible into two (2) shares of common stock.

In addition, upon the earlier to occur of:

(a) the closing

of the sale of shares of common stock to the public at a price of at least $3.00 per share in a public offering pursuant to an effective

registration statement or offering statement under the Securities Act resulting in at least $10,000,000 of gross proceeds to the Company,

(b) the date on which the shares of common stock of the Company are listed on a national stock exchange, including without limitation

the New York Stock Exchange, NYSE American or the Nasdaq Stock Market (any tier), or (c) the date and time, or the occurrence of an event,

specified by vote or written consent of the holders of at least 67% of the then outstanding shares of series I preferred stock, voting

together as a single class, each share of series I preferred stock shall be automatically converted into such number of shares of common

stock as is determined in accordance with the provisions above.

Such conversion price is subject to standard adjustments in the event

of any stock splits, stock combinations, stock dividends, stock reclassifications and similar events.

Redemption Rights .

Holders of series I

preferred stock do not have any redemption rights.

Series J Preferred Stock

As of September 30, 2025 and December 31, 2024,

there were no shares of series J preferred stock issued and outstanding.

During the nine months ended September 30, 2024, all outstanding

shares of series J preferred stock were converted into common stock.

The series J preferred stock ranks,

with respect to the distribution of assets upon liquidation, (i) senior to all common stock, series A preferred stock and to each other

class or series that is not expressly made senior to or on parity with the series J preferred stock;

(ii) on parity with the series B

preferred stock, series C preferred stock, series E preferred stock, series F-1 preferred stock, series L preferred stock and each other

class or series that is not expressly subordinated or made senior to the series J preferred stock;

and (iii) junior to the series I preferred

stock, series N senior convertible preferred stock, series R convertible preferred stock, series X senior convertible preferred stock

and to each other series of preferred stock and each class or series that is expressly made senior to the series J preferred stock, as

well as to all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company.

Dividend Rights.

The holders of series

J preferred stock are entitled to receive dividends equal (on an as converted to common stock basis) to and in the same form as dividends

actually paid on shares of common stock when, as and if such dividends are paid on shares of common stock.

No other dividends shall be

paid on shares of series J preferred stock.

Liquidation Rights .

Upon any liquidation,

dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of series J preferred stock shall be entitled

to receive out of the assets of the Company the same amount that a holder of common stock would receive if the shares of series J preferred

stock were fully converted to common stock immediately prior to such liquidation, which amount shall be paid to the holders of series

J preferred stock pari passu with all holders of parity securities and in preference to the holders of junior securities.

Voting Rights .

On any matter presented

to stockholders for their action or consideration, each holder of series J preferred stock shall be entitled to cast one (1) vote per

share of series J preferred stock held.

Except as provided by law, the holders of series J preferred stock shall vote together with the

holders of shares of common stock as a single class.

However, as long as any shares of series J preferred stock are outstanding, the Company

shall not, without the affirmative vote of the holders of a majority of outstanding series J preferred stock, (a) alter or change adversely

the powers, preferences or rights given to the series J preferred stock or alter or amend the certificate of designation for the series

J preferred stock, or (b) amend the Company’s amended and restated articles of incorporation or other charter documents in any manner

that adversely affects any rights of the holders of series J preferred stock.

Conversion Rights .

Each share of series

J preferred stock is convertible, at any time and from time to time at the option of the holder thereof, into such number of shares of

common stock as is determined as follows:

(i) if the closing market price of the common stock on the principal trading market on which

the common stock is then traded or quoted is less than $4.00 per share, then each share of series J preferred stock shall be convertible

into a number of shares of common stock equal to two (2) times the stated value ($4.00 per share), divided by such closing market price

on the date of conversion;

or (ii) if such closing market price is equal to or greater than $4.00 per share, then each share of series

J preferred stock shall be convertible into two (2) shares of common stock.

In addition, upon the earlier to occur of:

(a) the closing

of the sale of shares of common stock to the public at a price of at least $3.00 per share in a public offering pursuant to an effective

registration statement or offering statement under the Securities Act resulting in at least $3,000,000 of gross proceeds to the Company,

(b) the date on which the shares of common stock of the Company are listed on a national stock exchange, including without limitation

the New York Stock Exchange, NYSE American or the Nasdaq Stock Market (any tier), or (c) the date and time, or the occurrence of an event,

specified by vote or written consent of the holders of at least 67% of the then outstanding shares of series J preferred stock, voting

together as a single class, each share of series J preferred stock shall be automatically converted into such number of shares of common

stock as is determined in accordance with the provisions above.

Such conversion price is subject to standard adjustments in the event

of any stock dividends, stock reclassifications and similar events (but not for reverse stock splits).

Redemption Rights .

Holders of series J

preferred stock do not have any redemption rights.

As of March 31, 2026 and December 31, 2025, there

were no shares of series I preferred stock issued and outstanding.

During the year ended December 31, 2025, all outstanding shares of

series I preferred stock were converted into common stock.

Series L Preferred Stock

As of September 30, 2025 and December 31, 2024,

there were 319,493 shares of series L preferred stock issued and outstanding.

The series L preferred stock ranks,

with respect to the distribution of assets upon liquidation, (i) senior to all common stock, series A preferred stock and to each other

class or series that is not expressly made senior to or on parity with the series L preferred stock;

(ii) on parity with the series B

preferred stock, series C preferred stock, series E preferred stock, series F-1 preferred stock, series J preferred stock and each other

class or series that is not expressly subordinated or made senior to the series L preferred stock;

and (iii) junior to the series I preferred

stock, series N senior convertible preferred stock, series R convertible preferred stock, series X senior convertible preferred stock

and to each other series of preferred stock and each class or series that is expressly made senior to the series L preferred stock, as

well as to all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company.

Dividend Rights.

The holders of series

L preferred stock are entitled to receive dividends equal (on an as converted to common stock basis) to and in the same form as dividends

actually paid on shares of common stock when, as and if such dividends are paid on shares of common stock.

No other dividends shall be

paid on shares of series L preferred stock.

Liquidation Rights .

Upon any liquidation,

dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of series L preferred stock shall be entitled

to receive out of the assets of the Company the same amount that a holder of common stock would receive if the shares of series L preferred

stock were fully converted to common stock immediately prior to such liquidation, which amount shall be paid to the holders of series

L preferred stock pari passu with all holders of parity securities and in preference to the holders of junior securities.

Voting Rights .

On any matter presented

to stockholders for their action or consideration, each holder of series L preferred stock shall be entitled to cast one (1) vote per

share of series L preferred stock held.

Except as provided by law, the holders of series L preferred stock shall vote together with the

holders of shares of common stock as a single class.

However, as long as any shares of series L preferred stock are outstanding, the Company

shall not, without the affirmative vote of the holders of a majority of outstanding series L preferred stock, (a) alter or change adversely

the powers, preferences or rights given to the series J preferred stock or alter or amend the certificate of designation for the series

L preferred stock, or (b) amend the Company’s amended and restated articles of incorporation or other charter documents in any manner

that adversely affects any rights of the holders of series L preferred stock.

Conversion Rights .

Each share of series

L preferred stock is convertible, at any time and from time to time at the option of the holder thereof, into such number of shares of

common stock as is determined as follows:

(i) if the closing market price of the common stock on the principal trading market on which

the common stock is then traded or quoted is less than $4.00 per share, then each share of series L preferred stock shall be convertible

into a number of shares of common stock equal to two (2) times the stated value ($4.00 per share), divided by such closing market price

on the date of conversion;

or (ii) if such closing market price is equal to or greater than $4.00 per share, then each share of series

L preferred stock shall be convertible into two (2) shares of common stock.

In addition, upon the earlier to occur of:

(a) the closing

of the sale of shares of common stock to the public at a price of at least $3.00 per share in a public offering pursuant to an effective

registration statement or offering statement under the Securities Act resulting in at least $3,000,000 of gross proceeds to the Company,

(b) the date on which the shares of common stock of the Company are listed on a national stock exchange, including without limitation

the New York Stock Exchange, NYSE American or the Nasdaq Stock Market (any tier), or (c) the date and time, or the occurrence of an event,

specified by vote or written consent of the holders of at least 67% of the then outstanding shares of series L preferred stock, voting

together as a single class, each share of series L preferred stock shall be automatically converted into such number of shares of common

stock as is determined in accordance with the provisions above.

Such conversion price is subject to standard adjustments in the event

of any stock dividends, stock reclassifications and similar events (but not for reverse stock splits).

Redemption Rights .

Holders of series L

preferred stock do not have any redemption rights.

Series Y Senior Preferred Stock

As of September 30, 2025 and December 31, 2024,

there were 1,041,764 and 979,125 shares of series Y senior convertible preferred stock issued and outstanding, respectively.

The series Y senior convertible

preferred stock ranks, with respect to the payment of dividends and the distribution of assets upon liquidation, (i) senior to all common

stock and each series of preferred stock, and to each other class or series that is not expressly made senior to or on parity with the

As of March 31, 2026 and December 31, 2025, there

were 319,493 shares of series L preferred stock issued and outstanding.

Series N Senior Convertible Preferred Stock

As of March 31, 2026 and December 31, 2025, there

were 1,068,004 and 1,037,311 shares of series N senior convertible preferred stock issued and outstanding, respectively.

For the three

months ended March 31, 2026, cumulative dividends earned on the series N senior convertible preferred stock were $ 122,772 .

The cumulative

accrued dividends for the three months ended March 31, 2026 were paid by the Company via the issuance of 30,693 shares of series N senior

convertible preferred stock.

Series Y Senior Convertible Preferred Stock

(ii) on parity with each class or series that is not expressly subordinated or made senior

to the series Y senior convertible preferred stock;

and (iii) junior to each class or series that is expressly made senior to the series

Y senior convertible preferred stock.

Dividend Rights .

Holders of series Y senior

convertible preferred stock are entitled to dividends at a rate per annum of 10.0% of the stated value ($4.00 per share);

provided that

upon an event of default (as defined in the certificate of designation for the series Y senior convertible preferred stock), such rate

shall increase by 5% per annum.

Dividends shall accrue from day to day, whether or not declared, and shall be cumulative.

Dividends shall

be payable quarterly in arrears on each dividend payment date and may be paid in cash or common stock at our discretion;

provided that

the Company may only pay dividends in common stock if such common stock is free-trading, freely transferable, and does not contain a legend

(or be subject to stop transfer or similar instructions) restricting the resale or transferability thereof.

Dividends payable in common

stock shall be calculated based on a price equal to eighty percent (80%) of the VWAP during the five (5) trading days immediately prior

to the applicable payment date.

For the nine months ended September 30, 2025, cumulative dividends earned on the series Y senior convertible

preferred stock were $ 301,470 .

The cumulative accrued dividends for the nine months ended September 30, 2025 were paid by the Company

via the issuance of 62,639 shares of series Y senior convertible preferred stock and $ 50,000 in cash.

At September 30, 2025, the total

dividends payable was $ 33,108 .

Liquidation Rights.

Subject to the rights

of creditors and the holders of any senior securities or parity securities (in each case, as defined in the certificate of designation),

upon any liquidation event (as defined in the certificate of designation), before any payment or distribution of the assets of the Company

(whether capital or surplus) shall be made to or set apart for the holders of junior securities (as defined in the certificate of designation),

including the common stock, each holder of outstanding series Y senior convertible preferred stock shall be entitled to receive an amount

of cash equal to the greater of (i) 100% of the stated value of $4.00 per share, plus an amount of cash equal to all accumulated accrued

and unpaid dividends thereon (whether or not declared) to, but not including the date of final distribution to such holders or (ii) such

amount per share as would have been payable had all shares of series Y senior convertible preferred stock been converted into common stock

immediately prior to such liquidation event.

Voting Rights .

Holders of series Y senior

convertible preferred stock do not have any voting rights;

provided that, so long as any shares of series Y senior convertible preferred

stock are outstanding, the affirmative vote of holders of a majority of the series Y senior convertible preferred stock, which majority

must include Leonite Capital LLC so long as it holds any shares of series Y senior convertible preferred stock, voting as a separate class,

shall be necessary for approving, effecting or validating any amendment, alteration or repeal of any of the provisions of the certificate

of designation, prior to the Company’s issuance of additional shares of series Y senior convertible preferred stock or prior to

the creation or issuance of any securities that are not subordinate to the series Y senior convertible preferred stock or new indebtedness

(as defined in the certificate of designation);

provided that the foregoing shall not apply to any financing transaction the use of proceeds

of which will be used to redeem the series Y senior convertible preferred stock in full.

Conversion Rights .

Commencing on the first

anniversary of the date on which the Company’s common stock begins trading on the Nasdaq Stock Market, each share of series Y senior

convertible preferred stock, plus all accrued and unpaid dividends thereon, shall be convertible, at the option of the holder thereof,

at any time and from time to time, into such number of fully paid and nonassessable shares of common stock determined by dividing the

stated value ($4.00 per share), plus the value of the accrued, but unpaid, dividends thereon, by a conversion price equal to the lowest

VWAP during the five (5) trading days immediately prior to the applicable conversion date.

Such conversion price is subject to adjustment

if the Company issues common stock at a price lower than such conversion price, subject to certain exceptions.

Notwithstanding the foregoing,

in no event shall the holder of any series Y senior convertible preferred stock be entitled to convert any number of shares that upon

conversion the sum of (i) the number of shares of common stock beneficially owned by the holder and its affiliates and (ii) the number

of shares of common stock issuable upon the conversion of the series Y senior convertible preferred stock with respect to which the determination

of this proviso is being made, would result in beneficial ownership by the holder and its affiliates of more than 4.99% of the then outstanding

common stock.

This limitation may be waived (up to a maximum of 9.99%) by the holder and in its sole discretion, upon not less than sixty-one

(61) days’ prior notice to the Company.

As of March 31, 2026 and December 31, 2025, there

were 1,094,354 and 1,067,878 shares of series Y senior convertible preferred stock issued and outstanding, respectively.

For the three

months ended March 31, 2026, cumulative dividends earned on the series Y senior convertible preferred stock were $ 106,772 .

The cumulative

accrued dividends for the three months ended March 31, 2026 were paid by the Company via the issuance of 26,476 shares of series Y senior

convertible preferred stock.

At March 31, 2026, the total dividends payable was $ 35,979 .

Preferred Stock Transactions

During the nine months ended September 30, 2025,

During the three months ended March 31, 2026,

the Company executed the following transactions:

An aggregate of 300,000 shares of series B preferred stock, 6 shares of series C preferred stock and 54,000 shares of series E preferred stock were issued in exchange for the cancellation of an aggregate of 391,500 shares of series I preferred stock.

An aggregate of 1,579,867 shares of series B preferred stock were converted into an aggregate of 3,159,736 shares of common stock.

An aggregate of 80 shares of series C preferred stock were converted into an aggregate of 800,000 shares of common stock.

An aggregate of 229,375 shares of series E preferred stock were converted into an aggregate of 458,750 shares of common stock.

An aggregate of 2,500 shares of series I preferred stock were converted into an aggregate of 5,000 shares of common stock.

An aggregate of 26,476 shares of series Y senior convertible preferred stock were issued with an aggregate value of $ 105,902 .

1 unchanged sentence

An aggregate of 10,729 shares of series X senior convertible preferred stock were issued with an aggregate value of $ 42,916 .

During the nine months ended September 30, 2024,

During the three months ended March 31, 2025,

the Company executed the following transactions:

On January 19, 2024, the Company issued 62,500 shares of series I preferred stock to each of Daniel R.

Thompson, the Chairman of the Board, and Alex Cunningham, the Company’s Chief Executive Officer, for $ 250,000 bonus compensation for the fiscal year of 2023, at the fair value of $4.48 per share.

On January 31, 2024, the Company issued 5,000 shares of series I preferred stock to Matthew Shafer, the Company’s Chief Financial Officer, for $ 20,000 , at the fair value of $4.48 per share.

On January 31, 2024, the Company issued 2,500 shares of series I preferred stock to Zia Choe, the Company’s former Chief Accounting Officer, for $ 10,000 , at the fair value of $4.48 per share.

An aggregate of 12,400 shares of series B preferred stock were converted into an aggregate of 8,268 shares of common stock.

An aggregate of 78 shares of series C preferred stock were converted into an aggregate of 780,000 shares of common stock.

An aggregate of 80,375 shares of series E preferred stock were converted into an aggregate of 160,750 shares of common stock.

An aggregate of 26,252 shares of series F-1 preferred stock were converted into an aggregate of 52,504 shares of common stock.

An aggregate of 2,500 shares of series I preferred stock were converted into an aggregate of 1,667 shares of common stock.

An aggregate of 1,713,584 shares of series J preferred stock were converted into an aggregate of 3,427,168 shares of common stock.

2 shares of series C preferred stock were cancelled, which were issued erroneously.

165 shares of series R preferred stock were cancelled as part of the settlement agreement described in Note 7.

Notes and Loans Payable

On May 15, 2024, in conjunction with the exchange of certain senior secured convertible promissory notes, 938,908 shares of series Y senior convertible preferred stock were issued with an aggregate value of $ 3,755,632 .

On September 25, 2024, 16,206 shares of series Y senior convertible preferred stock were issued with an aggregate value of $ 64,824 as payment of accrued dividends.

In connection with the aforementioned share issuances

on January 19, 2024 and January 31, 2024, the Company engaged a valuation specialist to perform a business valuation Monte Carlo simulation

for the series I preferred stock resulting in those indicated fair values.

During the nine months ended September 30, 2025,

An aggregate of 11,775 shares of series Y senior convertible preferred stock were issued with an aggregate value of $ 47,100 .

An aggregate of 27,271 shares of series N senior convertible preferred stock were issued with an aggregate value of $ 109,081 .

An aggregate of 9,720 shares of series X senior convertible preferred stock were issued with an aggregate value of $ 38,880 .

During the three months ended March 31, 2026,

in addition to the conversions of preferred stock noted above, the Company issued common stock as part of the following transactions:

On June 5, 2025, as part of a legal settlement, the Company retired 59,248 shares of common stock.

On June 30, 2025, the Company issued 15,000 shares of common stock to an investor relation service provider.

The Company recognized the fair value for the issuance of the 15,000 shares at $6.50 per share on the closing market price of June 30, 2025, and recorded selling, general and administrative expense of $ 97,500 in the consolidated statement of operations.

On September 2, 2025, the Company issued 192,495 shares of common stock upon conversion of a convertible note.

On July 31, 2025, the Company issued 2,500 shares of common stock to an employee for services rendered.

The Company recognized the fair value for the issuance of the 2,500 shares at $5.00 per share on the closing market price of July 30, 2025, and recorded share-based compensation expense of $ 12,500 in the consolidated statement of operations.

On September 26, 2025, the Company issued an aggregate of 15,000 shares of restricted common stock under the Company’s 2024 Equity Incentive Plan to three board members for their annual retainer grants for the fiscal year 2024, which vested in full on the date of grant.

The Company recognized the fair value for the issuance of the shares at $1.53 per share based on the closing market price on the grant date.

Share-based compensation expense of $ 22,950 was recorded in the consolidated statement of operations.

On September 26, 2025, the Company also issued an aggregate of 15,000 shares of restricted common stock under the Company’s 2024 Equity Incentive Plan to three board members for their annual retainer grants for the fiscal year 2025, with 3,750 shares vesting on the date of grant and the remaining shares vesting in equal parts over the course of three quarters commencing on October 1, 2025.

The Company recognized the fair value for the issuance of the shares at $1.53 per share based on the closing market price on the grant date.

Share-based compensation expense of $ 5,738 was recorded in the consolidated statement of operations.

During the nine months ended September 30, 2024, in addition to the

conversions of preferred stock noted above, the Company issued common stock as part of the following transactions:

The Company issued an aggregate of 234,909 shares of common stock in payment of various accrued dividends on the series N, series X and series Y preferred stock.

The Company issued 1,222 shares of common stock upon conversion of certain convertible notes.

In February 2024, as part of the Red Rock settlement executed in July 2022, the Company issued an aggregate of 37,104 shares of common stock to six previous owners.

The Company recognized the fair value for the issuance of 37,104 shares at $ 3 per share on the closing market price of February 4 through February 6, 2024, and recorded share loss from discontinued operations of $ 111,312 in the consolidated statement of operations.

On March 5, 2024, the Company issued 7,500 shares of common stock to an investor relation service provider.

The Company recognized the fair value for the issuance of the 7,500 shares at $ 1.55 per share on the closing market price of March 5, 2024 and recorded selling, general and administrative expense of $ 11,617 in the consolidated statement of operations.

On March 26, 2024, the Company issued an aggregate of 30,000 shares of common stock to three board members.

The Company recognized the fair value for the issuance of 30,000 shares at $ 6.50 per share on the closing market price of March 26, 2024 and recorded share-based compensation expense of $ 195,000 in the consolidated statement of operations.

In September 2024, the Company issued an aggregate of 74,225 shares of common stock as part of a legal settlement.

On January 6, 2026, the Company issued an aggregate of 16,667 shares of common stock in connection with a financing transaction that also included the issuance of convertible promissory notes and warrants.

As the shares of common stock were freestanding equity instruments issued as part of a single financing unit, the fair value recognized by the Company was measured at its grant date fair value based on the closing market price as of January 6, 2026 of $5.10 per share and then allocated along with the fair values of the promissory note and the warrants to each instrument in the financing units.

The allocated fair value of the shares was then recorded to additional paid-in-capital with a corresponding debt discount recognized in connection with the related promissory note.

See also Note 9.

Convertible Notes Payable and Note 12.

On January 13, 2026, in accordance with an agreement effective November 24, 2025, which included a provision that entitles a consultant service provider to receive additional common shares in the event of a reverse stock split, the Company issued 200,000 shares of common stock to the provider subsequent to the reverse stock split which was effected by the Company on January 12, 2026.

The Company recognized the fair value for the issuance of the 200,000 shares at the November 24, 2025 grant-date fair value of $ 2.55 per share, and recorded selling, general and administrative expense of $ 357,000 in the consolidated statement of operations.

On January 13, 2026, the Company issued 62,500 shares of common stock to an employee for services in settlement of a bonus payable totaling $ 228,000 , of which 31,250 shares vested on the date of grant and 15,625 shares will vest on each of January 2, 2027 and January 2, 2028.

On January 14, 2026, the Company issued 13,761 shares of common stock to a legal service provider.

The Company recognized the fair value for the issuance of the 13,761 shares of $ 60,000 per the service agreement, and recorded selling, general and administrative expense in the consolidated statement of operations.

On January 16, 2026, the Company issued an aggregate of 20,000 shares of common stock in connection with a financing transaction that also included the issuance of convertible promissory notes and warrants.

As the shares of common stock were freestanding equity instruments issued as part of a single financing unit, the fair value recognized by the Company was measured at its grant date fair value based on the closing market price as of January 20, 2026 (date funds received by the Company) of $4.00 per share and then allocated along with the fair values of the promissory note and the warrants to each instrument in the financing unit.

The allocated fair value of the shares was then recorded to additional paid-in-capital with a corresponding debt discount recognized in connection with the related promissory note.

See also Note 9.

Convertible Notes Payable and Note 12.

On January 31, 2026, the Company cancelled 6,667 shares of common stock following the forfeiture of the underlying award.

The cancelled shares were returned to the status of authorized and unissued common stock and the $ 29,667 value of the award was removed from unearned compensation.

Stock Compensation expense had not yet been recorded for this award at the time of cancellation.

On February 3, 2026, the Company issued 556,528 shares of common stock pursuant to a conversion agreement with Alex Cunningham, the Company’s Chief Executive Officer, for which deferred compensation in the amount of $ 2,365,242 owed to Mr.

Cunningham was cancelled.

The number of shares issued was determined based on the closing market price of the Company’s common stock of $4.25 on January 28, 2026.

Because the underlying compensation was fully earned and the fair value of equity issued equals the amount accrued, the settlement was accounted for as an equity issuance with no impact on the Company’s consolidated statements of operations.

The Company recorded a reduction to accrued compensation and a corresponding increase to stockholders’ equity upon issuance of the shares.

See also Note 6.

Related Party Transactions .

On February 28, 2026, the Company cancelled 5,000 shares of common stock following the forfeiture of the underlying award.

The cancelled shares were returned to the status of authorized and unissued common stock and the $ 22,250 value of the award was removed from unearned compensation.

In accordance with ASC 718, previously recorded stock compensation expense of $ 1,854 was removed from the consolidated statement of operations at the time of cancellation.

On March 6, 2026, the Company issued 588,249 shares of common stock pursuant to a conversion agreement with Daniel Thompson, the Company’s former Chairman of the Board, for which deferred compensation in the amount of $ 2,352,994 owed to Mr.

Thompson was cancelled.

The number of shares issued was determined based on the closing market price of the Company’s common stock of $4.00 on March 4, 2026.

The Company recorded a reduction to accrued compensation and a corresponding increase to stockholders’ equity upon issuance of the shares.

See also Note 6.

Related Party Transactions .

On March 19, 2026, the Company issued 19,614 shares of common stock to an investor relations service provider.

The Company recognized the fair value for the issuance of the 19,614 shares of $ 30,000 per the service agreement in settlement of stock compensation payable.

During the three months ended March 31, 2025, there were no additional

issuances of common stock except from the conversions of preferred stock noted above.

Share-based compensation

Share-based compensation expense is attributable to restricted common

stock awards granted to our non-employee independent directors as well as common or preferred stock issued to employees and service providers

for services rendered.

We recognize expense using a straight-line amortization method as reflected in general and administrative expense

in the condensed consolidated statement of operations.

Share-based compensation expense for the three months ended September 30, 2025

On January 31, 2024, the Company’s board

of directors and stockholders adopted the Cardiff Lexington Corporation 2024 Equity Incentive Plan (the “Plan”).

may be granted include incentive stock options, non-qualified stock options, stock appreciation rights, restricted awards, performance

share awards, and performance compensation awards.

In accordance with the annual evergreen provision of the Plan, the number of shares

available for issuance increased on January 1, 2026 to 1,606,718 .

Share-based compensation expense is attributable

to restricted common stock awards, stock option awards and preferred stock granted to non-employee independent directors, employees and

service providers for services rendered.

The Company recognizes expense using a straight-line amortization method as reflected in general

and administrative expense in the consolidated statement of operations.

Share-based compensation expense for the three months ended March

31, 2026 and 2025, was $ 664,196 and $ 0 , respectively.

Share-based compensation for the nine months ended September 30, 2025 and 2024 was $ 138,688

and $ 300,225 , respectively.

This expense includes share-based compensation expense related to the issuance of

shares to various service providers of $ 432,000 for which services were rendered and fully earned as well as to various employees for

restricted stock and options grants.

Generally, all forms of share-based payments,

including restricted stock grants, are measured at their fair value on the awards’ grant date, based on estimated number of awards

that are ultimately expected to vest.

Grant date fair value of restricted common stock and common stock awards is determined using the

Company’s closing share price on the grant date.

including stock option grants, warrants and restricted stock grants are measured at their fair value on the awards’ grant date,

based on the estimated number of awards that are ultimately expected to vest.

The Company has elected to account for forfeitures as they

occur and expense is recognized over the requisite service period.

Grant date fair value of restricted common stock and common stock awards

is determined using the Company’s closing share price on the grant date and the grant date fair value of stock options awarded is

determined using a Black-Scholes valuation model.

Grant date fair value of any preferred stock awards is determined utilizing a third-party

Total unearned stock-based compensation was $ 17,213 at September 30, 2025 as compared to $ 0 at September 30, 2024.

will be charged to expense and amortized on a straight-line basis during the fourth quarter of 2025 as well as the first and second quarters

A summary of non-vested restricted stock activity for the nine months

ended September 30, 2025 is presented as follows:

Summary of non-vested restricted stock activity

Non-vested Restricted Common Shares

Grant Date Fair Value

Balance at January 1, 2025

Balance at September 30, 2025

Non-Vested Common Stock

Share-based compensation expense of $ 116,383 and

$ 0 was recorded in the consolidated statement of operations for the three months ended March 31, 2026 and 2025, respectively.

13, 2026, the Company issued a restricted stock award for 62,500 shares of common stock.

Total unrecognized compensation cost related

to unvested awards was $ 331,938 and $ 0 as of March 31, 2026 and 2025, respectively, which is expected to be recognized over a weighted-average

period of 0.67 of a year.

Stock Options

On December 11, 2025, the Company granted stock options to purchase

90,002 shares of its common stock to certain employees and directors under the Plan.

Share-based compensation expense is recognized on

a straight-line basis over the requisite service period.

During the three months ended March 31, 2026, the Company recognized $ 115,813

in share-based compensation expense related to these options.

Total unrecognized compensation cost at March 31, 2026 is $ 231,626 and the

weighted-average remaining amortization period is 0.50 of a year.

During the fourth quarter of 2025, the Company

issued a three-year warrant to purchase 100,000 shares of common stock at $ 3.00 per share with an investor relations firm as part of a

service agreement which provides that the warrant is subject to vesting 30 days prior to the date that the Company’s common stock

is listed on a national securities exchange.

As of March 31, 2026, the listing had not occurred and was not considered probable yet based

on the status of the Company’s application and the remaining substantive listing requirements.

Accordingly, no fair value has been

calculated and no liability or equity instrument has been recognized related to the warrant as of March 31, 2026.

If the listing occurs

in a future period, the Company will recognize the warrant at its fair value on the date the listing becomes probable or is satisfied

with the corresponding impact recorded in equity.

See also Note 11.

Capital Stock .

In December 2025, the Company entered into a financing

arrangement pursuant to which it issued a twelve-month convertible promissory note with a principal amount of $ 50,000 , together with a

warrant to purchase 16,667 shares of common stock at $ 9.00 per share and 1,667 shares of common stock.

The Company concluded that the

note, warrant and common shares represent freestanding financial instruments issued as a single financing unit and, accordingly, allocated

the total transaction proceeds to each instrument based on their relative fair values.

The $1.72 per share fair value of the warrant was

estimated using a Black-Scholes option pricing model, and the fair value of the common shares was based on the quoted market price on

the issuance date.

The aggregate amount allocated to the warrant and common shares was recorded as a debt discount and is being amortized

to interest expense over the contractual term of the note.

See also Note 9.

Convertible Notes Payable and Note 11.

Capital Stock .

In December 2025, the Company entered into a financing

arrangement pursuant to which it issued a twelve-month convertible promissory note with a principal amount of $ 150,000 , together with

a warrant to purchase 50,000 shares of common stock at $ 9.00 per share and 5,000 shares of common stock.

The Company concluded that the

note, warrant and common shares represent freestanding financial instruments issued as a single financing unit and, accordingly, allocated

the total transaction proceeds to each instrument based on their relative fair values.

The $1.76 per share fair value of the warrant was

estimated using a Black-Scholes option pricing model, and the fair value of the common shares was based on the quoted market price on

the issuance date.

The aggregate amount allocated to the warrant and common shares was recorded as a debt discount and is being amortized

to interest expense over the contractual term of the note.

See also Note 9.

Convertible Notes Payable and Note 11.

Capital Stock .

Also, during December 2025, the Company issued

a three-year warrant to purchase 33,334 shares of common stock at $ 9.00 per share with an investor relations firm in connection with a

financing transaction that also included the issuance of a convertible promissory note and restricted common shares.

Upon funding of the

convertible promissory note in January 2026, the note, warrant and common shares issued were accounted for as a single financing unit

and, accordingly, the total transaction proceeds were allocated to each instrument based on their relative fair values.

The $5.00 per

share fair value of the warrant was estimated using a Black-Scholes option pricing model, and the fair value of the common shares was

based on the quoted market price on the issuance date.

The aggregate amount allocated to the warrant and common shares was recorded as

a debt discount and is being amortized to interest expense over the contractual term of the note.

See also Note 9.

Convertible Notes

Payable and Note 11.

Capital Stock .

On January 14, 2026, the Company issued a three-year

warrant to purchase 40,000 shares of common stock at $ 9.00 per share with an accredited investor in connection with a financing transaction

that also included the issuance of a convertible promissory note and restricted common shares.

Upon funding the convertible promissory

note on January 20, 2026, the note, warrant and common shares issued were accounted for as a single financing unit and, accordingly, the

total transaction proceeds were allocated to each instrument based on their relative fair values.

The $3.91 per share fair value of the

warrant was estimated using a Black-Scholes option pricing model, and the fair value of the common shares was based on the quoted market

price on the issuance date.

The aggregate amount allocated to the warrant and common shares was recorded as debt discount and is being

amortized to interest expense over the contractual term of the note.

See also Note 9.

Convertible Notes Payable and Note 11.

The table below sets forth warrant activity during

the nine months ended September 30, 2025 and 2024:

the three months ended March 31, 2026 and 2025:

Schedule of warrant activity

Balance at January 1, 2026

Balance at September 30, 2025

Warrants Exercisable at September 30, 2025

Balance at March 31, 2026

Warrants Exercisable at March 31, 2026

Balance at January 1, 2025

Balance at September 30, 2024

Warrants Exercisable at September 30, 2024

DISCONTINUED OPERATIONS

Net liabilities from discontinued operations on

the condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024 include residual liabilities related to the sale

of Platinum Tax which was sold in November 2023.

The $ 111,312 loss from discontinued operations presented in the condensed consolidated

statement of operations for the nine months ended September 30, 2024 is a part of the execution of a settlement reached in July 2022 with

six previous owners of Red Rock, an entity that was discontinued by the Company in May 2019.

As a result, the Company recognized the fair

value for the issuance of 37,104 shares at $ 3 per share on the closing market price of February 4 through February 6, 2024, and recorded

share loss from discontinued operations of $ 111,312 in the consolidated statement of operations.

Schedule of discontinued operations

Net liabilities of discontinued operations

September 30, 2025

December 31, 2024

Accounts payable and accrued expenses

Net liabilities of discontinued operations

$ ( 238,285 )

Nine Months Ended September 30,

Gain (Loss) from discontinued operations

Loss on settlement

$ ( 111,312 )

Loss from discontinued operations

$ ( 111,312 )

Balance at March 31, 2025

Warrants Exercisable at March 31, 2025

The Company reviews goodwill for impairment on

a reporting unit basis annually and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable.

During the nine months ended September 30, 2025 and 2024, the Company determined there were no triggering events which may suggest impairment

During the three months ended March 31, 2026 and 2025, the Company determined there were no triggering events which may suggest impairment

indicators were present.

14 unchanged sentences

not to recognize lease assets and liabilities for leases with a term of 12 months or less.

The Company leases twelve medical facilities and

one vehicle as operating leases as of September 30, 2025.

The Company recorded operating lease expenses of $ 112,832 and $ 126,831 for the

three months ended September 30, 2025 and 2024, respectively, and $ 347,350 and $ 327,008 for the nine months ended September 30, 2025 and

2024, respectively.

The Company leases eleven medical facilities and

one vehicle as operating leases as of March 31, 2026.

The Company recorded operating lease expenses of $ 96,500 and $ 119,071 for the three

months ended March 31, 2026 and 2025, respectively.

The Company has operating leases with future commitments

Schedule of operating leases with future commitments

October 2025 – September 2026

October 2026 – September 2027

April 2026 – March 2027

April 2027 – March 2028

Total Future Undiscounted Lease Payments

6 unchanged sentences

Weighted-average discount rate

Effective January 1, 2025, the Company entered

into an employment agreement with Alex Cunningham, the Company’s President and Chief Executive Officer.

Pursuant to the employment

agreement, Mr.

Cunningham is entitled to an initial base salary of $ 885,000 per year and is eligible for an annual bonus.

The base salary

shall be increased by a minimum of 10% per year beginning on January 1, 2026.

Cunningham’s base salary shall be automatically

and permanently increased by $100,000 upon the successful acquisition of certain companies in 2025.

His base salary will also be automatically

and permanently increased by $100,000 following the Company’s successful listing on Nasdaq and a corresponding $4 million dollar

capital raise beginning the month after the uplisting and commensurate close of the equity raise.

Cunningham is entitled to a one-time

performance bonus of $100,000 following the Company’s successful listing on Nasdaq with a corresponding $4 million dollar capital

Cunningham shall also earn a one-time performance bonus of $100,000 following each future successful acquisition.

that the Company is unable to pay his base salary or bonus in dollars, a portion of, or all compensation due to Mr.

Cunningham, may be

converted to a promissory note bearing an annual interest rate of 5.00% with interest to be paid quarterly.

In addition, effective as

of January 1, 2025, all past due amounts owed to Mr.

Cunningham shall earn interest at a rate of 5% with interest paid quarterly.

the year ended December 31, 2024, the Company agreed to pay $360,000 per year and $250,000 of targeted annual incentives to Mr.

based on his prior employment agreement and its related amendments since July 1, 2020, of which 75% was being paid in cash and 25% was

accrued as of December 31, 2024.

The total outstanding accrued compensation as of September 30, 2025 and December 31, 2024 was $ 2,215,500

which is included in, accrued expenses – related parties, in the condensed consolidated balance sheets as of September 30, 2025

and December 31, 2024.

The total interest accrued for the three and nine months ended September 30, 2025 was $ 27,921 and $ 82,854 respectively.

Effective July 15, 2020, the Company entered into

an employment agreement with Daniel Thompson, the Company’s Chairman, which was amended January 1, 2025.

Pursuant to the employment

agreement, Mr.

Thompson is entitled to a base salary of $360,000 per year through 2024 and $ 700,000 for calendar year 2025.

is eligible for an incentive annual bonus, for a one-time performance bonus of $200,000 following the Company’s successful listing

on Nasdaq with a corresponding $4 million dollar capital raise and for a one-time performance bonus of $250,000 upon the successful closing

of any acquisition in 2025.

Through calendar year 2024, Mr.

Thompson was also eligible to receive compensation in shares of preferred

stock in the event that the Company was unable to pay his base salary in dollars.

For calendar year 2025, in the event that the Company

is unable to pay his base salary or bonus in dollars, a portion of or all compensation due to Mr.

Thompson may be converted to a promissory

note bearing an annual interest rate of 5.00% with interest to be paid quarterly.

In addition, effective as of January 1, 2025, all past

due amounts owed to Mr.

Thompson shall earn interest at a rate of 5% with interest paid quarterly.

For the year ended December 31, 2024,

the Company agreed to pay $360,000 per year and $250,000 of targeted annual incentives to the Mr.

Thompson based on his employment agreement

and its related amendments since July 15, 2020, of which 56% was paid in cash and 44% was accrued at December 31, 2024.

In connection with separate employment agreements

and related addendums with Alex Cunningham, the Company’s Chairman, President and Chief Executive Officer, and Daniel Thompson,

the Company’s former Chairman, from time to time the Company accrued each of their respective compensation elements at their election

rather than pay them in cash to Accrued expenses - related parties in the Company’s consolidated balance sheet.

The total outstanding

accrued compensation as of September 30, 2025 and December 31, 2024 was $ 2,320,500 which is included in, accrued expenses – related

parties, in the condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024.

The total interest accrued for the

three and nine months ended September 30, 2025 was $ 29,245 and $ 86,780 , respectively.

On January 2, 2024, the Company entered into an

employment agreement with Matthew T.

Shafer, the Company’s Chief Financial Officer.

Pursuant to the employment agreement, Mr.

is entitled to an annual base salary of $ 228,000 , which may be increased from time to time, provided that the base salary shall increase

by a minimum of 10% after each of the first two years of service.

Accordingly, Mr.

Shafer’s base salary was increased to $250,800

effective as of January 1, 2025.

He is also eligible for consideration for a one-time achievement bonus equal to 35% of base salary within

sixty (60) days upon our company uplisting to a national securities exchange.

In addition, he is also eligible for an annual target bonus

equal to 25% of base salary based on the achievement of certain performance goals and annual stock option grants .

There was no outstanding

accrued compensation as of September 30, 2025 and December 31, 2024.

The Company entered into a management agreement

effective May 31, 2021 for compensation to the principals of Nova in the form of an annual base salaries of $ 372,000 to one of the three

doctors, $ 450,000 to the second, and $ 372,000 to the third doctor.

Collectively, as a group, such principals will receive an annual cash

bonus and stock equity set forth below, which will be conditioned upon the Company achieving 100% of the annual objectives of financial

performance goals as set forth below.

The Company did not record an accrual for the bonus for the nine months ended September 30, 2025

and the year ended December 31, 2024, as the financial performance objectives were not expected to be met.

Schedule of annual objectives of financial performance goals

Minimum Annual Nova EBITDA

Cash Annual Bonus

Series J Preferred Stock

120,000 Shares

135,000 Shares

150,000 Shares

180,000 Shares

210,000 Shares

accrued compensation as of March 31, 2026 and December 31, 2025 for Alex Cunningham was $ 121,688 and $ 2,163,000 , respectively, and for

Daniel Thompson was $ 58,333 and $ 2,237,167 , respectively, all of which is included in Accrued expenses – related parties in the

consolidated balance sheets as of March 31, 2026 and December 31, 2025, respectively.

The total interest accrued as of March 31, 2026

was $ 1,500 for Alex Cunningham and $ 184 for Daniel Thompson.

See also Note 6.

Related Parties and Note 8.

Notes and Loans Payable .

LEGAL PROCEEDINGS

3 unchanged sentences

and an adverse result in these or other matters may arise from time to time that may harm the Company’s business.

Management is

not currently aware of any such legal proceedings or claims that it believes will have a material adverse effect on the Company’s

business, financial condition, or operating results.

At September 30, 2025, the Company had federal

and state net operating loss carry forwards of approximately $ 21.2 million that expire in various years through the year 2040.

current period losses and carryforwards of past net operating losses, there is no provision for current federal or state income taxes

for the three and nine months ended September 30, 2025 and 2024.

Please refer to

Subsequent Events, for further detail.

At March 31, 2026, the Company had federal and

state net operating loss carry forwards of approximately $ 24.4 million that expire in various years through the year 2041.

Due to current

period losses and carryforwards of past net operating losses, there is no provision for current federal or state income taxes for the

three months ended March 31, 2026 and 2025.

The Company has not paid federal or state income

taxes as a result of its net losses and the availability of its net operating loss carryforwards.

The State of Nevada, the Company's state

of incorporation, does not impose a corporate income tax.

Florida, the state in which the Company's operating subsidiary conducts business,

imposes a corporate income tax at a rate of 5.5 %;

however, the Company has not been required to pay Florida income taxes due to its net

loss position and available net operating loss carryforwards.

The Company does not conduct any business outside the United States and

accordingly has no foreign income tax obligations.

Deferred income taxes reflect the net tax effects

6 unchanged sentences

The OBBBA, which was enacted on July 4, 2025, makes numerous tax changes.

does not expect the tax provisions of the OBBBA will have a material impact on the Company’s effective tax rate.

The tax provisions of

the OBBBA did not have a material impact on the Company’s effective tax rate and it also did not impact the Company’s net

deferred tax assets, as the Company continues to maintain a full valuation allowance against that balance.

SEGMENT REPORTING

As of September 30, 2025, the Company 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 March 31, 2026, the Company 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)

24 unchanged sentences

Schedule of revenues and net income from operations

September 30, 2025

March 31, 2026

December 31, 2025

1 unchanged sentence

Consolidated assets

Three Months Ended September 30,

Consolidated revenues

Cost of sales:

Consolidated cost of sales

Operating Expenses:

Depreciation expense

Selling, general and administrative

Total Healthcare

Corporate, administration and other expenses (a)

Consolidated operating expenses

Income (loss) from operations from subsidiaries:

Income from operations from subsidiaries

Loss from operations from Cardiff Lexington

( 1,000,224 )

Total income (loss) from operations

$ ( 585,160 )

Income (loss) before taxes

Corporate, administration and other non-operating expenses (b)

( 2,787,802 )

( 2,112,165 )

Consolidated loss from continuing operations

$ ( 1,144,299 )

$ ( 1,977,968 )

Nine Months Ended September 30,

Three Months Ended March 31,

Consolidated revenues

8 unchanged sentences

Consolidated operating expenses

Income (loss) from operations from subsidiaries:

(Loss) Income from operations from subsidiaries:

Income from operations from subsidiaries

1 unchanged sentence

( 1,625,021 )

( 2,255,914 )

Total income (loss) from operations

Total (loss) income from operations

$ ( 511,159 )

Income (loss) before taxes

(Loss) Income before taxes

Corporate, administration and other non-operating expenses (b)

7 unchanged sentences

SUBSEQUENT EVENTS

The Company has evaluated its operations subsequent to September 30,

2025 to the date these consolidated financial statements were available to be issued and determined the following subsequent event and

transaction required disclosure in these consolidated financial statements.

Effective October 1, 2025, the Company and Nova entered into amendment

4 to the purchase and security agreement with DML which further increased the maximum advance amount to $23,000,000 (See Note 7.

and Loan Payable ).

On October 31, 2025, the Company entered into a service agreement with

Greentree Financial Group, Inc.

(“Greentree”), pursuant to which the Company engaged Greentree to provide certain advisory

services relating to, among other things, the Company’s planned uplisting to a national securities exchange (the “Uplisting”).

As compensation for its services, Greentree shall receive (i) 50,000 shares of common stock, which were issued on November 3, 2025, (ii)

200,000 shares of common stock within two days after the Uplisting and (iii) a three-year warrant to purchase 100,000 shares of common

stock at an exercise price of $3.00 (subject to adjustments), which shall vest 30 days prior to the Uplisting, which was issued on October

The Company has evaluated its operations subsequent to March 31, 2026

to the date these consolidated financial statements were available to be issued and determined the following subsequent event and transaction

required disclosure in these consolidated financial statements.

Convertible Promissory Note

On April 8, 2026, the Company entered into a securities

purchase agreement with an accredited investor, pursuant to which the Company issued to such investor a convertible promissory note in

the principal amount of $268,889 with a $26,889 original issuance discount, $5,000 in associated legal fees and $7,000 for due diligence

costs, for total proceeds of $230,000.

This convertible promissory note carries a one-time interest charge of $32,267 (rate of twelve

percent (12%)) which is guaranteed at issuance.

This note matures on April 8, 2027.

The note may be converted at any time after issuance

at a variable conversion price equal to 60% of the lowest trading price of the Company’s common stock the ten trading days prior

to the conversion date.

The note also contains an ownership limitation, which provides that the Company shall not effect any conversion,

and a holder shall not have the right to convert, to the extent that after giving effect to the issuance of common stock upon such conversion,

such holder, together with its affiliates, would beneficially own in excess of 4.99% of the number of shares of common stock outstanding

immediately after giving effect to the issuance of common stock upon such conversion.

In accordance with ASC 815, the Company will analyze

the terms of the note to determine if there are any clauses that would require bifurcation of an embedded conversion option derivative.

If deemed necessary, a Monte Carlo valuation will be obtained from valuation specialists to fair value the derivative liability.

Additional Stock Issuances

On April 1, 2026, the Company issued an aggregate

of 4,175 shares of common stock in payment of accrued interest on convertible promissory notes outstanding as of March 31, 2026.

Also on April 1, 2026, the Company issued an aggregate

of 15,000 shares of common stock for the annual Director’s share grant award.

The award will vest in equal parts over the course

of four (4) quarters (i.e., January 1, April 1, July 1 and October 1) commencing on July 1, 2026.

On April 17, 2026, in accordance with an extension

of an agreement effective November 24, 2025, the Company issued 100,000 shares of common stock to the consulting service provider for

services to be rendered.

Legal Proceeding

On May 1, 2026, Daniel R.

Thompson, the Company’s

former Chairman of the Board and a significant stockholder, commenced a lawsuit against the Company by filing a complaint against it

in the Eighth Judicial District Court, Clark County, Nevada.

In the complaint, Mr.

Thompson alleges that he entered into an employment

agreement and addendum thereto with the Company.

He alleges that the Company failed to provide him with restricted preferred stock

and separation compensation allegedly owed to him under those agreements, and he alleges that the Company has improperly continued to

defer payment of accrued salary and other compensation he claims to be owed.

The complaint asserts claims for breach of contract, breach

of the implied covenant of good faith and fair dealing, and unjust enrichment.

Thompson alleges damages in an unspecified amount

in excess of $15,000 under each of those claims.

Thompson also seeks declaratory relief regarding compensation that he claims

to be owed and regarding the validity of a conversion agreement between him and the Company.

Pursuant to the conversion agreement,

Thompson agreed to cancel $2,352,994 in deferred compensation owed to him in exchange for receiving 588,249 shares of common stock

from the Company.

Thompson contends in the complaint that he revoked the conversion agreement or that it is otherwise

unenforceable and, in the alternative, seeks its reformation to provide that it was contingent on the successful uplisting of the Company’s

stock to the Nasdaq Stock Market.

The complaint also asserts a claim for accounting, seeking inspection of the Company’s books,

records, and accounts.

The complaint also seeks an award of attorneys’ fees and costs.

The Company intends to vigorously defend

Thompson's claims.

Although the Company believes it has meritorious defenses to those claims, the Company is unable to reasonably

estimate the potential loss or range of loss, if any, that may result from this matter because the case is in its preliminary stages

and the outcome of litigation is inherently uncertain.

It is possible that an adverse outcome could have a material adverse effect on

the Company’s business, financial condition, results of operations, cash flows, and prospects.

As of March 31, 2026, the Company

had accrued for all earned and undisputed obligations due to Mr.

Thompson within its consolidated balance sheets.

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 1. Financial Statements