Syra Health Corp 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA SYRA HEALTH CORP. INDEX TO FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB Firm ID: 2738 ) F-2 Balance Sheets at December 31, 2024 and 2023 F-3 Statements of Operations for the Years Ended December 31, 2024 and 2023 F-4 Statements of Stockholders’ Equity for the Years Ended December 31, 2024 and 2023 F-5 Statements of Cash Flows for the Years Ended December 31, 2024 and 2023 F-6 Notes to the Financial Statements F-7 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Syra Health Corp. Opinion on the Financial Statements We have audited the accompanying balance sheets of Syra Health Corp. (the Company) as of December 31, 2024 and 2023, and the related statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2024 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above 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 years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company had a cash balance of $2,395,405, working capital of $2,739,246 and an accumulated deficit of $8,824,193 since inception, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are discussed in Note 2. The 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 audits 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. 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 the significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe our audits provides a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audits 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 matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which they relate. Due to the net loss for the year, the Company evaluated the need for a going concern. Auditing management’s evaluation of a going concern can be a significant judgement given the fact that the Company uses management estimates on future revenues and expenses which are not able to be substantiated. As discussed in Note 2, the Company has a going concern due to its insufficient cash balance and accumulated net losses. To evaluate the appropriateness of the going concern, we examined and evaluated the financial information along with management’s plans to mitigate the going concern and management’s disclosure on going concern. /s/ M&K CPAS, PLLC We have served as the Company’s auditor since 2023 The Woodlands, TX March 11, 2025 F- 2 SYRA HEALTH CORP. BALANCE SHEETS December 31, December 31, 2024 2023 ASSETS Current assets: Cash and cash equivalents $ 2,395,405 $ 3,280,075 Accounts receivable, net 680,827 1,060,634 Accounts receivable related party - 50,614 Accounts receivable - 50,614 Other current assets 276,563 389,787 Total current assets 3,352,795 4,781,110 Property and equipment, net 27,347 78,974 Right-of-use asset 299,190 63,199 Total assets $ 3,679,332 $ 4,923,283 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 101,690 $ 462,991 Accrued expenses 230,383 198,978 Deferred revenue 16,611 - Current portion of operating lease liability, related party 111,978 63,199 Notes payable 152,887 184,904 Total current liabilities 613,549 910,072 Non-current portion of operating lease liability, related party 187,212 - Total liabilities 800,761 910,072 Commitments and contingencies - - Stockholders’ equity: Preferred stock, $ 0.001 par value, 10,000,000 shares authorized, no shares designated, issued and outstanding - - Class A common stock, $ 0.001 par value, 100,000,000 shares authorized, 8,979,204 and 5,588,298 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively 8,979 5,588 Convertible class B common stock, $ 0.001 par value, 5,000,000 shares authorized, 833,334 shares issued and outstanding 833 833 Common stock, value 833 833 Additional paid-in capital 11,692,952 9,071,745 Accumulated deficit ( 8,824,193 ) ( 5,064,955 ) Total stockholders’ equity 2,878,571 4,013,211 Total liabilities and stockholders’ equity $ 3,679,332 $ 4,923,283 See accompanying notes to audited financial statements. F- 3 SYRA HEALTH CORP. STATEMENTS OF OPERATIONS 2024 2023 For the Year Ended 2024 2023 Net revenues $ 7,982,082 $ 5,515,144 Cost of services 6,329,119 4,103,244 Gross profit 1,652,963 1,411,900 Operating expenses: Salaries and benefits 2,718,743 2,292,295 Professional services 606,051 586,463 Research and development expenses 585,146 240,048 Selling, general and administrative expenses 1,445,170 1,131,922 Depreciation 62,738 48,771 Total operating expenses 5,417,848 4,299,499 Operating loss ( 3,764,885 ) ( 2,887,599 ) Other income (expense): Interest income 21,247 2,942 Interest expense ( 15,600 ) ( 53,686 ) Total other income (expense) 5,647 ( 50,744 ) Net loss $ ( 3,759,238 ) $ ( 2,938,343 ) Weighted average common shares outstanding - basic and diluted 7,551,576 4,877,861 Net loss per common share - basic and diluted $ ( 0.50 ) $ ( 0.60 ) See accompanying notes to audited financial statements. F- 4 SYRA HEALTH CORP. STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY For the Years Ended December 31, 2024 and 2023 Shares Amount Shares Amount Shares Amount Capital Deficit Equity Preferred Stock Class A Common Stock Convertible Class B Common Stock Additional Paid-in Accumulated Total Stockholders’ Shares Amount Shares Amount Shares Amount Capital Deficit Equity Balance, December 31, 2023 - $ - 5,588,298 $ 5,588 833,334 $ 833 $ 9,071,745 $ ( 5,064,955 ) $ 4,013,211 Class A common stock issued for services - - 56,992 57 - - 71,321 - 71,378 Warrants exercised for cash - - 130,789 131 - - 849,998 - 850,129 Class A common stock issued for cash - - 3,203,125 3,203 - - 1,615,818 - 1,619,021 Class A common stock options issued for services - - - - - - 59,803 - 59,803 Options issued for Director fees - - - - - - 24,267 - 24,267 Net loss - - - - - - - ( 3,759,238 ) ( 3,759,238 ) Balance, December 31, 2024 - $ - 8,979,204 $ 8,979 833,334 $ 833 $ 11,692,952 $ ( 8,824,193 ) $ 2,878,571 Preferred Stock Class A Common Stock Convertible Class B Common Stock Additional Paid-in Accumulated Total Stockholders’ Shares Amount Shares Amount Shares Amount Capital Deficit Equity Balance, December 31, 2022 - $ - 3,568,758 $ 3,569 833,334 $ 833 $ 2,832,308 $ ( 2,126,612 ) $ 710,098 Balance - $ - 3,568,758 $ 3,569 833,334 $ 833 $ 2,832,308 $ ( 2,126,612 ) $ 710,098 Cancellation of Class A common stock - - ( 41,666 ) ( 42 ) - - 42 - - Class A common stock issued for debt conversion - - 446,206 446 - - 1,472,014 - 1,472,460 Stock-based compensation - - - - - - 32,831 - 32,831 Class A common stock options issued for cash - - 1,615,000 1,615 - - 4,734,550 4,736,165 Net loss - - - - - - - ( 2,938,343 ) ( 2,938,343 ) Balance, December 31, 2023 - $ - 5,588,298 $ 5,588 833,334 $ 833 $ 9,071,745 $ ( 5,064,955 ) $ 4,013,211 Balance - $ - 5,588,298 $ 5,588 833,334 $ 833 $ 9,071,745 $ ( 5,064,955 ) $ 4,013,211 See accompanying notes to audited financial statements . F- 5 SYRA HEALTH CORP. STATEMENTS OF CASH FLOWS 2024 2023 For the Years Ended December 31, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 3,759,238 ) $ ( 2,938,343 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 62,738 48,771 Common stock issued for services 71,378 - Non-cash lease expense 89,500 - Stock-based compensation 59,803 32,831 Changes in operating assets and liabilities: Accounts receivable 379,807 ( 59,547 ) Accounts receivable, related party 50,614 ( 50,614 ) Other current assets 491,883 203,110 Right-of-use asset 121,089 Accounts payable ( 361,301 ) 30,603 Accounts payable, related parties - ( 3,200 ) Deferred revenue 16,611 - Accrued expenses 55,672 ( 22,679 ) Operating lease liability ( 89,500 ) ( 121,089 ) Net cash used in operating activities ( 2,932,033 ) ( 2,759,068 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment ( 11,111 ) ( 15,251 ) Net cash used in investing activities ( 11,111 ) ( 15,251 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from sale of common stock and exercise of warrants 2,469,150 5,332,283 Proceeds received from line of credit - 300,000 Repayments on line of credit - ( 1,050,551 ) Proceeds received from advances, related party - 1,295,010 Repayments on advances, related party - ( 1,095,000 ) Repayments on notes payable ( 410,676 ) ( 185,692 ) Proceeds received from convertible notes payable - 1,455,000 Net cash provided by financing activities 2,058,474 6,051,050 NET CHANGE IN CASH AND CASH EQUIVALENTS ( 884,670 ) 3,276,731 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,280,075 3,344 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,395,405 $ 3,280,075 SUPPLEMENTAL INFORMATION: Interest paid $ 15,600 $ 36,226 Income taxes paid $ - $ - NON-CASH INVESTING AND FINANCING ACTIVITIES: Initial recognition of right-of-use asset and lease liability $ 325,491 $ - Cancellation of Class A common stock $ - $ 42 Non-cash application of invoices to STLogics loan $ - $ 200,010 Class a common stock issued for debt and interest conversion $ - $ 1,472,460 Options issued for accrued director fees $ 24,267 $ - Prepaid asset financed with note payable $ 378,659 $ 370,596 See accompanying notes to audited financial statements. F- 6 SYRA HEALTH CORP. NOTES TO FINANCIAL STATEMENTS Note 1 – Nature of Business and Significant Accounting Policies Nature of Business Syra Health Corp. (“Syra” or the “Company”) was incorporated in the state of Indiana on November 20, 2020 to provide workforce staffing solutions, health education and healthcare research consulting services to mental health hospitals and organizations, including government agencies, integrated health networks, managed care entities and pharmaceutical manufacturers. On March 11, 2022, the Company redomiciled to Delaware. The Company’s corporate office is located in Carmel, Indiana. Basis of Presentation The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Concentrations of Credit Risk The Company maintains cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 under current regulations. The Company had $ 1,032,827 cash in excess of FDIC insured limits at December 31, 2024. The Company has not experienced any losses in such accounts. Fair Value of Financial Instruments Accounting Standards Codification (“ASC”) 820 defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows: - Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. - Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. - Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement. The carrying value of the Company’s financial assets and liabilities, such as cash, accounts receivable and accounts payable are estimated by management to approximate fair value primarily due to the short-term nature of the instruments. The Company’s advances from related party approximates the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at December 31, 2024 and December 31, 2023. Cash and Cash Equivalents Cash equivalents include money market accounts which have maturities of three months or less when acquired. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. Cash equivalents are stated at cost plus accrued interest, which approximates market value. There were $ 1,749,977 cash equivalents on hand at December 31, 2024, consistent of certificates of deposit with maturities of three months or less. There were no cash equivalents at December 31, 2023. Accounts Receivable Accounts receivable is carried at their estimated collectible amounts. Accounts receivable is periodically evaluated for collectability based on past credit history with customers and their current financial condition. The Company had an allowance of $ 5,520 at December 31, 2024 and December 31, 2023. F- 7 Property and Equipment Property and equipment is stated at cost, less accumulated depreciation. The cost of office equipment is depreciated using the straight-line method based on a five -year life expectancy. Repairs and maintenance expenditures are charged to operations as incurred. Major improvements and replacements, which extend the useful life of an asset, are capitalized and depreciated over the remaining estimated useful life of the asset. When assets are retired or sold, the cost and related accumulated depreciation are eliminated, and any resulting gain or loss is reflected in operations. Impairment of Long-Lived Assets In accordance with the provisions of ASC Topic 360, “ Impairment or Disposal of Long-Lived Assets ”, all long-lived assets such as property and equipment held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. Leases The Company accounts for its leases under ASC 842 - Leases . The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current portion of obligations under operating leases, and obligations under operating leases, non-current on the Company’s balance sheets. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date, adjusted by the deferred rent liabilities at the adoption date. As the Company’s lease does not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The Company’s terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term. Segment Reporting ASC Topic 280, “ Segment Reporting ,” requires annual and interim reporting for an enterprise’s operating segments and related disclosures about its products, services, geographic areas and major customers. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and expenses, and about which separate financial information is regularly evaluated by the chief operating decision maker in deciding how to allocate resources. In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure.” The ASU updates reportable segment disclosure requirements, primarily through requiring enhanced disclosures about significant segment expenses and information used to assess segment performance. The amendments do not change how segments are determined, aggregated, or how thresholds are applied to determine reportable segments. The Company adopted ASU No. 2023-07 during the year ended December 31, 2024. Segment information is prepared on the same basis that our CEO, who is our Chief Operating Decision Maker (“CODM”), manages our segments, evaluates financial results, and makes key operating decisions. We have one reportable operating segment, Healthcare services. The reportable segment derives its revenue from a variety of services primarily to state and federal health authorities. Our CODM uses net income to evaluate and make key operating decisions. The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations. F- 8 Revenue Recognition The Company recognizes revenue in accordance with ASC 606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation. The Company accounts for revenues when both parties to the contract have approved the contract, the rights and obligations of the parties are identified, payment terms are identified, and collectability of consideration is probable. Payment terms vary by client and the services offered. The Company has the following main forms of revenue: – Healthcare Workforce; – Population Health – Digital Health – Behavioral and Mental Health Services – Health Education The Company primarily provides its services to state health and social service agencies and universities. Healthcare Workforce, Health Education and Behavioral Mental Health Service contracts are primarily accounted for as a single performance obligation satisfied over time because the customer simultaneously receives and consumes the benefits of our medical staffing on an hourly or daily basis. Population Health and Digital Health contracts generally consist of multiple performance obligations that are distinct, such as to provide data analytics and reporting, training, or develop technology for implementation and maintenance with the customer. The Company allocates the transaction price across the performance obligations based on the estimated fair value of the distinct performance obligations. Depending on the performance obligation, revenue is recognized at a point in time when the customer obtains the benefit of the services are provide, or over time in the case of digital health revenue where the customer simultaneously receives and consumes benefits of the contract, such as ongoing performance of our technology product. The contracts generally stipulate bi-weekly or monthly billing, and the Company has elected the “as invoiced” practical expedient to recognize revenue based on the hours incurred at the contractual rate as the Company has the right to payment in an amount that corresponds directly with the value of performance completed to date. The Company may also be subject to penalties for violations of certain ethical standards and non-performance measures within these state contracts. The Company recognizes revenue net of penalties. Disaggregated revenue data The Company’s revenue consists of the following revenue services within its industry: Schedule of Disaggregation of Revenue Year Ended December 31, 2024 December 31, 2023 Net revenues: Healthcare workforce $ 5,896,433 $ 4,259,292 Population health 1,659,804 715,499 Digital health 369,000 515,250 Behavioral and mental services 16,845 12,797 Health education 40,000 12,306 Net revenues $ 7,982,082 $ 5,515,144 F- 9 Cost of Services The cost of services includes wages and related payroll taxes, employee benefits and certain other employee-related costs of the Company’s contract service employees, while the employees work on contract assignments. Significant Concentrations The majority of accounts receivable and revenue contracts are between the Company and different divisions within the Indiana Family and Social Services Administration (“FSSA”). Most contracts require monthly payments as the projects progress. The Company generally does not require collateral or advance payments. For the years ended December 31, 2024 and 2023, FSSA accounted for approximately 61 % and 68 % of revenues, respectively, which was derived through a combination of divisions within the State of Indiana, including the FSSA-NeuroDiagnostic Institute, representing $ 4,567,637 and $ 3,734,004 of the Company’s Healthcare Workforce revenue for years ended December 31, 2024 and 2023, respectively, and the FSSA-Division of Mental Health and Addiction, representing $ 312,000 and $ 305,000 of the Company’s Population Health revenues for each of the years ended December 31, 2024 and 2023, respectively. In addition, the combined divisions of the FSSA (NeuroDiagnostic Institute and Division of Mental Health and Addiction), owed 56 % and one other customer represented 11 %, of the Company’s accounts receivable respectively, at December 31, 2024, and FSSA represented 30 % of outstanding accounts receivable as of December 31, 2023. Stock-Based Compensation The Company accounts for equity instruments issued to employees and non-employees in accordance with the provisions of ASC 718 Stock Compensation (“ASC 718”). All transactions in which the consideration provided in exchange for the purchase of goods or services consists of the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Basic and Diluted Loss Per Share Basic earnings per share (“EPS”) are computed by dividing net income (the numerator) by the weighted average number of common shares outstanding for the period (the denominator). Weighted average shares for basic EPS are calculated based on weighted average Class A and Class B shares outstanding. Diluted EPS is computed by dividing net income by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period. Potential common shares include stock options, warrants, conversion of Class B shares and restricted stock. The number of potential common shares outstanding relating to stock options, warrants, conversion of Class B shares and restricted stock is computed using the treasury stock method. For the periods presented, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share. Income Taxes The Company accounts for income taxes under the Financial Accounting Standards Board (“FASB”) ASC 740 Income Taxes (“ASC 740”), which requires use of the liability method. FASB ASC 740-10-25 provides that deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for significant deferred tax assets when it is more likely than not, that such asset will not be recovered through future operations. Uncertain Tax Positions In accordance with ASC 740, the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be capable of withstanding examination by the taxing authorities based on the technical merits of the position. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. F- 10 Various taxing authorities may periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. The Company has not yet undergone an examination by any taxing authorities. The Company recognizes interest and penalties related to uncertain tax positions, if any, as an income tax expense. The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions. Recent Accounting Standards From time to time, new accounting pronouncements are issued by the FASB that are adopted by the Company as of the specified effective date. In November 2023, the Financial Accounting Standard Board (“ FASB ”) issued ASU 2023-07, Improvements to Reportable Segment Disclosures , which amends the existing segment reporting guidance (ASC Topic 280) to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, an amount for other segment items by reportable segment and a description of its composition, the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The amendments in this update were effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted this standard on a retrospective basis within our annual report for the year ended December 31, 2024, with no material impact to our financial statements. Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements. Note 2 – Going Concern As shown in the accompanying financial statements, as of December 31, 2024, the Company had a cash balance of $ 2,395,405 , working capital of $ 2,739,246 and an accumulated deficit of $ 8,824,193 since inception. The Company is too early in its development stage to project revenue with a necessary level of certainty. Therefore, the Company may not have sufficient funds to sustain its operations for the next twelve months from the issuance date of these financial statements and may need to raise additional cash to fund its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company has commenced sales and continues to develop its operations. In the event sales do not materialize at the expected rates, management would seek additional financing or would attempt to conserve cash by further reducing expenses. There can be no assurance that the Company will be successful in achieving these objectives. The Company continues to pursue sources of additional capital through debt and financing transactions or arrangements, including equity financing or other means. The Company may not be successful in identifying suitable funding transactions in a sufficient time period or at all and may not obtain the required capital by other means. If the Company does not succeed in raising additional capital, resources may not be sufficient to fund its business. The Company’s ability to scale production and distribution capabilities and further increase the value of its brands, is largely dependent on its success in raising additional capital. From January through April of 2023, the Company raised a total of $ 1,455,000 of capital from the sale of convertible notes. On October 3, 2023, the Company completed its IPO and received net proceeds of approximately $ 5,332,283 . In October 2023, the convertible notes were converted into Class A common stock in accordance with the terms of the convertible promissory notes as a result of the IPO. On September 11, 2024, the Company completed a public offering and received net proceeds of $ 1,619,021 . The financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. These financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. Note 3 – Related Party Transactions The Company pays for payroll and related costs for its employees that provide services to Sahasra Technologies Corp., doing business as STLogics to service contracts of STLogics, which is an entity beneficially owned by the principal owners and management team of Syra. During the year ended December 31, 2024, the Company paid $ 101,411 of payroll and related costs for these employees and had a receivable from STLogics of $ 0 and $ 50,614 for additional costs incurred as of December 31, 2024 and December 31, 2023, respectively. F- 11 Office Lease The Company leases its current corporate headquarters under a three-year lease from STVentures, LLC (“STVentures”) , an entity beneficially owned by the principal owners and the management team of Syra and their affiliates . The lease commenced on July 1, 2021 and as amended on May 1, 2022, provides for a base monthly rent of $ 10,711 over the three-year term of the lease. A total of $ 131,516 and $ 128,527 was included in selling, general and administrative expenses for the year ended December 31, 2024 and 2023, respectively. The lease was further amended on June 26, 2024, and provides for a base monthly rent of $ 11,209 over the additional three-year term of the lease. Information Technology (“IT”) Services The Company incurred a total of $ 22,233 and $ 3,320 of services from RAD CUBE LLC, which is an entity beneficially owned by the principal owners and the management team of Syra and their affiliates, for outsourced IT services which have been presented within selling, general and administrative expenses in the statements of operations during the years ended December 31, 2024 and 2023, respectively. Recruitment and Human Resource Services The Company paid a total of $ 516,129 and $ 348,304 for recruitment and human resource services from NLogix, which is an entity beneficially owned by the principal owners and the management team of Syra and their affiliates, which have been presented within cost of sales in the statements of operations during the years ended December 31, 2024 and 2023, respectively . Advances from Related Party On various dates from July 11, 2023, through August 23, 2023, Sahasra Technologies Corp., doing business as STLogics, which is an entity beneficially owned by the principal owners and management team of Syra, made short term, non-interest bearing advances due upon demand, of which an aggregate of $ 1,295,010 was advanced and we repaid an aggregate $ 1,095,000 of such advances. The Company pays for payroll and related costs for its employees that provide services to STLogics customers. During the year ended December 31, 2023, the Company applied $ 200,010 of such costs to reduce the balance of the advance to $ 0 . During the year ended December 31, 2024, the Company paid $ 101,411 of payroll and related costs for these employees and had a receivable from STLogics of $ 0 and $ 50,614 for additional costs incurred as of December 31, 2024 and December 31, 2023, respectively. Note 4 – Basic and Diluted Earnings per Share During the years ended December 31, 2024 and 2023, the Company used the two-class method to compute net loss per common share because it had issued securities, other than a single class of common stock, that contractually entitled the holders to participate in dividends and earnings. These participating securities included the Company’s Class A common stock, which was authorized pursuant to the Company’s amendment to its Certificate of Incorporation on May 2, 2022, and convertible Class B common stock which are entitled to share equally, on a per share basis, in all assets of the Company of whatever kind available for distribution to the holders of common stock. The two-class method requires earnings for the period to be allocated between common stock and participating securities based upon their respective rights to receive distributed and undistributed earnings. Under the two-class method, for periods with net income, basic net income per common share is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Net income attributable to common stockholders is computed by subtracting from net income the portion of current period earnings that the participating securities would have been entitled to receive pursuant to their dividend rights had all of the period’s earnings been distributed. No such adjustment to earnings is made during periods with a net loss, as the holders of the participating securities have no obligation to fund losses. The Company reports the more dilutive of the approaches (two-class or “if-converted”) as its diluted net income per share during the period. For the periods presented, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share. F- 12 Common shares consisting of shares potentially dilutive that are excluded from the calculated of diluted earnings per share because they are anti-dilutive as of December 31, 2024 and 2023 are as follows: Schedule of Diluted Earnings Per Share December 31, 2024 December 31, 2023 Warrants 8,192,967 1,760,350 Stock options 223,599 140,750 Total 8,416,566 1,901,100 Note 5 – Other Current Assets Other current assets included the following as of December 31, 2024 and December 31, 2023: Schedule of Other Current Assets December 31, December 31, 2024 2023 Federal and state income tax receivable (1) $ - $ 73,069 Prepaid expenses and other current assets 276,563 316,718 Total other current assets $ 276,563 $ 389,787 (1) Includes $ 50,000 for a federal refundable payroll tax credit, called the Employee Retention Tax Credit (“ERTC”) Tax Credit, which provides a credit to businesses who kept employees, or were negatively impacted, during the COVID-19 pandemic. Note 6 – Property and Equipment Property and equipment at December 31, 2024 and December 31, 2023, consisted of the following: Schedule of Property and Equipment December 31, December 31, 2024 2023 Office equipment – 5 year estimated life $ 85,958 $ 81,340 Leasehold improvements – 2 year estimated life 60,783 60,783 Furniture and fixtures – 7 year estimated life 6,170 677 Property and equipment, gross 6,170 677 Less: Accumulated depreciation ( 126,564 ) ( 63,826 ) Total property and equipment, net $ 27,347 $ 78,974 Depreciation of property and equipment was $ 62,738 and $ 48,771 for the years ended December 31, 2024 and 2023, respectively. Note 7 – Accrued Expenses Accrued expenses at December 31, 2024 and December 31, 2023, consisted of the following: Schedule of Accrued Expenses December 31, December 31, 2024 2023 Accrued payroll and taxes $ 202,038 $ 148,924 Accrued expenses 28,345 50,054 Total accrued expenses $ 230,383 $ 198,978 The Company provides postretirement benefits pursuant to IRS code section 401(k) for employees meeting specified criteria. The Company matches 100 % of the employees’ contributions that are not in excess of 4 % of the employee’s contributions. These matching contributions are fully vested and paid pursuant to the employees’ bi-weekly or semi-monthly pay periods. The Company does not prefund these benefits and has the right to modify or terminate certain of these benefits in the future. For the year ended December 31, 2024, the Company incurred $ 103,760 of IRA contribution expenses pursuant to the Company’s matching contributions, including $ 0 , as accrued at December 31, 2024. For the year ended December 31, 2023, the Company incurred $ 88,327 of investment retirement account contribution expenses pursuant to the Company’s matching contributions, including $ 8,778 , as accrued at December 31, 2023 F- 13 Note 8 – Lease The Company leases its current corporate headquarters under a three-year lease from STVentures, a related party. The lease, as amended on May 1, 2022, to expand its office space from 2,976 square feet to approximately 5,978 square feet, commenced on July 1, 2021, and provides for a base monthly rent of $ 10,711 , as increased from $ 5,332 per month, over the three-year term of the lease. The lease was further amended on June 26, 2024 and provides for a base monthly rent of $ 11,209 per month, over a three-year term of the lease commencing on July 1, 2024. The Company is occupying the space for executive and administrative offices. Rent expense for the years ended December 31, 2024 and 2023 was $ 131,516 and $1 28,527 , respectively , which is included in selling, general and administrative expenses within the statements of operations . The components of lease expense were as follows: Schedule of Lease Expenses 2024 2023 For the Year Ended December 31, 2024 2023 Operating lease cost: Amortization of ROU asset $ 282,876 $ 121,089 Interest on lease liability 16,314 7,438 Total operating lease cost $ 299,190 $ 128,527 Supplemental balance sheet information related to leases was as follows: Schedule of Supplemental Balance Sheet Information December 31, December 31, 2024 2023 Operating lease: Operating lease assets $ 299,190 $ 63,199 Current portion of operating lease liability, related party $ 111,978 63,199 Noncurrent operating lease liability, related party 187,212 - Total operating lease liability $ 299,190 $ 63,199 Weighted average remaining lease term: Operating leases 2.50 years 0.5 years Weighted average discount rate: Operating lease 9.25 % 5.75 % The following payments are required under leases as of December 31, 2024: Schedule of Payments Under Leases Remaining Operating Term in Lease Years 2025 134,505 2026 134,505 2027 67,252 Total lease payments 336,262 Less: imputed interest ( 37,072 ) Present value of lease liability 299,190 2.50 F- 14 Note 9 – Notes Payable Line of Credit On February 7, 2022, the Company entered into a business loan agreement (as amended, the “loan agreement”) with Citizens State Bank of New Castle pursuant to which it originally received a revolving line of credit of up to $ 1,500,000 which was subsequently amended to $ 800,000 (as amended, the “Revolving Line of Credit”). Pursuant to the terms of the Revolving Line of Credit, the outstanding balance shall not exceed 75% of the Company’s outstanding accounts receivable due from the State of Indiana aged more than 90 days together with all other accounts receivable aged less than 90 days. The Revolving Line of Credit was to terminate on December 31, 2022, unless extended pursuant to the terms thereof. The Company received extensions on the Revolving Line of Credit such that it will now terminate on October 24, 2023; however, no further advances are available under the Revolving Line of Credit. In the event of a default, all commitments and obligations pursuant to the Revolving Line of Credit will terminate immediately and, at Citizens State Bank of New Castle’s request, all Indebtedness (as defined in the loan agreement) shall become immediately due and payable. Advances on the Revolving Line of Credit are pursuant to a promissory note dated February 7, 2022 which accrues interest at a variable rate of 1.5% above the national prime interest rate as quoted in the Wall Street Journal, not to be less than 4.75% per annum or more than 21% per annum or the maximum rate allowed by law. Interest shall increase by an 2.0% in the event of a default. Pursuant to the promissory note, the Company has been required to pay monthly payments of unpaid interest since March 7, 2022. The Company may prepay all or a portion of the amount due prior to the date upon which it is due without any penalty. In connection with the Revolving Line of Credit, the Company entered into a commercial security agreement with Citizens State Bank of New Castle dated February 7, 2022, pursuant to which it granted Citizens State Bank of New Castle a security interest in the Collateral (as defined in the commercial security agreement) to secure the Indebtedness (as defined in the commercial security agreement). During the year ended December 31, 2023, the Company received proceeds of $ 300,000 and repaid total advances of $ 1,050,551 . In addition, the Company paid an underwriting fee of $ 14,076 on February 7, 2022, which was amortized over the original life of the line of credit using the straight-line method, which approximated the effective interest method. The balance of the line of credit was $ 0 at December 31, 2023, and was closed during the year ended December 31, 2023. Convertible Notes payable On various dates from January through April 7, 2023, the Company entered into subscription agreements with accredited investors pursuant to which it issued convertible promissory notes in the aggregate principal amount of $ 1,455,000 . The notes mature on various dates between July 10, 2024 and October 7, 2024 , accrue interest at 2 % per annum and may be prepaid by the Company at any time without any penalties. The holders may convert the principal amount of the notes together with accrued interest thereon at any time prior to the earlier of the maturity date and the effectiveness of the registration statement relating to the Company’s initial public offering at a conversion price of $ 6.00 per share. Upon the closing of the Next Equity Financing (as defined herein), the principal amount of the notes together with accrued interest thereon shall automatically convert into such number of shares of the Company’s Class A common stock determined by dividing (x) the outstanding principal balance and unpaid accrued interest of the notes on the date of conversion by (y) the price per share equal to the product of the price per Equity Security (as defined in the notes) sold in the Next Equity Financing multiplied by 80%. “Next Equity Financing” means an initial public offering by the Company of its Equity Securities pursuant to which such Equity Securities are listed on a national securities exchange. In addition, if prior to the maturity date of the notes, the notes remains outstanding, then in the event of a Corporate Transaction (as defined in the notes), the holder of each note may elect to convert the outstanding principal balance and unpaid accrued interest of each note, subject to the terms and conditions contained in the note, into Conversion Shares (as defined in the notes) immediately prior to the closing of such Corporate Transaction based upon a conversion price equal to the lesser of (i) the Corporate Transaction Price (as defined in the notes) or (ii) the quotient resulting from dividing (x) the Valuation Cap (as defined in the notes) by (y) the fully diluted capitalization immediately prior to the closing of the Corporate Transactions. F- 15 On October 3, 2023, a total of $ 1,472,460 , consisting of $ 1,455,000 of principal and $ 17,460 of interest, was converted into an aggregate 446,206 shares of Class A common stock in accordance with the terms of the convertible promissory notes. Insurance Notes Payable In 2023, the Company entered into three insurance policy financing arrangements to purchase various insurance policies. The total principal of these arrangements was $ 370,596 with interest rates ranging from 10.38 % through 14.05 % and monthly payments totaling $ 32,328 are due through July 2024. The Company made principal repayments of $ 184,904 and incurred interest expense of $ 6,265 during the year ended December 31, 2024. As of December 31, 2024 and December 31, 2023, the remaining balance was $ 0 and $ 184,904 , respectively. In 2024, the Company entered into two insurance policy financing arrangements to purchase various insurance policies. The total principal of these arrangements was $ 378,659 with interest rates of 10.350 % and 10.50 % and monthly payments of $ 11,783 and $ 19,171 due through July 2025. The Company made principal repayments of $ 225,773 and incurred interest expense of $ 9,436 during the year ended December 31, 2024. As of December 31, 2024, the remaining balance was $ 152,887 . The Company recognized interest expense for the years ended December 31, 2024 and 2023 as follows: Schedule of Recognized Interest Expense December 31, December 31, 2024 2023 Interest on line of credit $ - $ 27,054 Interest on convertible notes payable - 17,460 Interest on notes payable 15,600 8,966 Amortization of underwriting fee on line of credit - - Interest on credit card debt - 206 Total interest expense $ 15,600 $ 53,686 Note 10 – Commitments and Contingencies Legal Contingencies From time to time, we may be involved in various disputes and litigation matters that arise in the ordinary course of business. The Company is currently not a party to any material legal proceedings. In January 2024, a former employee filed a wrongful termination lawsuit against the Company in the U.S. District Court, Southern District of Indiana. This case was settled on January 15, 2025 with no material impact to the Company. Note 11 – Changes in Stockholders’ Equity Class A Common Stock The Company has 100,000,000 authorized shares of $ 0.001 par value Class A common stock, and 8,979,204 shares were issued and outstanding as of December 31, 2024. F- 16 During the year ended December 31, 2024, two investors exercised 130,789 warrants to purchase Class A Common stock pursuant to which the Company received cash proceeds of $ 850,129 . On September 11, 2024, the Company completed a public offering of an aggregate of (i) 3,203,125 shares of Class A common stock of the Company, par value $ 0.001 per share (the “Common Stock”), (ii) eighteen-month warrants (the “Series A Warrants”) to purchase up to an aggregate of 3,203,125 shares of Common Stock at an exercise price of $ 0.64 per share, and (iii) five-year warrants (the “Series B Warrants” and, together with the Series A Warrants, the “Warrants”) to purchase up to an aggregate of 3,203,125 shares of Common Stock at an exercise price of $ 0.64 per share, at an offering price of $ 0.64 per share of Common Stock and related Warrants, for aggregate gross proceeds of $ 2,050,000.00 . The Company issued to Rodman or its designees warrants to purchase up to an aggregate of 160,156 shares of Common Stock, at an exercise price of $ 0.80 per share and an expiration date of September 11, 2029 . The Company received net cash proceeds of $ 1,619,021 after offering expenses. The Series A Warrants expire 18 months from the date of the offering, and the Series B Warrants expire on September 11, 2029 . The estimated fair value of the warrants issued in connection with the public offering was estimated using a Black-Scholes option pricing model and the following assumptions: 1) dividend yield of 0 %; 2) risk-free rate of 3.45 % to 3.62 %; 3) volatility of 127 % to 138 %; 4) a common stock price of $ 0.80 , and 5) a contractual term of 1.5 to 5 years. The fair value of the Class A Warrants was $ 1,677,768 , the estimated fair value of the Class B Warrants was $ 2,235,055 and the estimated fair value of the underwriter warrants was $ 109,728 . The fair value of the warrants was recognized as a cost of capital related to the public offering. During the year ended December 31, 2024, the Company issued 50,000 shares pursuant to a restricted stock award from November 2023. These shares vest quarterly over a one-year period. The Company recognized expense of $ 67,378 and $ 8,122 for these awards during the years ended December 31, 2024 and 2023, respectively. During the year ended December 31, 2024, the Company issued 6,992 shares for services to a consultant with a fair value of $ 4,000 , recognized as stock-based compensation. On August 13, 2024, the Company received written notification (the “Notice”) from the Listing Qualifications Department of the Nasdaq Stock Market LLC (“Nasdaq”) indicating that the Company’s stockholder’s equity was below the minimum requirement of $ 2,500,000 0 for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(1) (the “Minimum Shareholder Equity Requirement”). On November 1, 2024, the Company was notified by Nasdaq that it had regained compliance with the Minimum Shareholder Equity Requirement. On October 18, 2024, the Company received a Notice from Nasdaq indicating that the bid price for its Class A common stock, for the last 30 consecutive business days for the last thirty consecutive business days, had closed below the minimum $ 1.00 per share and, as a result, the Company was not in compliance with the $ 1.00 minimum bid price requirement (the “Minimum Bid Price Requirement”) for the continued listing on the Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2). If the Company fails to comply with Nasdaq’s continued listing standards, the Company may be delisted and its Class A common stock will trade, if at all, only on the over-the-counter market, such as the OTC Bulletin Board or OTCQX market, and then only if one or more registered broker-dealer market makers comply with quotation requirements. In addition, delisting of the Company’s Class A common stock could depress our stock price, substantially limit liquidity of our Class A common stock and materially adversely affect our ability to raise capital on terms acceptable to us, or at all. Finally, delisting of the Class A common stock could result in the Class A common stock becoming a “penny stock” under the Exchange Act. F- 17 Class A Common Stock Warrants Summary of Activity of Outstanding Stock Warrants The following is a summary of activity of outstanding stock warrants: Weighted Average Number Exercise of Shares Prices Balance, December 31, 2023 1,760,350 $ 6.39 Warrants granted 6,566,406 0.64 Warrants exercised ( 130,789 ) 6.50 Warrants cancelled - - Balance, December 31, 2024 8,195,967 $ 1.78 Exercisable, December 31, 2024 8,195,967 $ 1.78 The warrants had a weighted average remaining life of 3.15 years and no intrinsic value as of December 31, 2024. Convertible Class B Common Stock The Company has 5,000,000 authorized shares of $ 0.001 par value convertible Class B common stock, and had 833,334 shares issued and outstanding as of December 31, 2024, as retrospectively applied, pursuant to the Company’s subsequent recapitalization in 2022 and effective as of May 3, 2022, whereby the founders exchanged their 83,334 Founders Shares for 833,334 shares of convertible Class B common stock. Note 12 – Common Stock Options Omnibus Equity Incentive Plan On April 11, 2022, the Company’s board of directors adopted, and the Company’s stockholders approved, the Syra Health Corp. 2022 Omnibus Equity Incentive Plan, as amended on April 19, 2023 (as amended, the “2022 Plan”). No more than 1,041,667 shares of the Company’s Class A common stock shall be issued pursuant to the exercise of incentive stock options under the 2022 Plan. Class A Common Stock Option Awards During the year ended December 31, 2024, the Company granted options to purchase an aggregate 42,000 shares of the Company’s Class A common stock to employees at an exercise price ranging from $ 1.28 to $ 1.88 per share for terms of 10 years and 5 years under the 2022 Plan. These options will vest 25% on each anniversary, and 25% quarterly, until fully vested . The options had no intrinsic value. The aggregate estimated value using the Black-Scholes Pricing Model, based on an expected terms of 6.25 and 3.54 years, a weighted average volatility rate ranging from 109 % to 126 %, a weighted average risk-free interest rate ranging from 3.82 % to 4.63 %, and a weighted average call option value ranging from $ 0.331 to $ 1.450 , was $ 79,383 . The expected term was estimated using the simplified method allowed under SEC Staff Accounting Bulletin 107 (“SAB 107”). During the years ended December 31, 2024 and 2023, the Company recognized expense of $ 59,803 and $21,041, respectively, related to common stock options. As of December 31, 2024, a total of $ 179,549 of unamortized expenses are expected to be expensed over the vesting period. The Company also granted options to purchase an aggregate of 73,349 shares of the Company’s Class A common stock to directors under the 2022 Plan to settle an aggregate of $ 47,500 of accrued director fees. The options have an exercise price of $ 0.3683 , a term of 10 years, with 25% of the options vesting immediately and the remaining over 12 months from the grant date . The aggregate estimated value using the Black-Scholes Pricing Model, based on an expected term of 6.25 years, an estimated volatility of 124 %, a risk-free interest rate of 4.32 %, and a call option value of $ 0.33 , was $ 24,267 . The expected term was estimated using the simplified method allowed under SAB 107. The difference between the accrued expense and the value of the options was recognized in selling, general and administrative expenses. F- 18 The following is a summary of activity of outstanding stock options: Summary of Activity of Outstanding Stock Options Weighted Average Number Exercise of Shares Prices Balance, December 31, 2023 140,750 $ 1.82 Options granted 115,349 0.79 Options cancelled ( 32,500 ) - Balance, December 31, 2024 223,599 $ 1.32 Exercisable, December 31, 2024 - $ - The options had a weighted average remaining life of 8.20 years and no intrinsic value as of December 31, 2024. Note 13 – Income Taxes For the period from November 20, 2020 (inception) through December 31, 2024, the Company incurred a net operating loss and, accordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At December 31, 2024, the Company had approximately $ 8,265,000 of federal net operating losses. Under the Tax Cuts and Jobs Act of 2017, the net operating loss carry forwards can be carried forward indefinitely, however the deductions are limited to 80% of taxable income. The effective income tax rate for the years ended December 31, 2024 and 2023 consisted of the following: Schedule of Effective Income Tax Rate December 31, December 31, 2024 2023 Federal statutory income tax rate 21 % 21 % State income taxes 3 % 3 % Change in valuation allowance ( 24 )% ( 24 )% Net effective income tax rate - - The components of the Company’s deferred tax asset are as follows: Schedule of Deferred Tax Assets 2024 2023 December 31, 2024 2023 Deferred tax assets: Net deferred tax assets before valuation allowance $ 1,900,457 $ 1,029,723 Less: Valuation allowance ( 1,900,457 ) ( 1,029,723 ) Net deferred tax assets $ - $ - Based on the available objective evidence, including the Company’s history of its loss, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at December 31, 2024 and 2023, respectively. In accordance with FASB ASC 740, the Company has evaluated its tax positions and determined there are no uncertain tax positions. Note 14 – Subsequent Events The Company evaluates events that have occurred after the balance sheet date through the date these financial statements were issued. On January 7, 2025, the Company granted options to purchase an aggregate 57,646 shares of the Company’s Class A common stock at an exercise price of $ 0.7386 per share for terms of 10 years under the 2022 Plan. These options will vest 25% on each anniversary, and 25% quarterly, until fully vested . On January 17, 2025, a total of 233,334 shares of Class B Common Stock previously held by the Company’s Executive Chairman and President, Sandeep Allam, automatically converted into 2,333,340 shares of Class A common stock according to the terms of the Company’s Articles of Incorporation. On January 31, 2025, with the completion of the Company’s contract FSSA (NeuroDiagnostic Institute), the Company expects a decline in revenue generation for healthcare workforce. A new contract from FSSA (NeuroDiagnostic Institute) has been executed with a contract end date of June 30, 2025 with a ceiling value of $ 1,480,000 in revenue . F- 19 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.