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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2026-03-31 compared with 2025-03-31 · 779 added, 338 removed, 312 unchanged (78% of the section changed)

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December 31, 2025

Report of Independent Registered Public Accounting Firm - (Firm ID 587 )

Consolidated Balance Sheets as of December 31, 2024 and 2023

Consolidated Statements of Operations for the years ended December 31, 2024 and 2023

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2024 and 2023

Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023

Notes to Consolidated Financial Statements for the years ended December 31, 2024 and 2023

Report of Independent Registered Public Accounting Firm - (Firm ID 587 ) F-2

Consolidated Balance Sheets as of December 31, 2025 and 2024 F-4

Consolidated Statements of Operations for the years ended December 31, 2025 and 2024 F-5

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2025 and 2024 F-6

Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024 F-7

Notes to Consolidated Financial Statements for the years ended December 31, 2025 and 2024 F-8

Houston Office:

7915 FM 1960 West, Ste.

7915 FM 1960 West,

Houston, Texas 77070

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of ENDRA Life Sciences Inc.

and Subsidiaries (collectively, the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, shareholders’ equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes and schedules (collectively referred to as the “financial statements”).

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

The Company’s Ability to Continue as a Going Concern

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

As discussed in Note 2 to the accompanying consolidated financial statements, the Company has suffered recurring losses from operations, generated negative cash flows from operating activities, has an accumulated deficit and has stated that substantial doubt exists about Company’s ability to continue as a going concern.

Management’s evaluation of the events and conditions and management’s plans in regarding these matters are also described in Note 2.

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

We have audited the accompanying consolidated

balance sheets of ENDRA Life Sciences Inc.

and Subsidiaries (collectively, the “Company”) as of December 31, 2025 and 2024,

the related consolidated statements of operations, stockholders’ equity and cash flows for each of the two years in the period

ended December 31, 2025, and the related notes and schedules (collectively referred to as the “financial statements”).

our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December

31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025

and 2024 in conformity with accounting principles generally accepted in the United States of America.

The Company’s Ability to Continue as a Going

The accompanying consolidated financial statements

have been prepared assuming the Company will continue as a going concern.

As discussed in Note 2 to the accompanying consolidated financial

statements, the Company has suffered recurring losses from operations, generated negative cash flows from operating activities, has an

accumulated deficit and has stated that substantial doubt exists about Company’s ability to continue as a going concern.

evaluation of the events and conditions and management’s plans in regarding these matters are also described in Note 2.

The consolidated

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

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

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

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

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

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged

to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding

of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

We determined that there are no critical audit matters.

We have served as the Company’s auditor since 2015.

7915 FM 1960 West, Ste.

The critical audit matters

communicated below are matters arising from the current period audit of the financial statements that were communicated or required to

be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and

(2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in

any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below,

providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Crypto Assets Held

Critical Audit Matter

assets are generally accessible only by the possessor of the unique private key relating to the digital wallet or node in which the crypto

assets are held.

Accordingly, private keys must be safeguarded and secured in order to prevent an unauthorized party from accessing the

crypto assets within a digital wallet.

The Company primarily holds crypto assets for its own use in wallets.

The loss, theft, or otherwise

compromise of access to the private keys required to access the crypto assets could adversely affect the Company’s ability to access

the crypto assets within its environment.

This could result in loss of crypto assets held.

identified crypto assets held as a critical audit matter due to the nature and extent of audit effort required to obtain sufficient appropriate

audit evidence to address the risks of material misstatement related to the existence and rights & obligations of crypto assets in

The nature and extent of audit effort required to address the matter includes significant involvement of more experienced

engagement team members related to the matter.

How the Critical Audit

Matter Was Addressed in the Audit

audit procedures related to crypto assets held in wallet included the following, among others:

We noted the controls within the Company’s private key management process including controls related

to physical access, key generation, and segregation of duties across the processes.

We tested the effectiveness of management’s reconciliation control of internal books and records

to external blockchains.

We independently obtained evidence from public blockchains to test the existence of crypto asset balances.

We obtained confirmation from Custodian confirming the number of tokens held in the wallet as on the reporting

We obtained evidence that management has control of the private keys required to access crypto assets

held through observing the wallets signed in using selected private keys or through observing the movement of selected crypto asset transactions.

We evaluated the reliability of audit evidence obtained from public blockchain

We applied auditor judgment in determining the

nature and extent of audit evidence required, especially related to assessing the existence of the digital assets and whether the Company

controls the digital assets.

We evaluated the sufficiency and appropriateness of audit evidence obtained by assessing the results of procedures

performed over the digital assets.

We have served as the Company’s auditor

Houston, Texas

March 31, 2026

PCAOB ID Number 587

ENDRA Life Sciences Inc.

Consolidated Balance Sheets

Consolidated Balance

Current Assets

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Prepaid expenses, long term

Digital Assets

Liabilities and Stockholders’ Equity

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Long Term Debt

Loans, long term

Lease liabilities

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Total Liabilities

and Contingencies

Stockholders’ Equity

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Total Liabilities and Stockholders’ Equity

The accompanying notes are an integral part of these consolidated financial statements.

The accompanying notes are an integral part of

these consolidated financial statements.

ENDRA Life Sciences Inc.

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Other (expenses) income

Digital asset staking compensation

Change in fair value of digital assets

Warrant expense

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Total other expenses

( 1,264,309 )

Loss from operations before income taxes

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Net loss per share – basic and diluted

$ ( 2,766.85 )

Weighted average common shares – basic and diluted

The accompanying notes are an integral part of these consolidated financial statements.

The accompanying notes are an integral part of

these consolidated financial statements.

ENDRA Life Sciences Inc.

Consolidated Statements of Stockholders’ Equity

Year Ended December 31, 2023

Series A Convertible

Series B Convertible

Consolidated Statements of Stockholders’

Preferred Stock

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Stockholders’

Paid in Capital

Stock Payable

December 31, 2023

Balance as of December 31, 2023

$ ( 91,930,152 )

Common stock issued for cash, net of funding costs

Preferred Stock conversion To Common Stock

Common Stock issued for Cash

Common Stock issued for Warrant Exercise

Warrants issued for cash, net of funding costs

Common Stock issued for Cashless Warrant Exercise

Fair value of vested Common Stock

Fair value of vested Stock Options

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$ 105,998,412

Year Ended December 31, 2024

Series A Convertible

Series B Convertible

$ ( 103,438,099 )

Preferred Stock

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Stockholders’

Paid in Capital

Stock Payable

Year Ended December 31, 2025

Balance as of December 31, 2024

$ 105,998,412

Preferred stock conversion to common stock

$ ( 103,438,099 )

Common stock issued for cash

Common stock issued for warrant exercise

Common stock issued for cashless warrant exercise

Fair value of vested common stock

Fair value of vested stock options

Stock payable towards preference dividend

Common stock issued for fundraising

Fair value of vested advisory warrant

Fair value of

vested stock options

Fair value of vested restricted stock units

( 7,027,410 )

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$ ( 110,465,509 )

The accompanying notes are an integral part of these consolidated financial statements.

The accompanying notes are an integral

part of these consolidated financial statements.

ENDRA Life Sciences Inc.

Consolidated Statements of Cash Flows

Consolidated Statements

of Cash Flows

Cash Flows from Operating Activities

December 31, 2024

December 31, 2023

$ ( 7,027,410 )

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Amortization of right of use assets

Fair value of vested advisory warrant

Digital asset staking compensation

Changes in fair value of digital assets

Warrant Expense

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Changes in operating assets and liabilities:

Decrease in prepaid expenses

Decrease/(increase) in prepaid expenses

Decrease in inventory

Decrease in accounts payable and accrued liabilities

Increase/(decrease) in accounts payable and accrued liabilities

Decrease in lease liability

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Proceeds from sale of fixed assets

Purchase of Digital Intangible Assets

( 3,000,000 )

Net cash used in investing activities

( 3,017,280 )

Cash Flows from Financing Activities

Proceeds from issuance of common stock

Proceeds from warrant issuances and exercises

Proceeds from fundraising activities

Proceeds from issuance of common stock for cash

Proceeds from issuance of common stock for cashless warrant exercise -

Repayment of loan

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Cashless warrants

The accompanying notes are an integral part of these consolidated financial statements.

The accompanying notes are an integral part of

these consolidated financial statements.

ENDRA Life Sciences Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2024 and 2023

Notes to Consolidated

Financial Statements

For the years ended December

31, 2025 and 2024

Note 1 - Nature of the Business

ENDRA Life Sciences Inc.

(“ENDRA” or the “Company”) is designing a medical device for accurate liver fat measurement for use in metabolic disease detection and management and GLP-1 drug eligibility and management in circumstances where other technologies are unavailable or impractical.

or the “Company”) is designing a medical device for accurate liver fat measurement for use in metabolic disease detection

and management and GLP-1 drug eligibility and management in circumstances where other technologies are unavailable or impractical.

In 2025, the Company expanded its business strategy

to include a Digital Asset Treasury (“DAT”) initiative, managed in collaboration with Arca Investment Management (“Arca”),

which seeks to optimize capital preservation and generate non-dilutive returns through investments in decentralized finance (“DeFi”)

This financial strategy operates in tandem with the Company’s core medical technology mission:

the commercialization of

the TAEUS platform via a recurring subscription model, with a specific focus on the burgeoning GLP-1 and metabolic disease markets.

ENDRA was incorporated on July 18, 2007 as a Delaware corporation.

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Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.

The preparation of the financial statements in

conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that

affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements

and the reported amounts of expenses during the reporting period.

Actual results could differ from those estimates.

Management makes estimates that affect certain accounts including inventory reserve, deferred income tax assets, accrued expenses, fair value of equity instruments, fair value of warrant liability and reserves for any other commitments or contingencies.

Any adjustments applied to estimates are recognized in the period in which such adjustments are determined.

Management makes estimates that affect certain

accounts including inventory reserve, deferred income tax assets, accrued expenses, fair value of equity instruments, fair value of warrant

liability and reserves for any other commitments or contingencies.

Any adjustments applied to estimates are recognized in the period in

which such adjustments are determined.

Principles of Consolidation

The Company’s consolidated financial statements include all accounts of the Company and its consolidated subsidiaries and/or entities as of reporting period ending date(s) and for the reporting period(s) then ended.

The Company’s consolidated financial statements

include all accounts of the Company and its consolidated subsidiaries and/or entities as of reporting period ending date(s) and for the

reporting period(s) then ended.

All inter-company balances and transactions have been eliminated.

Basis of Presentation

The financial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

These financial statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States.

The financial statements and related disclosures

have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

These financial

statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”)

of the United States.

Cash and Cash Equivalents

The Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit, and other highly liquid investments with maturities of one year or less, when purchased, to be cash.

Cash equivalents include investments in an institutional money market fund, which invests in U.S.

The Company considers all cash on hand and in

banks, including accounts in book overdraft positions, certificates of deposit, and other highly liquid investments with maturities of

one year or less, when purchased, to be cash.

Cash equivalents include investments in an institutional money market fund, which invests

Treasury bills, notes and bonds, and/or repurchase agreements, backed by such obligations.

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The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits.

The Company has not experienced any losses in such accounts and periodically evaluates the creditworthiness of the financial institutions and has determined the credit exposure to be negligible.

The Company maintains cash deposits at multiple banks to mitigate the risk associated with a failure of any specific bank.

The Company’s inventory is stated at the lower of cost or estimated net realizable value, with cost primarily determined on a weighted-average cost basis on the first-in, first-out method.

The Company has not experienced

any losses in such accounts and periodically evaluates the creditworthiness of the financial institutions and has determined the credit

exposure to be negligible.

The Company maintains cash deposits at multiple banks to mitigate the risk associated with a failure of any

specific bank.

The Company’s inventory is stated at the

lower of cost or estimated net realizable value, with cost primarily determined on a weighted-average cost basis on the first-in, first-out

The Company periodically determines whether a reserve should be taken for devaluation or obsolescence of inventory.

In 2024, The Company determined that it needed to redesign its system so that it requires less space, is simpler to use and is more cost effective.

Based on this, the Company performed a thorough assessment of the valuation of inventory as of December 31, 2024 and reserved 100 % of the inventory.

This reserve totaled $ 2,525,179 as of December 31, 2024.

In 2024, The Company determined that it needed

to redesign its system so that it requires less space, is simpler to use and is more cost effective.

Based on this, the Company performed

a thorough assessment of the valuation of inventory as of December 31, 2024 and reserved 100 % of the inventory.

This reserve totaled $ 2,525,179

as of December 31, 2024.

Our reserve was 5 % of inventory, or $ 138,045 as of December 31, 2023.

Capitalization of Fixed Assets

The Company capitalizes expenditures related to property and equipment, subject to a minimum rule, that have a useful life greater than one year for:

The Company capitalizes expenditures related to

property and equipment, subject to a minimum rule, that have a useful life greater than one year for:

(1) assets purchased;

(2) existing assets that are replaced, improved or the useful lives have been extended;

assets that are replaced, improved or the useful lives have been extended;

or (3) all land, regardless of cost.

Acquisitions of new assets, additions, replacements and improvements (other than land) costing less than the minimum rule in addition to maintenance and repair costs, including any planned major maintenance activities, are expensed as incurred.

Accounting Standards Update (“ASU”) No.

2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months.

A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest period presented in the financial statements.

At December 31, 2024 and 2023 the Company recorded a right of use asset of $ 578,013 and $ 354,091 , respectively.

At December 31, 2024 and 2023 the Company recorded a lease liability of $ 584,419 and $ 365,919 , respectively.

Acquisitions of new assets,

additions, replacements and improvements (other than land) costing less than the minimum rule in addition to maintenance and repair costs,

including any planned major maintenance activities, are expensed as incurred.

Accounting Standards Update (“ASU”)

2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with

terms longer than 12 months.

A modified retrospective transition approach is required for lessees for capital and operating leases existing

at, or entered into after, the beginning of the earliest period presented in the financial statements.

At December 31, 2025 and 2024 the

Company recorded a right of use asset of $ 461,949 and $ 578,013 , respectively.

At December 31, 2025 and 2024 the Company recorded a lease

liability of $ 492,352 and $ 584,419 , respectively.

Digital Assets

The Company maintains a digital asset treasury strategy (“DAT

Strategy”) under which it may acquire, hold, and deploy certain digital assets as part of its treasury and capital management activities.

The Company’s digital assets consist primarily of [Bitcoin/Ethereum/other], which are recorded on the consolidated balance sheets

as “Digital assets.”

Measurement of Digital Assets

Digital assets are accounted for as indefinite-lived intangible assets

and, effective January 1, 2025, are measured at fair value in accordance with ASC 350-60, Intangibles—Goodwill and Other—Crypto

The Company determines the fair value of its digital assets based on quoted market prices in active markets (Level 1 inputs)

as of the reporting date.

Changes in the fair value of digital assets are recognized in the consolidated

statements of operations within “Change in fair value of digital assets.” Realized gains and losses from the sale of digital

assets are also recorded within this line item.

Transaction costs associated with the acquisition or disposition of digital assets are

expensed as incurred within operating expenses.

Digital Asset Staking

The Company may participate in staking activities whereby it validates

transactions on blockchain networks and earns rewards in the form of additional digital assets.

Digital asset staking rewards are recognized as revenue within “Digital

asset staking compensation” in the consolidated statements of operations when the Company has (i) performed the required validation

services, (ii) earned the right to receive the rewards, and (iii) the amount can be reasonably estimated.

Staking rewards are measured

at the fair value of the digital assets received at the time they are earned.

Digital assets received from staking activities are initially recorded

at fair value and subsequently included in the Company’s digital asset holdings, where they are remeasured at fair value at each

reporting period.

Custody and Safeguarding

The Company utilizes third-party custodians to safeguard its digital

The Company recognizes digital assets on its balance sheet when it has control over the assets, including when assets are held

by a custodian on the Company’s behalf.

Digital assets are classified as noncurrent assets on the consolidated

balance sheets unless management intends to sell them within one year.

Changes in fair value and staking compensation are presented separately

within operating income (loss), unless otherwise required by the nature of the Company’s operations.

Revenue Recognition

2014-09, “Revenue from Contracts with Customers” (“ASC Topic 606”) provides a single set of guidelines for revenue recognition to be used across all industries and requires additional disclosures.

The updated guidance introduces a five-step model to achieve its core principle of the entity recognizing revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Under ASC Topic 606, in order to recognize revenue, the Company is required to identify an approved contract with commitments to perform respective obligations, identify rights of each party in the transaction regarding goods to be transferred, identify the payment terms for the goods transferred, verify that the contract has commercial substance and verify that collection of substantially all consideration is probable.

The adoption of ASC Topic 606 did not have an impact on the Company’s operations or cash flows.

2014-09, “Revenue from Contracts

with Customers” (“ASC Topic 606”) provides a single set of guidelines for revenue recognition to be used across all

industries and requires additional disclosures.

The updated guidance introduces a five-step model to achieve its core principle of the

entity recognizing revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which

the entity expects to be entitled in exchange for those goods or services.

Under ASC Topic 606, in order to recognize revenue,

the Company is required to identify an approved contract with commitments to perform respective obligations, identify rights of each party

in the transaction regarding goods to be transferred, identify the payment terms for the goods transferred, verify that the contract has

commercial substance and verify that collection of substantially all consideration is probable.

Research and Development Costs

The Company follows FASB Accounting Standards Codification (“ASC”) Subtopic 730-10, “Research and Development”.

Research and development costs are charged to the statement of operations as incurred.

During the years ended December 31, 2024 and 2023, the Company incurred $ 3,190,293 and $ 5,003,695 of expenses related to research and development costs, respectively.

The Company follows FASB Accounting Standards

Codification (“ASC”) Subtopic 730-10, “Research and Development”.

Research and development costs are charged to

the statement of operations as incurred.

During the years ended December 31, 2025 and 2024, the Company incurred $ 1,849,996 and $ 3,190,293

of expenses related to research and development costs, respectively.

Net Earnings (Loss) Per Common Share

The Company computes earnings per share under ASC Subtopic 260-10, “Earnings Per Share”.

Basic earnings (loss) per share is computed by dividing the net income (loss) attributable to the common stockholders (the numerator) by the weighted average number of shares of common stock outstanding (the denominator) during the reporting periods.

Diluted loss per share is computed by increasing the denominator by the weighted average number of additional shares that could have been outstanding from securities convertible into common stock (using the “treasury stock” method), unless their effect on net loss per share is anti-dilutive.

There were 180,986 and 788 potentially dilutive shares, which include outstanding common stock options, and warrants, as of December 31, 2024 and 2023, respectively.

The Company computes earnings per share under

ASC Subtopic 260-10, “Earnings Per Share”.

Basic earnings (loss) per share is computed by dividing the net income (loss) attributable

to the common stockholders (the numerator) by the weighted average number of shares of common stock outstanding (the denominator) during

the reporting periods.

Diluted loss per share is computed by increasing the denominator by the weighted average number of additional shares

that could have been outstanding from securities convertible into common stock (using the “treasury stock” method), unless

their effect on net loss per share is anti-dilutive.

There were 2,626,254 and 180,986 potentially dilutive shares, which include outstanding

common stock options, and warrants, as of December 31, 2025 and 2024, respectively.

Options to purchase common stock

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Shares issuable upon conversion of Series A Convertible Preferred Stock

Restricted Stock Units

Potential equivalent shares excluded

Fair Value Measurements

Disclosures about fair value of financial instruments require disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value.

In accordance with ASC Topic 820, “Fair Value Measurements and Disclosures,” the Company measures certain financial instruments at fair value on a recurring basis.

ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Disclosures about fair value of financial instruments

require disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate

In accordance with ASC Topic 820, “Fair

Value Measurements and Disclosures,” the Company measures certain financial instruments at fair value on a recurring basis.

Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted

in the United States, and expands disclosures about fair value measurements.

Fair value is defined as the price that would

be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement

ASC Topic 820 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The hierarchy

gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and

the lowest priority to unobservable inputs (Level 3 measurements).

These tiers include:

Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The carrying amounts of the Company’s financial assets and liabilities, including cash, accounts receivable, prepaid expenses, accounts payable, accrued expenses, and other current liabilities, approximate their fair values because of the short maturity of these instruments.

The fair value of options and warrants is estimated using the Black-Scholes option pricing model or other appropriate valuation techniques.

Key assumptions include expected volatility, risk-free interest rate, expected term, and dividend yield.

These inputs are based on observable market data where available (Level 2) or, when necessary, management’s estimates (Level 3).

Fair value measurements are reassessed at each reporting date, and any changes are reflected in the financial statements.

● Level 1, defined as observable inputs such as quoted prices

for identical instruments in active markets;

● Level 2, defined as inputs other than quoted prices in active

markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices

for identical or similar instruments in markets that are not active;

● Level 3, defined as unobservable inputs in which little or

no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques

in which one or more significant inputs or significant value drivers are unobservable.

Financial assets are considered Level 3 when their

fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant

model assumption or input is unobservable.

The carrying amounts of the Company’s financial

assets and liabilities, including cash, accounts receivable, prepaid expenses, accounts payable, accrued expenses, and other current liabilities,

approximate their fair values because of the short maturity of these instruments.

The fair value of options and warrants is estimated

using the Black-Scholes option pricing model or other appropriate valuation techniques.

Key assumptions include expected volatility, risk-free

interest rate, expected term, and dividend yield.

These inputs are based on observable market data where available (Level 2) or, when

necessary, management’s estimates (Level 3).

Fair value measurements are reassessed at each reporting date, and any changes are

reflected in the financial statements.

Share-based Compensation

The Company’s 2016 Omnibus Incentive Plan (the “Omnibus Plan”) permits the grant of stock options and other share-based awards to its employees, consultants and non-employee members of the board of directors.

Each January 1 the pool of shares available for issuance under the Omnibus Plan automatically increases by an amount equal to the lesser of (i) the number of shares necessary such that the aggregate number of shares available under the Omnibus Plan equals 25% of the number of fully-diluted outstanding shares on the increase date (assuming the conversion of all outstanding shares of preferred stock and other outstanding convertible securities and exercise of all outstanding options and warrants to purchase shares) and (ii) if the board of directors takes action to set a lower amount, the amount determined by the board.

Effective January 1, 2025, the pool of shares issuable under the Omnibus Plan automatically increased by 178,033 shares from 1,738 shares to 179,771 shares .

The Company records share-based compensation in accordance with the provisions of the Share-based Compensation Topic of the FASB Codification.

The guidance requires the use of option-pricing models that require the input of highly subjective assumptions, including the option’s expected life and the price volatility of the underlying stock.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option valuation model, and the resulting charge is expensed using the straight-line attribution method over the vesting period.

Stock compensation expense recognized during the period is based on the value of share-based awards that were expected to vest during the period adjusted for estimated forfeitures.

The estimated fair value of grants of stock options and warrants to non-employees of the Company is charged to expense, if applicable, in the financial statements.

These options vest in the same manner as the employee options granted under the stock incentive plan as described above.

Accounting guidance requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The Company has limited historical experience with forfeitures and were based on management’s estimates.

The Company’s 2016 Omnibus Incentive Plan

(the “Omnibus Plan”) permits the grant of stock options and other share-based awards to its employees, consultants and non-employee

members of the board of directors.

Each January 1 the pool of shares available for issuance under the Omnibus Plan automatically increases

by an amount equal to the lesser of (i) the number of shares necessary such that the aggregate number of shares available under the Omnibus

Plan equals 25% of the number of fully-diluted outstanding shares on the increase date (assuming the conversion of all outstanding shares

of preferred stock and other outstanding convertible securities and exercise of all outstanding options and warrants to purchase shares)

and (ii) if the board of directors takes action to set a lower amount, the amount determined by the board.

On January 1, 2025, the pool

of shares issuable under the Omnibus Plan automatically increased by 178,033 .

In addition, on December 9, 2025, the stockholders of ENDRA

Life Sciences Inc.

(the “Company”) approved the Second Amendment to the Company’s 2016 Omnibus Incentive Plan (the “Omnibus

Plan Amendment”) at the 2025 Annual Meeting of the Company’s Stockholders (the “Annual Meeting”).

That Amendment

increased the pool of shares available for issuance by 3,200,000 shares of common stock.

Due to these increases, the pool of shares issuable

under the Omnibus Plan shares increased from from 1,738 shares to 3,379,771 shares as of December 31, 2025.

As of December 31, 2024, prior

to such increase, there were 1,441 shares of common stock remaining available for issuance under the Omnibus Plan.

The Company records share-based compensation in

accordance with the provisions of the Share-based Compensation Topic of the FASB Codification.

The guidance requires the use of option-pricing

models that require the input of highly subjective assumptions, including the option’s expected life and the price volatility of the underlying stock.

The fair value

of each option grant is estimated on the date of grant using the Black-Scholes option valuation model, and the resulting charge is expensed

using the straight-line attribution method over the vesting period.

Stock compensation expense recognized during

the period is based on the value of share-based awards that were expected to vest during the period adjusted for estimated forfeitures.

The estimated fair value of grants of stock options and warrants to non-employees of the Company is charged to expense, if applicable,

in the financial statements.

These options vest in the same manner as the employee options granted under the stock incentive plan as

described above.

Accounting guidance requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent

periods if actual forfeitures differ from those estimates.

The Company has limited historical experience with forfeitures and were based

on management’s estimates.

Going Concern

The Company’s financial statements are prepared using accounting principles generally accepted in the United States (“U.S.

GAAP”) applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

The Company has limited commercial experience and had a cumulative net loss from inception to December 31, 2024 of $ 103,438,099 .

The Company’s financial statements are prepared

using accounting principles generally accepted in the United States (“U.S.

GAAP”) applicable to a going concern, which contemplates

the realization of assets and liquidation of liabilities in the normal course of business.

The Company has limited commercial experience

and had a cumulative net loss from inception to December 31, 2025 of $ 110,465,509 .

The Company had working capital of $ 217,013 as of December

The Company has not established an ongoing source of revenue sufficient to cover its operating costs and to allow it to continue as a going concern and will require additional financing to fund its future planned operations, including research and development and commercialization of its products.

The Company has not established an ongoing source of revenue sufficient to cover its operating costs and to allow it to continue

as a going concern and will require additional financing to fund its future planned operations, including research and development and

commercialization of its products.

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

The accompanying financial statements for the year ended December 31, 2024 have been prepared assuming the Company will continue as a going concern, but the ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it establishes a revenue stream and becomes profitable.

Management’s plans to continue as a going concern include raising additional capital through sales of equity securities and borrowing.

However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

If the Company is not able to obtain the necessary additional financing on a timely basis, the Company will be required to delay, reduce the scope of, or eliminate one or more of the Company’s research and development activities or commercialization efforts or perhaps even cease the operation of its business.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully secure other sources of financing and attain profitable operations.

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

The accompanying financial statements for the year ended December 31, 2025 have been prepared assuming the Company will continue as a

going concern, but the ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to

fund operating losses until it establishes a revenue stream and becomes profitable.

Management’s plans to continue as a going concern

include raising additional capital through sales of equity securities and borrowing.

However, management cannot provide any assurances

that the Company will be successful in accomplishing any of its plans.

If the Company is not able to obtain the necessary additional financing

on a timely basis, the Company will be required to delay, reduce the scope of, or eliminate one or more of the Company’s research

and development activities or commercialization efforts or perhaps even cease the operation of its business.

The ability of the Company

to continue as a going concern is dependent upon its ability to successfully secure other sources of financing and attain profitable operations.

The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to

continue as a going concern.

Recent Accounting Pronouncements

The Company considered recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC, did not or in management’s opinion will not have a material impact on the Company’s present or future consolidated financial statements.

The Company considered recent accounting pronouncements

issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC, did

not or in management’s opinion will not have a material impact on the Company’s present or future consolidated financial statements.

Note 3 - Inventory

As of December 31, 2024 and 2023, inventory consisted of raw materials, subassemblies to be used in the assembly of TAEUS systems, and finished goods.

As of December 31, 2024, the Company had no orders pending for the sale of a TAEUS system.

As of December 31, 2024 and 2023, the Company had recorded inventory reserves totaling $ 2,525,179 and $ 138,045 , respectively.

As of December 31, 2024 and 2023, the Company had inventory valued at $ 0 and $ 2,622,865 , respectively.

As of December 31, 2025 and 2024, inventory consisted

of raw materials, subassemblies to be used in the assembly of TAEUS systems, and finished goods.

As of December 31, 2025 and 2024, the

Company had no orders pending for the sale of a TAEUS system.

As of December 31, 2025 and 2024, the Company had recorded inventory

reserves totaling $ 0 and $ 2,525,179 , respectively.

As of December 31, 2025 and 2024, the Company had inventory valued

at $ 0 and $ 0 , respectively.

Note 4 - Fixed Assets

6 unchanged sentences

Note 5 - Accounts Payable and Accrued Liabilities

As of December 31, 2024 and 2023, current liabilities consisted of the following:

As of December 31, 2025 and 2024, current liabilities consisted of

the following:

Accounts payable

Accrued payroll

Accrued bonuses

Accrued employee benefits

Insurance premium financing

Insurance premium financing and other accruals

Note 6 - Bank Loans

Toronto-Dominion Bank Loan

On April 27, 2020, the Company entered into a commitment loan with TD Bank under the Canadian Emergency Business Account, in the principal aggregate amount of CAD 40,000 , due and payable upon the expiration of the initial term on December 31, 2022, which was later extended to December 31, 2023 .

This note bears interest on the unpaid balance at the rate of zero percent ( 0 %) per annum during the initial term.

Under this note no interest payments are due until January 1, 2024.

Under the conditions of the loan, twenty-five percent (25%) of the loan will be forgiven if seventy-five percent (75%) is repaid prior to the initial term date .

On April 27, 2020, the Company entered into a

commitment loan with TD Bank under the Canadian Emergency Business Account, in the principal aggregate amount of CAD 40,000 , due and payable

upon the expiration of the initial term on December 31, 2022, which was later extended to December 31, 2023.

This note bears interest

on the unpaid balance at the rate of zero percent ( 0 %) per annum during the initial term.

Under this note no interest payments are due

until January 1, 2024.

Under the conditions of the loan, twenty-five percent (25%) of the loan will be forgiven if seventy-five percent

(75%) is repaid prior to the initial term date.

As of December 31, 2023, the loan had a balance of CAD 40,000 .

The loan was fully repaid in 2024.

The loan was fully repaid

Note 7 - Capital Stock

Reverse Stock Splits

On August 16, 2024, the Company filed with the Secretary of State of the State of Delaware a certificate of amendment to its certificate of incorporation, which effectuated as of August 20, 2024 at 12:01 a.m.

Eastern Time a reverse split of the Company’s common stock by a ratio of one-for-50 (the “August 2024 Reverse Stock Split”).

On November 4, 2024, the Company filed with the Secretary of State of the State of Delaware a certificate of amendment to its certificate of incorporation, which effectuated as of November 7, 2024 at 12:01 a.m.

Eastern Time a reverse split of the Company’s common stock by a ratio of one-for-35 (the “November 2024 Reverse Stock Split”).

All per share amounts (including exercise prices) and number of shares in the consolidated financial statements and related notes have been retroactively restated to reflect both the August 2024 Reverse Stock Split and the November 2024 Reverse Stock Split.

The August 2024 Reverse Stock Split and the November 2024 Reverse Stock Split resulted in a proportionate adjustment to the per share conversion or exercise price and the number of shares of common stock issuable upon the conversion or exercise of outstanding preferred stock, stock options and warrants, as well as the number of shares of common stock eligible for issuance under the Omnibus Plan.

On August 16, 2024, the Company filed with the

Secretary of State of the State of Delaware a certificate of amendment to its certificate of incorporation, which effectuated as of August

20, 2024 at 12:01 a.m.

Eastern Time a reverse split of the Company’s common stock by a ratio of one-for-50 (the “August 2024

Reverse Stock Split”).

On November 4, 2024, the Company filed with the

Secretary of State of the State of Delaware a certificate of amendment to its certificate of incorporation, which effectuated as of November

7, 2024 at 12:01 a.m.

Eastern Time a reverse split of the Company’s common stock by a ratio of one-for-35 (the “November 2024

Reverse Stock Split”).

All per share amounts (including exercise prices)

and number of shares in the consolidated financial statements and related notes have been retroactively restated to reflect both the August

2024 Reverse Stock Split and the November 2024 Reverse Stock Split.

The August 2024 Reverse Stock Split and the November

2024 Reverse Stock Split resulted in a proportionate adjustment to the per share conversion or exercise price and the number of shares

of common stock issuable upon the conversion or exercise of outstanding preferred stock, stock options and warrants, as well as the number

of shares of common stock eligible for issuance under the Omnibus Plan.

Capital Stock

At December 31, 2024, the authorized capital of the Company consisted of 30,000,000 shares of capital stock, comprised of 20,000,000 shares of common stock with a par value of $ 0.0001 per share, and 10,000,000 shares of preferred stock with a par value of $ 0.0001 per share.

The Company has designated 10,000 shares of its preferred stock as Series A Convertible Preferred Stock (“Series A Preferred Stock”), 1,000 shares of its preferred stock as Series B Convertible Preferred Stock (“Series B Preferred Stock”), 100,000 shares of its preferred stock as Series C Preferred Stock, and the remainder of the 9,889,000 preferred shares remain authorized but undesignated.

As of December 31, 2024, there were 536,908 shares of common stock (which excludes both the 69 unvested shares of restricted stock described in Note 8 below, the 1 share of common stock into which the outstanding shares of Series A Preferred Stock are convertible and does include 12,857 shares of common stock due to exercise of warrants), 17 .488 shares of Series A Preferred Stock, and no shares of Series B Preferred Stock or Series C Preferred Stock issued and outstanding, and a stock payable balance of $ 0 .

During the year ended December 31, 2024, the Company issued a total of 530,971 shares of its common stock, as follows:

Registered offering (described below):

At December 31, 2025, the authorized capital of

the Company consisted of 1,010,000,000 shares of capital stock, comprised of 1,000,000,000 shares of common stock with a par value of

$ 0.0001 per share, and 10,000,000 shares of preferred stock with a par value of $ 0.0001 per share.

The Company has designated 10,000 shares

of its preferred stock as Series A Convertible Preferred Stock (“Series A Preferred Stock”), 1,000 shares of its preferred

stock as Series B Convertible Preferred Stock (“Series B Preferred Stock”), 100,000 shares of its preferred stock as Series

C Preferred Stock, and the remainder of the 9,889,000 preferred shares remain authorized but undesignated.

As of December 31, 2025, there were 1,176,477

shares of common stock (which excludes both the 69 unvested shares of restricted stock described in Note 8 below, the 1 share of common

stock into which the outstanding shares of Series A Preferred Stock are convertible and does include 12,857 shares of common stock due

to exercise of warrants and 6 shares issued but held in treasury), 17.488 shares of Series A Preferred Stock, and no shares of Series

B Preferred Stock or Series C Preferred Stock issued and outstanding, and a stock payable balance of $ 0 .

During the year ended December 31, 2025, the Company issued a total

of 639,569 shares of its common stock, as follows:

Private Placement offering (described below):

● 379,539 shares of its common stock (along with 364,801 Prefunded Warrants and 1,488,680 Warrants) in return for aggregate net proceeds

of $ 4,514,482 ;

Other issuances:

● 249,994 shares of its common stock in return for aggregate net proceeds of $ 1,152,682 under the February 2024 ATM Agreement

● 10,036 shares of its common stock in return for aggregate net proceeds of $ 65,559 under the February 2024 ATM Agreement

During the year ended December 31, 2024, the Company issued a total

of 530,971 shares of its common stock, as follows:

Private placement (described below):

● 3,490 shares of its common stock in return for aggregate net proceeds of $ 728,503 under the Placement Agreement;

31,666 shares of its common stock upon exercise of pre-funded warrants for aggregate net proceeds of $ 6,609,831 under the Placement Agreement (includes net proceeds from sale and exercise of pre-funded warrants);

● 31,666 shares of its common stock upon exercise of pre-funded warrants for aggregate net proceeds of $ 6,609,831 under the Placement

Agreement (includes net proceeds from sale and exercise of pre-funded warrants);

Other issuances:

2 unchanged sentences

● 5 shares of its common stock upon conversion of 123.909 shares of its Series A Preferred Stock;

46 shares of the previously issued restricted common stock vested.

The shares were issued for services and valued at $ 80,000 .

● 46 shares of the previously issued restricted common stock vested (which were issued for services and valued at $ 80,000 );

● 39 shares of common stock issued as beneficial round up shares as a result of our reverse stock splits.

Series B warrant exercises:

495,476 shares of its common stock upon cashless exercise of Series B Warrants

During the year ended December 31, 2023, the Company issued a total of 4,126 shares of its common stock, as follows:

2,464 shares of its common stock in return for aggregate net proceeds of $ 4,712,750 in a registered underwritten offering that closed on May 2, 2023;

757 shares of its common stock in return for aggregate net proceeds of $ 1,770,643 under the June 2021 ATM Agreement;

905 upon warrant exercises for an aggregate net proceeds of $ 1,014,859 .

Registered Offering

On June 4, 2024, the Company entered into a placement agency agreement (the “Placement Agreement”) with Craig-Hallum Capital Group LLC (the “Placement Agent”) pursuant to which the Placement Agent served, on a best efforts basis, in connection with the issuance and sale (the “Offering”) of 3,490 shares of common stock and 31,674 pre-funded warrants to purchase up to an aggregate of 31,666 shares of common stock (the “pre-funded warrants”), together with Series A warrants to purchase up to an aggregate of 178,255 shares of common stock (the “Series A Warrants”) and Series B warrants to purchase up to an aggregate of 178,255 shares of common stock (the “Series B Warrants” and, together with the Series A Warrants, the “Series Warrants”).

The common stock, pre-funded warrants and Series Warrants were sold in a fixed combination, with each share of common stock or pre-funded warrant accompanied by a Series A Warrant to purchase one share of common stock and a Series B Warrant to purchase one share of common stock.

In connection with the Offering, the Company also issued to the Placement Agent warrants (“Placement Agent Warrants”) to purchase up to 1,758 shares of common stock.

The Offering closed on June 5, 2024.

The purchase price of each share of common stock and accompanying Series Warrants was $ 227.50 and the purchase price of each pre-funded warrant and accompanying common warrants was $ 227.325 .

The Company received net proceeds from the Offering, after deducting offering expenses payable by the Company, of $ 7,338,333 .

The Offering was made pursuant to the Company’s registration statement on Form S-1 (File No.

● 495,476 shares of its common stock upon cashless exercises of Series B Warrants.

Recent Offerings

On October 15, 2025, the Company closed a private

placement offering (the “Private Placement”) of an aggregate of 744,340 shares of its common stock, or prefunded warrants

in lieu thereof, and warrants to purchase an aggregate of up to 1,488,680 shares of common sock at a per share exercise price of $ 6.32

(or $ 6.81 in respect of warrants purchased by a member of the Company’s board of directors), for net proceeds of $ 4,514,482 .

On June 4, 2024, the Company entered into a placement

agency agreement (the “Placement Agreement”) with Craig-Hallum Capital Group LLC (the “Placement Agent”) pursuant

to which the Placement Agent served, on a best efforts basis, in connection with the issuance and sale (the “Offering”) of

3,490 shares of common stock and 31,674 pre-funded warrants to purchase up to an aggregate of 31,666 shares of common stock (the “pre-funded

warrants”), together with Series A warrants to purchase up to an aggregate of 178,255 shares of common stock (the “Series

A Warrants”) and Series B warrants to purchase up to an aggregate of 178,255 shares of common stock (the “Series B Warrants”

and, together with the Series A Warrants, the “Series Warrants”).

The common stock, pre-funded warrants and Series Warrants

were sold in a fixed combination, with each share of common stock or pre-funded warrant accompanied by a Series A Warrant to purchase

one share of common stock and a Series B Warrant to purchase one share of common stock.

In connection with the Offering, the Company also

issued to the Placement Agent warrants (“Placement Agent Warrants”) to purchase up to 1,758 shares of common stock.

closed on June 5, 2024.

The purchase price of each share of common stock and accompanying Series Warrants was $ 227.50 and the purchase

price of each pre-funded warrant and accompanying common warrants was $ 227.325 .

The Company received net proceeds from the Offering, after deducting

offering expenses payable by the Company, of $ 7,338,333 .

The Offering was made pursuant to the Company’s

registration statement on Form S-1 (File No.

333-278842), declared effective by the SEC on June 4, 2024.

The Series Warrants were first exercised in connection with effectiveness of the amendment to the Company’s certificate of incorporation filed for the August 2024 Reverse Stock Split (the “Initial Exercise Date”).

The Series Warrants were first exercised in connection

with effectiveness of the amendment to the Company’s certificate of incorporation filed for the August 2024 Reverse Stock Split

(the “Initial Exercise Date”).

Each Series A Warrant will expire five years from the Initial Exercise Date.

Each Series B Warrant will expire two and one-half years from the Initial Exercise Date.

In addition, the Series Warrants include a provision that resets their respective exercise prices in the event of a reverse split of the Company’s common stock to a price equal to the lesser of (i) the then current exercise price and (ii) lowest volume weighted average price (“VWAP”) during the period commencing five trading days immediately preceding and the five trading days commencing on the date the Company effects a reverse stock split, (such lower price, the “Floor Price”), provided that such Floor Price shall not be lower than $0.0434 (subject to adjustment for reverse and forward splits, recapitalizations and similar transactions), with a proportionate adjustment to the number of shares underlying the Series Warrants.

The effect of the Company’s August 2024 and November 2024 reverse splits are that the number of shares underlying the Series A Warrants and Series B Warrants totaled 178,255 each.

Subject to certain exceptions, the Series A Warrants provide for an adjustment to the exercise price and number of shares underlying the Series A Warrants upon the Company’s issuance of Common Stock or Common Stock equivalents at a price per share that is less than the exercise price of the Series A Warrants, provided that such adjusted price shall be no less than $ 75.95 .

Under the alternate cashless exercise option of the Series B Warrants, the holder of a Series B Warrant has the right to receive an aggregate number of shares equal to the product of (x) the aggregate number of shares of common stock that would be issuable upon a cashless exercise of the Series B Warrant using $ 1.75 as the exercise price for that purpose and (y) 3.0.

A holder does not have the right to exercise any portion of the Series A Warrants or Series B Warrants if the holder (together with its affiliates) would beneficially own in excess of 4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Series A Warrants and Series B Warrants.

However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99% , provided that any increase in such percentage shall not be effective until 61 days following notice from the holder to us.

Pursuant to the Placement Agreement, in addition to the Placement Agent Warrants described above, the Company paid the Placement Agent a cash placement fee equal to 7.0% of the aggregate gross proceeds raised in the Offering .

The Company reimbursed expenses of the Placement Agent in connection with the Offering, including but not limited to legal fees, of $ 100,000 .

The Placement Agent Warrants have an expiration date of three and one- half years from the Initial Exercise Date and were immediately exercisable upon issuance.

The Company has agreed, subject to certain exceptions, not to effect any issuance of Common Stock or securities convertible into Common Stock involving a Variable Rate Transaction, as defined in the Placement Agreement, for a period commencing on the date of the Placement Agreement until 180 days following the closing of the Offering.

Each Series B

Warrant will expire two and one-half years from the Initial Exercise Date.

In addition, the Series Warrants include a provision

that resets their respective exercise prices in the event of a reverse split of the Company’s common stock to a price equal to the

lesser of (i) the then current exercise price and (ii) lowest volume weighted average price (“VWAP”) during the period commencing

five trading days immediately preceding and the five trading days commencing on the date the Company effects a reverse stock split, (such

lower price, the “Floor Price”), provided that such Floor Price shall not be lower than $ 0.0434 (subject to adjustment for

reverse and forward splits, recapitalizations and similar transactions), with a proportionate adjustment to the number of shares underlying

the Series Warrants.

The effect of the Company’s August 2024 and November 2024 reverse splits are that the number of shares underlying

the Series A Warrants and Series B Warrants totaled 178,255 each.

Subject to certain exceptions, the Series A Warrants

provide for an adjustment to the exercise price and number of shares underlying the Series A Warrants upon the Company’s issuance

of Common Stock or Common Stock equivalents at a price per share that is less than the exercise price of the Series A Warrants, provided

that such adjusted price shall be no less than $ 75.95 .

Under the alternate cashless exercise option of

the Series B Warrants, the holder of a Series B Warrant has the right to receive an aggregate number of shares equal to the product of

(x) the aggregate number of shares of common stock that would be issuable upon a cashless exercise of the Series B Warrant using $ 1.75

as the exercise price for that purpose and (y) 3.0.

A holder does not have the right to exercise any

portion of the Series A Warrants or Series B Warrants if the holder (together with its affiliates) would beneficially own in excess of

4.99% of the number of shares of the Company’s common stock outstanding immediately after giving effect to the exercise, as such

percentage ownership is determined in accordance with the terms of the Series A Warrants and Series B Warrants.

However, any holder may

increase or decrease such percentage to any other percentage not in excess of 9.99%, provided that any increase in such percentage shall

not be effective until 61 days following notice from the holder to us.

Pursuant to the Placement Agreement, in addition

to the Placement Agent Warrants described above, the Company paid the Placement Agent a cash placement fee equal to 7.0 % of the aggregate

gross proceeds raised in the Offering.

The Company reimbursed expenses of the Placement Agent in connection with the Offering, including

but not limited to legal fees, of $ 100,000 .

The Placement Agent Warrants have an expiration date of three and one-half years from the

Initial Exercise Date and were immediately exercisable upon issuance.

At-the-Market Equity Offering Programs

On June 21, 2021, the Company entered into the At-The-Market Issuance Sales Agreement with Ascendiant (the “June 2021 ATM Agreement”) to sell shares of common stock for aggregate gross proceeds of up to $ 20.0 million, from time to time, through an “at-the-market” equity offering program under which Ascendiant acts as sales agent.

Prior to its replacement by the February 2024 ATM Agreement (as defined below), under the June 2021 ATM Agreement the Company issued an aggregate of 1,547 shares of common stock in return for net proceeds of $ 11,407,240 , resulting in $ 354,527 of compensation paid to Ascendiant.

On February 14, 2024, the Company entered into a new At-The-Market Issuance Sales Agreement with Ascendiant (the “February 2024 ATM Agreement”) to sell shares of common stock for aggregate gross proceeds of up to $ 6.2 million, which replaced the June 2021 ATM Agreement.

As of December 31, 2024, the Company had not sold any shares under the February 2024 ATM Agreement.

Note 8 - Common Stock Options and Restricted Stock

On June 21, 2021, the Company entered into the

At-The-Market Issuance Sales Agreement with Ascendiant (the “June 2021 ATM Agreement”) to sell shares of common stock for

aggregate gross proceeds of up to $ 20.0 million, from time to time, through an “at-the-market” equity offering program under

which Ascendiant acts as sales agent.

Prior to its replacement by the February 2024 ATM Agreement (as defined below), under the June 2021

ATM Agreement the Company issued an aggregate of 1,547 shares of common stock in return for net proceeds of $ 11,407,240 , resulting in

$ 354,527 of compensation paid to Ascendiant.

On February 14, 2024, the Company entered into a new At-The-Market Issuance Sales Agreement

with Ascendiant (the “February 2024 ATM Agreement”) to sell shares of common stock for aggregate gross proceeds of up to $ 6.2

million, which replaced the June 2021 ATM Agreement.

As of December 31, 2025, the Company had sold 249,994 shares of common stock in return

for net proceeds of $ 1,152,682 , resulting in $ 35,953 of compensation paid to Ascendiant under the February 2024 ATM Agreement.

29, 2025, the Company entered into an At-The-Market Issuance Sales Agreement with Lucid Capital Markets, LLC, as sales agent (“Lucid”),

pursuant to which the Company may offer and sell, from time to time through Lucid, shares of Common Stock for aggregate gross proceeds

of up to $ 1,750,000 (the “October 2025 ATM Agreement”).

In the month of December 2025, the Company sold 10,036 shares of common

stock in return for net proceeds of $ 65,559 , resulting in $ 2,028 of compensation paid to Lucid under the October 2025 ATM Agreement.

of December 31, 2025, the Company had sold 260,036 shares through ATM Agreement.

Note 8 - Common Stock Options, Restricted Stuck Units and Restricted

Common Stock Options

Stock options are awarded to the Company’s employees, consultants and non-employee members of the board of directors under the Omnibus Plan and are generally granted with an exercise price equal to the market price of the Company’s common stock at the date of grant.

The aggregate fair value of these stock options granted by the Company during the year ended December 31, 2024 was determined to be $ 77,418 using the Black-Scholes-Merton option-pricing model based on the following assumptions:

(i) volatility rate of 107 % to 111 %, (ii) discount rate of 0 %, (iii) zero expected dividend yield, (iv) risk free rate of 3.93 % to 4.21 %, (v) price of $ 1,977.50 to $ 2,782.50 , and (vi) expected life of 8 - 10 years.

A summary of option activity under the Company’s Omnibus Plan as of December 31, 2024, and changes during the year then ended, is presented below:

Stock options are awarded to the Company’s

employees, consultants and non-employee members of the board of directors under the Omnibus Plan and are generally granted with an exercise

price equal to the market price of the Company’s common stock at the date of grant.

There were no issuances of stock options in

the year ended December 31, 2025.

A summary of option activity under the Company’s Omnibus Plan as of December 31, 2025, and changes

during the year then ended, is presented below:

Weighted Average

Average Remaining

Number of Options Exercise

Price Contractual

Balance outstanding at December 31, 2024 278 $ 30,628.90 5.35

2 unchanged sentences

Exercisable at December 31, 2025 216 $ 30,862.14 2.80

Restricted Stock Units

On June 11, 2025, the Company granted a total

of 161,527 restricted stock units (“RSUs”) under its Omnibus Plan.

The fair value per share (closing stock price) was $ 3.37 .

The grants included both standard RSUs issued to members of the Board of Directors and performance-based RSUs (“PBRSUs”) issued

to employees.

The PBRSUs were subject to both service and performance vesting conditions.

In March 2026, the Board of Directors modified

the terms of the PBRSUs to remove the performance-vesting conditions and to provide that the RSUs would vest in full upon the one-year

anniversary of the grant date.

During the year ended December 31, 2025, the Company

recognized $ 186,287 in stock-based compensation expense related to these RSU and PBRSU grants.

This expense is included in total operating

expenses in the condensed consolidated statements of operations.

Unrecognized stock-based compensation expense

related to these RSUs will be recognized over the remaining vesting period, which is one year for standard RSUs and subject to performance

conditions for PBRSUs.

As of December 31, 2025, the total compensation expense to be recognized in future periods is $ 309,672 over the

next two years .

Restricted Common Stock

On November 30, 2023, the Company issued 115 shares of restricted common stock (the “Restricted Stock”) of the Company to PatentVest, Inc.

(“PatentVest”) pursuant to a Restricted Stock Agreement and Consulting Services Agreement, each with PatentVest, in exchange for certain services related to the Company’s patent portfolio.

The fair value of the Restricted Stock was determined to be $ 200,485 using the market price of the stock on the date of the issuance.

The Restricted Stock is subject to a vesting schedule pursuant to the Restricted Stock Agreement and the shares may not be sold, assigned, transferred, pledged, hypothecated, disposed of or otherwise encumbered prior to becoming vested.

During the year ended December 31, 2024, the Company recorded as vested 46 shares valued at $ 80,000 .

On November 30, 2023, the Company issued 115 shares

of restricted common stock (the “Restricted Stock”) of the Company to PatentVest, Inc.

(“PatentVest”) pursuant

to a Restricted Stock Agreement and Consulting Services Agreement, each with PatentVest, in exchange for certain services related to the

Company’s patent portfolio.

The fair value of the Restricted Stock was determined to be $ 200,485 using the market price of the stock

on the date of the issuance.

The Restricted Stock is subject to a vesting schedule pursuant to the Restricted Stock Agreement and the

shares may not be sold, assigned, transferred, pledged, hypothecated, disposed of or otherwise encumbered prior to becoming vested.

the year ended December 31, 2025, the Company recorded as vested 46 shares valued at $ 80,000 .

The Restricted Stock is subject to a vesting

schedule pursuant to the Restricted Stock Agreement and the shares may not be sold, assigned, transferred, pledged, hypothecated, disposed

of or otherwise encumbered prior to becoming vested.

No services were provided by PatentVest, Inc.

in the period ended December 31, 2025.

Note 9 - Common Stock Warrants

As described above in “Registered Offering” (Note 7), the Company issued 31,674 pre-funded warrants to purchase up to an aggregate of 31,666 shares of common stock (the “pre-funded warrants”), together with Series A Warrants to purchase up to an aggregate of 178,255 shares of common stock and Series B Warrants to purchase up to an aggregate of 178,255 shares of common stock.

Additionally, the Series B Warrants contain an alternative cashless exercise option whereby the holder of a Series B Warrant has the right to receive an aggregate number of shares equal to the product of (x) the aggregate number of shares of common stock that would be issuable upon a cashless exercise of the Series B Warrant using $ 1.75 (after adjustment) as the exercise price for that purpose and (y) 3.0.

In connection with the Offering, the Company also issued placement agent warrants (“Placement Agent Warrants” and, together with the pre-funded warrants and the Series Warrants, the “Warrants”) to purchase up to 1,758 shares of common stock.

The purchase price of each share of common stock and accompanying Series Warrants was $ 227.50 and the purchase price of each pre-funded warrant and accompanying Series Warrants was $ 227.325 .

As described above in “Recent Offerings”

(Note 7), in 2025, the Company issued 364,801 pre-funded warrants to purchase an equivalent number of shares of common stock together

with Warrants to purchase 1,488,680 shares of common stock at an exercise price of $ 6.32 per share.

In 2024, the Company issued 31,674

pre-funded warrants to purchase up to an aggregate of 31,666 shares of common stock, together with Series A Warrants to purchase up to

an aggregate of 178,255 shares of common stock and Series B Warrants to purchase up to an aggregate of 178,255 shares of common stock.

Additionally, the Series B Warrants contain an

alternative cashless exercise option whereby the holder of a Series B Warrant has the right to receive an aggregate number of shares equal

to the product of (x) the aggregate number of shares of common stock that would be issuable upon a cashless exercise of the Series B Warrant

using $ 1.75 (after adjustment) as the exercise price for that purpose and (y) 3.0.

In connection with the 2025 Private Placement,

the Company also issued placement agent warrants (“Placement Agent Warrants” to purchase up to 44,660 shares of common stock

at an exercise price of $ 9.47 per share.

Additionally, and as part of the DAT strategy, the Company issued to its investment advisor warrants

to purchase an aggregate of 400,000 shares of Common Stock (the “Advisory Warrants”).

Advisory Warrants in respect of 100,000

shares are exercisable immediately for an exercise price equal to $ 6.95 .

Advisory Warrants in respect of 300,000 shares become exercisable

in the event that AUM exceeds certain thresholds within six or nine months following the closing, at exercise prices ranging from $ 6.95

In connection with the 2024 Offering, the Company

also issued placement agent warrants (“Placement Agent Warrants” and, together with the pre-funded warrants and the Series

Warrants, the “Warrants”) to purchase up to 1,758 shares of common stock.

The purchase price of each share of common stock

and accompanying Series Warrants was $ 227.50 and the purchase price of each pre-funded warrant and accompanying Series Warrants was $ 227.325 .

Warrant Exercises

On May 2, 2023, the Company conducted a registered offering in which the Company issued 1,232 warrants to purchase shares of common stock for an exercise price per share equal to $ 2,450 .

On May 2, 2023, the Company conducted a registered

offering in which the Company issued 1,232 warrants to purchase shares of common stock for an exercise price per share equal to $ 2,450 .

The warrants expire May 2, 2028.

In December 2023, the Board approved a temporary reduction of the exercise price per share from $ 2,450 to $ 1,225 .

The Company also issued to the underwriter and its designees warrants exercisable for an aggregate of 172 shares of common stock for an exercise price per share equal to $ 2,625 .

In December 2023, the Board approved a temporary reduction of the exercise price per share from $ 2,450

The Company also issued to the underwriter and its designees warrants exercisable for an aggregate of 172 shares of common

stock for an exercise price per share equal to $ 2,625 .

The warrants expire November 2, 2026.

During the year ended December 31, 2024, the Company issued a total of 67 shares of its common stock upon warrant exercises for aggregate net proceeds of $ 83,233 .

Between June 4, 2024 and June 7, 2024, 31,674 pre-funded warrants were exercised.

The company issued a total of 31,666 shares of its common stock upon the cash exercises of 25,339 pre-funded warrants and cashless exercises of 6,327 pre-funded warrants for aggregate net proceeds of $ 6,609,831 (includes net proceeds from sale and exercise of pre-funded warrants).

The remaining 8 pre-funded warrants were used to satisfy the exercise price under the warrants’ cashless exercise provision.

Between August 19, 2024 and December 31, 2024, the Company issued a total of 495,476 shares of its common stock upon the alternate cashless exercise of 177,987 Series B Warrants.

The following table summarizes all stock warrant activity of the Company for the year ended December 31, 2024:

During the year ended December 31, 2024,

the Company issued a total of 67 shares of its common stock upon warrant exercises for aggregate net proceeds of $ 83,233 .

Between June 4, 2024 and June 7, 2024, 31,674

pre-funded warrants were exercised.

The company issued a total of 31,666 shares of its common stock upon the cash exercises of 25,339

pre-funded warrants and cashless exercises of 6,327 pre-funded warrants for aggregate net proceeds of $ 6,609,831 (includes net proceeds

from sale and exercise of pre-funded warrants).

The remaining 8 pre-funded warrants were used to satisfy the exercise price under the

warrants’ cashless exercise provision.

Between August 19, 2024 and December 31, 2024,

the Company issued a total of 495,476 shares of its common stock upon the alternate cashless exercise of 177,987 Series B Warrants.

During the year ended December 31, 2025, no warrants

were exercised.

The following table summarizes all stock warrant activity of the Company

for the year ended December 31, 2025 :

Weighted Weighted

Number of Average

Exercise Average

Warrants Price Term (Years)

Balance outstanding at December 31, 2024 180,707 $ 85.38 4.58

Issued 2,298,141 5.49 3.66

Balance outstanding at December 31, 2025 2,478,848 $ 11.31 3.66

1 unchanged sentence

Common Stock Warrants

As described above in “Registered Offering” (Note 7), the Company issued 178,255 Series A Warrants and 178,255 Series B Warrants.

The Company accounts for the 356,510 warrants, in the aggregate, in accordance with the guidance in ASC 815 “Derivative and Hedging” whereby under that provision the warrants do not meet the criteria for equity treatment and must be recorded as a liability.

Accordingly, the Company classified the warrant instruments as a liability at fair value and adjusts the instruments to fair value each period.

This liability will be re-measured at each balance sheet date until the warrants are exercised or expire, and any change in fair value will be recognized in the Company’s statement of operations.

During the year ending December 31, 2024, the Company recognized $ 7,323,685 as warrant liability expense and income from the change in fair value of warrant liability of $ 3,447,737 in the statement of operations.

For the year ended December 31, 2024, the Company recognized $ 3,076,664 as gain on settlement for the exercise of warrants during the period, and $ 799,284 as a warrant liability as of December 31, 2024.

Series A Warrants

Each Series A Warrant entitles the holder to purchase one share of the Company’s common stock at $ 75.95 per share, subject to antidilution adjustments, and expires on August 19, 2029 .

In addition, if the Company sells or issues equity or an equity linked instrument for consideration per share less than the price equal to the exercise price then in effect, then the exercise price shall be reduced to an amount equal to the lower of (a) the new issuance price, or (b) the lowest VWAP during the five consecutive trading days immediately following the dilutive issuance.

The reduced share price shall not be less than $75.95 .

In addition, if there is a share price adjustment upon a split, reverse-split, share dividend, or share combination recapitalization, and the lowest VWAP during the preceding five trading days is less than the exercise price in effect (the “Event Market Price”), the then exercise price shall be reduced to the Event Market Price and the number of warrant issuable shall be increased such that the aggregate exercise price of the Series A Warrant on the issuance date then outstanding shall remain unchanged.

The reduced share price shall not be less than $75.95.

Series B Warrants

Each Series B Warrant entitles the holder to purchase one share of the Company’s common stock at $ 75.95 per share, subject to antidilution adjustments, and expires on February 18, 2027 .

The reduced share price shall not be less than $75.95 .

In addition, if there is a share price adjustment upon a split, reverse-split, share dividend, or share combination recapitalization, and the lowest VWAP during the preceding five trading days is less than the exercise price in effect (the “Event Market Price”), the then exercise price shall be reduced to the Event Market Price and the number of warrant issuable shall be increased such that the aggregate exercise price of the Series B Warrant on the issuance date then outstanding shall remain unchanged.

The reduced share price shall not be less than $75.95.

Alternative Cashless Exercise for Series B Warrants

The holders of the Series B Warrants may exercise their warrants at the alternative cashless exercise price of $ 1.75 per share.

Also, upon cashless exercise, the holder receives three underlying common shares for each warrant exercised.

Redemption Right

The Series A and Series B Warrants may be redeemed at the option of the Company any time after (i) the VWAP has equal or exceeded $577.50 for ten consecutive trading days and (ii) the average daily trading volume for such days exceeded $150,000 .

Recurring Fair Value Measurements

The Company’s warrant liability for the Series A and Series B Warrants is based on the Black-Scholes option pricing model utilizing management judgement and pricing inputs from observable and unobservable markets.

Significant deviations from these estimates and inputs could result in a material change in fair value.

The fair value of the warrant liability is classified within Level 2 of the fair value hierarchy because the Company uses observable inputs like market prices for its common stock and risk-free interest rate, but requires estimations for factors like the Company’s own volatility, which is not directly quoted in active markets.

The Company established the initial fair value for the warrant liability on August 20, 2024, the date the warrants were initially exercisable.

Upon exercise, the instrument is marked to its fair value upon exercise, and the shares delivered are recorded at fair value in the Company’s statement of stockholders’ equity.

The warrant liability was valued based on the following inputs for the Series A and Series B Warrants, respectively:

August 20, 2024

(Initial Measurement)

December 31, 2024

As described above in “Recent Offerings”

(Note 7), the Company issued 1,488,680 warrants in 2025 and 178,255 Series A Warrants and 178,255 Series B Warrants in 2024.

Additionally,

in 2025, the Company issued 44,660 Placement Agent Warrants and 400,000 Advisor Warrants.

The Company evaluates the warrants described

above in accordance with ASC 815, “Derivatives and Hedging,” including the guidance in ASC 815-40.

Warrants that do not meet

the criteria for equity classification are recorded as liabilities at fair value.

Accordingly, the Company classifies the warrants issued

in 2025 as equity and the warrants issued in the 2024 offering as liabilities.

Warrants classified as

liabilities are remeasured at fair value at each balance sheet date until exercised or expired, with changes in fair value recognized

in the statement of operations.

During the years ended December 31, 2025 and 2024, the Company recognized a gain of $ 116,137 and $ 3,447,737 ,

respectively, related to the change in fair value of warrant liabilities.

The Company established

the initial fair value for the Series Warrant liability on August 20, 2024, the date the Series Warrants were initially exercisable.

exercise, the instrument is marked to its fair value upon exercise, and the shares delivered are recorded at fair value in the Company’s

statement of stockholders’ equity.

The warrant liability was valued based on the following inputs for the warrants:

Exercise price

$ 28.70 and $ 1.75

$ 6.32 - $ 75.95

$ 28.70 and $ 1.75

$ 4.53 and $ 7.41

140.44 % - 163.82 %

Discount rate

3.70 % and 3.90 %

3.47 % - 3.63 %

Expected life (years)

Note 10 - Digital Assets

The Company holds digital assets as part of its treasury strategy.

As of December 31, 2025, the Company’s digital asset holdings consist of HYPE tokens.

Initial Purchase

On October 23, 2025, the Company purchased approximately 78,863.1 HYPE

tokens for an aggregate cost of $ 3.0 million.

Accounting Policy

The Company accounts for its digital assets in accordance with ASC

350-60, Accounting for and Disclosure of Crypto Assets.

Digital assets are measured at fair value each reporting period, with changes

in fair value recognized in earnings.

Fair value is determined using observable market prices derived from

active trading venues.

The Company uses the market price reported in custody statements provided by Anchorage Digital Bank, the Company’s

digital asset custodian.

Digital Asset Balance

Digital assets at fair value

Unrealized gain (loss) recognized in earnings

$ ( 995,161 )

Staking Activities

The Company participates in staking activities related to its HYPE

Staking rewards represent additional tokens earned from participation in blockchain validation activities.

Staking rewards are recognized as income when the Company obtains control

of the tokens, which occurs when the tokens are credited to the Company’s custody account.

The rewards are measured at fair value

at the time of receipt.

For the year ended December 31, 2025, the Company recognized $ 5,121

of staking reward income, which is included in Other Income in the consolidated statements of operations.

Note 11 - Related Party Transactions

On May 2, 2023, the Company conducted a registered offering in which the Company sold 48 shares of its common stock and 24 warrants to the Company’s director, Anthony DiGiandomenico, for cash at the public offering price, which was less than 5 % of beneficial ownership in the Company.

On October 17, 2023, the Company entered into a consulting agreement with one of its directors, Alex Tokman, pursuant to which Mr.

Tokman provided commercialization services.

Under the terms of the agreement, Mr.

Tokman was compensated at a rate of $ 150 per hour for his services.

On August 13, 2024, this agreement was replaced with an employment agreement as described in Note 11.

On November 30, 2023, the Company entered into a Restricted Stock Agreement and Consulting Services Agreement, each with PatentVest, in exchange for certain services related to the Company’s patent portfolio.

PatentVest is a wholly-owned subsidiary of MDB Capital Holdings, LLC (“MDB”).

Anthony DiGiandomenico, a member of the Company’s board of directors, is the Chief of Transactions and a director of MDB.

In September 2024 the Company began using IS Bookkeeping & Payroll which is a division of Impact Solve, LLC (dba Impact Solutions) an accounting and chief financial officer service firm.

As described below in note 11, the Company’s Chief Financial Officer works in a part-time capacity for the Company through Impact Solutions.

In 2024, IS Bookkeeping & Payroll provided human resources and payroll processing services to the Company totaling $ 18,693 .

In September 2024 the Company began using IS Bookkeeping

& Payroll which is a division of Impact Solve, LLC (dba Impact Solutions) an accounting and chief financial officer service firm.

As described below in note 11, the Company’s Chief Financial Officer works in a part-time capacity for the Company through Impact

In 2025 and 2024, IS Bookkeeping & Payroll provided human resources and payroll processing services to the Company totaling

$ 31,635 and $ 18,693 , respectively.

In October 2025, the Company conducted a private placement offering

in which the Company sold 70,822 shares of common stock and warrants exercisable for 141,644 shares of common stock to Anthony DiGiandomenico

at a combined price of $ 7.06 per share and two warrants.

Note 12 - Commitments and Contingencies

Effective January 1, 2015, the Company entered into an office lease agreement with Green Court, LLC, a Michigan limited liability company, for approximately 3,657 rentable square feet of space, for the initial monthly rent of $ 5,986 , which commenced on January 1, 2015 for an initial term of 60 months.

On October 10, 2017, this lease was amended increasing the rentable square feet of space to 3,950 and the monthly rent to $7,798 .

On March 15, 2021, the Company entered into an amendment to the lease, increasing the total rentable square feet to 7,198 , increasing the initial monthly rent to $ 15,452 effective May 2021, and extending the term of the lease to December 31, 2025 .

On December 1, 2024, the Company entered into an amendment to the lease, decreasing the total rentable square feet to 6,513 , decreasing the initial monthly rent to $ 15,278 effective March 2025 (after three months of no rent) and extending the term of the lease to March 31, 2029 .

The Company records the lease asset and lease liability at the present value of lease payments over the lease term.

Effective January 1, 2015, the Company entered

into an office lease agreement with Green Court, LLC, a Michigan limited liability company, for approximately 3,657 rentable square feet

of space, for the initial monthly rent of $ 5,986 , which commenced on January 1, 2015 for an initial term of 60 months.

On October 10,

2017, this lease was amended increasing the rentable square feet of space to 3,950 and the monthly rent to $ 7,798 .

On March 15, 2021, the Company entered into an

amendment to the lease, increasing the total rentable square feet to 7,198 , increasing the initial monthly rent to $ 15,452 effective May

2021, and extending the term of the lease to December 31, 2025.

On December 1, 2024, the Company entered into

an amendment to the lease, decreasing the total rentable square feet to 6,513 , decreasing the initial monthly rent to $ 15,278 effective

March 2025 (after three months of no rent) and extending the term of the lease to March 31, 2029.

The Company records the lease asset and lease

liability at the present value of lease payments over the lease term.

The lease typically does not provide an implicit rate;

therefore, the Company uses its estimated incremental borrowing rate at the time of lease commencement to discount the present value of lease payments.

the Company uses its estimated incremental borrowing rate at the time of lease commencement to discount the present value of lease payments.

The Company’s discount rate for operating leases at December 31, 2025 was 10 %.

Lease expense is recognized on a straight-line basis over the lease term to the extent that collection is considered probable.

As a result, the Company has been recognizing rents as they become payable based on the adoption of ASC Topic 842.

Lease expense is recognized on a straight-line basis

over the lease term to the extent that collection is considered probable.

As a result, the Company has been recognizing rents as they

become payable based on the adoption of ASC Topic 842.

The weighted-average remaining lease term is 3.17 years.

5 unchanged sentences

Long-term lease obligations

For the years ended December 31, 2024 and 2023, the Company incurred rent expenses of $ 203,265 and $ 218,815 , respectively.

For the years ended December 31, 2025 and 2024, the Company incurred

rent expenses of $ 176,822 and $ 203,265 , respectively.

Employment and Consulting Agreements

Alexander Tokman - Effective August 13, 2024, the Board appointed Alexander Tokman as the Company’s acting Chief Executive Officer and Chairman of the Board of Directors.

Alexander Tokman - Effective August

13, 2024, the Board appointed Alexander Tokman as the Company’s Chief Executive Officer and Chairman of the Board of Directors.

In connection with his appointment, Mr.

Tokman and the Company entered into an employment agreement, dated August 13, 2024 (the “Employment Agreement”).

Tokman’s employment with the Company is “at will” and may be terminated by him or the Company at any time and for any reason.

Tokman and the Company entered into an employment agreement, dated August 13, 2024 (the “Employment

Tokman’s employment with the Company is “at will” and may be terminated by him or the Company

at any time and for any reason.

Pursuant to the Employment Agreement, Mr.

Tokman will receive an annual base salary of $ 300,000 , subject to adjustment at the Board’s discretion.

Tokman is also eligible for an annual cash bonus based upon the achievement of performance-based objectives established by the Board of Directors.

Tokman’s employment is terminated by the Company without cause (as defined in the Omnibus Plan), if Mr.

Tokman will receive an annual base salary of $ 300,000 , subject

to adjustment at the Board’s discretion.

Tokman is also eligible for an annual cash bonus based upon the achievement of performance-based

objectives established by the Board of Directors.

Tokman’s employment is terminated by the Company without cause (as defined

in the Omnibus Plan), if Mr.

Tokman resigns for good reason (as defined in the Employment Agreement), or if Mr.

Tokman’s employment ends following the hiring no later than February 13, 2026 of a replacement chief executive officer whom Mr.

Tokman assists in recruiting, Mr.

Tokman will be entitled to receive, subject to his execution of a standard release agreement, 12 months’ continuation of his current base salary and a lump sum payment equal to 12 months of continued healthcare coverage (or 24 months’ continuation of his current base salary and a lump sum payment equal to 24 months of continued healthcare coverage if such termination occurs within one year following a change in control).

Tokman’s employment

ends following the hiring no later than February 13, 2026 of a replacement chief executive officer whom Mr.

Tokman assists in recruiting,

Tokman will be entitled to receive, subject to his execution of a standard release agreement, 12 months’ continuation of his

current base salary and a lump sum payment equal to 12 months of continued healthcare coverage (or 24 months’ continuation of his

current base salary and a lump sum payment equal to 24 months of continued healthcare coverage if such termination occurs within one year

following a change in control).

Additionally, under the Employment Agreement, Mr.

Tokman is eligible to receive benefits that are substantially similar to those of the Company’s other senior executive officers.

Michael Thornton - The Company has an employment agreement with Michael Thornton, the Company’s Chief Technology Officer, dated May 12, 2017, as amended December 27, 2019.

The employment agreement provides for an annual base salary that is subject to adjustment at the board of directors’ discretion.

Effective January 1, 2022, the Compensation Committee increased Mr.

Thornton’s annual salary to $ 324,000 .

In September 2023, Mr.

Thornton agreed to a 30 % reduction of his base salary received for the remainder of 2023 in order to preserve cash for the Company’s operations.

Under the employment agreement, Mr.

Thornton is eligible for an annual cash bonus based upon achievement of performance-based objectives established by the board of directors.

Upon termination without cause, any portion of Mr.

Thornton’s option award scheduled to vest within 12 months will automatically vest, and upon termination without cause within 12 months following a change of control, the entire unvested portion of the option award will automatically vest.

Upon termination for any other reason, the entire unvested portion of the option award will terminate.

Thornton’s employment is terminated by the Company without cause or Mr.

Thornton terminates his employment for good reason, Mr.

Thornton will be entitled to receive 12 months’ continuation of his current base salary and a lump sum payment equal to 12 months of continued healthcare coverage (or 24 months’ continuation of his current base salary and a lump sum payment equal to 24 months of continued healthcare coverage if such termination occurs within one year following a change in control).

Under his employment agreement, Mr.

Thornton is eligible to receive benefits that are substantially similar to those of the Company’s other senior executive officers.

Richard Jacroux - On August 7, 2024, the Company’s Board of Directors appointed Richard Jacroux as Chief Financial Officer.

Jacroux works in a part-time capacity for the Company through Impact Solve, LLC (dba Impact Solutions) an accounting and chief financial officer service firm.

The Company pays Impact Solutions a base monthly fee of $ 8,650 plus expenses in respect of his services to the Company and any hours worked in excess of 20 hours per week are paid at a rate of $ 150 per hour

From time to time the Company may become a party to litigation in the normal course of business.

As of December 31, 2024, there were no legal matters that management believes would have a material effect on the Company’s financial position or results of operations.

Tokman is eligible to receive benefits that are substantially

similar to those of the Company’s other senior executive officers.

Richard Jacroux - On August 7,

2024, the Company’s Board of Directors appointed Richard Jacroux as Chief Financial Officer.

Jacroux works in a part-time capacity

for the Company through Impact Solve, LLC (dba Impact Solutions) an accounting and chief financial officer service firm.

pays Impact Solutions a base monthly fee of $ 8,650 plus expenses in respect of his services to the Company and any hours worked in excess

of 20 hours per week are paid at a rate of $ 150 per hour.

From time to time the Company may become a party

to litigation in the normal course of business.

During the year ended December 31, 2025, the Company recognized $ 10,000 of expense related

to certain minor legal matters.

Note 13 - Income Taxes

5 unchanged sentences

( 1,073,800 )

( 1,593,300 )

Total income (loss) before income taxes

1 unchanged sentence

$ ( 11,508,000 )

Income tax provision (benefit) consists of the following for the years ended December 31, 2024 and 2023:

Income tax provision (benefit):

Income tax provision

(benefit) consists of the following for the years ended December 31, 2025 and 2024:

For the Years Ended

Income tax provision (benefit):

Total Current

2 unchanged sentences

A reconciliation of the income tax provision (benefit) by applying the statutory United States federal income tax rate to income (loss) before income taxes is as follows:

Rate Reconciliation

For the Years Ended

Rate Reconciliation

Expected tax at statutory rates

2 unchanged sentences

Permanent Differences

$ ( 157,900 )

State Income Tax, Net of Federal benefit

1 unchanged sentence

State Rate Change-Federal Impact

$ ( 197,600 )

State Rate Change Adjustment

4 unchanged sentences

Income tax provision (benefit)

Deferred tax assets and liabilities are provided for significant income and expense items recognized in different years for tax and financial reporting purposes.

Deferred tax assets

and liabilities are provided for significant income and expense items recognized in different years for tax and financial reporting purposes.

Temporary differences, which give rise to a net deferred tax asset is as follows:

Deferred Tax Assets/(Liabilities) Detail

For the Years Ended

Deferred Tax Assets/(Liab.) Detail

Deferred Tax Assets (Liabilities):

Stock Based Compensation

Stock Based Comp

Accrued Bonus

2 unchanged sentences

ROU Liability

Changes in fair value of digital asset

Capitalized R&D

4 unchanged sentences

( 26,484,500 )

( 24,573,700 )

Net deferred tax assets (liabilities)

The domestic U.S.

net operating loss carryforward increased from $ 62,032,405 at December 31, 2023 to $ 72,521,129 at December 31, 2024.

After consideration of all the evidence, both positive and negative, management has recorded a full valuation allowance at December 31, 2024 and 2023, due to the uncertainty of realizing the deferred income tax assets.

Out of the $72,521,129 net operating losses carry forward, $16,012,698 will begin to expire in 2028 and $56,508,431 will have an indefinite life .

The Company’s Total State net operating losses also increased from $ 74,926,792 at December 31,2023 to $ 84,972,922 at December 31, 2024.

net operating loss carryforward

increased from $ 70,976,189 at December 31, 2024 to $ 77,880,679 at December 31, 2025.

After consideration of all the evidence, both positive

and negative, management has recorded a full valuation allowance at December 31, 2025 and 2024, due to the uncertainty of realizing the

deferred income tax assets.

Out of the $77,880,679 net operating losses carry forward, $16,012,698 will begin to expire in 2028 and $61,867,981

will have an indefinite life.

The Company’s Total State net operating losses also increased from $ 94,278,557 at December 31, 2024

to $ 101,674,023 at December 31, 2025.

The State net operating losses will began to expire in 2028 .

There are also net operating losses from Canada, France, Germany, Netherlands and UK total to 5,498,797 as of December 31, 2024.

The Internal Revenue Code includes a provision, referred to as Global Intangible Low-Taxed Income (“GILTI”), which provides for a 10.5% tax on certain income of controlled foreign corporations.

We have elected to account for GILTI as a period cost if and when occurred, rather than recognizing deferred taxes for basis differences expected to reverse.

There are also net operating losses

from Canada, France, Germany, Netherlands and UK total to 6,060,699 as of December 31, 2025.

The Internal Revenue Code includes a provision,

referred to as Global Intangible Low-Taxed Income (“GILTI”), which provides for a 10.5 % tax on certain income of controlled

foreign corporations.

We have elected to account for GILTI as a period cost if and when occurred, rather than recognizing deferred taxes

for basis differences expected to reverse.

The Company is subject to taxation in the U.S.

1 unchanged sentence

federal income tax returns for 2022 and after remain open to examination.

We and our subsidiaries are also subject to income tax in multiple states and foreign jurisdictions.

Generally, foreign income tax returns after 2021 remain open to examination.

subsidiaries are also subject to income tax in multiple states and foreign jurisdictions.

Generally, foreign income tax returns after

2022 remain open to examination.

No income tax returns are currently under examination.

As of December 31, 2024 and 2023, the Company does not have any unrecognized tax benefits, and continues to monitor its current and prior tax positions for any changes.

The Company recognizes penalties and interest related to unrecognized tax benefits as income tax expense.

For the years ended December 31, 2024 and 2023, there were no penalties or interest recorded in income tax expense.

As of December 31, 2025 and 2024, the Company

does not have any unrecognized tax benefits, and continues to monitor its current and prior tax positions for any changes.

recognizes penalties and interest related to unrecognized tax benefits as income tax expense.

For the years ended December 31, 2025

and 2024, there were no penalties or interest recorded in income tax expense.

Note 14 - Segment Reporting

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision making group, in deciding how to allocate resources in assessing performance.

Operating segments are defined as components of

an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision

making group, in deciding how to allocate resources in assessing performance.

The Company has one reportable segment:

The biotech segment consists of the development of clinical and preclinical product candidates for the development of the Company’s proprietary new enhanced thermoacoustic technology platform.

The Company’s chief operating decision maker (“CODM”) is the chief executive officer.

The accounting policies of the biotech segment are the same as those described in the summary of significant accounting policies.

The CODM assesses performance for the biotech segment based on net loss, which is reported on the income statement as consolidated net loss.

The measure of segment assets is reported on the balance sheet as total consolidated assets.

To date, the Company has not generated any product revenue.

The Company expects to continue to incur significant expenses and operating losses for the foreseeable future as it advances product candidates through all stages of development and clinical trials and, ultimately, seek regulatory approval.

As such, the CODM uses cash forecast models in deciding how to invest into the biotech segment.

Such cash forecast models are reviewed to assess the entity-wide operating results and performance.

segment consists of the development of clinical and preclinical product candidates for the development of the Company’s proprietary

new enhanced thermoacoustic technology platform.

The Company’s chief operating decision maker (“CODM”) is the chief

executive officer .

The accounting policies of the biotech segment

are the same as those described in the summary of significant accounting policies.

The CODM assesses performance for the biotech segment

based on net loss, which is reported on the income statement as consolidated net loss.

The measure of segment assets is reported on the

balance sheet as total consolidated assets.

To date, the Company has not generated any product

The Company expects to continue to incur significant expenses and operating losses for the foreseeable future as it advances

product candidates through all stages of development and clinical trials and, ultimately, seek regulatory approval.

As such, the CODM uses cash forecast models in

deciding how to invest into the biotech segment.

Such cash forecast models are reviewed to assess the entity-wide operating results and

Net loss is used to monitor budget versus actual results.

Monitoring budgeted versus actual results is used in assessing performance of the segment and in establishing management’s compensation, along with cash forecast models.

The table below summarizes the significant expense categories regularly reviewed by the CODM for the years ended December 31, 2024, and 2023:

Monitoring budgeted versus actual results is used in assessing

performance of the segment and in establishing management’s compensation, along with cash forecast models.

The table below summarizes the significant expense categories regularly

reviewed by the CODM for the years ended December 31, 2025, and 2024:

Operating Expenses

9 unchanged sentences

$ ( 690,800 )

$ ( 7,027,410 )

$ ( 11,507,947 )

Reconciliation of net loss

3 unchanged sentences

$ ( 11,507,947 )

(a) Other segment items included in segment loss includes warrant expense, changes in warrant liability, gain on settlement of warrant liability and interest income.

(a) Other segment items included in segment loss includes digital

asset staking compensation, changes in digital assets, warrant expense, changes in warrant liability, gain on settlement of warrant liability

and interest income.

Note 15 - Subsequent Events

The Company has evaluated events through, March 31, 2025, the filing date of this Annual Report on Form 10-K, and determined that, other than as disclosed below, no other events have occurred that would require adjustment to or disclosures in these consolidated financial statements.

Subsequent to the year ended December 31, 2024, the Company issued a total of 25,305 shares of its common stock in return for aggregate gross proceeds of $ 150,416 under the February 2024 ATM Agreement.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

The Company has evaluated events through March

31, 2026, the filing date of this Annual Report on Form 10-K and determined that there have been no additional subsequent events that

occurred that would require adjustments to our disclosures in the consolidated financial statements, other than the following:

On February 23, 2026, the Company completed a

sale and transfer of $ 150,000 of digital assets to fund ongoing operations.

On February 26, 2026, the Company issued a total

of 64,274 shares of its common stock in return for aggregate net proceeds of $ 263,748 under the October 2025 ATM Agreement, which takes

into account $ 8,154 in compensation paid to Lucid.

On March 16, 2026, the Company completed a sale

and transfer of $ 150,000 of digital assets to fund ongoing operations.

On March 19, 2026, the Company implemented a

reduction in workforce as part of efforts to extend its cash runway and align resources with its strategic priorities.

In connection

with this action, the Company expects to incur pre-tax cash charges of approximately $ 51,282 related to severance payments, which are

expected to be recognized in the first quarter of 2026.

On March 25, 2026, the Company announced that

it had initiated a process to evaluate a range of strategic alternatives aimed at maximizing shareholder value.

The Company continues

to evaluate these alternatives;

however, there can be no assurance as to the outcome or timing of this process.

Changes in and Disagreements with Accountants on Accounting

and Financial Disclosure.

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

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk